A Phoenix specialty hospital that built its brand on surgeon leadership is cutting a multimillion-dollar check to the federal government after regulators said patient referrals were tainted by improper financial deals.
Southwest Orthopedic and Spine Hospital LLC, which does business as OASIS Hospital, and two management partners agreed to pay $5.6 million to resolve federal allegations tied to a physicians' group that sent patients to the facility, the U.S. Department of Justice said Tuesday.
Federal settlement
The U.S. Department of Justice said OASIS Hospital, United Surgical Partners International (USPI) and Dignity/USP Phoenix Surgery Centers LLC agreed to the $5.6 million civil settlement to resolve alleged False Claims Act violations.
According to the department, from 2011 through 2018 the hospital and its partners made improper financial contributions to a physician group that referred patients to OASIS. The government alleges those arrangements violated federal laws that restrict payments tied to referrals when federal health programs are on the hook.
"The AKS and Stark Law are designed to ensure that decisions about patient care are not influenced by physicians' personal financial interest," Assistant Attorney General Brett A. Shumate said in the announcement, referring to the Anti-Kickback Statute and the Physician Self-Referral Law.
Allegations spelled out
Local coverage from 12News reports that the alleged payments came in the form of interest on convertible bonds issued to Southwest Orthopedic and Spine Hospital Physicians Group, which was the same physician group sending patients to OASIS.
According to 12News, USPI flagged the financial arrangements during a 2019 internal compliance review, disclosed them to the government and cooperated with the federal investigation, steps that officials said counted in the company’s favor when the settlement was negotiated.
Cooperation and remedial steps
The Justice Department said OASIS and USPI took remedial actions after discovering the issue, submitted a detailed written disclosure and cooperated throughout the probe.
"Kickback schemes undermine the medical decision-making of medical professionals," Acting Deputy Inspector General Scott J. Lampert of the HHS Office of Inspector General said in the federal release, which noted that the Civil Division's Fraud Section handled the matter.
Local context
OASIS opened in 2011 as a surgeon-led orthopedic and spine specialty hospital affiliated with Dignity Health, and the building spans roughly 94,000 square feet, according to AZRE. The hospital serves north Phoenix, and federal officials have not alleged any wrongdoing by patients.
The settlement resolves questions about past billing and referral arrangements but keeps a bright spotlight on how ownership stakes and compensation structures can pull federal scrutiny when Medicare or other federal health programs are involved.
What this means legally
Federal laws such as the Anti-Kickback Statute and the Physician Self-Referral Law, often called the Stark Law, prohibit offering or receiving remuneration to induce referrals and can convert improper referral relationships into False Claims Act exposure when federal health care programs are billed, according to the Medicare Learning Network (CMS).
Civil settlements like this one typically resolve allegations without any admission of wrongdoing or formal finding of liability. Reporting by 12News notes that federal officials said the agreement resolves the allegations and that there has been no determination of liability.
