Tenet, Health Management Accused of Paying Kickbacks

Aug. 1 (Bloomberg) -- Tenet Healthcare Corp., the third-biggest publicly traded U.S. hospital chain, and Health Management Associates Inc. were accused in a lawsuit of paying kickbacks to a Georgia clinic in exchange for referrals.

The hospital chains were sued under the Federal False Claims Act in a whistle-blower case brought by Ralph Williams, a former chief financial officer of Health Management Associates, on behalf of the U.S. and Georgia. The lawsuit, filed in federal court in Athens, Georgia, was ordered unsealed yesterday.

The clinic recruited pregnant, undocumented Hispanic women who would be eligible for Medicaid benefits when they gave birth and referred them to Health Management and Tenet hospitals in exchange for kickbacks, according to the complaint.

The Tenet hospitals said in an e-mailed statement that the agreements were appropriate and provided substantial benefit to women in underserved Hispanic communities.

“The services provided under these agreements included translation, determination of Medicaid eligibility, and other services designed to improve the delivery of obstetric care and increase the likelihood of a safe birth and a healthy baby,” according to the statement.

Tenet, based in Dallas, fell 12 cents, to $44.53 at 3:08 p.m. in New York Stock Exchange composite trading. Health Management rose 2 cents to $13.50.

“The company denies the allegations contained in the complaint, which the federal government declined to intervene in, and intends to vigorously defend itself,” Naples, Florida-based Health Management said in an e-mailed statement.

The case is U.S. v. Health Management Associates Inc., 09-00130, U.S. District Court, Middle District of Georgia (Athens.)

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.