Washington, Oct 3, 2016 – A major U.S. hospital chain, Tenet Healthcare Corporation, and two of its Atlanta-area subsidiaries will pay over $513 million to resolve criminal charges and civil claims relating to a scheme to defraud the United States and to pay kickbacks in exchange for patient referrals.
Two subsidiaries have agreed to plead guilty, principal officers in the Justice department have announced.
They are Principal Deputy Assistant Attorney General David Bitkower of the Justice Department’s Criminal Division; U.S. Attorney John Horn of the Northern District of Georgia; Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division; U.S. Attorney G.F. Peterman III of the Middle District of Georgia; Georgia Attorney General Samuel S. Olens; Acting Special Agent in Charge George Crouch of the FBI’s Atlanta Field Office; and Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG) in Atlanta.
In addition, two Tenet subsidiaries, Atlanta Medical Center Inc. and North Fulton Medical Center Inc., have 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 (AKS).
They will forfeit over $145 million to the United States – which represents the amount paid to Atlanta Medical Center Inc. and North Fulton Medical Center Inc. by the Medicare and Georgia Medicaid programs for services provided to patients referred as part of the scheme.
The plea agreements remain subject to acceptance by the court. Up until April 2016, Atlanta Medical Center Inc. and North Fulton Medical Center Inc. owned and operated acute-care hospitals located in the greater Atlanta metropolitan area.
Atlanta Medical Center Inc. and North Fulton Medical Center Inc. were charged in a criminal information filed in federal court in Atlanta with conspiracy to defraud the United States by obstructing the lawful government functions of HHS and to violate the AKS, which, among other things, prohibits payments to induce the referral of patients for services paid for by federal health care programs.
Tenet Health System Medical Inc. and its subsidiaries (collectively THSM) entered into a non-prosecution agreement (NPA) with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Northern District of Georgia related to the charges in the criminal information.
THSM is the parent company of Atlanta Medical Center Inc., North Fulton Medical Center Inc., Spalding Regional Medical Center Inc. and Hilton Head Hospital, and employed their executives. THSM is a subsidiary of Tenet Healthcare Corporation. Under the terms of the NPA, THSM and Tenet will avoid prosecution if they, among other requirements, cooperate with the government’s ongoing investigation and enhance their compliance and ethics program and internal controls.
Tenet has also agreed to retain an independent compliance monitor to address and reduce the risk of any recurrence of violations of the AKS by any entity owned in whole, or in part, by Tenet. The term of THSM’s and Tenet’s obligations under the NPA is three years, but the NPA may be extended for up to one year.
In the civil settlement, Tenet agreed 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 by Ralph D. Williams, a Georgia resident, in the Middle District of 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 $244,227,535.30, the state of Georgia will recover $122,880,339.70 and the state of South Carolina will recover $892,125. Mr. Williams’ share of the combined civil settlement amount is approximately $84.43 million.
“When pregnant women seek medical advice, they deserve to receive care untainted by bribes and illegal kickbacks,” said Principal Deputy Assistant Attorney General Bitkower. “The Tenet case is the first brought through the assistance of the Criminal Division’s corporate health care fraud strike force. This is one of more than a dozen active corporate investigations by the strike force, and we are committed to following evidence of health care fraud wherever it leads – whether it be individual physicians, pharmacy owners or corporate boardrooms.”
“Our Medicaid system is premised on a patient’s ability to make an informed choice about where to seek care without undue interference from those seeking to make a profit,” said U.S. Attorney Horn. “Tenet cheated the Medicaid system by paying bribes and kickbacks to a pre-natal clinic to unlawfully refer over 20,000 Medicaid patients to the hospitals. In so doing, they 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 Department of Justice continues to devote enormous resources to exposing and pursuing alleged misconduct of improper financial relationships between hospitals and referral sources,” said Principal Deputy Assistant Attorney General Mizer. “Such relationships exploit vulnerable populations and threaten to drive up the cost of healthcare for everyone. In addition to yielding a substantial recovery for taxpayers, this settlement reflects the department’s lack of tolerance for these types of abusive arrangements, and the negative effects they can have on our health care system.”
“The global resolution of this complex and sophisticated fraud scheme exemplifies what can be accomplished through the cooperation of federal and state investigative and prosecutorial authorities,” said U.S. Attorney Peterman. “I am particularly proud of the civil attorneys in the U.S. Attorney’s Office for the Middle District of Georgia, working hand in hand with investigators of the U.S. Department of Health and Human Services and attorneys in the Civil Division and the Medicaid Fraud Control Unit of the Office of the Attorney General of Georgia, whose combined efforts greatly contributed to this outstanding result on behalf of the American taxpayers.”
“Tenet took advantage of vulnerable pregnant women in clear violation of the law by paying kickbacks in order to bring their referrals to Tenet hospitals,” said Georgia Attorney General Olens. “Through this scheme, Tenet defrauded the Georgia Medicaid program, and reaped hundreds of millions of dollars. This is an unprecedented settlement for the state of Georgia, and reflects my office’s commitment to protecting Georgia taxpayers by uncovering Medicaid fraud and abuse.”
