The Department of Justice (DOJ) recently announced a settlement with Tenet Healthcare Corporation and several subsidiaries, resolving criminal charges and civil claims relating to a scheme to defraud the United States and to pay kickbacks in exchange for patient referrals.
Criminal Charges
Two of the subsidiaries, Atlanta Medical Center Inc. and North Fulton Medical Center Inc., agreed to plead guilty to conspiracy to defraud the United States and to violate the Anti-Kickback statute by paying health care kickbacks and bribes.
Atlanta Medical Center Inc. and North Fulton Medical Center Inc. were charged in a criminal information in federal court in Atlanta with conspiracy to defraud the United States by obstructing the lawful government functions of the Department of Health and Human Services (HHS) and to violate the AKS. The information alleges that the subsidiaries paid bribes and kickbacks to the owners and operators of prenatal care clinics serving primarily undocumented Hispanic women, in return for the referral of those patients for labor and delivery medical services at Tenet hospitals. These kickbacks and bribes allegedly helped Tenet obtain more than $145 million in Medicare and Medicaid funds based on the resulting patient referrals.
Some of the pregnant women were told at the prenatal clinics that Medicaid would cover the costs associated with their childbirth and the care of their newborn only if they delivered at one of the Tenet hospitals, and in other cases were told that they were required to deliver at one of the Tenet hospitals, leaving them with the false belief that they could not select a hospital of their choice. The information alleges that as a result of these false and misleading statements and representations, many expecting mothers were forced to travel long distances from their homes to deliver their babies, placing their health and safety, and that of their babies, at risk.
According to Special Agent in Charge Jackson,
OIG continues to emphasize investigation of improper financial relationships between health care providers. Using their positions of trust, health providers – after receiving payments from Tenet – sent expectant women specifically to Tenet hospitals. Patients were often directed to Tenet facilities miles and miles from their homes and on their journeys passed other hospitals that could have provided needed care. These women were thereby placed at increased risk during one of the most vulnerable points in their lives. HHS-OIG will continue to protect patients by exposing such illegal arrangements.
In addition to pleading guilty to the allegations in the information filed, the subsidiaries will forfeit over $145 million to the United States – the amount paid to the subsidiaries by the Medicare and Georgia Medicaid programs for services provided to patients referred as part of the scheme.
Non-Prosecution Agreement
Tenet and the subsidiaries entered into a non-prosecution agreement (NPA) with the Criminal Division’s Fraud Section and the United States Attorney’s Office of the Northern District of Georgia as to the charges in the criminal information. Under the NPA, Tenet and its subsidiaries will avoid prosecution if they, among other requirements, cooperate with the government’s ongoing investigation and work to enhance their compliance and ethics program, as well as internal controls. Tenet also agreed to retain an independent compliance monitor to address and reduce the risk of any additional violations of the AKS by any entity owned in whole, or in part, by Tenet. The NPA is for a term of three years, but may be extended for up to one year.
Civil Settlement
In the civil settlement, Tenet agrees to pay $368 million to the federal government, the state of Georgia, and the state of South Carolina to resolve claims asserted in United States ex rel. Williams v. Health Mgmt. Assocs., Tenet Healthcare, et al., a lawsuit filed under the federal and Georgia False Claims Acts by Ralph D. Williams, a whistleblower. The federal share of the settlement is $244,227,535.30, Georgia will receive $122,880,339.70, and South Carolina will recover $892,125. Mr. Williams will receive roughly $84.43 million as his whistleblower share.
According to Tenet CEO Trevor Fetter,
The conduct in this matter was unacceptable and failed to live up to our high expectations for integrity. The relationships between the four hospitals and Clinica de la Mama violated the explicit requirements of our own 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.
While the DOJ and the parties have reached agreements, the agreements remain subject to court acceptance. Also important to note, Tenet previously sold both Georgia hospitals that were at the heart of the investigation and one of the South Carolina hospitals.
The breakdown in Tenet’s compliance program reiterates how critical it is to develop clear, comprehensive, and understandable protocols regarding referral and marketing relationships in the health care industry. It also underscores the importance of building a culture of transparency, including with legal counsel.