Florida Files Suit Against Tenet Healthcare Over Alleged $1 Billion in Improper Medicare Reimbursements

Florida Attorney General Charlie Crist (R) on Wednesday filed a civil racketeering lawsuit on behalf of hospitals in the state over allegations that Tenet Healthcare, the second-largest U.S. hospital chain, received about $1 billion in improper Medicare reimbursements, USA Today reports (Appleby, USA Today, 3/3).

The lawsuit alleges that Tenet inflated prices at a number of hospitals between 2000 and 2003 to increase reimbursements from the Medicare Outlier Pool, which pays hospitals that provide seriously ill patients with high-cost treatments (Girion, Los Angeles Times, 3/3). None of the 30 Tenet hospitals named in the lawsuit is located in Florida (Dorschner/Hatcher, Miami Herald, 3/3).

According to the lawsuit, Tenet hospitals raised prices nationwide by an average of 477% over actual costs, which increased the minimum threshold that other hospitals had to reach before they could qualify for reimbursements from the Medicare Outlier Pool. The lawsuit, filed in the U.S. District Court in Miami, alleges that Tenet has "reached the pinnacle of corporate wrong-doing" and has a "long history of fraud, corruption and other criminal acts" (USA Today, 3/3).

Crist filed the lawsuit under the Florida Racketeer Influenced Corrupt Organizations Act, which could require Tenet to pay triple damages, and the state's unfair trade practices law, which could require the company to disgorge improper Medicare reimbursements (Los Angeles Times, 3/3).

Crist said, "Tenet systematically, consistently and in a prolonged way has been cheating the system," which "takes significant resources from those that are doing it honest and right" (AP/Tallahassee Democrat, 3/2).

Tenet General Counsel Peter Urbanowicz said that the lawsuit includes "very strong allegations that are unwarranted" (Miami Herald, 3/3). He added, "We are surprised that the plaintiffs would bring this suit more than two years after Tenet voluntarily reduced the amount of outlier payments and adopted stringent new policies governing such payments" (USA Today, 3/3). Urbanowicz said that Tenet will fight the lawsuit "vigorously."

Elizabeth Foley, a law professor at Florida International University, said that the lawsuit could serve as "a precursor to ... a multiplicity of suits" in other states (Miami Herald, 3/3).

However, health law attorney John Reiss said, "You can argue what these hospitals did was outrageous, but there was nothing illegal about it. There was nothing ... that said you can't raise prices" (USA Today, 3/3).