Hospital Chain Fined $513M for Kickback Scheme

Tenet Healthcare paid for labor-and-delivery referrals

A major hospital chain, Tenet Healthcare Corporation, and two of its Atlanta-area subsidiaries have been ordered to pay more than $513 million to resolve criminal charges and civil claims relating to a scheme to pay kickbacks in exchange for patient referrals, according to the U.S. Department of Justice (DOJ).

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). The plea agreements remain subject to acceptance by the court. Until April 2016, Atlanta Medical Center Inc. and North Fulton Medical Center Inc. owned and operated acute-care hospitals in the greater Atlanta metropolitan area.

As alleged in civil complaints filed by the DOJ and the state of Georgia in 2014 and 2013, Atlanta Medical Center Inc., North Fulton Medical Center Inc., 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. These kickbacks and bribes allegedly helped Tenet obtain more than $145 million in Medicaid and Medicare funds based on the resulting patient referrals.

According to the criminal information, as part of the scheme, expectant mothers were in some cases told at the prenatal-care clinics that Medicaid would cover the costs associated with their childbirth and with 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. The criminal information alleges that as a result of these false and misleading statements and representations, many expectant mothers traveled long distances from their homes to deliver at the Tenet hospitals, placing their health and safety, and that of their newborn babies, at risk.

“When pregnant women seek medical advice, they deserve to receive care untainted by bribes and illegal kickbacks,” said Principal Deputy Assistant Attorney General David 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 John 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.”

Source: Department of Justice; October 3, 2016.