Tenet Ordered To Pay $253 Million to Former Executive in Contract Dispute
The 2nd District Court of Appeals in Los Angeles on Tuesday ruled that California-based Tenet Healthcare must pay $253 million to a former executive for failure to honor a compensation contract in 1993, the Los Angeles Times reports (Vrana, Los Angeles Times, 10/31). In the case, John Bedrosian, a co-founder of Tenet predecessor National Medical Enterprises, filed a lawsuit over allegations that the company failed to provide him with stock benefits when he was terminated without cause in 1993. Bedrosian has not received any of the benefits, which were due from the start of fiscal year 1994 through September 1995, Bedrosian attorney Richard Hodge said. A lower court had awarded $9.2 million to Bedrosian, based on a share price of $19 and no subsequent stock splits. The appeals court decision, written by Justice Roger Boren, calculated a share price of $52.50, the highest market value within a "reasonable" time limit, and included subsequent stock splits. Tenet officials plan to appeal the decision. "We do not believe the evidence in this case justifies this huge award, and we will ask the court to promptly review," Tenet Deputy General Counsel Gary Robinson said (Dunn, Bloomberg/Philadelphia Inquirer, 10/31). The award, equal to about one-third of Tenet earnings in 2002, would represent a "severe financial blow" for the company, the Times reports. Tenet officials have said that the company would take the award as a one-time charge in the third quarter (Los Angeles Times, 10/31). Tenet currently faces several state and federal investigations. Since October 2002, the Senate Finance Committee, the Securities and Exchange Commission, the HHS Office of Inspector General, the Justice Department and the Federal Trade Commission have launched separate investigations into Tenet related to alleged Medicare fraud and other issues. The company also faces an investigation by the Florida Medicaid Fraud Control Unit (California Healthline, 10/20).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.