Senate Finance Committee Opens Investigation Into Tenet, Asks for Documents
Officials at California-based Tenet Healthcare, the nation's second-largest for-profit hospital chain, announced Sept. 5 that the company has received a letter from Senate Finance Committee Chair Charles Grassley (R-Iowa) requesting documents related to the company's corporate governance practices, the Wall Street Journal reports (Rundle, Wall Street Journal, 9/8). Most of the committee's requests for documents, e-mail messages and other records dating back as far as 1990 pertain to practices at Tenet's Redding, Calif.-based Redding Medical Center, the New York Times reports (Eichenwald, New York Times, 9/6). On Aug. 6, Tenet officials agreed to pay $54 million to settle allegations that Dr. Chae Hyun Moon, Redding's former chief cardiologist, and Dr. Fidel Realyvasquez, a cardiac surgeon, performed unnecessary heart surgeries and defrauded Medicare. Under the settlement, Tenet did not admit any wrongdoing but agreed to implement new procedures at Redding. The settlement ended civil and criminal investigations into Tenet, subsidiary Tenet HealthSystems Hospitals and Redding, but it allowed federal investigations into the involvement of individuals in the alleged Medicare fraud at Redding to continue (Kaiser Daily Health Policy Report, 9/5). The committee also is seeking documents about Tenet's formula to calculate outlier payments -- which reimburse for unusually expensive care under Medicare -- and about a neurosurgeon at one of Tenet's hospitals who has been repeatedly sued for malpractice or wrongful death, the Times reports (New York Times, 9/6).
'Ethically and Morally Bankrupt'?
In the four-page letter sent to acting CEO Trevor Fetter, Grassley said that Tenet might be "ethically and morally bankrupt," adding, "In the annals of corporate fraud, Tenet more than holds its own among the worst corporate wrongdoers." While the Senate Finance Committee probe does not seem to "cover new ground," the investigation "underscores the gravity of the allegations against Tenet and the difficulties of resolving persistent questions about the company's corporate culture," the Journal reports (Wall Street Journal, 9/8). Tenet spokesperson Harry Anderson said that Tenet will cooperate with the investigation and that the company hopes the committee will determine that Tenet has made the appropriate corporate changes in response to the investigations, the Times reports (New York Times, 9/6).
Other Investigations and Lawsuits
Currently, Tenet has about a month to prove to the federal government that Redding should not be barred from Medicare and other federal health programs following an HHS Office of Inspector General investigation that found that Redding physicians billed Medicare for services that were "medically unnecessary and failed to meet professional recognized standards of care." In addition, Tenet, Redding and its physicians face a lawsuit filed in August by 366 former cardiac patients for allegedly performing unnecessary heart surgeries to increase profit. Tenet also faces investigations into a variety of other allegations. The Securities and Exchange Commission, the HHS OIG and the Federal Trade Commission have launched several investigations into Tenet since October 2002; the company also faces shareholder lawsuits and investigations by the Florida Medicaid Fraud Control Unit and the U.S. Attorney's office in Los Angeles (Kaiser Daily Health Policy Report, 9/5).