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Tenet to Pay $513M for Kickback Scheme

News  |  By John Commins  
   October 04, 2016

A federal prosecutor blasts Tenet for 'taking advantage of vulnerable pregnant women in clear violation of the law.' A kickback and bribe scheme allegedly helped the hospital chain obtain more than $145 million in Medicaid and Medicare funds based on illegal patient referrals.

Tenet Healthcare Corporation and two subsidiaries will pay more than $513 million to resolve criminal charges and civil whistleblower suits for a kickback scheme that illegally steered more than 20,000 undocumented, pregnant Medicaid recipients to Tenet Atlanta-area hospitals, the Department of Justice said Monday.

Two hospitals that were managed under subsidiary Tenet HealthSystem Medical Inc. will plead guilty to conspiracy to defraud Medicare and Medicaid, and to paying kickbacks and bribes in violation of the Anti-Kickback Statute as part of the investigation. The deal was announced in August and finalized this week, but awaits a judge's approval in U.S. District Court in Atlanta.

In criminal and civil complaints, federal and Georgia state prosecutors alleged that in 2013 and 2014 THSM Inc.'s Atlanta Medical Center Inc., North Fulton Medical Center Inc., Spalding Regional Medical Center Inc. and Hilton Head Hospital paid bribes and kickbacks to the operators of Clinica de la Mama prenatal care clinics serving primarily undocumented Hispanic women in return for the referral of those patients for labor and delivery medical services at Tenet hospitals.

These kickbacks and bribes allegedly helped Tenet obtain more than $145 million in Medicaid and Medicare funds based on the resulting patient referrals, DOJ said.

Prosecutors said expectant mothers were told at the clinics that Medicaid would cover the costs associated with their childbirth and the care of their newborn only if they delivered at Tenet hospitals.

In some cases, the women were told that they were required to deliver at Tenet hospitals, leaving them with the false belief that they could not pick the hospital of their choice. As a result, prosecutors said many expectant mothers traveled long distances from their homes to deliver at Tenet hospitals, putting their health and safety and that of their newborn babies at risk.

Prosecutor: 'Tenet Cheated' Medicaid
"Our Medicaid system is premised on a patient's ability to make an informed choice about where to seek care without undue interference from those seeking to make a profit," John Horn, U.S. Attorney of the Northern District of Georgia, said in prepared remarks.

"Tenet cheated the Medicaid system by paying bribes and kickbacks to a pre-natal clinic to unlawfully refer over 20,000 Medicaid patients to the hospitals," Horn said. "In so doing, they exploited some of the most vulnerable members of our community and took advantage of a payment system designed to ensure that underprivileged patients have choices in receiving care."

In the civil settlement, Tenet, the nation's third-largest for-profit hospital chain, will pay $368 million to the federal government, the state of Georgia and the state of South Carolina to resolve claims in a whistleblower lawsuit filed by Ralph D. Williams.

The federal share of the civil settlement is $244 million; Georgia will recover $122.8 million; South Carolina gets $892,125; and Williams gets $84.4 million. Tenet will also retain an independent compliance monitor for at least three years to address and reduce the risk of any recurrence of violations of the anti-kickback statutes by any of its hospitals, DOJ said.

Other Tenet Actions
Tenet Chairman and CEO Trevor Fetter said Monday his for-profit hospital chain's "conduct in this matter was unacceptable and failed to live up to our high expectations for integrity."

"The relationships between the four hospitals and Clinica de la Mama violated the explicit requirements of our compliance program and were inconsistent with the strong culture of compliance we've worked hard to establish at Tenet," Fetter said in prepared remarks.

"We take seriously our responsibility to operate our business in accordance with the highest ethical standards, every day and in every interaction."

The criminal complaint against Tenet notes that the executives who worked at Atlanta Medical Center, and North Fulton Medical Center "concealed material facts" of the scheme from Tenet lawyers and outside counsel "because they knew that the agreements would not be approved if the true nature of the Clinica arrangements were disclosed to lawyers." Tenet said that the executives involved in the scheme no longer work for the hospital chain.

This week's settlement marks the latest brush with the law for Tenet, which in 2012 was fined $42.7 million after the company self-disclosed overbilling Medicare for services provided by inpatient rehabilitation facilities. In 2006, Tenet agreed to pay more than $900 million to settle an investigation of alleged unlawful billing practices, primarily through improper "upcoding," and "outlier" payments for inflated charges.

Atlanta Medical Center, North Fulton Medical Center, were sold to WellStar on April 1.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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