OCOM: Hospital Benefits for Referring Surgeons

In the OCOM orthopedic Stark settlement, the hospital, its management companies, a physician group and two physicians agreed to pay $72.3 million to resolve allegations that financial benefits bought orthopedic referrals and generated false claims to Medicare, Medicaid and TRICARE. The alleged benefits reached ordinary business decisions: who paid for office space and staff, who could buy hospital equity, and who kept the rewards when the hospital bought surgical supplies. For someone in hospital finance, surgical purchasing or medical device sales, those payment decisions may be the part of the story they know.

OCOM is the Oklahoma Center for Orthopaedic and Multi-Specialty Surgery, a specialty hospital in Oklahoma City. The Justice Department’s July 8, 2020 announcement identified USP OKC Inc. and USP OKC Manager Inc. as its part-owner and management company. Southwest Orthopaedic Specialists, the Oklahoma City physician group known as SOS, and two of its physicians also settled.

A whistleblower brought the case under the False Claims Act and the Oklahoma Medicaid False Claims Act. The government’s allegations covered conduct from 2006 through 2018. The complaint describes how the alleged benefits worked inside the hospital and the practice, including who could approve them and what those decisions had to do with referrals.

What Are Some Examples of Kickbacks in Healthcare?

Free office space, subsidized employees, excess compensation and favorable investment terms were all alleged referral benefits in the OCOM case.

The hospital and its management companies allegedly provided the practice and certain physicians with office space, employees and supplies free or below fair market value. They allegedly paid more than fair market value for services the group and physicians provided. The settlement also covered equity buyback provisions and payments that allegedly exceeded fair market value, along with preferential investment opportunities connected to anesthesia services at OCOM.

The resolution also addressed preferential physician investment offers at four Texas surgery facilities.

How the Hospital Referral Became a Claim

The government alleged that OCOM’s financial arrangements produced claims for services provided to improperly referred patients. That was the connection between the office lease or equity terms and the public money: a benefit to a referring physician, a patient sent to OCOM, and a hospital claim to a government health program.

In its announcement, the Justice Department explained that the Stark Law restricts Medicare hospital billing for certain services referred by physicians with improper financial arrangements. Its examples included compensation above the value of the work, free or below-market rent, and office staff. The Anti-Kickback Statute addresses benefits offered or received to induce federally funded referrals.

At OCOM, the alleged benefit bought a choice of hospital. An equity offer explains what a physician stood to gain. The referrals explain the business the hospital stood to receive.

Equity Offers With a Referral Test

The whistleblower alleged that access to additional OCOM equity depended on how much business a physician brought to the hospital. According to the complaint’s account of equity decisions, when a physician outside SOS sought more equity, OCOM’s chief executive sought permission from the hospital’s board chairman and the SOS physicians.

The complaint described the decision rule directly:

The whistleblower further alleged that two SOS physicians vetoed purchases by doctors they regarded as unprofitable from a referral standpoint, and hospital management followed those decisions. On that account, the opportunity to own more of the hospital depended on the patients a doctor could bring through its doors.

The settlement’s equity allegations also reached the terms on which certain SOS physicians could sell back their interests. The government alleged that those buyback provisions and payments exceeded fair market value. The alleged advantage sat at both ends: who was allowed to buy, and what they were paid to sell back.

A 2020 paper in the Journal of Forensic and Investigative Accounting, A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud, separates ownership interests, investment interests and compensation agreements as forms of physician financial relationships. That distinction helps make sense of OCOM’s allegations. A review confined to the doctor’s salary would leave the equity terms and investment opportunities untouched.

The Hospital Paid, the Physician Benefited

The whistleblower described alleged benefits inside purchasing, payroll and property arrangements. Each put hospital money toward a cost or opportunity that benefited a physician. These are concrete transactions an employee can recognize without seeing the whole referral arrangement.

Surgical Supplies on a Personal Credit Card

The complaint alleged that, during at least 2011, OCOM’s board chairman and medical director arranged for hospital surgical-supply purchases to run through his personal credit card. OCOM allegedly reimbursed him each month for the purchases, while he retained the card’s reward points.

The alleged benefit was in the payment arrangement itself: the hospital covered the purchases, and the physician kept the points. Someone handling surgical-supply orders or reimbursements could know how that arrangement worked.

A Personal Scrub Technician on Hospital Payroll

The complaint also described an earlier staffing arrangement, around 2004. It alleged that OCOM’s highest-volume referring physician wanted to reduce what he personally paid his scrub technician. He allegedly used that influence to have OCOM hire the technician as a hospital employee for at least 50% of the technician’s existing salary.

The whistleblower described the arrangement as unwritten and for the physician’s benefit. The alleged advantage was a personal staffing cost shifted onto the hospital.

Lease Payments for Space the Hospital Allegedly Did Not Need

The whistleblower alleged that two physicians used their influence to keep rental income flowing from OCOM despite the space lacking a proper business justification. The complaint put the lease extensions in 2014 and estimated the payments at approximately $17,000 per month.

According to the complaint, a fair-market-value study was obtained to justify the arrangement. The practice’s chief financial officer questioned that exercise in an email:

An appraisal gave the rent a price. The complaint alleged that OCOM had no business reason to keep renting the space, yet extended the lease anyway. The same accounting paper identifies the amount of leased space reasonably needed for business as a question requiring examination. A price appraisal answers only part of the question when the allegation is that the hospital had no business reason to keep paying for the space.

Who Agreed to Pay

The Justice Department withdrew its earlier $77.2 million figure as incorrect.

The announced payment obligations were divided between the management side and the physician side:

• USP OKC Inc. and USP OKC Manager Inc.: $60.86 million to the United States, $5 million to Oklahoma and $206,000 to Texas.
• Southwest Orthopaedic Specialists and two physicians: $5.7 million to the United States and $495,619 to Oklahoma.

The physician group and the two doctors had their own payment obligation, alongside the much larger management-company obligation. The resolution reached the people receiving the alleged referral benefits as well as the businesses providing them.

OCOM and the practice each entered a five-year Corporate Integrity Agreement with the Inspector General’s office, requiring compliance programs, independent reviews of their arrangements and certifications from key executives.

Southwest Orthopaedic’s Earlier Ultrasound and Assistant Claims

Southwest Orthopaedic Specialists and its physicians had agreed to a separate $670,000 settlement announced on July 13, 2018. That earlier resolution addressed allegations of unnecessary ultrasonic needle-guidance procedures and surgical-assistant services that were not performed. A former employee brought the allegations.

The complaint describes the ultrasound issue in terms a practice employee would recognize. It alleged that SOS doctors routinely directed physician assistants to use ultrasound devices even when the doctor was absent and could not provide the required supervision. It also alleged that the group’s outside billing company, ALN, noticed a spike in ultrasound-guidance claims.

According to the complaint, ALN warned the doctors in January 2014 that each use had to be medically necessary, documented and supervised when performed by an assistant. After that warning, the physicians allegedly reduced and eventually stopped using the devices for injections. The billing company’s warning connected the clinical practice with the claims it was seeing.

The assistant-billing allegation was more immediate. The whistleblower alleged that an assistant worked and billed for clinical services in the SOS building while the same assistant was simultaneously billed as a surgeon’s assistant in the OCOM building next door. The schedules and locations were central to the allegation: the billing put the assistant in both places at once.

Ownership and Financing Can Carry the Referral Benefit

Other hospital cases show why ownership decisions and financing payments deserve the same attention as compensation. In the Flower Mound Hospital settlement, announced in 2021, the government alleged that repurchased physician ownership shares were reallocated according to referral volume or value. That allegation parallels the complaint’s account of OCOM equity offers: access to ownership allegedly depended on the business a doctor generated.

In the OASIS Hospital settlement, announced in 2026, the government alleged improper financial contributions to a referring physician group through interest payments on convertible bonds. The financial benefit appeared in a financing arrangement. Across these cases, the question is what the economic relationship rewarded, whether the payment appeared as compensation, an ownership opportunity or interest.

What Kind of Proof Is Needed to Be a Whistleblower?

We work with you to assess how the arrangement you know connects to referrals and government health care claims. At OCOM, the complaint made those connections through decisions about equity, leases, purchasing and staff.

You may know the decision behind a payment. An employee who knows why a lease was extended or who controlled an equity offer can explain a decision that a payment ledger alone leaves unexplained. A billing employee may know how the patient referrals became claims. Those perspectives belong together when we assess the case.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Why the Arrangement Was Approved

If you work in surgical purchasing, medical device sales or a physician practice and know how benefits rewarded referrals, speak to our Whistleblower Experts about the payments you know. We build your strongest hospital kickback whistleblower case around the decisions you can explain and bring in healthcare fraud whistleblower lawyers who understand hospital referral arrangements. We stand beside you throughout the case.