U.S. Probe at a Tenet Hospital Expands

In a widening of the probe of whether doctors at Tenet Healthcare Corp.’s hospital in San Diego received illegal kickbacks, federal prosecutors Tuesday subpoenaed physician- recruitment records at all of its 114 hospitals and sought detailed information about seven of its Southern California hospitals, Tenet said.

In addition, the Santa Barbara-based company said it expected a grand jury to return an indictment this week against its Alvarado Hospital Medical Center in San Diego, which has been under investigation for the last year, and possibly against the company as well.

Last month, Alvarado’s chief executive was indicted on eight counts of violating anti-kickback laws for allegedly authorizing illegal payments to doctors to win more referrals of Medicare patients.

The subpoenas from the U.S. attorney’s office in Los Angeles seek physician-relocation agreements since 1995 at seven Southern California hospitals, the company said.

Those hospitals are Centinela Hospital Medical Center in Inglewood, Daniel Freeman Memorial Hospital in Inglewood, Daniel Freeman Memorial Hospital in Marina del Rey, John F. Kennedy Memorial Hospital in Indio, Brotman Medical Center in Culver City, Encino-Tarzana Regional Medical Center in Tarzana and Century City Hospital.

Relocation agreements help hospitals recruit doctors and usually involve reimbursements for moving costs and salary guarantees on promises that the physicians will stay at a hospital for a certain amount of time. About 1,000 doctors who have admitting privileges at Tenet’s 114 hospitals nationwide have relocation agreements, based on company estimates.

“We believe we have a solid relocation policy that is entirely appropriate under the law,” said Steven Campanini, a Tenet spokesman. “Physician recruitment and relocation is an accepted and common hospital industry practice.”

Tenet executives said they didn’t know why investigators singled out seven hospitals for detailed information. Some of those hospitals were bought by Tenet in recent years and have beefed up specialty departments such as cardiology.

Thom Mrozek, spokesman for the U.S. attorney’s office in Los Angeles, said he couldn’t comment on the situation.

Tenet, the nation’s second-largest hospital chain, has been beset by investigations and lawsuits since last fall, when it was revealed that the firm received excessive Medicare reimbursements by sharply increasing its charges at some hospitals. Tenet has 40 hospitals in California.

The company is under investigation by at least three federal agencies. Besides looking into Tenet’s Medicare billings, U.S. officials also are probing whether doctors at a Tenet hospital in Redding, Calif., performed unnecessary heart surgeries.

Since the investigations started in October, the company’s stock has lost about two-thirds of its value.

“It’s not only a widening of the investigation from San Diego to Los Angeles, but across the whole company,” said Sheryl Skolnick, an analyst with Fulcrum Global Partners. “This is no longer fun and games here. This is serious stuff.”

In December, federal authorities armed with warrants raided Alvarado, looking for various records.

In June, a federal grand jury indicted its chief executive, Barry Weinbaum, alleging he authorized Alvarado to pay more than $10 million in relocation packages to doctors who joined medical groups in Alvarado’s service area.

Weinbaum has denied the accusations.

The latest subpoena news was announced after the stock market closed. Tenet stock closed Tuesday at $12.45, up 65 cents on the New York Stock Exchange.

“When you go through the litany of things this company is facing, you wonder how it will manage through all this,” said Skolnick, the Wall Street analyst.