Tenet Healthcare pays more than $513 million to settle hospital kickback case

Tenet Healthcare Corp. has announced that it has reached “an agreement in principle” to settle a whistleblower case for more than $513 million, settling that Tenet paid kickbacks to a string of clinics to refer pregnant undocumented Hispanic women to a Tenet hospital for medical treatment in birthing.Court pleadings in the whistleblower case allege that from 2000 to 2013, the clinics collected as much as $20,000 a month per hospital to funnel tens of thousands of pregnant women exclusively to Tenet hospitals to illegally boost the volume of hospital deliveries with Medicaid patients. Medicaid covers the cost of infant deliveries of low-income or indigent women, even if the mothers are undocumented.

Federal anti-kickback statutes bar hospitals from paying clinics, physicians or others to steer patients their way for treatment.

Two Tenet corporate subsidiaries operating the Atlanta Medical Center and North Fulton Hospital,, also agreed to plead guilty to conspiring to violate the federal anti-kickback statute, according to a quarterly report Tenet submitted to the U.S. Securities and Exchange Commission.

The proposed settlement would include a $145,788,345 million fine in return for an agreement not to prosecute Tenet Healthcare Corp. and $368 million to settle the civil case.

It would also authorize the U.S. Justice Department to appoint a corporate monitor for three years to ensure Tenet’s compliance with anti-kickback laws, according to the SEC report, and the hospital chain would sign a corporate integrity agreement with the U.S. Health and Human Services Department’s inspector general. In return, the federal government would not exclude any Tenet hospitals or clinics from participating in federal health care programs, foremost among them Medicare and Medicaid, the report said.

The whistleblower Ralph Williams a former Chief Financial Officer of a Tenet hospital in Georgia is represented by Atlanta attorney Marlan Wilbanks, who filed the whistleblower suit in 2009. Williams claimed that Tenet used sham contracts to provide cover for the payments of kickbacks to a string of clinics operating as Clinica de la Mama that catered to undocumented pregnant Hispanic women.

In 2014, one of Tenet’s former hospital CEOs and the former CEO and CFO of the now-defunct company that operated the prenatal clinics pleaded guilty to conspiring to pay or receive illegal kickbacks. Wilbanks said it was “extraordinary … to have key players on both sides of a kickback arrangement come forward and enter a guilty plea while a major whistleblower case is pending.”

Jeffrey Newman represents whistleblower, but not Mr. Williams who is represented by Marlan Wilbanks of Atlanta.