Friday, April 27, 2012

Another Legal Settlement for Tenet, Another $10 Million Plus for its CEO

Yet another large health care organization has added to its collection of legal settlements. 

Reuters briefly noted Tenet Healthcare's latest scuffle with the law:
Tenet Healthcare Corp has agreed to pay almost $43 million to settle allegations that it overbilled the federal Medicare healthcare program for treating patients at certain rehabilitation facilities, the Justice Department said on Tuesday.

The company was accused of improperly billing Medicare between May 2005 and December 2007 for treating people at inpatient rehabilitation facilities when they did not qualify for such an admission, the Justice Department said.

Tenet agreed to $42.75 million to resolve the allegations, which were made under the U.S. False Claims Act. Medicare is the federal healthcare program for the elderly.

While this story appeared briefly and without context in a few business news outlet, it really is part of a much bigger picture.

National Medical Enterprises

Published in 2006, Maggie Mahar's Money Driven Medicine was one of the important early works on health care dysfunction (see post here, the web-site of the documentary film based on it here).  One of the striking cases it discussed was that of Nartional Medical Enterprises.  NME was charged not only with run of the mill offenses like over-billing, but more exotic ones like kidnapping patients. NME eventually settled with federal authorities in 1994 for $379 million, and pleaded guilty to a variety of charges. The results were similar to many more recent cases. No one went to jail, and the CEO walked away with a golden parachute.  Despite the seriousness of the offenses, NME did not go out of business.  It simply changed its name - to Tenet Healthcare.

Legal Problems in the 21st Century

The "new" Tenet continued to have legal issues.  These included a $395 million settlement of the Redding Medical Center unnecessary heart surgery scandal in 2004 (look here), and a $21 million settlement of US government charges of kickbacks (look here), a $7 million settlement with the government of Florida of charges of fraudulent billing (look here), and a $900 million settlement of federal over-billing complaints (look here, and see our post here), all in 2006.  There was an apparent lull, and then in 2011 the company settled a class action suit brought after the deaths of 34 patients in a Tenet facility in New Orleans after Hurricane Katrina (see Bloomberg story here.)

Again, while this substantial string of settlements suggest a pattern of repeated misbehavior, as in many other legal resolutions in health care (look here), the cost of financial penalties was diffused across the organization.  No individuals seemed to suffer any negative consequences from any of these episodes.

No Consequences for Hired Managers

Instead, despite this evidence of repeated misbehavior, now extending over nearly 20 years and across two centuries, the top hired leaders of Tenet continued to flourish.  Earlier this month Becker's Hospital Review announced the compensation received by Tenet's CEO in 2011:
Total compensation for Trevor Fetter, president and CEO of Dallas-based Tenet Healthcare, dropped 12 percent from 2010 to $10.74 million in 2011, according to documents from the U.S. Securities and Exchange Commission.

Mr. Fetter's base salary in fiscal year 2011 was $1.08 million, the same as the previous two years. He received $4.88 million in stock awards, $2.67 million in non-equity incentive plan compensation and $1.93 million of accumulated benefits under his supplemental executive retirement plan. Mr. Fetter also received more than $142,000 for personal use of Tenet's aircraft.

Despite the small dip last year, Mr Fetter's total compensation has generally increased  over the years, from $6.12 million in 2003 (via the LA Times), to $9.7 million in 2008 (AP via Fox News).


One would think that Tenet's record of legal trouble would have turned it into a pariah, or led to its corporate demise.  However, like many other large health care organizations, the organization has been able to shrug off evidence of a deeply flawed culture, and within such a culture, its leaders have continued to enrich themselves with seeming impunity. 

Such cases should raise many questions - Why are repeated offenses by the same well known health care organizations barely considered news?   Why do repeat offenses not generate at least increasing financial penalties?  Why do the organizations' stake-holders, particularly as represented by their boards, not show more concern?  Why has the regulation of health care organizations devolved into Kabuki theater?

So, I once again insist, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.


APeticola said...

This one is personal for me, because my brother died two years ago, neglected and miserable, two days after leaving a badly-run, understaffed Tenet hospital. His death may not have been owing to the care, but his misery, untreated pain (despite prescriptions from the attending doctors), and horrible treatment by some of the hospital staff made his last two weeks a horror and everything all of us would not wish for our own deaths. This was despite his ex-wife's and my efforts to advocate for him, but it was impossible to get good care at that hospital most of the time.

After his death I found out more about Tenet hospitals and practices and his experience was unfortunately anything but unique.

I did everything I could subsequently including complaining to JCAHO and writing all board members, but I have no confidence it made any difference.

Afraid said...

Sorry for your loss Al. There is no excuse for doctors and nurses not to revolt under the conditions you describe.

Yet there is no revolt. What does that say?

Welcome to my world.

maggiemahar said...


Yes, it is extraordinary how these for-profit hospitals survive, even after fraud and corruption have been discovered by the FBI. They
just change their names, start over, and do it all over again. (Sometimes they don't even bother to change their names.)

What worries me are reports that for-profit hospitals will be taking over more and more small non-profits as we move toward reform. We need to keep writing about their history of fraud

Anonymous said...

The big non-profits are just as bad. Singling out the for-profits does not help. It is really bigger systems, monopolists of any flavor, are the bad actors.

See Fairview, UPMC, etc etc.

Roy M. Poses MD said...

Anonymous of 2 May -

If you peruse other posts on this blog, you will see we hardly single out for-profit corporations. We have heartily criticized all kinds of non-profit organizations, government agencies, etc. In fact, most of the wording of the post above refers to health care organizations, not for-profit corporations per se.

Small Business Web Design said...

Cases like this should have legal actions and remedies. Proper authorities should focus on this problem.

Afraid said...

Seems the commenter was reacting to the singling out of for-profits by the prior commenter.

In my experience, HCR has always called a spade a spade no matter of the charitable purpose. It seems to me always that descicable behavior from non-profits is always ethically worse (not to mention financially perverse as it pertains to mission). This I think is frequently pointed out on HCR also.

Anonymous said...

Tenet likes to claim it is all about the patient, patient care, patient satisfaction, but the bottom line is all Tenet is about is the all mighty dollar. Employees are not treated well, management is a bully and benefits are disappearing.