FindLaw |

Legal News & Information

Suits Accuse Tenet of $1B Medicare Racketeering Scheme

Two civil complaints filed in Florida federal court charge Tenet Healthcare Corp. with operating a racketeering scheme that bilked the Medicare program of more than $1 billion and cost legitimate health care providers millions of dollars.

One of the lawsuits is headed by the Florida Attorney General Charlie Crist and has 13 hospital plaintiffs, while the other is a proposed class action by Boca Raton Community Hospital on behalf of hospitals nationwide participating in the Medicare program.

Both make similar claims for violation of the federal Racketeer Influenced and Corrupt Organizations Act, state racketeering and business law violations, fraud, and unjust enrichment.

Dallas-based Tenet has called Crist's suit "unwarranted." Tenet is the second-largest for-profit hospital corporation in the nation.

"We will defend ourselves vigorously," Tenet general counsel E. Peter Urbanowicz said in a statement.

The alleged racketeering activities involved the rates Medicare pays for average-cost hospital stays and the extra payments it makes for more costly hospital stays. Those extra payments, called "outliers," are made from a government fund created through assessments against all hospitals participating in the Medicare program. The higher the national rate of extra payments, the higher the assessment rate.

According to the complaints, Tenet's corporate machinery engaged in a pattern of racketeering from 1999 to 2003 that artificially inflated its prices and turned average patient bills into outlier bills. The alleged scheme, which took in more than $1 billion, also inflated the government's outlier assessment system and its consequent costs to the hospital plaintiffs, the suits say.

The plaintiffs in both cases want a jury trial and are seeking disgorgement of ill-gotten gains and unspecified damages amounts, which can be trebled under the racketeering laws.