It took the U.S. attorney in Miami until last week to officially announce what the rest of the healthcare world had known since late June-that Tenet Healthcare Corp. would pay $29 million to settle allegations that its 360-bed Palmetto General Hospital had defrauded Medicare through its home health agencies.
Tenet, Santa Barbara, Calif., had previously disclosed it would pay $55.8 million to settle civil fraud charges at two of its hospitals and end a national clinical laboratory billing fraud investigation (June 24, p. 12). In its June Securities and Exchange Commission filings, Tenet mentioned the Palmetto settlement but offered few details.
The U.S. Justice Department announced the clinical lab settlement and a $9.8 million whistleblower settlement with Tenet's 244-bed Brotman Medical Center in Culver City, Calif., shortly after Tenet's announcements, but refused to comment on the Palmetto case. It was then considered likely that a still-sealed whistleblower suit against Tenet and Palmetto was being resolved and still under a court-ordered seal. Last week, a Miami federal judge partially unsealed the suit, which was filed in 1997 in U.S. District Court in Miami by Isabel Ayers, a former psychiatric nursing supervisor at Palmetto's home health division. Ayers will receive $4 million for her role in the recovery.
Tenet inherited the lawsuit and liability. Palmetto, which is located in nearby Hialeah, Fla., was purchased by Tenet-predecessor Lifemark Hospitals in 1981 and later owned by American Medical International. Tenet acquired it in 1995.
The suit alleged that from 1994 to 1997, Palmetto General's home health agencies in Dade County, Islamorada and Key West-originally known as Florida Home Care and later a division of Tenet Home Care-allegedly lied about patients' conditions and Medicare eligibility and submitted bills for services not rendered or provided by unlicensed personnel.
Federal prosecutors also said Palmetto General subsequently manipulated its Medicare cost reports by illegally reclassifying costs among agencies, misallocating capital expenses and claiming noneligible fees to a related company.
Miami U.S. Attorney Guy Lewis said the settlement demonstrates his office's commitment to pursue fraud and abuse in Medicare.
"Healthcare providers, whether they be small local providers or large national chains, can and will be held accountable for their billing practices," Lewis said.
In the settlement agreement Tenet denied legal wrongdoing.
"This was not a business that we started or emphasized," said Tenet spokesman Harry Anderson. "But because we are the owners of record we are the ones to settle with the government. We closed the agencies in 1998. We made the decision then that we were not in the home-health business."
Ayers' Fort Lauderdale attorney, Jon May, of the firm May & Cohen, said his client feels vindicated by the settlement.
"Her allegations were validated as a result of the settlement and the company was required to pay back the money obtained unlawfully," May said. "The current management of Tenet was not responsible for the fraudulent activity and has acted responsibly in reaching a settlement to pay what is owed to Medicare."
Tenet's stock rose nearly $2 on news of the settlement.