A 34-month-old federal investigation into alleged physician kickback arrangements at three Florida hospitals owned by Tenet Healthcare Corp. may be coming to a head, Florida sources close to the investigation said.
The Santa Barbara, Calif.-based company recently mailed letters to former or currently employed doctors and staff members of at least three large physician groups purchased by three former American Medical International hospitals, which Tenet now owns. The letters inform the employees that they may be contacted by authorities and that they do not have to speak with federal investigators. The letters advise them to hire their own attorneys or seek Tenet legal counsel.
Physicians who were subpoenaed in the case in April 1998 are being interviewed by federal authorities. The 24 doctors are current or former employees of 211-bed Delray Medical Center in Delray Beach, 213-bed Palms of Pasadena Hospital in St. Petersburg and 391-bed North Ridge Medical Center in Fort Lauderdale. The subpoenas sought information about possible kickbacks for patient referrals at the hospitals and questioned whether the hospitals deliberately overpaid for three large single-specialty physician group practices they purchased from 1992 to 1995 (May 25, 1998, p. 3).
Both Tenet and government officials refused to say whether the allegations stemmed from a whistleblower lawsuit.
Tenet inherited the arrangement when its predecessor, National Medical Enterprises, purchased the former AMI hospitals in 1995.
The U.S. attorney and HHS' inspector general documented physician referral patterns before, during and after the doctors sold their practices to the hospitals to accurately gauge the value of the practices and watch for increased referrals.
South Florida sources said the investigation has intensified in recent weeks, with more subpoenas served and more doctors, employees and other witnesses interviewed at the newly opened South Florida Health Care Fraud Center in the Miami suburb of Miramar. Investigators, auditors and prosecutors from the U.S. Justice Department, FBI, U.S. attorney's office, inspector general, Food and Drug Administration, U.S. Postal Service, Internal Revenue Service and Florida Medicaid Fraud Control Unit have launched a series of major healthcare fraud investigations from the facility, the first of its kind in the country.
Assistant U.S. Attorney Barbara Bisno, who is leading the probe, declined comment, as did Tenet's Florida region attorneys. But Tenet spokesman Harry Anderson said there has been no news since the subpoenas were first issued in 1998.
"We are still of the belief that we will be able to satisfy the government (that nothing wrong took place)," Anderson said. "To my knowledge there isn't anything new to add and we haven't been served with any new demand letters. I'm not aware of any new letters sent (to employees), although it wouldn't surprise me if a new letter had gone out. It's a normal consequence to tell employees what their rights are. But we don't know any more about this now than we did in 1997."
Anderson said that at one time, Tenet owned 1,000 physician practices, but it has since divested or discontinued contracts with more than 60% of those.
Miami attorney Ted Klein of the firm Bierman, Shohat, Loewy & Klein is representing Tenet. He declined comment.
Since 1998, the inspector general's office has warned providers it will investigate higher-than-market-value purchase prices for physician practices, a common practice in the early 1990s. A December 1992 letter from D. McCarty "Mac" Thornton, now chief counsel to the inspector general, to the IRS detailed his opinion that overpayments for physician practices by hospitals could constitute a kickback. Investigating overpayments for physician practices became a priority in the inspector general's 1998 work plan.
The kickback probe isn't the first federal inquiry North Ridge Medical Center has faced. The hospital was put on probation by the Joint Commission on Accreditation of Healthcare Organizations in 1995 after a site visit uncovered quality-of-care irregularities. The hospital, which did not admit legal guilt, paid more than $90,000 to the inspector general to settle patient dumping allegations for violating the 1986 Emergency Medical Treatment and Active Labor Act law in 1996 and 1998.