In a startling update to the disclosure made last year by Tenet Healthcare Corporation, as covered in my post Tenet to Pay $66-Plus Million to Settle FCA Suit Involving Company Model of Anesthesia Services, last week, the United States Department of Justice announced the conclusion of a settlement agreement with Tenet’s USPI entities Oklahoma Center for Orthopaedic and Multi-Specialty Surgery (OCOM), a specialty hospital in Oklahoma City, Oklahoma, its part-owner and management company, USP OKC, Inc., and USP OKC Manager, Inc. (collectively USP), as well as medical group Southwest Orthopaedic Specialists, PLLC (SOS), and two SOS physicians.
Collectively the Tenet controlled entities will pay $60.86 million to the United States, $5 million to the State of Oklahoma, and $206,000 to the State of Texas.
SOS and two of its physicians, Anthony L. Cruse, D.O. and R.J. Langerman, Jr., D.O., will pay $5.7 million to the United States, and $495,619 to the State of Oklahoma.
The whistleblower lawsuit, entitled U.S. ex rel. Wayne Allison, etc., et al. v. Southwest Orthopaedic Specialists, PLLC, et al., centers around, among other serious allegations, the claim that the Tenet entities, the medical practice, and the surgeons 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.
Specifically, the lawsuit alleges that SOS and other defendants, 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.
As the U.S. Department of Justice put it, the settlement resolves allegations that between 2006 and 2018, OCOM and USP provided improper remuneration to SOS and certain of its physicians in exchange for patient referrals to OCOM in the form of (i) free or below-fair market value office space, employees, and supplies, (ii) compensation in excess of fair market value for the services provided by SOS and certain of its physicians, (iii) equity buyback provisions and payments for certain SOS physicians that exceeded fair market value, and (iv) preferential investment opportunities in connection with the provision of anesthesia services at OCOM.
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.
It must be stressed that the allegations in the complaint were settled, not admitted to, by the paying defendants. However, $72.3 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, sponsors 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. His reward for bringing the whistleblower suit is yet to be determined but will likely be between 10% and 25% of the $72.3 million.
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.
