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Catch of the Week: Tenet Healthcare to Pay $66M Over Kickback Allegations

Posted  November 7, 2019

Tenet Healthcare, a healthcare giant that operates 65 hospitals and conducts over 10 million patient encounters annually, has agreed in principle to pay the United States roughly $66M to settle allegations that it violated the Stark Law and the Anti-Kickback Statute. These laws generally prohibit medical providers from paying or receiving kickbacks, remuneration, or anything of value in exchange for referrals of patients who will receive treatment paid for by government healthcare programs such as Medicare and Medicaid, and from entering into certain kinds of financial relationships. A former administrator an orthopedic center in Oklahoma that did business with Tenet, Wayne Allison, initiated the case in a whistleblower lawsuit under the qui tam provisions of the False Claims Act. The orthopedic center, Southwest Orthopedic Specialists, and several other defendants in this suit settled similar allegations last year, paying $670k.

The settlement, which is not yet final, was first disclosed in Tenet’s recent financial filing to the SEC. The filing indicated that Tenet had established a reserve of $68M for the matter, and that it anticipated that the funds will be paid in the first quarter of 2020. A recent letter to the court anticipated a final resolution to be announced by December 11th of this year.

The suit, which was first filed in 2016, alleged a conspiracy among a group of Oklahoma orthopedic surgeons, a surgery hospital they created (The Oklahoma Center of Orthopedic and Multispecialty Surgery), and USPI, a Tenet-owned company that held stake in the hospital, along with the physicians.

Specifically, the complaint alleges that beginning in 2002, several orthopedic surgeons, and several corporations, entered into a web of financial agreements that functionally paid surgeons kickbacks in exchange for patient referrals. The alleged kickbacks included increased equity ownership stakes in the hospital, annual bonuses to physicians, signing bonuses when physicians joined the practice, free access to medical assistants, access to office space at very low prices, and, bizarrely, credit card points. The Complaint calculates that these referrals led to over $150M of medical services.

This is not Tenet’s first, large False Claims Act settlement. In 2016, the company paid $513M to resolve allegations that they violated the False Claims Act and Anti-Kickback statute through , also, illegal kickbacks that it paid in exchange for patient referrals. Allegedly, Tenet altered several of its financial agreements with the orthopedic surgeons in Oklahoma when the earlier case was settled. In that case, the whistleblower, Ralph Williams, received an award of over $84M.


Tagged in: Anti-Kickback and Stark, Catch of the Week, FCA Federal, Importance of Whistleblowers, SEC Whistleblower Reward Program, Whistleblower Case, Whistleblower Rewards,