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$513 Million Tenet Healthcare Fraud Case

November 15, 2016


Tenet Healthcare Corporation and two of its subsidiaries, Atlanta Medical Center Inc. and Northern Fulton Medical Center Inc., were charged in federal court with conspiracy to defraud the U.S. The claim involves violations of laws that govern referrals and illegal kickbacks. 

Tenet defrauded the Georgia Medicaid program by paying kickbacks to bring referrals to Tenet hospitals. According to criminal investigation information, expectant women were often sent long distances to Tenet hospitals, passing by nearer hospitals that could have provided care. Some pregnant women were told that Medicaid would only cover costs associated with childbirth if they delivered at a Tenet hospital, which was not true. These women were placed at increased risk.

Tenet Healthcare Fraud Statistics and Effects on Shareholders

Tenet has agreed to pay $368 million in total in the civil settlement. Of that amount, the State of Georgia will receive more than $122 billion, while South Carolina will receive more than $890,000. 

On the criminal side, Tenet will forfeit more than $145 million to the U.S. The settlement has so far resulted in a 4 percent drop in Tenet’s stock prices over the course of just a few months. Tenet has absorbed the settlement into its second-quarter earnings for 2016. It reported a $44 million net loss on operations for that quarter. 

The Importance of Data in Preventing Healthcare Fraud

Healthcare fraud is unique in that it is often the result of collaborations between many individuals and, sometimes, entire organizations. It requires a creative use of data and analysis that is typically much more extensive than that found in more localized types of fraud. As new medicines and technologies are released, new methods and structures for fraud also develop in parallel. 

Thus, data-based anti-fraud analysis always needs to be evolving, and should:  

  • Focus on data technology that facilitates integration of data that may be spread out across numerous systems
  • Encourage data sharing between important stakeholders
  • Broaden the scope of research to create more complete data sets; these should include everything from doctor’s notes to information related to insurance claims, and other relevant data

One of the dangers of healthcare fraud is that money that should be spent on high-quality healthcare goes instead to the fraudsters. However, the larger issue is the type of fraud that, in effect, limits healthcare options for consumers, such as in the Tenet Healthcare fraud scheme. Effective use of data can help protect consumer choices and preserve market freedom. Involvement of whistleblowers can also supplement data and assist in the fight against healthcare fraud.

Other Issues in the Healthcare Industry 

Healthcare fraud continues to be a pervasive concern in the industry.  For instance, U.S. prosecutors are scrutinizing generic pharmaceutical companies in a broad investigation into price collusion rings. The antitrust probe is being conducted by the Justice Department and currently involves over a dozen companies. 

In addition to widespread fraud such as that involving unlawful referrals and kickbacks, healthcare fraud can involve very nuanced and specific types of mechanisms. For example, a cohort of doctors, pharmacy owners, and marketers were recently indicted in Dallas in connection with a $100-million military healthcare fraud scheme. Their actions included conspiring to sell soldiers expensive, unneeded items like pain and scar creams. The claim also includes counts of illegal kickbacks. 

Every sector of the healthcare industry can be affected by fraud. As the industry itself becomes more and more complex, there is the potential for fraud to proliferate at various levels of operations. If you have any questions, concerns, or conflicts involving healthcare fraud, contact Kessler Topaz today. Our team of attorneys is dedicated to eradicating fraudulent practices and helping victims of fraud recover lost assets. All case evaluations are free and confidential.