Trouble keeps rolling over Tenet Healthcare Corp., Santa Barbara, Calif., like waves battering a shoreline.
The company announced that federal investigators have raided its 193-bed Alvarado Hospital Medical Center, San Diego. The search warrants covered the offices of the hospital's CEO and director of business development, Tenet said.
Based on the search warrants, Tenet said, it appeared that investigators were examining physician recruitment, relocation and consulting issues.
Tenet said it has no information that would suggest the investigation involves patient care or Medicare outlier payment issues.
Earlier today, Tenet said it remained deadlocked with the Justice Department over terms to resolve a payment row dating to the 1990s.
In a letter to shareholders, Tenet Chairman and CEO Jeffrey Barbakow said that despite lengthy negotiations in recent days, the two parties "remain far apart on settlement issues" and that the hospital company is "prepared to try this case if necessary."
At issue are allegations that Tenet hospitals overcharged Medicare for inpatient stays related to four conditions -- pneumonia, operating room procedures for infectious diseases, septicemia, and respiratory system diagnosis with a mechanical ventilator -- between September 1992 and December 1998.
Tenet contends that it is not fully responsibly because during that period the hospitals were owned by various other companies, including American Medical International, National Medical Enterprises and OrNda HealthCorp.
Several years ago, the Justice Department launched an industrywide investigation into hospitals' coding for laboratory tests and inpatient stays. Tenet settled the lab issues in June for $17 million.
Separately, Tenet has been struck by a lawsuit, filed on behalf of 650,000 seniors, that accuses the nation's second-largest hospital chain of price-gouging on drugs and hospital stays.
The Congress of California Seniors, which filed the suit in Los Angeles Superior Court, claims Tenet "trumped up its profits" by using its regional market dominance to set high prices, resulting in higher premiums, deductibles and co-payments. The group is seeking to reclaim an "estimated millions of dollars."
At deadline, Tenet officials could not be reached for comment on the congress' lawsuit. -- by Laura B. Benko