(Bloomberg) — Four Tenet Healthcare Corp. (NYSE:THC) hospitals are the target of a federal criminal probe into allegations executives paid kickbacks to obstetric clinics for patient referrals, the company said in securities filings.
The investigation arose from a 2009 whistleblower lawsuit accusing Tenet’s hospitals of paying local clinics to send pregnant, undocumented Hispanic women to their facilities for deliveries covered by Medicaid, officials of the Dallas-based hospital chain said in a May 4 filing.
Federal prosecutors told Tenet last month the hospitals, located in Georgia and South Carolina, were “designated as targets of the government’s criminal investigation,” the chain said in the U.S. Securities and Exchange Commission (SEC) filing.
Tenet, the third-largest publicly traded hospital chain, has been dogged by fraud allegations over the years and agreed to a $900 million settlement with the government in 2006 to resolve claims it cheated Medicare through overbilling.
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Donn Walker, a Tenet spokesman, said the company had “disclosed this investigation in our public filings for some time” and declined to comment further on the hospitals’ target status.
The probe is part of a U.S. Justice Department crackdown on health care fraud that has recovered more than $13 billion through whistleblower cases, prosecutors said last year. The government decided to join a suit targeting the Tenet hospitals’ referral payments to the clinics in February 2014.
The suit also focuses on referral kickbacks allegedly made by Health Management Associates Inc. (HMA), another hospital chain, to the same clinics. The company has denied the allegations.
Last year, the Justice Department joined eight whistleblower cases against HMA accusing the Naples, Fla.-based company of billing federal health care programs for unnecessary admissions from hospital emergency departments.
Franklin, Tenn.-based Community Health Systems Inc. (NYSE:CYA) acquired HMA last year for $3.9 billion after U.S. antitrust regulators cleared the deal.
In the Tenet case, hospital officials allegedly paid kickbacks disguised as legitimate payments to a chain of obstetric clinics known as Clinica de la Mama in return for patient referrals. The chain was owned by Hispanic Medical Management, a Georgia company hired by Tenet and HMA to provide translation services, marketing and evaluations of Medicare eligibility, according to court documents and Tenet’s SEC filing.