Although there is no perfect system that can prevent all types of criminal activity, the United States federal government has secured some huge victories in recent times prosecuting enormously large healthcare companies found to be committing fraud and taking advantage of patients for their own financial gain.  Both Tenet Healthcare Inc., a multinational healthcare services conglomerate worth $18 billion, and Life Care Centers of America, the largest private nursing care company in the United States, have been caught red-handed this year defrauding the federal government and putting the needs of their patients second by deferring them to out-of-the-way healthcare centers and administering unnecessary services respectively.

Tenet Healthcare was found to be purposefully deferring pregnant patients to certain subsidiary facilities for profitable kickbacks, while also overcharging for unnecessary services. Life Care Centers of America was found to be overcharging for unnecessary services and keeping patients longer than necessary to squeeze more money out of patients and the federal government.  As a result of these infractions, Tenet Healthcare has agreed to settle for $513 million and Life Care Centers of America has agreed to pay $145 million as a result of the lawsuits levied against them by state and federal prosecutors, awarding millions of dollars back to the government and taxpayers across the country.

The depth and scale of these fraudulent activities is alarming. In Tenet Healthcare’s case, it is the fourth major healthcare scandal they have faced since the early 1990s. In the case of Life Care Centers of America, their fraudulent activities were tracked between 2006 and 2013. In both cases, the criminal activities involved taking advantage of the patients that place their trust in their services for their own personal profit.

Life Care Centers of America has agreed to pay out $145 million in a settlement with the United States government after it was discovered that they has been defrauding Medicare and TRICARE by overcharging for rehabilitation and therapy services that their patients did not require between 2006 and 2013.  Through their more than 220 skilled nursing care centers across the country, Life Care Centers of America engaged in fraudulent activities that involved overbilling elderly for services they did not request or did not require and also billing patients with less serious care requirements as though they needed the highest level of necessary care – “Ultra high” – which netted them more money from the federal government.

In some cases, the nursing care centers would keep patients for much longer than necessary to extend their stay and bleed more money out of the patients and the government. The lone shareholder of Life Care Centers of America, Forrest L. Preston, was implicated in a separate lawsuit for his profiting from the widespread scam.  “Billing federal healthcare programs for medically unnecessary rehabilitation services not only undermines the viability of those programs, it exploits our most vulnerable citizens,” said Eastern District of Tennessee U.S. Attorney Nancy Stallard Harr. “We are committed to working with our federal partners to protect both.”

Life Care Centers of America, the largest private nursing care company in the country, based in Tennessee, in addition to paying the hefty settlement, is now the subject of a five-year Corporate Integrity Agreement with the federal government, which means they are now required to be reviewed by independent agencies to assess the necessity of their rendered services for the next five years.  The allegations, legal action, and eventual settlement was brought to light by two former Life Care employees, who made authorities aware of the scheme via the whistleblowing protections of the False Claims Act. Tammie Taylor and Glenda Martin will receive a share of $29 million for their part in exposing the crime.

Tenet Healthcare Inc., a multinational healthcare services conglomerate worth over $18 billion, and two of its subsidiary companies have committed to pay out a total of $513 million to the United States government after it was revealed to be defrauding federal and state government agencies through an egregious scheme where kickback payments were doled out in exchange for patient referrals.

The two subsidiary companies, Atlanta Medical Center Inc. and North Fulton Medical Center Inc., will plead guilty to a healthcare kickback scheme that unnecessarily funneled pregnant patients to Tenet Healthcare facilities for kickback payments, which is in direct violation of the Anti-Kickback Statute, which “prohibits the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal health care program business.”  Tenet Healthcare Inc. agreed to pay out $368 million to the federal government, the state of Georgia and the state of South Carolina in response to multiple civil court claims brought against them under the authority of the federal False Claims Act and Georgia’s local statute equivalent. The federal government will receive over $244 million of that, Georgia will receive over $122 million, South Carolina will receive $892,125 and Ralph D. Williams, who filed the initial case in Georgia, will receive about $85 million.

“Using their positions of trust, health providers – after receiving payments from Tenet – sent expectant women specifically to Tenet hospitals,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services-Office of Inspector General. “Patients were often directed to Tenet facilities miles and miles from their homes and on their journeys passed other hospitals that could have provided needed care.  These women were thereby placed at increased risk during one of the most vulnerable points in their lives.”  The depth and scale of the illicit operation is unprecedented in the area and is amongst the most lucrative of such schemes ever brought to light in the United States. The Attorney General’s office praised collaborative work from local, state and federal litigators in helping shed light on the corruption.

“Our Medicaid system is premised on a patient’s ability to make an informed choice about where to seek care without undue interference from those seeking to make a profit,” said U.S. Attorney John Horn of the Northern District of Georgia.  “Tenet cheated the Medicaid system by paying bribes and kickbacks to a pre-natal clinic to unlawfully refer over 20,000 Medicaid patients to the hospitals.  In so doing, they exploited some of the most vulnerable members of our community and took advantage of a payment system designed to ensure that underprivileged patients have choices in receiving care.”

No company, regardless of size, can toy with its patients’ care for profit

The Tenet case is another sad reminder of how companies of considerable wealth, breadth and success just cannot seem to resist greedy, shady and illegal tactics to earn more patients and secure more profits. This scheme directly put patients second and profit margins for the parent and subsidiary companies first.  This is not Tenet’s first major scandal either. Since the early 1990s, Tenet has been involved in scandals involving hospitalizing and overcharging patients for unnecessary psychiatric care, performing dangerous and unnecessary heart surgeries on over 600 patients, and was caught in another Medicare fraud scandal in 2006. In all of these cases, rather than accept blame or go to court, they settled for hundreds of millions of dollars combined to avoid admitting any fault. Continue reading