U.S. Attorney’s Office Subpoenas Records From Seven Tenet Hospitals in Kickback Investigation

The U.S. Attorney's Office in Los Angeles has issued subpoenas to California-based Tenet Healthcare seeking records about physician-relocation agreements since 1995 at seven Southern California facilities, Tenet officials said July 15 , the Los Angeles Times reports. The hospitals are Centinela Hospital Medical Center in Inglewood; Daniel Freeman Memorial Hospital in Inglewood; Daniel Freeman Memorial Hospital in Marina del Rey; John F. Kennedy Memorial Hospital in Indio; Brotman Medical Center in Culver City; Encino-Tarzana Regional Medical Center in Los Angeles; and Century City Hospital in Los Angeles (Vrana, Los Angeles Times, 7/16). The subpoenas also seek "more general information" about physician-relocation agreements within all of the company's 114 hospitals, the New York Times reports. Officials already had been investigating such agreements at Alvarado Hospital Medical Center in San Diego, but the new probe "indicates that the issue is looming larger for the authorities," according to the New York Times (Pollack, New York Times, 7/16). As part of the Alvarado investigation, a federal grand jury in June indicted Alvarado CEO Barry Weinbaum on charges that he made illegal payments to encourage physicians to refer patients to the facility. Weinbaum was charged with one count of conspiring to violate the federal antikickback statute and seven counts related to the offer and payment of illegal compensation (Kaiser Daily Health Policy Report, 6/9).

Reaction
Steven Campanini, a Tenet spokesperson, said that the company's physician relocation program "is entirely appropriate under the law." Under such programs, hospitals typically pay a portion of moving costs for doctors and guarantee their salaries for a certain period; the agreements allow the doctors to refer patients to any hospital. Tenet said it would cooperate with the investigation and that fewer than 2.5% of the 42,000 physicians with admitting privileges at Tenet hospitals had relocation agreements (New York Times, 7/16). A spokesperson from the Los Angeles-based U.S. Attorney's Office declined to comment on the subpoenas, the Wall Street Journal reports. Tenet officials yesterday said separately that they expect a San Diego grand jury this week to indict Alvarado Hospital Medical Center and possibly "other corporate parent entities." Daniel Butcher, an assistant U.S. attorney in San Diego who is prosecuting the case against Weinbaum, declined to comment on the case (Rundle, Wall Street Journal, 7/16).

Pending Investigations
In addition to the announcements, Tenet is currently being investigated by at least three federal agencies, the Bloomberg/Philadelphia Inquirer reports (Snider, Bloomberg/Philadelphia Inquirer, 7/16). The Securities and Exchange Commission last week issued a subpoena seeking documents that date back to May 31, 1997, on stop-loss payments, increases in "gross charges" and Medicare outlier payments in an investigation into whether Tenet executives misled investors. Last November, Tenet officials said the SEC had opened an informal file on the company to examine the volume of trades of the company's stock before several important announcements. The HHS Office of Inspector General in early November announced plans to audit Tenet hospitals to determine whether the company properly billed Medicare for outlier payments. The Federal Trade Commission last November also requested information about the 1999 merger of two Tenet hospitals in Missouri as part of a broader investigation of hospital mergers nationwide. Last October, federal officials launched an investigation into allegations that two surgeons performed unnecessary procedures at California-based Redding Medical Center. Tenet also faces a number of lawsuits from shareholders and patients treated by the two physicians in Redding (Kaiser Daily Health Policy Report, 7/10).