Life Science Compliance Update

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March 08, 2017

Former Tenet Healthcare Executive Charged

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John Holland, former senior executive of Tenet Healthcare Corporation, was recently indicted for his alleged role in a $400 million scheme to defraud. The indictment alleges that the scheme to defraud victimized not only the U.S. government, but also the Georgia and South Carolina Medicaid programs, and prospective patients of Tenet hospitals.

The indictment was filed on January 24, 2017, in the Southern District of Florida, and charges Holland with one count of mail fraud, one count of health care fraud, and two counts of major fraud against the United States.

Holland previously served as a senior vice president of operations for Tenet Healthcare Corporation’s Southern States Region, and as chief executive officer of North Fulton Medical Center, Inc., in Roswell, Georgia. The indictment alleges that from roughly 2000 through 2013, Holland engaged in a scheme to defraud the United States (as well as Georgia and South Carolina Medicaid programs), by causing the payment of bribes and kickbacks in return for the referral of patients to North Fulton Medical Center, Inc., and other Tenet hospitals in the Southern States Region, including Atlanta Medical Center, Inc., Spalding Regional Medical Center, Inc., and Hilton Head Hospital.

From roughly 2007 through 2013, Tenet maintained and operated an affiliated billing center in Boca Raton, Florida, that assisted in processing for payment Medicaid billings for the aforementioned hospitals. Holland allegedly took affirmative steps to conceal the scheme, including circumventing internal accounting controls and falsifying Tenet’s books, records, and reports. These kickbacks and bribes helped Tenet bill the Georgia and South Carolina Medicaid programs over $400 million, and Tenet obtained more than $149 million in Medicaid and Medicare funds, based on the resulting patient referrals.

According to the allegations, Holland, among other things, made false and fraudulent statements to the Department of Health and Human Services Office of Inspector General (HHS-OIG) in connection with Tenet’s 2006 Corporate Integrity Agreement (the CIA), in which he falsely certified to HHS-OIG that Tenet was in compliance with the terms of participation in the Medicare and Medicaid Programs and the terms of the CIA, when in fact he knew that Tenet was paying for illegal patient referrals. Holland’s certifications were included as part of Tenet’s yearly annual reports that were mailed to the HHS-OIG monitor located in Miami Lakes, Florida. Throughout the duration of the CIA from 2007 through 2011, Tenet received over $10 billion in payments from federal health care programs – monies that Tenet would not have received had the company been excluded from participation in federal health care programs, the indictment alleges.  

On Oct. 19, 2016, North Fulton Medical Center, Inc. and Atlanta Medical Center, Inc. both pled guilty to conspiring to defraud the United States and to violating the Anti-Kickback Statute (AKS). Tenet subsidiary Tenet HealthSystem Medical, Inc. (and its subsidiaries (THSM)) also entered into a non-prosecution agreement (NPA) with the government at that time. Under the terms of the NPA, THSM and Tenet will avoid prosecution if they, among other requirements, cooperate with the government’s ongoing investigation and enhance their compliance and ethics program and internal controls. 

Tenet also agreed to retain an independent compliance monitor to address and reduce the risk of any recurrence of violations of the AKS by any entity owned in whole, or in part, by Tenet. Tenet and its subsidiaries also agreed to pay over $513 million to resolve the criminal charges and civil claims arising from the matter. Holland is the first executive from Tenet to face the charges individually.

“These charges underscore our continued commitment to holding both individuals and corporations accountable for their fraudulent conduct,” said Acting Assistant Attorney General Blanco.  “We will follow the evidence where it takes us, including to the corporate executive ranks.”

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