Justice Department sues hospital chain over Medicare

LOS ANGELES -- The Justice Department sued Tenet Healthcare for up to $323 million Thursday, accusing the nation's second-largest hospital chain of overcharging Medicare for certain procedures to inflate its revenue.

The department said Tenet improperly assigned diagnosis codes for in-hospital stays in order to get paid higher reimbursements than it was entitled to between 1992 and 1998. The lawsuit was filed in Los Angeles against the Santa Barbara-based company.

The federal government is seeking triple damages, which could run as high as $323 million.

"We had been far apart in our discussions with the Department of Justice and we're sorry we didn't come to a fair and equitable agreement," Tenet spokesman Steven Campanini said Thursday. "We dispute many of their claims."

Tenet owns 114 acute-care hospitals in 16 states.

The alleged violations occurred at hospitals that were owned by various corporate entities now owned by Tenet, including National Medical Enterprises and American Medical Holdings. In 1995, NME merged with AMH and changed its name to Tenet Healthcare.

Tenet has said it expected the lawsuit after settlement talks broke down Wednesday.

The company previously reached a $17 million settlement with the Justice Department over similar allegations involving clinical lab tests.

The chain has been battered by a series of investigations and settlements involving its billing practices.

Since October, Tenet stock has plunged 70 percent amid allegations that two doctors at a hospital in Redding performed hundreds of unnecessary heart operations and that doctors at a hospital in San Diego may have paid to recruit patients. Federal officials have raided both hospitals, but no charges have been filed.

------

On the Net:

Tenet is at http://www.tenethealth.com