OASIS Hospital Settles Allegations in Kickback Scheme Investigation

Phoenix surgery center OASIS Hospital has agreed to pay $5.6 million to settle allegations that it violated federal anti-kickback laws by providing financial incentives to doctors for patient referrals, the Department of Justice announced Tuesday.

The settlement resolves claims that Southwest Orthopedic and Spine Hospital LLC, which operates as OASIS Hospital, made improper payments to Southwest Orthopedic and Spine Hospital Physicians Group between 2011 and 2018. According to federal investigators, OASIS allegedly structured these payments by giving bonds to doctors and then paying interest on those bonds.

“Kickback schemes undermine the medical decision-making of medical professionals,” said Acting Deputy Inspector General Scott Lampert of the Health and Human Services Office. Lampert emphasized that such arrangements can drive up healthcare costs for everyone by potentially encouraging unnecessary procedures and treatments.

The allegations centered on violations of two key healthcare regulations: the Anti-Kickback Statute, which prohibits paying for patient referrals, and the Stark Law, which forbids billing Medicare for services ordered by physicians with specific financial relationships to a hospital.

“As this settlement reflects, we will hold accountable those who violate these important safeguards,” said Assistant Attorney General Brett Shumate in a statement. However, Shumate noted that the Justice Department also took into consideration OASIS Hospital’s cooperation during the investigation.

The case came to light not through a whistleblower or external investigation but through OASIS’s own internal compliance efforts. Following a 2019 internal audit, the hospital voluntarily disclosed the potentially problematic payment arrangements to federal authorities. This self-disclosure, along with full cooperation from both the hospital and its parent company throughout the investigation, likely factored into the settlement terms.

The $5.6 million settlement underscores the federal government’s continued focus on combating healthcare fraud, particularly arrangements that could influence medical decision-making based on financial incentives rather than patient need. The Justice Department has increasingly targeted such violations in recent years as healthcare costs continue to rise nationwide.

Financial relationships between healthcare providers and referring physicians have long been an area of regulatory scrutiny. The laws in question are designed to ensure that medical decisions are made based solely on what’s best for patients rather than what might financially benefit providers.

For Phoenix-area patients, the settlement provides reassurance that oversight mechanisms are working to maintain healthcare integrity. However, it also raises questions about how widespread such practices might be in the competitive orthopedic and spine surgery market, where procedures can generate significant revenue for facilities.

While the settlement includes no admission of wrongdoing by OASIS Hospital, the significant payment amount reflects the seriousness with which federal authorities view potential kickback arrangements. The resolution allows the hospital to move forward without the cloud of ongoing federal investigation while implementing stronger compliance measures.

This case highlights the importance of robust internal compliance programs for healthcare facilities, particularly those with complex financial relationships with physician groups. The fact that OASIS’s own audit discovered the issue demonstrates the value of self-monitoring in the heavily regulated healthcare sector.

The settlement comes at a time when healthcare costs and billing practices are under increased scrutiny nationwide, with federal agencies stepping up enforcement of regulations designed to prevent financial considerations from influencing medical care decisions.