Tenet Settles Heart Surgery Lawsuits

Tenet Healthcare today said it will pay $395 million to settle hundreds of patient lawsuits over allegedly unnecessary heart surgeries performed at a former company hospital in Redding, Calif.

The tentative agreement would resolve a major legal and financial problem for the Santa Barbara-based company, which has lost money for the past two years amid a series of lawsuits and government investigations.

Under the agreement, Tenet will pay $395 million into a fund to pay the 750 people who filed civil lawsuits related to allegedly unnecessary heart procedures performed at the Redding Medical Center, which the company has sold. The agreement has been approved by attorneys for both sides but must still be ratified by "substantially all" of the plaintiffs and reviewed by a California court, the company said.

"We believe this settlement is the fair and honorable way to conclude this very sad chapter," said Trevor Fetter, president and chief executive officer, in a statement. "It would likely have taken multiple trials and many years to assess liability in these cases."

Attorneys for the plaintiffs issued a joint statement describing the tentative settlement as one that provides "measure of justice and closure" for patients and their families.

"All involved in this tragedy can move forward and begin the healing process," the attorneys said. "This has been a long and difficult road for our clients."

The settlement with Tenet does not cover lawsuits filed against individual physicians who practiced at the Redding facility.

Tenet itself still faces numerous other lawsuits and government investigations on a variety of matters. In San Diego, the company is on trial on charges that executives at its Alvarado Hospital Medical Center made $15 million in illegal bribes to 99 doctors to steer patients to the struggling San Diego facility.

Authorities are looking into possible doctor kickbacks at Tenet hospitals in other cities, cardiac procedures at three Los Angeles hospitals and Tenet's method of billing Medicare for the sickest patients.

Last week, the company warned that fourth-quarter charges could surpass $1 billion, resulting in a greater loss than in the previous three months, and that it would be lucky to break even in 2005.

The company employs 98,000 people and operates 85 hospitals. In an effort to restore profitability, Tenet has divested 11 hospitals this year and has deals pending to drop another 11 from its roster. The company still hopes to find buyers for five more hospitals, all in Southern California, by the end of the year.

Times Staff Writer Ronald White and Lisa Girion contributed to this story.