Tenet Settles Two Justice Department Inquiries for $31 Million

California-based Tenet Healthcare has agreed to pay $30.7 million to settle two federal inquiries into improper financial arrangements with doctors and "Medicare patient discharges and transfers," the Los Angeles Times reports. In one case, Tenet agreed to pay $22.5 million to resolve a lawsuit in which the Justice Department joined a whistleblower in alleging that North Ridge Medical Center in Fort Lauderdale, Fla., "improperly bill[ed] Medicare for patients referred by doctors who had financial relationships with the hospital," according to the Times. The suit, originally filed by former Tenet employee Sal Barbera, alleged that beginning in 1993, North Ridge violated a federal law prohibiting physicians from referring Medicare beneficiaries to facilities with which doctors have a financial relationship. The suit involved doctor contracts made between 1993 and 1995. Barbera will receive about $5 million from the settlement, which federal officials said is the "largest ever over such claims at a single hospital," the Times reports. Tenet admitted no wrongdoing in the settlement (Girion, Los Angeles Times, 3/25). The second case, which Tenet settled for $8.2 million, pertained to allegations that the company's hospitals overbilled Medicare by listing patients who had been transferred to another hospital as "discharged" instead of "transferred" to collect higher reimbursements (Appleby, USA Today, 3/25). Peter Urbanowitz, general counsel for Tenet, said the settlement of the two cases is "an important step forward as Tenet works to rebuild its business and reputation." The company still faces "myriad government investigations and private lawsuits related to a variety of business practices and to alleged unnecessary heart surgeries performed by doctors" at a California hospital, according to the Times. Tenet executives last week reassured investors that the company has enough cash to resolve all of the lawsuits (Los Angeles Times, 3/25).

In other Tenet news, company President and CEO Trevor Fetter last week in a memo to employees said that Tenet may move its headquarters from Santa Barbara, Calif. According to the Journal, the move is part of an effort to "placate shareholders who have criticized the hospital chain for locating its corporate offices in a coastal resort town far from major airports." In the memo, Fetter said that "it's clear to everyone that the Santa Barbara headquarters location was originally created for the personal convenience of the top executives of this company" and that he is making it a high priority to do away with "a tradition of self indulgence at the top." A decision on where the company will locate its new headquarters is expected within 90 days. The Journal reports that Dallas is "the most logical place for relocation" in part because Tenet already maintains a large operation there. Tenet said that if it decides to close the Santa Barbara office, the closure would not take place before mid-2005 (Rundle, Wall Street Journal, 3/25).