Tenet to pay $513 million to settle referral kickback case

Tenet Healthcare Corporation and two of its subsidiaries in Atlanta will pay a total of $513 million to settle both civil and criminals charges of kickbacks and bribes being paid in exchange for Medicaid patient referrals.

As outlined in a whistleblower lawsuit filed in 2014, four Tenet hospitals made illegal payments to clinics run by Clinica de la Miami and Hispanic Medical Management in exchange for Clinica referring pregnant Medicaid beneficiaries to the hospitals and disguised the kickbacks as legitimate payments for services like marketing and translation. Those kinds of arrangements are banned by the Anti-Kickback Statute (AKS).

In some cases, pregnant women were told Medicaid would only cover their delivery services if they had their baby at a Tenet hospital. The criminal case alleged this put expectant mothers in danger by forcing them to travel long distances when the delivery could’ve been covered at another hospital closer to their homes.

Two of the four hospitals—Atlanta Medical Center and North Fulton Medical Center in Roswell, Georgia—will plead guilty to charges of conspiracy to defraud the U.S. and violating the AKS. The criminal penalty will be $145 million, the same amount the two facilities received in Medicare and Medicaid funds as a result of the scheme. The rest of the settlement comes in the form of a $368 million civil penalty.

“Our Medicaid system is premised on a patient’s ability to make an informed choice about where to seek care without undue interference from those seeking to make a profit,” John Horn, U.S. Attorney for the Northern District of Georgia, said in a statement.  “Tenet cheated the Medicaid system by paying bribes and kickbacks to a pre-natal clinic to unlawfully refer over 20,000 Medicaid patients to the hospitals. In so doing, they exploited some of the most vulnerable members of our community and took advantage of a payment system designed to ensure that underprivileged patients have choices in receiving care.”

As part of the settlement, Tenet will be required to retain an independent monitor for at least three years.

The DOJ did deflect some of the allegations away from Tenet management, saying hospital employees violated company companies to pull of the scheme and withheld information about the illegal arrangements. Tenet’s own statement acknowledged the wrongdoing.

“The conduct in this matter was unacceptable and failed to live up to our high expectations for integrity,” Tenet Chairman and CEO Trevor Fetter said. “The relationships between the four hospitals and Clinica de la Mama violated the explicit requirements of our compliance program and were inconsistent with the strong culture of compliance we’ve worked hard to establish at Tenet. We take seriously our responsibility to operate our business in accordance with the highest ethical standards, every day and in every interaction.”

Tenet said it has “amended and expanded” policies on referral source arrangements due to this case, like limiting services purchased from clinics that refer patients to their hospitals. It also promised to adopt “more rigorous standards” in its vendor selection process and enhance training for workers on the referral policy.