Tenet Healthcare Paying $54 Million in Fraud Settlement over Redding CA heart care

[NRSKarenRN, BSN, RN]

August 7, 2003

By KURT EICHENWALD

NY Times

The Tenet Healthcare Corporation agreed yesterday to pay $54 million to resolve government accusations that doctors at a hospital in Northern California conducted unnecessary heart procedures and operations on hundreds of patients.

The settlement is the largest in a case involving what is known as medical necessity fraud, or billing government health programs for tests and treatments that the patient's condition did not require.

The settlement pre-empts any civil and criminal charges by the Justice Department against Tenet, its hospital division and the hospital itself, which did not admit wrongdoing. Nevertheless, in settling, Tenet signaled it would rather pay a record fine than argue in court that there was a medical reason for the patients to undergo the procedures or operations.

Under the agreement, the Department of Health and Human Services is allowed to continue its own inquiry to determine whether Tenet and its hospitals should be barred from federal health programs, including Medicare. Criminal and civil investigations of individuals are continuing. Moreover, former patients can proceed with their lawsuits against Tenet, the hospital and the doctors.

The existence of the government inquiry into accusations of unnecessary procedures and operations at the Tenet hospital, which is in Redding, Calif., has been known for more than 10 months. But throughout that time, defenders of the doctors who are at the center of the investigation have treated the case as simply too outrageous to be believed and repeatedly cited the absence of any government action as proof.

But now, experts in law and health care said, the settlement raises anew the questions of what was happening at the hospital, the Redding Medical Center.

"This is not just a health care fraud that takes dollars out of the system," said Neil Getnick, a partner at Getnick & Getnick, which specializes in antifraud litigation. "This is rank patient abuse. This is as bad as it gets."

Under the terms of the settlement, which covers procedures done at the hospital from 1997 to 2002, Tenet must cooperate with existing civil and criminal investigations into individuals who may have participated in billing government health programs like Medicare for unnecessary procedures. Citing those inquiries, federal prosecutors declined to provide details of their evidence but suggested that it was substantial.

"The allegations in this case were extremely serious, and we treated them as such," said Michael A. Hirst, the assistant United States attorney handling the case. "Although defendants do not admit liability in the settlement, there are 54 million reasons why we believe our investigation was effective and our evidence compelling."

Under the settlement, Tenet agreed to a strict compliance program at the Redding Medical Center to ensure that no unnecessary cardiac procedures are conducted in the future. That program includes requirements for six random audits of the cardiology program at the center over the next three years. The results of those audits must be turned over to the government.

Tenet has been battered by a series of financial scandals in the months since the Redding Medical Center investigation was made public, with a result that much of its senior management-including Jeffrey C. Barbakow, its longtime chief executive-have been replaced. Yesterday, the new management team portrayed the settlement as an effort by Tenet to close a difficult chapter in its history.

"Tenet's new leadership team is pleased that we were able to work cooperatively with federal and state authorities to bring closure to one of the most serious matters facing the company," Trevor Fetter, Tenet's president and acting chief executive, said in a statement. "We made a strategic business decision to negotiate a reasonable settlement in a spirit of cooperation in order to put this matter behind us."

Tenet, based in Santa Barbara, Calif., also faces an investigation by the Justice Department into whether it artificially increased prices at some hospitals to inflate the payments it received under a complex formula used by Medicare.

Shares of Tenet fell 11 cents, to $13.05, on the New York Stock Exchange before trading was halted about 2:30 p.m. in advance of the announcement of the settlement. However, they rose as high as $14.04 after hours. Tenet shares have lost almost three-quarters of their value since the scandals at the company began surfacing last year.

The investigation of the Redding Medical Center first emerged last October, when F.B.I. agents raided the hospital and the offices of Dr. Chae Hyun Moon and Dr. Fidel Realyvasquez. Dr. Moon was the longtime chief of the center's cardiology department, while Dr. Realyvasquez was its top cardiac surgeon.

In the months since then, Redding's cardiology program was effectively-albeit temporarily-shut down, while both Dr. Moon and Dr. Realyvasquez suspended their practices. Recently, Dr. Moon agreed to a suspension of his medical license pending resolution of the investigation.

Lawyers for the two doctors-who have not been charged with any wrongdoing and who have steadfastly maintained their innocence-said that they were somewhat heartened by the Tenet settlement, largely because of the government's decision not to pursue criminal charges against the hospital.

"The government willingness to relinquish any criminal allegations against Redding and Tenet Healthcare as part of a civil compromise indicates that the criminal investigation has little merit," said Malcolm Segal, a lawyer for Dr. Realyvasquez. "The government does not ordinarily accept payment of money in a civil case when it believes it has a viable criminal charge."

Matthew Jacobs, a lawyer for Dr. Moon, echoed those sentiments. "The government quite correctly decided not to pursue criminal sanctions against" the Redding Medical Center, he said, adding, "I would hope that the government would choose to treat Dr. Moon the same way."

But regardless of the outcome of the criminal case, both doctors still have huge civil exposure from former patients, as does Tenet and the Redding Medical Center. Plaintiffs' lawyers handling those cases heralded the settlement yesterday, adding that the evidence they had seen so far was overwhelming.

"We have over 100 clients where we have confirmed that they had unnecessary cardiac bypass surgery," said Dugan Barr, a Redding lawyer who represents numerous former patients of the doctors, who added that he saw the settlement as a positive development. "I can't imagine that Tenet did this if they were not looking to get rid of the whole thing."

http://www.nytimes.com/2003/08/07/business/07CARE.html?ex=1061697600&en=424b9a6a0898186e&ei=5070

[legsmalone, RN]

Tenet has been popping up repeatedly in the news out here, myself and a few classmates were discussing some of the problems one night and came to the conclusion that for right now, a Tenet hospital may not be the best place to work as new grads. Thanks for the update Karen!

[dprayvd]

aaaaa

[legsmalone, RN]

Originally posted by dprayvd

Legsmalone, I read your profile--we just hired 4 new grads into the ER; how about you?

At my hospital, I am one of 4 new grads in Maternal/child health, 3 of us will eventually be over in L and D. 2 new grads in ER, 6 or so scattered throughout med-surg, tele, etc. At our county hospital, I believe there are 3 new grads in ER and 3 or 4 in L and D, then about 12 others scattered throughout, our heart hospital took 2 to ER and 3 to the floor. Some moved out of the area, which I am sure happens a lot, and my best friend is in an ER in Orange county now. So a pretty fair number of new grads got to start in ER....