Is a Settlement in Sight Over Alleged Kickbacks at Tenet Hospitals?

When businesses are faced with potential trouble, their first instinct is to settle and make it go away, and that may be in the works for Tenet Healthcare. The hospital company recently said it has potentially reached a $514 million agreement with the federal government to resolve allegations that four Tenet hospitals paid kickbacks to a prenatal care provider.

A company press release said the potential agreement would resolve both criminal and civil matters. Without an agreement, the company could face heavy sanctions as well as possible exclusion from participating in federal health-care programs.

The potential agreement in principle stems from a criminal investigation of Clinica de la Mama, a Norcross, Ga.-based company that provides prenatal services to undocumented Hispanics. Four Tenet hospitals (Atlanta Medical Center, North Fulton Hospital, Spalding Regional Hospital and Hilton Head Hospital) allegedly paid kickbacks to the clinic in return for patient referrals to the hospitals for labor and delivery. The alleged scheme, which lasted 12 years, disguised the kickback payments as translation and Medicaid eligibility determination fees.

While Tenet no longer owns three (Atlanta Medical Center, North Fulton Hospital and Spalding Regional) of the four affected hospitals, it still retains potential liability for their conduct.

Over the 12 year period, Medicaid made $100 million in reimbursement payments to the Tenet hospitals and other hospitals for the referred patients. A Tenet spokesman told me the company wasn’t commenting on the proposed agreement, while the Department of Justice declined my request to comment.

Beyond the $514 million payment, which Tenet expects to make as soon as the third quarter of 2016, the company may enter either a corporate integrity agreement or a non-prosecution agreement. Tenet also said the potential agreement would require the wholly-owned subsidiaries that previously ran the Atlanta Medical Center and the North Fulton Hospital to plead guilty to involvement in the alleged kickback scheme.

Stay on top of new developments in health law and regulation with a free trial to the Health Law Resource Center. Learn more about Bloomberg Law and sign up for a free trial.