Tenet Loses Bid to Dismiss Indictment

A U.S. judge Monday denied a request by Tenet Healthcare Corp. to dismiss an indictment of a company unit for allegedly paying kickbacks to doctors in exchange for referrals.

Tenet, the second-largest U.S. hospital chain, had argued that several of the government’s key witnesses had lied during grand jury testimony. But U.S. District Judge M. James Lorenz in San Diego said there was “no undisputed evidence of perjury” and Tenet was “impermissibly attacking the sufficiency of evidence before the grand jury.”

Lorenz’s ruling allows the case against Tenet’s Alvarado Hospital Medical Center and two former hospital administrators to proceed to jury trial today. If found guilty, 311-bed Alvarado could be excluded from Medicare and other government healthcare programs, and the two hospital officials could go to jail.

“The fair and appropriate thing to do is to return to the grand jury,” David Schindler, a lawyer for Santa Barbara-based Tenet, said during Monday’s hearing.

Last week, Lorenz denied Tenet’s motion for a hearing into possible false statements by at least six witnesses. Tenet said the witnesses, including a group of doctors, had lied about agreements with a hospital administrator and the government.

In the underlying case, prosecutors claim Barry Weinbaum, former chief executive of Alvarado Hospital, gave $10 million in relocation agreements to about 100 physicians. The agreements were really bribes for referring Medicare patients to the hospital, prosecutors claim.

Tenet shares fell 11 cents to $10.30 on the New York Stock Exchange. They have fallen more than 35% this year.