Tenet Agrees to Settle 106 Suits
Tenet Healthcare Corp. said Thursday that it agreed to pay $31 million to settle 106 lawsuits over complications from heart surgeries at a hospital in Palm Beach, Fla.
The lawsuits, filed from 1997 to 2002, alleged that patients “suffered post-surgical infections after having cardiac surgeries” at Palm Beach Gardens Medical Center, Tenet said.
The company, the second-largest U.S. hospital chain, is based in Santa Barbara but will move its headquarters to Dallas next month.
Chief Executive Trevor Fetter is trying to restore confidence in Tenet, which since 2002 has been under investigation by at least three federal agencies for a variety of charges, including raising prices to get more money from Medicare.
Tenet agreed this week to set aside $395 million to settle patient lawsuits claiming doctors at a California hospital performed unnecessary heart surgeries.
“It’s encouraging to see some of the settlement activity we’ve seen this week, but they’ve still got a long way to go with legal issues,” said senior analyst Darren Lehrich at Piper Jaffray & Co. in New York. “This is still a very operationally challenged company.”
Tenet shares rose 3 cents to $10.71 on the New York Stock Exchange. They have fallen 33% this year.
In 2003, Tenet paid $54 million to settle government allegations that two doctors performed unnecessary cardiac operations at the California unit, Redding Medical Center, which has since been sold.
In another case, Tenet, its Alvarado Hospital Medical Center and two former hospital administrators are on trial in San Diego on charges that the unit paid illegal kickbacks to doctors in exchange for Medicare patient referrals. Tenet’s lawyers say the company followed legal guidelines for the doctor agreements.
Fetter, 44, took over in May 2003 when former CEO Jeffrey C. Barbakow resigned. The company said it was cooperating and trying to settle probes by the Justice Department, the Securities and Exchange Commission and the Department of Health and Human Services.
Tenet in January announced plans to sell a quarter of its hospitals this year, trimming the chain to 69, and has been cutting costs to restore profit. Tenet last reported a profit in 2002 and said Dec. 13 that its loss from continuing operations would widen in the fourth quarter from the third because of increased bad debt and charges that might exceed $1 billion.
The company is expected to report a loss of 16 cents a share, according to analysts surveyed by Thomson First Call.
In a separate statement Thursday, Tenet said it completed the sale of two hospitals in St. Louis to Argilla Healthcare Inc. for about $45 million. The transaction brought the total of hospitals sold this year to 13. Tenet has agreements to sell nine others and is in talks to divest five.
