Tenet Healthcare Corporation, a major nationwide hospital chain, and two of its Atlanta-area subsidiaries — Atlanta Medical Center Inc. and North Fulton Medical Center Inc. — will pay over $513 million to resolve criminal charges and civil claims that the hospitals defrauded the United States, the State of Georgia and the State of South Carolina by paying kickbacks in exchange for patient referrals.

In the civil case, the hospitals will pay a total of $368 million to resolve claims originally filed by a private whistleblower under the qui tam provisions of the federal and Georgia False Claims Acts.  The qui tam provisions allow private whistleblowers to file suit on behalf of the government and share in any recovery.  The whistleblower in this case will receive $84.43 million as his share of the settlement.  The federal government will receive $244,227,535, the state of Georgia will receive $122,880,339 and the state of South Carolina will recover $892,125.  This case represents the largest qui tam recovery in the history of the Georgia False Claims Act.

The whistleblower’s complaint, which was filed in the Middle District of Georgia, alleged Atlanta Medical Center Inc., North Fulton Medical Center Inc., Spalding Regional Medical Center Inc. and Hilton Head Hospital paid bribes and kickbacks to the owners and operators of prenatal care clinics serving primarily undocumented Hispanic women in return for the referral of those patients for labor and delivery medical services at Tenet hospitals.  The clinics, operated by Clinica de la Mama and Hispanic Medical Management, received kickbacks disguised as “commissioning translation,” “marketing services” and “Medicaid eligibility determination services.”  These kickbacks and bribes allegedly helped Tenet obtain more than $145 million in Medicaid and Medicare funds based on the resulting patient referrals.

According to the criminal information, expectant mothers were told at the prenatal care clinics that Medicaid would cover the costs associated with their childbirth and the care of their newborn only if they delivered at one of the Tenet hospitals.  In other cases pregnant women were simply told that they were required to deliver at one of the Tenet hospitals, leaving them with the false belief that they could not select the hospital of their choice.  As a result of these false representations, many expectant mothers traveled long distances from their homes to deliver at the Tenet hospitals, placing their health and safety, and that of their newborn babies, at risk.

In the criminal case, which alleged the same facts as the whistleblower’s civil allegations, the two Tenet subsidiaries have agreed to plead guilty to violating the Anti-Kickback Statute and conspiracy to defraud the United States by obstructing the lawful government functions of the Department of Health and Human Services and will forfeit over $145 million to the United States.  Tenet Health System and its subsidiaries have also entered a non-prosecution agreement.  Under the terms of the non-prosecution agreement, Tenet and its subsidiaries will avoid prosecution if they, among other requirements, cooperate with the government’s ongoing investigation and enhance their compliance and ethics program and internal controls.   The non-prosecution agreement has a three year term but may be extended for up to one year.

“Tenet took advantage of vulnerable pregnant women in clear violation of the law by paying kickbacks in order to bring their referrals to Tenet hospitals,” said Georgia Attorney General Samuel S. Olens.  “Through this scheme, Tenet defrauded the Georgia Medicaid program, and reaped hundreds of millions of dollars.  This is an unprecedented settlement for the state of Georgia, and reflects my office’s commitment to protecting Georgia taxpayers by uncovering Medicaid fraud and abuse.”