Tenet Healthcare Corporation’s most recent quarterly report (for the period ended 9/30/19) indicates that it’s reached an agreement in principle with the United States Department of Justice to settle a whistleblower suit involving, among other serious allegations, that it participated in a so-called “company model of anesthesia services” scheme. That’s an arrangement in which, roughly speaking, the surgeons working at a facility, usually owners of the facility, and perhaps the facility itself, own the entity providing anesthesia services.
The cost of the settlement? Tenet’s 10-Q filing states that it’s $66 million with another $2 million reserved for the relator’s attorneys fees and other costs.
The lawsuit, entitled U.S. ex rel. Wayne Allison, etc., et al. v. Southwest Orthopaedic Specialists, PLLC, et al., centers around numerous Oklahoma orthopedic surgeons, their practice, Southwest Orthopaedic Specialists (“SOS”), the surgical hospital they created, Oklahoma Center for Orthopaedic and Multispecialty Surgery (“OCOM”), and the corporate entities that purchased and/or control the surgical hospital, Tenet Healthcare and its subsidiary, USPI.
Among other things, the lawsuit alleges that SOS and other defendants, including Tenet and USPI, entered into an anesthesia company scheme under which they formed and operated an entity called Anesthesia Partners of Oklahoma, LLC, to which OCOM granted the exclusive anesthesia contract. The complaint alleges that, as a result, anesthesia company profits were distributed to those owners in a manner directly related to the volume and value of referrals by the SOS surgeons.
These allegations are of additional interest because they’re not along the traditional line of company model scheme attack. The common attack involves an allegation that there’s an inherent, forced kickback in the relationship between the surgeon or facility-controlled anesthesia company and the anesthesiologists and/or CRNAs it employs or engages.
The lawsuit states that Tenet, through USPI and other subsidiaries, owns 22 companies holding interests in anesthesia companies, claimed to be set up via a boilerplate “kit” of documents supplied by the Tenet-related entity.
Although it must be stressed that Tenet is settling the case, certainly without any admission of liability, $66 million is no small chunk of change.
A similar amount could destroy many facilities, including nearly any ASC that directly, or through their control physicians, that sponsor similar anesthesia company deals.
Here are some additional takeaways for you:
1. Just because a large entity, for example, a hospital or a surgery center management company, tells you that a deal’s been vetted by their lawyers and is “legal,” don’t bet on it. Vet it through your own counsel and assess your own risk. As in carpentry, measure (assess) twice, cut (do the deal) once. Or not do the deal – you get the idea.
2. I’ve written, many times before (see, for example, How to Build a Whistleblower and Hospital Chain Paying More Than a Quarter Billion Dollars to Resolve False Billing and Kickback Allegations), false claims act lawsuits often arise from an insider. In the instant case, the relator, Mr. Allison, was the administrator of SOS, the surgical practice, that is, until he was fired.
3. Last, and quite interesting, is the fact that there are at least several anesthesia companies, some working nationally, and some surgery center management companies, that appear to engage in “cookie cutter” anesthesia company arrangements as a part of their overall business plan. Each of those arrangements is clearly now a target for false claims act action, likely via claims brought by insiders such as administrative personnel or anesthesia providers, or outsiders, such as billing service employees. Only time will tell what transpires.
[Note for readers wishing to view the above-linked documents directly on government sites: You can access the Tenet 10-Q at the SEC’s site via this link. If you have a PACER account you can access the case documents (Case No. CIV-16-569-F) via the U.S. District Court for the Western District of Oklahoma’s PACER portal. If you don’t have access to PACER, you can establish a PACER account (paywall) here.]
