Tenet Fined $10.3 Million in Settlement

Tenet Healthcare Corp., a Santa Barbara-based hospital operator, has agreed to pay $10.3 million to settle a lawsuit accusing it of contributing to the death of a woman by hiring a doctor with a known drug problem.

As part of the settlement reached Tuesday with the family of Margo Glickman Johnson, the hospital company also agreed to begin testing all the physicians at South Park Hospital and Medical Center in Lubbock, Texas, for drug use.

As another condition of the unusual public settlement, Tenet agreed to push Texas legislators to change laws that make it difficult to sue hospitals for granting privileges to doctors who later commit malpractice, and laws that make deliberations by physician peer-review panels secret.

A Tenet spokesman had no immediate comment on the settlement, which was approved by a Texas state court judge Wednesday.

Shares in Tenet Healthcare fell 44 cents to close at $29 on the New York Stock Exchange.

According to the settlement, Johnson died on July 4, 1995, after anesthesiologist Jack Dunn III punctured a major blood vessel while trying to administer an injection of painkillers into the 20-year-old patient before the birth of her first child.

The settlement said South Park granted privileges to Dunn even though three of his references, including the director of the hospital’s anesthesia service, “were aware of Dr. Dunn’s possible impairment and did not tell the hospital administration.”

Dunn’s attorney wasn’t immediately available to comment.

Under the settlement, Tenet agreed to tighten its policies for granting privileges to physicians and said it would press the Texas legislature to reverse a recent court ruling that forces plaintiffs to prove a hospital acted “with malice” in granting those privileges to a negligent physician.

The company also has agreed to press for changes in the rules that keep doctors’ employment records and the deliberations of disciplinary panels secret.

Tenet faces dozens of other lawsuits. The attorney general in the Canadian province of Ontario recently targeted Tenet’s predecessor company, National Medical Enterprises, in a lawsuit accusing it of wooing Canadian psychiatric patients to its U.S. hospitals, over-treating them and submitting inflated bills to the Ontario government.

National Medical paid more than $360 million in fines and pleaded guilty to federal criminal charges in 1994 stemming from abuses at its psychiatric hospital division.

Tenet still faces dozens of lawsuits filed by former patients of National Medical’s psychiatric hospitals in Texas and Washington, D.C.