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Tenet Settles Fraud Suits for $900 Million

Nationwide hospital owner Tenet Healthcare Corp. will pay the federal government more than $900 million to settle three health fraud whistle-blower suits, according to the Los Angeles U.S. Attorney's Office.

The three cases were filed in the U.S. District Court for the Central District of California and accused Dallas-based Tenet of defrauding the federal Medicare, Medicaid and TRICARE programs.

Medicare is America's national health insurance plan for the elderly and disabled, Medicaid provides government-paid coverage for the poor, and TRICARE supplies health insurance to U.S. military personnel and their dependents.

All three programs operate under contracts between the federal government and health care providers such as Tenet

The 2003 and 2004 whistle-blower suits alleged that Tenet inflated the bills it sent to the federal health programs and illegally paid kickbacks to doctors for referring Medicare patients to Tenet hospitals across the country.

"The Medicare program currently faces great challenges and can ill afford attempts by hospitals to manipulate and cheat the system," Los Angeles U.S. Attorney Debra Wong Yang said in a statement. "This settlement demonstrates our strong commitment to recovering taxpayer funds from health care companies that break the rules in pursuit of higher profits."

Under the terms of the settlement, Tenet will make the $900 million payment plus interest over the next four years, and the claims against the hospital company will be dismissed with prejudice by July 29, according to federal prosecutors and court records.

The whistle-blower suits all made claims under the federal False Claims Act. The law allows private citizens known as "relators" to file suit on behalf of the government in contract fraud cases.

If the government intervenes and takes over prosecution of the case, the relator receives 15 percent to 25 percent of any consequent settlement. The government intervened in all three cases against Tenet.

The settlement agreement does not disclose the names of the whistle-blowers, and some identifying case information has been redacted.

And it appears that a legal fight may be taking shape over the nearly $1 billion in proceeds. The only language in the settlement agreement relating to the whistle-blowers seems to anticipate a dispute of some sort.

"Should this agreement be challenged by any relator as not fair, adequate or reasonable," the agreement says, "the United States and the Tenet entities agree that they will take all reasonable and necessary steps to defend this agreement."

Finally, as a further presage to dispute, Yang's statement notes that the whistle-blowers' shares of the settlement "remain undetermined pending further negotiations or court proceedings."