Another Probe Touches Troubled Tenet

Tenet investors, by now accustomed to scandals, shrugged off news of the indictment. In early trading, the company's shares actually tacked on a few cents to hit $16.03.

Jeffries analyst Frank Morgan shared the general market's lack of alarm.

"The company has much larger issues to deal with," said Morgan, who rates the stock a hold and doesn't own any shares himself. "We view this as more of a hospital-specific issue than a systemic problem."

Bigger Problems

Morgan pointed to Tenet's loss of Medicare "outliers" -- generous payments for high-risk procedures -- along with its rising hospital costs, its increasingly unionized workforce and its shareholder litigation as much bigger concerns right now. He went on to describe the Alvarado investigation as "totally different" from those dogging Tenet hospitals in places such as Palm Beach and Redding, Calif.

In the last two cases, Tenet stands accused of providing inadequate -- and even unnecessary -- medical treatment to hundreds of unhappy patients. Jim Moriarty, a Houston attorney representing dozens of Redding patients and their survivors, dismisses any notion that Tenet's problems are isolated instead of systemwide. He says the company never truly reformed itself after being slapped down roughly a decade ago for locking up juvenile patients for psychiatric treatment they didn't really need. And he went on to insist that Tenet's link to scandalized doctors is no accident.

"Good doctors don't generate as much revenue as bad doctors," said Moriarty, who landed a huge settlement for Tenet psychiatric patients in the 1990s and expects even bigger payouts -- surpassing $1 billion -- for patients at Redding. And "Tenet sees patients as billing opportunities."

But in many cases, Moriarty said, Tenet's hospital physicians "left a trail of bodies behind them."

Trail of Tears

At Tenet's Western Medical Center in Santa Ana -- operator of the biggest head trauma center in Orange County -- top neurosurgeon Israel Chambi faces multiple complaints for allegedly performing botched or unnecessary brain surgeries. Chambi is an extremely busy surgeon in one of the hospital's most lucrative divisions.