Tenet Healthcare agreed last year to pay $513 million to settle a federal and state kickback case. But that giant settlement didn't close the matter for good.
Now, Tenet is facing a civil lawsuit that seeks compensation for the pregnant women who were caught up in the alleged kickback scheme.
"We decided to pursue this case because Tenet’s settlements with the United States, Georgia, and South Carolina over the illegal kickback scheme failed to compensate the patients who were the unknowing victims," Joseph G. Sauder, one of the attorneys in the case, told the AJC. "It is grossly unjust to reimburse the government but not those who suffered under the illegal scheme."
On top of that civil challenge, a pending criminal case against a former Tenet executive has the potential to net other white collar defendants who worked for Tenet when the alleged scheme was playing out at two of its subsidiaries -- Atlanta Medical Center and North Fulton Hospital.
Back in October, Tenet Healthcare and the two hospitals agreed to a settlement that would end criminal and civil charges being pursued by the U.S. Department of Justice.
The two subsidiaries agreed to plead guilty to the criminal charges and forfeit $145 million. Tenet agreed to pay $368 million to settle the civil case, which accused Tenet of paying kickbacks to Clinica de la Mama, a health care provider that primarily served undocumented Hispanic women. The kickbacks were paid in exchange for referring patients to the hospitals for labor and delivery services that were paid for by Medicaid, according to the allegations.
(Atlanta Medical Center and North Fulton Hospital are now owned by WellStar Health System. WellStar bought the hospitals after the federal investigation began and is not implicated in the case in any way.)
U.S. Attorney John Horn of the Northern District of Georgia said at the time of the settlement that the unlawful referrals involved over 20,000 patients.
Georgia, South Carolina and the federal government got shares of the $513 million settlement. Georgia's cut was $110 million.
Tenet declined to comment on the new civil case. But in its filings, Tenet has asked a judge to dismiss the case.
According to the allegations, Clinica de la Mama falsely told pregnant patients that Medicaid would only cover the costs of delivering babies if they went to a Tenet hospital. The Justice Department accused Tenet of paying Clinica in exchange for the stream of patients.
Sauder said that Clinica was acting as an agent for Tenet when it told its patients where they had to deliver their babies. "All of Clinica’s misrepresentations were intended to push patients to Tenet facilities, there was no other reason for their misstatements," he said.
The plaintiff in the new civil case, identified as "S.B.," went to a Clinica location near her home in Norcross for prenatal care in 2006, Sauder said. She did not have insurance at the time and enrolled in Medicaid.
Clinica told her that she had to deliver her baby at Atlanta Medical Center in order for the delivery to be covered, according to the suit.
The lawsuit says that "S.B." became pregnant with twins in 2009 and went back to Clinica. At the time, the suit says, she had private insurance through her job. But the suit says that Clinica told her she had a high-risk pregnancy that would not be covered by her insurance and she needed to enroll in Medicaid again and deliver at Atlanta Medical Center, even though she preferred another hospital.
The lawsuit seeks to represent all Clinica patients who were referred to Tenet hospital to deliver their babies.
While the civil lawsuit on behalf of patients is working its way through the legal process, a new criminal lawsuit is also unfolding.
In February, a former Tenet executive was indicted for his alleged role in the Tenet scheme.
John Holland, a former CEO at North Fulton Hospital who later oversaw operations for Tenet hospitals in Georgia and South Carolina, was charged in an indictment filed on January 24 in the Southern District of Florida with one count of mail fraud, one count of health care fraud and two counts of major fraud against the United States.
Just this week, federal prosecutors filed a superseding indictment against Holland that added wire fraud to the charges pending against the former Tenet executive.
Holland's attorneys say the former Tenet exec is not guilty of the charges and that the corporate settlement should have ended the matter.
“This case has been investigated for over four years, and settled with the government at the corporate level, and now the government is alleging nothing new, but merely adding inflammatory characterizations to sensationalize their claims," said Jamila Hall, an attorney at Jones Day who is co-counsel for Holland. "These new charges change nothing about Mr. Holland's position and he looks forward to his day in court to prove he is not guilty.”
When the original charges were filed in January, Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division said the charges represented the government's commitment to holding both individuals and corporations accountable. “We will follow the evidence where it takes us, including to the corporate executive ranks," Blanco said at the time.
It’s unclear if other Tenet executives could face criminal charges too. As part of its October settlement, a Tenet subsidiary entered into a non-prosecution agreement that requires it to cooperate with the “ongoing investigation.”