Tenet Healthcare Settles Shareholder Suits Over Medicare Billing for $215M
Tenet Healthcare on Thursday announced plans to pay $215 million to settle federal class-action shareholder lawsuits that alleged the company misled investors about improper Medicare billing practices, the AP/San Luis Obispo Tribune reports. Tenet said that insurance likely will cover about $75 million of the settlement, with the remainder paid as a charge against fourth-quarter earnings (AP/San Luis Obispo Tribune, 1/12).
In addition, former Tenet CEO Jeffrey Barbakow and former Chief Operating Officer Thomas Mackey will pay about $1.5 million of the settlement. The settlement covers a series of lawsuits, the first of which was filed in late 2002, that alleged Tenet and some former officials made or were responsible for false or misleading statements related to improper Medicare billing practices and related issues.
The lawsuits involved shareholders who purchased Tenet securities between Jan. 11, 2000, and Nov. 7, 2002 (Ryerson-Cruz, Bloomberg/Philadelphia Inquirer, 1/13).
"Disclosure of the Medicare billing scheme" in 2002, as well as a number of other "scandals," has since led to an 85% decrease in the price of Tenet shares and reported losses for 11 consecutive fiscal quarters, the Los Angeles Times reports. In addition, Tenet has sold 27 hospitals to reduce costs.
Peter Urbanowicz, general counsel for Tenet, said, "This settlement is another significant step forward in our turnaround" (Girion, Los Angeles Times, 1/13).
Rob Mains, an analyst at Ryan Beck, said, "Any litigation settlement is incremental good news for a company that has a lot of litigation outstanding," adding, "In the scheme of everything going on at Tenet, this is not a particularly major issue" (Bloomberg/Philadelphia Inquirer, 1/13).