Federal Trial Against Alvarado Hospital Medical Center Over Physician-Relocation Agreements To Begin This Week

The federal government's trial against California-based Tenet Healthcare's Alvarado Hospital Medical Center, which has "broad significance for the hospital business," is scheduled to begin Thursday in U.S. District Court in San Diego, the Wall Street Journal reports (Rundle, Wall Street Journal, 10/12).

Federal prosecutors allege that some Tenet hospitals, including Alvarado, have offered physician-relocation agreements in exchange for patient referrals. 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; CEO Barry Weinbaum; and owner Tenet HealthSystem Hospitals, a Tenet subsidiary, over allegations that Alvarado paid more than $10 million for more than 100 physician-relocation agreements between 1992 and 2000 (California Healthline, 8/9).

Former hospital administrator Mina Nazaryan also has been charged in the case. All of the defendants in the case have denied wrongdoing, according to the Journal. If Alvarado is found to be at fault in the case, it would not be allowed to participate in public health care programs.

Peter Urbanowicz, Tenet's general counsel, said, "We've reviewed the ... relocation agreements that are at issue, and we still believe these were appropriate and legal. We have a fundamental disagreement with the U.S. attorney's office as to whether the agreements were extended for the right reasons." Urbanowicz added that Tenet has an "ongoing dialogue" with the federal government to resolve all investigations into the company's business practices (Wall Street Journal, 10/12).