Tenet Healthcare Corporation
(
THC
) has opted for a $42.75 million civil settlement with the U.S.
Attorney's Office, Northern District of Georgia and the Departments
of Justice and Health and Human Services in connection with
over-billing of Medicare. The company was facing allegations that
it admitted several Medicare patients to 25 of its inpatient
rehabilitation facilities during May 2005-December 2007, even
though the patients did not qualify for such treatment.
The allegations were made under the U.S. False Claims Act. As
per the U.S. Department of Justice, the payment is the largest in
the history of settlements related to inappropriate admission to
rehabilitation facilities.
Inpatient rehabilitation units are generally reimbursed at a
higher rate than other facilities covered under Medicare plans as
such units are for patients who require a high degree of medical
supervision and a skilled nursing and medical team. Thus, Tenet
received higher Medicare reimbursement from the government for
unnecessarily admitting patients in inpatient rehabilitation
facilities.
The discrepancy was first discovered in a Georgia hospital by
Tenet's compliance department during an internal review in 2007.
The company then reported the same to the Office of Inspector
General (OIG), as required under its corporate indemnity agreement
with the OIG, as well as OIG's self-disclosure protocol.
Thereafter, the company was involved in several discussions with
federal officials, which led to the voluntary settlement deal.
Tenet will make the settlement payment in the second quarter of
2012. However, the company had created a reserve for the same
during 2011.
So far, 2012 has been a bad year for Tenet as far as legal cases
are involved. Last month, a U.S. district court dismissed a lawsuit
filed by Tenet against rival health care company,
Community Health Systems Inc.
(
CYH
) with prejudice, as it lacked a proper legal standing. A lawsuit
rejected with prejudice prevents the company from re-filing the
case in any court.
Tenet was seeking recovery of damages incurred during the failed
takeover attempts by Community Health. The company had also made
allegations related to over-billing of Medicare against the
latter.
Tenet currently carries a Zacks #2 Rank, which translates into a
short-term Buy rating. We maintain a long-term Neutral
recommendation on the stock.
COMMNTY HLTH SY (
CYH
): Free Stock Analysis Report
TENET HEALTH (
THC
): Free Stock Analysis Report
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