Friday, June 30, 2006

Tenet Pays $900 Million to Settle Medicare Fraud Claims

Tenet Healthcare Corp. has agreed to pay $900 million to settle claims that it gamed the Medicare system to enrich itself.  Two Tenet hospitals in California have been in the news the past couple years for practices involving unnecessary surgeries and improper agreements to attract physicians to relocate their practices.  With one hospital, the Alvarado Hospital Medical Center near San Diego, the Department of Health and Human Services even threatened the "nuclear option" to put it out of business by seeking to bar the hospital from participating in federal healthcare programs (see earlier post here); that action was settled when Tenet agreed to sell the facility.  A Department of Justice press release (here) breaks down the settlement payments:

-- more than $788 million to resolve claims arising from Tenet’s receipt of excessive “outlier” payments (payments that are intended to be limited to situations involving extraordinarily costly episodes of care) resulting from the hospitals’ inflating their charges substantially in excess of any increase in the costs associated with patient care and billing for services and supplies not provided to patients;

-- more than $47 million to resolve claims that Tenet paid kickbacks to physicians to get Medicare patients referred to its facilities, and that Tenet billed Medicare for services that were ordered or referred by physicians with whom Tenet had an improper financial relationship; and,

-- more than $46 million to resolve claims that Tenet engaged in “upcoding,” which refers to situations where diagnosis codes that Tenet is unable to support or that were otherwise improper were assigned to patient records in order to increase reimbursement to Tenet hospitals.

Not surprisingly, some of Tenet's practices were the target of qui tam suits, and the whistle-blowers in those actions will recover a portion of the payment made to settle the action. Will Tenet learn its lesson, or will we be reading about it in a similar context a few years down the road? (ph)

Civil Enforcement, Fraud, Settlement | Permalink

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Hey, great to see a blog dedicated to white collar crime, especially in the non-profit hospital sector.

The non-profit hospital sector makes up a huge segment of the American economy, and there has been increasing legislative scrutiny from Washington as a result of the Abramoff scandal (all non-profits are being looked at much more closely). I am so glad to see that law professors are going to spend more time on this issue, because healthcare makes up a huge chunk of the American economy, and as a result, the industry may attract some unsavory characters who run their financial affairs in much the same way as the infamous and now deceased Kenneth Lay of the now-disgraced Enron company.

Please. Law professors and law students everywhere, KEEP ON THIS ISSUE. The American taxpayers will thank you for years to come as abuses within the system are brought to light.

As Justice Brandeis is famous for saying, "Sunlight is the best disinfectant."

Posted by: Illinois Taxpayer | Jul 11, 2006 8:50:06 AM

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