Arnall Golden Gregory – Tenet Healthcare Corporation, an investor-owned healthcare services company based in Texas, and two of its Atlanta-based subsidiaries have entered into an agreement with the government to resolve criminal charges and civil claims stemming from a scheme to defraud the United States and to violate the Anti-Kickback Statute (AKS).
According to the information, Atlanta Medical Center Inc., North Fulton Medical Center Inc., Spalding Regional Medical Center Inc., and Hilton Head Hospital signed sham contracts for interpreter and other services with Hispanic Medical Management, Inc., d/b/a Clinica de la Mama, which provided prenatal services to undocumented Hispanic women. In return, the clinics ensured that their pregnant patients were sent to the Tenet hospitals for labor and delivery. As a result, the government charged, many of the mothers were forced to travel long distances to deliver their children, risking the health and safety of the mothers and their children.
Atlanta Medical Center Inc. and North Fulton Medical Center Inc. will plead guilty to an information charging them with conspiracy to defraud the United States and to pay health care kickbacks in violation of the AKS. Tenet HealthSystem Medical, Inc., the parent of the two Atlanta companies, as well as of the other two hospitals, has also entered into a three-year non-prosecution agreement (NPA) related to these charges.
Between 2000 and 2013, Tenet received more than $145 million from Medicaid and Medicare for patients referred under the unlawful arrangements. The two hospitals will forfeit that amount to the United States.
The information also charges, however, that the two hospitals conspired to defraud the Department of Health and Human Services (HHS) in its administration and oversight of the Medicare and Medicaid Programs based on their failure to comply with the CIA and concealment of the unlawful referral arrangements while they were under the CIA.
Under the civil settlement, Tenet Healthcare Corporation will pay $368 million to the federal government, the state of Georgia, and the state of South Carolina to resolve claims asserted under the Georgia False Claims Act and the FCA. Under the terms of the NPA, Tenet Healthcare Corporation and Tenet HealthSystem Medical, Inc. will also be required to cooperate with the ongoing investigation and implement specific measure to enhance their compliance and ethics program and internal controls.
This case is a salutary warning to companies that are under, or in the process of entering, a CIA as part of any settlement with the government.
This circumstance, in juxtaposition with the Yates Memo’s directives regarding individual accountability for corporate acts, should cause companies and executives to consider their responsibilities under a CIA – and the certifications they make – very carefully. The fact that the subsidiary hospitals were required to plead guilty to criminal charges; the inclusion of the false certifications by the executives and others in the criminal charges; and the stringent requirements Tenet must meet under the NPA and the new CIA, all highlight the government’s increasing tendency to use compliance as a weapon, as well as an instrument, in its anti-fraud efforts.
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Sara M. Lord is a partner in the Litigation, Government Investigations, and Healthcare Practices. An award-winning former federal prosecutor, she has extensive experience investigating and litigating healthcare fraud, financial fraud and public corruption cases throughout the United States.
