HealthLawProf Blog

Editor: Katharine Van Tassel
Case Western Reserve University School of Law

Monday, February 27, 2006

Tenet Settles Outlier Rico Case with Florida

From's "Government News of the Week" site:

In a Robin Hood-like resolution to allegations of Medicare outlier payment fraud, most of Tenet Healthcare Corp.’s $7 million settlement with the Florida attorney general (AG) will be turned over to the public hospitals that claim they were the losers of Tenet’s alleged outlier games.

AG Charlie Crist alleged that Tenet violated the Racketeer Influenced and Corrupt Organizations (RICO) Act when it engaged in a scheme to leverage more Medicare outlier payments than it was entitled to by inflating charges for its services between 2000 and 2003. Because Medicare caps outlier payments in advance annually, hospitals that take too much are depriving hospitals of needed funds, according to a March 2005 complaint filed by Crist and 13 public hospitals that lost money to Tenet’s activities. (Outlier payments are Medicare add-ons for resource-intensive patients who cost far more money to treat than the money hospitals get from DRG reimbursement.)

The lawsuit, filed in the U.S. District Court for the Southern District of Florida, alleges that Tenet inflated its hospital charges so patients qualified for outlier payments. “By artificially inflating their billed charges, the Tenet Hospitals transformed ordinary or average-cost [inpatient prospective payment system] patients into outlier patients, even though the costs actually incurred by the hospital to treat those patients fell within the norm and, therefore, would not entitle the hospital to receive outlier payments,” the suit says.

The Feb. 21 settlement calls for Tenet to put $4 million into an “Uninsured Patient Fund.” The public hospitals that are parties to this case will submit requests for money from the fund to cover the costs of treating indigent patients who aren’t covered by Medicare, Medicaid or other payers, the settlement states. An additional $2 million will be distributed directly to the hospitals, and $1 million will be returned to the AG to cover the costs of the investigation.

Tenet “explicitly” denies the RICO allegations, says spokesman Harry Anderson. . . .

This settlement is just the tip of the iceberg of outlier cases against Tenet, says former OIG attorney Paul Danello. Anderson says Tenet is cooperating in a DOJ investigation of its pre-2003 outlier payments. . . .

Reprinted from the Feb. 27, 2006, issue of REPORT ON MEDICARE COMPLIANCE,


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