$5 Million in Tenet Healthcare Corp. Settlement

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June 22, 2014

Tenet Healthcare Corp, a large company that owns four different Miami-Dade hospitals, was the subject of a recent legal case involving allegations of kickbacks to doctors who would refer patients to those particular hospitals. The company decided to settle and pay $5 million rather than go to court, even though it claims no wrongdoing in the case. Out of this settlement, the government will receive $4 million, and the whistleblower will receive $1 million.

What Happened in This Case?

The whistleblower alleged that Tenet was paying kickbacks to doctors by letting them lease offices for rates below the current market value, as well as offering other benefits. The doctors were then expected to provide patient referrals. This quid pro quo is against both federal and state anti-kickback laws.

Tenet has a massive network of hospitals across 14 different states. In Florida, they operate Coral Gables Hospital, Hialeah Hospital, Palmetto General Hospital, and North Shore Medical Center. These hospitals heavily rely on government healthcare programs . In fact, more than thirty percent of the admissions are patients on Medicare and twelve percent are patients with Medicaid. This accounts for more than forty percent of their patients, and a substantial amount of their revenue, which measures into the billions of dollars.

The combination of the discounted leased and the referrals for patients on these various programs amounted to gains for both the physicians who were receiving the kickbacks as well as to Tenet who was receiving money from those programs. According to the Stark Law, hospitals are not allowed to file Medicare claims for these sorts of referrals.

Tenet Settles rather than Risking Trial

Tenet contested the allegations of the whistleblower in the case, but decided to settle, as it was a faster and easier way to deal with the matter.  A spokesman said, “After years of litigation, Tenet decided it was in its best interest to sever any remaining business relationships with Mr. Osheroff, (the whistleblower)”. “Palmetto General Hospital’s separate purchase of the medical office building located on its hospital campus from the real estate company partially owned by Mr. Osheroff was fully disclosed to the U.S. Department of Justice in connection with their approval of the settlement of the Osheroff lawsuit.”

These sorts of cases are anything but rare, and those who are looking in from the outside might not see anything wrong with a company such as Tenet offering good rental deals to doctors.  The government presumes that a doctor receiving a financial incentive to refer patients is not making referral decisions based purely on what is best for the patient, and that therefore claims to Medicare, Medicaid, or other government healthcare programs for reimbursement of medical services tainted by such kickbacks are false under the False Claims Act.

Healthcare fraud is an endemic and growing problem in part because the healthcare system is so complex that illegal conduct can be difficult to detect and to prove.  If you have suspicions or evidence of healthcare fraud, you need an experienced qui tam attorney to advise you.  Contact us at Seeger Weiss LLP for a consultation.