Federal Criminal Case Against Tenet Healthcare Subsidiary Over Alleged Kickbacks Ends in Mistrial
A federal criminal trial that alleges Tenet HealthSystem Hospitals -- a Tenet Healthcare subsidiary -- and an Alvarado Hospital Medical Center administrator paid illegal kickbacks to physician groups to increase patient referrals and revenue has ended in a mistrial, the Los Angeles Times reports (Girion, Los Angeles Times, 2/18).
Under anti-kickback laws for federal health care programs, hospitals cannot directly pay physicians for such referrals. In July 2003, a federal grand jury issued a 17-count criminal indictment of Alvarado administrator Mina Nazaryan, Alvarado CEO Barry Weinbaum and Tenet HealthSystem Hospitals over allegations that the hospital paid more than $10 million for more than 100 physician-relocation agreements between 1992 and 2000. Assistant U.S. Attorney Daniel Butcher in his opening statement in the case last October said that Weinbaum, who joined Alvarado in 1991, spent $15 million on 99 physician-relocation agreements that included excessive salaries and overhead compensation.
Nazaryan last month pleaded guilty to charges that she conspired with Weinbaum to pay physicians for patient referrals. She did not admit that she accepted kickbacks from physicians with whom she worked. In exchange for her plea, prosecutors agreed to drop other charges against Nazaryan, although she still faces tax-evasion charges. On March 28, Nazaryan likely will receive a three-year prison sentence (California Healthline, 1/7).
According to the Times, U.S. District Judge James Lorenz declared a mistrial after jurors reported they could not reach a decision after five days of deliberations.
U.S. Attorney Carol Lam said that a poll indicated the jury supported conviction by a 9-3 margin and that federal prosecutors likely will retry the case.
E. Peter Urbanowicz, general counsel for Tenet, said, "The fact that the jury struggled with this case demonstrates how much confusion there is regarding the laws that govern physician-relocation agreements. It's time for all of us to devote our full energies to resolving the broader issues." Tenet faces fines of less than $1 million in the case, but a conviction in a retrial could result in the loss of eligibility for Medicare and other government health care programs.
Sheryl Skolnick, an analyst at Fulcrum Global Partners, said, "This is clearly not a win for Tenet. We still have a tremendous amount of uncertainty as long as this is hanging out there" (Los Angeles Times, 2/18).