Arizona Surgical Hospital Agrees to Pay $5.6M to Resolve Alleged False Claims Act Violations

Southwest Orthopedic and Spine Hospital LLC doing business as OASIS Hospital (OASIS), United Surgical Partners International Inc. (USPI), and Dignity/USP Phoenix Surgery Centers LLC, have agreed to pay $5.6 million to resolve alleged False Claims Act violations relating to improper financial relationships between OASIS and Southwest Orthopedic and Spine Hospital Physicians Group LLC (Southwest Physicians). OASIS is a surgical hospital located in Phoenix, Arizona. USPI disclosed the arrangements at issue to the government following a 2019 internal compliance review and independent investigation.

The settlement resolves allegations that from 2011 through 2018 OASIS made improper financial contributions to Southwest Physicians, a physician group that referred patients to OASIS. Those financial contributions allegedly took the form of interest payments on convertible bonds issued to the physicians’ group. The United States alleged that these arrangements violated both the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law, commonly known as the Stark Law. The AKS prohibits the provision of remuneration to induce the referral of services or items that are paid for by a federal health care program. The Stark Law prohibits hospitals from billing for certain services referred by physicians with whom the hospital has a financial relationship, unless that relationship satisfies one of the law’s statutory or regulatory exceptions. A claim submitted in violation of the AKS or the Stark Law can also violate the False Claims Act.

“The AKS and Stark Law are designed to ensure that decisions about patient care are not influenced by physicians’ personal financial interest,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “As this settlement reflects, we will hold accountable those who violate these important safeguards, but we will also give credit when resolving such misconduct to those who fully disclose their mistakes, take appropriate remedial actions, and meaningfully cooperate with the government’s investigation.”

“Kickback schemes undermine the medical decision-making of medical professionals – including physicians – when such professional judgements should only serve the health and well-being of patients,” said Acting Deputy Inspector General for Investigations Scott J. Lampert at the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Both those who pay and those who receive kickbacks enrich themselves from such deals, but these schemes are corrosive to the integrity of our health care system and drive up the cost of health care for all of us. HHS-OIG will continue to collaborate with our law enforcement partners to protect taxpayer-funded health care programs and the millions of people in our country who rely on them.”

In connection with the settlement, the United States acknowledged that OASIS and USPI took a number of significant steps entitling them to credit for cooperating with the government. Following an internal compliance review and independent investigation, OASIS and USPI promptly took remedial actions and disclosed the relevant arrangements to the government. OASIS and USPI also provided the government with a detailed and thorough written disclosure and cooperated with the government throughout its investigation.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the Department of Health and Human Services Office of Inspector General.

The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The matter was handled by Fraud Section Senior Trial Counsel David Finkelstein.

The claims resolved by the United States in the settlement are allegations only and there has been no determination of liability.