A San Diego grand jury has returned an indictment
alleging that Tenet Healthcare illegally paid kickbacks to
doctors to refer patients to Alvarado Hospital in connection
with physician relocation agreements. U.S. Attorney Carol
Lam says "Kickbacks to doctors can wear many disguises,
including sham relocation agreements." A press release
from Santa Barbara-based Tenet says the company believes the
indictment mistakenly attacks a common, well-established and
lawful means that many U.S. hospitals use to attract needed
physicians to their communitie.
OFFICE OF THE UNITED STATES ATTORNEY
SOUTHERN DISTRICT OF CALIFORNIA
San Diego, California
United States Attorney
Carol C. Lam
For Further Information, Contact:
Assistant U.S. Attorney Daniel E. Butcher
(619) 557-5927
For Immediate Release
NEWS RELEASE SUMMARY
United States Attorney Carol C. Lam announced today that
a federal grand jury in San Diego has handed up a 17-count
indictment charging Tenet Health System Hospitals, Inc. and
Alvarado Hospital Medical Center, Inc. with criminal violations
relating to payments to physicians to induce them to refer
patients to Alvarado Hospital. Barry Weinbaum, Alvarado Hospital's
CEO, previously was indicted on June 5, 2003, and remains
a defendant in the superseding indictment filed today.
According to the indictment, from 1992-2002, Tenet HealthSystem
and Alvarado Hospital paid over $10,000,000 to fund more than
100 Physician Relocation Agreements, purportedly to recruit
needed medical services to the Alvarado service area. The
indictment alleges, however, that established physicians other
than the recruited doctors received a substantial portion
of this Relocation Agreement money to induce them to refer
patients to Alvarado Hospital.
The indictment alleges that the hospital paid substantial
sums of money not only to doctors recruited to the Alvarado
service area, but also to the "host" medical practices
with whom the recruited doctors were placed, in exchange for
patient referrals. Among the arrangements described in the
indictment were Relocation Agreements with four physicians
who joined the practice of Dr. Paul Ver Hoeve, located in
the Alvarado service area.. The defendants arranged for Ver
Hoeve personally to receive at least $600,000 of that Relocation
Agreement money. The indictment also charges that defendants
arranged for physicians practicing in the Mid-City Medical
Group to receive $230,000 in Relocation Agreement money, after
the physicians solicited funds from the hospital while promising
that the "patient load that we are capable to expand
will definitely help to increase the flow of admissions to
the Alvarado Hospital Medical Center."
United States Attorney Lam said, "Kickbacks to doctors
can wear many disguises, including sham relocation agreements.
They are still kickbacks, they are still illegal, and they
threaten the integrity of our medical system."
Federal law prohibits providing any benefit to induce the
referral of any patient insured by Medicare, Medicaid or any
other Federal health care program, according to Assistant
United States Attorney Daniel E. Butcher, who is prosecuting
the case. The law prohibits such payments whether they are
direct or indirect, overt or covert.
Defendants Tenet HealthSystem Hospitals, Inc. and Alvarado
Hospital Medical Center, Inc. are wholly-owned subsidiaries
of Tenet Healthcare Corporation. In 1994, Tenet (then known
as National Medical Enterprises), entered criminal guilty
pleas and paid the United States $325,000,000 to settle an
investigation into, among other things, paying illegal remunerations
to physicians to induce referrals to certain of its psychiatric
hospitals. Tenet also agreed to implement a five-year corporate
integrity program to prevent future violations of law in connection
with that settlement.
The 17-count indictment charges defendants with one count
of conspiring to violate the federal anti-kickback statute,
and with 16 counts of offering and paying illegal remunerations.
Each count carries a maximum penalty of five years imprisonment,
and a $25,000 fine.
Defendants are expected to be arraigned on the superseding
indictment tomorrow at 10:00 a.m. by the Honorable M. James
Lorenz, United States District Judge.
United States Attorney Lam praised the efforts of the United
States Department of Health and Human Services, the Federal
Bureau of Investigation, and the Internal Revenue Service
Criminal Investigation, which jointly investigated the case.
DEFENDANTS
BARRY WEINBAUM
TENET HEALTHSYSTEM HOSPITALS, INC.
ALVARADO HOSPITAL MEDICAL CENTER, INC.
SUMMARY OF CHARGES
COUNT 1 Conspiracy in violation of Title 18, United States
Code, § 371
COUNTS 2-17 Offering and paying illegal remunerations in violation
of Title 42, United States Code, § 1320a-7b(b)(2) and
aiding and abetting in violation of Title 18, United States
Code, § 2.
AGENCIES
United States Department of Health and Human Services
Federal Bureau of Investigation
Internal Revenue Service Criminal Investigation
An indictment itself is not evidence that the defendants
committed the crimes charged. The defendants are presumed
innocent until the Government meets its burden in court of
proving guilt beyond a reasonable doubt.
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