Tenet Settles Suit Over Alleged Overbilling
Tenet Healthcare Corp., the Santa Barbara health-care giant, agreed to pay $850,000 to settle a federal lawsuit that accused 42 hospitals, including many in Southern California, of overbilling government health programs and private insurers.
In a whistle-blowers’ case unsealed Thursday, federal prosecutors alleged the hospitals used a now-defunct Irvine billing service--Comprehensive Auditing Services for Hospitals, or CASH--to submit charges for services that were already paid for or services that weren’t provided.
U.S. District Judge Andrew Hauk in Los Angeles announced the settlement with Tenet on Thursday. Tenet admitted no wrongdoing.
Prosecutors alleged that the hospitals, previously owned by the former OrNda Healthcorp, had engaged in fraudulent billing before Tenet bought OrNda last year. The hospitals include 14 in Southern California that Tenet owns as well as several the company has closed or sold.
Assistant U.S. Atty. Consuelo S. Woodhead noted that while federal health-care fraud cases typically involve Medicare abuses, this case focused on alleged billing abuses involving health coverage for government and military employees.
Woodhead said the case should serve notice to would-be cheats that “you can’t just cut out Medicare and scam the other federal agencies.”
Woodhead refused to comment on whether the government is pursuing a related criminal probe.
Christi Sulzbach, Tenet’s associate general counsel, said Tenet settled the case so it can get on with its business.
“Litigating with the government is not really productive for any business,” Sulzbach said. “They are our principal [customer] in many instances, and if we can resolve things we are more inclined to take that route.”
The government’s charges originated in a 1996 case filed by two whistle-blowers--Viva Light, a nurse who runs her own auditing service, and Michael Vukanovich, a former CASH employee.
They claimed that from 1990 to 1995, employees of the Irvine billing service added improper charges to hospital bills sent to commercial insurers handling benefits for public employees.
CASH allegedly took a cut of as much as 35% of its billings and pressured its employees to pump up the bills, according to the whistle-blowers’ lawyer, Mark Kleiman.
In an interview Thursday, Light, who hires herself out to insurance companies to audit suspicious bills, said Vukanovich approached her one day while she was auditing at a hospital.
“He was worried because he said the company was doing fraudulent billing and he didn’t want to be caught up in it,” Light recalled.
“Mike and I worked together discreetly for many months,” she added. “He stayed at the company, became an inside person to obtain the documentation we needed to prove this was a pattern.”
In the lawsuit, Light claimed that at one point OrNda became suspicious of their activities and refused her access to hospitals she was auditing. Vukanovich also claimed that he warned some hospitals that CASH’s practices were illegal, but they continued to use the service.
Vukanovich couldn’t be reached for comment Thursday.
The whistle-blowers also claimed that CASH disguised itself, acting as if it were part of a hospital’s billing office, using hospital letterhead and signing letters to insurers as if they came from the hospital.
Their suit originally named as defendants the OrNda hospitals, CASH itself, and its owner, Napoleon Carbonell, who lives in Orange County. Brian Hennigan, a lawyer for CASH and Carbonell, said he doesn’t know if the government intends to bring any action against his clients. Hennigan said allegations against his clients had been dismissed without prejudice, which means the government could bring suit against them if it sees fit.
