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From Health Law Daily, October 4, 2016

Corporations, beware: Tenet Healthcare to pay $513M to settle kickback charges

By Sarah E. Baumann, J.D.

Tenet Healthcare Corporation and two subsidiaries, Atlanta Medical Center, Inc. and North Fulton Medical Center, Inc., have agreed to a $513 million settlement to resolve criminal and civil charges alleging that the corporations engaged in a scheme to defraud the United States and pay kickbacks to a prenatal clinic that referred pregnant Medicaid patients to Tenet hospitals. Atlanta Medical and North Fulton Medical also pleaded guilty to charges alleged in a criminal information for their role in the scheme that U.S. Attorney John Horn said, "exploited some of the most vulnerable members of our community and took advantage of a payment system designed to ensure that underprivileged patients have choices in receiving care." The Tenet case is the first one that involved the assistance of the Department of Justice (DOJ) Criminal Division’s corporate health care fraud strike force, and is one of 12 active corporate investigations.

Scheme. Tenet paid health providers at prenatal clinics, primarily serving undocumented Hispanic women, to refer more than 20,000 pregnant patients to Tenet hospitals, telling them, in some instances, that Medicaid would only cover the costs of childbirth if they delivered at those hospitals, or simply that they were required to deliver at Tenet hospitals. Special Agent in Charge Jackson noted that the hospitals were often "miles and miles from their homes" and that patients passed other hospitals that could have provided care, placing the women and their newborns "at increased risk during one of the most vulnerable points of their lives."

Resolution. Tenet Health System Medical, Inc.—the parent company of Atlanta Medical, North Fulton Medical, Spalding Regional Medical Center, Inc., and Hilton Head Hospital, and a subsidiary of Tenet—and its subsidiaries (collectively THSM) entered into a three-year non-prosecution agreement with the DOJ Criminal Division’s fraud section and the U.S. Attorney’s Office; the government may extend the agreement for up to one year. Both THSM and Tenet agree to cooperate with the ongoing investigation and enhance their compliance and ethics programs and internal controls. Tenet will also retain an independent compliance monitor to address and reduce the risk of Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) violations. Under the civil settlement, which must be approved by a court, Tenet will pay $368 million to settle qui tam allegations brought against it in a federal lawsuit (see Kickback allegations involving Medicaid referrals trump hospitals’ arguments, June 26, 2014). At least one other provider has already settled with the government for its role in the scheme (see Justice Department delivers settlement of pregnancy referral kickback claims, June 5, 2015).

As part of their guilty plea, Atlanta Medical and North Fulton Medical will forfeit more than $145 million in Medicaid payments made for referrals that were part of the unlawful arrangement. The two centers allegedly participated in the scheme while subject to a 2006 corporate integrity agreement (CIA) with the HHS Office of Inspector General (OIG). In fact, certain executives allegedly concealed the unlawful payments by falsely certifying to the OIG that they were complying with the CIA and intentionally failing to disclose reportable events.

Corporate fraud. The action represents a movement by government agencies to cooperate with one another in the investigation and prosecution of corporate health care fraud. In addition to the DOJ’s corporate health care fraud strike force, the FBI’s Major Provider Response Team (MPRT), created in 2011 to combat corporate health fraud schemes affecting benefits plans, participated in the investigation.

Companies: Tenet Healthcare Corporation; Atlanta Medical Center, Inc.; North Fulton Medical Center, Inc.; Tenet Health System Medical, Inc.; Spalding Regional Medical Center; Hilton Head Hospital

MainStory: TopStory AgencyNews ComplianceNews IPPSNews AntikickbackNews CorporateNews EnforcementNews FCANews FraudNews QuiTamNews

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