Tenet Healthcare Corp., Santa Barbara, Calif., said it would create a $395 million fund to settle patients' claims that they allegedly underwent unnecessary medical procedures at Redding (Calif.) Medical Center. Several physicians allegedly performed unnecessary cardiac catheterizations or bypass operations on about 750 Redding patients before November 2002. Tenet sold the hospital earlier this year to Hospital Partners of America in a deal with HHS to maintain the hospital's Medicare and Medicaid eligibility. The settlement of the patient claims is subject to approval by California state courts and individual plaintiffs. Tenet said the settlement would compel it to violate financial covenants but vowed to negotiate a new bank credit line in early 2005.
"We believe this settlement is the fair and honorable way to conclude this very sad chapter," said Tenet President and Chief Executive Officer Trevor Fetter in a news release. "It would likely have taken multiple trials and many years to assess liability in these cases." The settlement, if approved, would solve only one of Tenet's legal troubles. Tenet, its Alvarado Hospital Medical Center, San Diego, and the hospital's former CEO are being tried on kickback charges, and several states are investigating Tenet's physician recruiting tactics. In the release, Tenet's general counsel, Peter Urbanowicz, said, "We are seriously focused on bringing to a satisfactory conclusion all our remaining litigation and investigations, and this settlement is strong evidence of our progress." -- by Mark Taylor