How can you be accused of breaking the law when you believe that what you are doing is legal? I wrestled with this question for a good part of my four-year ordeal with the federal government.My marathon began in March 2002, when I received a call from my business development director telling me the FBI had paid her a visit at home. In December of that year, the facility where I was chief executive officer, Alvarado Hospital Medical Center in San Diego, was raided by 20 FBI agents wearing flak jackets and carrying guns. In April 2003, my attorney informed me that I would be indicted for allegedly violating the anti-kickback statute involving physician-relocation agreements. After 25 years of running hospitals, being happily married for 22 years and raising three boys, I was arraigned, fingerprinted and photographed. My travel was restricted, and I had to post a bond. Everything seemed so surreal. Each of the 20 counts naming me, Alvarado and Tenet Healthcare Corp. carried a maximum five-year prison sentence and $25,000 fine. The publicity was a nightmare, and my days were filled with paranoia. Is my phone being tapped? Am I under surveillance? Why am I being audited by the Internal Revenue Service for the first time in my life? How do I explain to criminal attorneys the economic reality of running a hospital? How do I deal with the government's one-dimensional, cynical view and the fact that it chose to ignore complex referral relationships and sophisticated approaches to building business? Worst of all was overcoming the presumption of guilt. After all, I had the U.S. attorney herself prosecuting the case at the end. On top of all of that, I had to endure not one but two trials. The first lasted four months and ended in a hung jury. The second dragged on for almost a year with the jury spending six months in deliberations -- a record in California. And that trial also ended in a hung jury. It was not the outcome I had hoped for, but as far as the lawyers were concerned, it was a win. After the first trial, I began to shift my attitude. I stopped resisting and started accepting the fact that I could not change the government's beliefs. Rather than being negative and stressed, I realized it was more productive to be positive, keep a sense of humor and trust that justice would prevail. I appreciated the enduring support I received from family, friends and colleagues, and that I was surrounded by great attorneys and a company that believed in me and supported me. When I began to view my situation as an opportunity to grow and learn, I was able to find the answer to my question. You can't be found guilty of violating the anti-kickback statute if you did not set out knowingly and willingly to violate the law. You must also have acted in good faith and on advice of counsel—assuming you disclosed all material facts. However, the way the anti-kickback statute is currently being interpreted makes it extremely difficult to have a financial arrangement with a physician and avoid violating the law if "any one purpose" is to increase admissions. My case wasn't necessarily about physician-relocation agreements but rather how prosecutors interpreted an ambiguous and confusing law, and strung together information over a 12-year period in an effort to make a business practice look sinister. A legal review and corporate approval of documents did not mean that I was insulated from the government's interpretation of the law. As my attorney, Charles La Bella, proclaimed during closing arguments: "This is a prosecution in search of a crime." I remain active in the healthcare industry and am pursuing my interest in medical office buildings and outpatient clinic development. I am also enjoying the opportunity to speak with healthcare administrators regarding my experience. One of the benefits of undergoing a multiyear investigation is the ability to see every mistake you have made, and gain insight into avoiding ever being in that situation again. Let me share with you some key points and suggest questions you might ask yourself: • Are your files complete, including all attorney/client correspondence, phone conversations, e-mail, etc.? Do you respond to communication from others making certain that you clarify statements that can be misconstrued? • Are you doing business with people and physicians whom you can trust and do they have integrity? What is their reputation and past experience with others? What input does your medical staff leadership have in your business planning? • How is your organization structured? Can your director of business development create exposure by virtue of his or her skill level and scope of responsibility? • What is your management style? Do you delegate too much? Are you a precise communicator, listener and observer? Are you too rushed, pressured and distracted to pick up and react to red flags? • What are you documenting in your operations reports and business plans? Does it contain physician-volume and related information that can be taken out of context and viewed as an inducement? Perhaps my case is unique. However, today's hospital environment consists in part of myriad confusing laws, and disgruntled staff and physicians. I recommend that you carefully examine all aspects of your documentation, management style and business development infrastructure to minimize your legal exposure while you try to creatively and resourcefully run your hospital.
Barry Weinbaum is the former CEO of Alvarado Hospital Medical Center in San Diego, which Tenet Healthcare was required to sell as part of its settlement of criminal kickback allegations.