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Tenet Healthcare pays $513 million for fraud and kickbacks, whistleblower awarded $84 million

Hospital chain Tenet Healthcare Corporation and two Atlanta-area subsidiaries will pay over $513 million to resolve criminal charges and civil claims for a scheme to defraud the United States and to pay kickbacks in exchange for patient referrals.  

In the criminal action, two Tenet subsidiaries — Atlanta Medical Center Inc. and North Fulton Medical Center Inc. — agreed to plead guilty to conspiracy to defraud the United States and to pay health care kickbacks and bribes in violation of the Anti-Kickback Statute. 

The plea agreements still need court approval. 

In the civil settlement, Tenet agreed to pay $368 million to the federal government and the states of Georgia and South Carolina.

The civil settlement resolves claims made in United States ex rel. Williams v. Health Mgmt. Assocs., Tenet Healthcare, et al., a lawsuit filed by Ralph D. Williams.

Williams is a Georgia resident and an accountant who worked in the healthcare industry for many years. He filed his lawsuit in federal court in Georgia under the federal and Georgia False Claims Acts. 

The acts permit whistleblowers to file suit for false claims against the government entities and to share in any recovery. 

The federal share of the civil settlement is $244 million, the state of Georgia will recover almost $123 million, and the state of South Carolina will recover $892,125. 

Williams’ share of the combined civil settlement is $84.4 million.

Until April 2016, Atlanta Medical Center and North Fulton Medical Center owned and operated acute-care hospitals in the greater Atlanta metropolitan area.

They were charged in a criminal information filed Monday in federal court

The two Tenet subsidiaries will forfeit over $145 million to the United States. That’s the amount paid to them by the Medicare and Georgia Medicaid programs for services provided to patients referred as part of the illegal scheme.

Atlanta Medical Center along with North Fulton Medical Center, Spalding Regional Medical Center Inc., and Hilton Head Hospital 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, according to the DOJ.

The kickbacks and bribes allegedly helped Tenet obtain more than $145 million in Medicaid and Medicare funds based on the resulting patient referrals.

The DOJ said,

Expectant mothers were in some cases told at the prenatal care 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 simply told that they were required to deliver at one of the Tenet hospitals, leaving them with the false belief that they could not select the hospital of their choice.

Tenet HealthSystem Medical Inc. (THSM) and its subsidiaries entered into a non-prosecution agreement (NPA) with the DOJ. THSM is the parent company of Atlanta Medical Center Inc., North Fulton Medical Center Inc., Spalding Regional Medical Center Inc. and Hilton Head Hospital. 

THSM is a subsidiary of Tenet Healthcare Corporation. 

Under the terms of the NPA, THSM and Tenet will avoid prosecution if they cooperate with the government’s ongoing investigation and enhance their compliance and ethics program and internal controls. 

Tenet agreed to retain an independent compliance monitor. 

The non-prosecution agreement has a three-year term but can be extended for a year.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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