Tenet hospitals under criminal investigation

Four hospitals owned by the Tenet chain — including Atlanta Medical Center and North Fulton Hospital — are targets in a federal criminal investigation, the company reported in its filings with the U.S. Securities and Exchange Commission.

The criminal investigation grew out of a whistle-blower’s allegations that hospitals in Georgia and South Carolina were paying kickbacks to attract pregnant Medicaid patients to their hospitals. Last summer, two individuals involved in the case pleaded guilty to charges that they violated the federal Anti-Kickback Statute.

Tenet’s disclosure in its SEC filings is the first indication that the federal government’s criminal investigation is focusing on the hospitals, too. Tenet said in its SEC filing that the Department of Justice informed it on April 10 that the four hospital subsidiaries are targets in the criminal investigation.

“We have disclosed this investigation in our public filings for some time,” said Donn Walker, a Tenet spokesman, in an email Thursday to The Atlanta Journal-Constitution. “We have no comment or information to provide beyond what is included in our public filings.”

In addition to Atlanta Medical Center and North Fulton Hospital, the case also involves Tenet-owned Spalding Regional in Griffin and a Tenet hospital in South Carolina.

The whistle-blower’s allegations are already the subject of a civil lawsuit. After conducting their own investigations, both the state of Georgia and the federal government joined the civil case. The hospitals could face hundreds of millions of dollars in penalties if it is successful.

The civil case has been stayed pending proceedings in the separate criminal case, Tenet said in its SEC filing.

The federal Anti-Kickback Statute prohibits payments in exchange for sending patients for care that is covered by a government health plan.

Tenet acknowledged that the penalties could be severe if the allegations are proven.

“If we or our subsidiaries were determined to have violated the anti-kickback statutes, the government could require us to reimburse related government program payments received during the subject period, assess civil monetary penalties including treble damages, exclude individuals or subsidiaries from participation in federal health care programs, or seek criminal sanctions against current or former employees of our hospital subsidiary companies or the hospital companies themselves,” the company reported in its SEC filing.

Ralph D. “Bill” Williams originally brought the case based on what he said he observed after he was hired to work as chief financial officer at Walton Regional in Monroe, now Clearview Regional Medical Center. That hospital is not part of the Tenet chain.

In 2009, Williams found an agreement between the hospital and clinics that offered prenatal services to undocumented immigrants. Although the agreements outlined services that the clinics were supposed to provide, Williams says he determined that the agreements were simply a way to pay kickbacks to the clinics in return for arranging for the patients to go to the Monroe hospital for delivery of their babies.

Williams discovered a similar scheme at Tenet hospitals, according to his whistle-blower suit.

While undocumented immigrants do not quality for regular Medicaid, they can qualify for emergency labor and delivery services through Medicaid if they meet the program’s financial requirements. The program will also pay for medical services for the newborns.

The accusations involve prenatal clinics — most doing business as “Clinica de la Mama” — that operated for years in various locations across metro Atlanta.

Last August, Tracey Cota of Dunwoody and Gary W. Lang of Atlanta admitted to conspiracy to violate the anti-kickback statute. Cota was chief operating officer and co-owner of Hispanic Medical Management Inc., which operated as Clinica de la Mama. Lang was CEO of Walton Regional. The two are scheduled to be sentenced this coming August.