Tenet Changes Counsel as Senate Closes In

The heavy workload for Tenet Healthcare's (THC Quote) top lawyer will soon get a whole lot lighter.

Lead counsel Christi Sulzbach -- accused of steering the company into legal and regulatory minefields -- will end her 20-year career at Tenet in November. News of Sulzbach's resignation came less than 24 hours after the U.S. Senate, one of several powerful bodies investigating the company, challenged Tenet's pledge to reform itself.

In a letter issued late Thursday to Tenet's nonexecutive chairman, Senate Finance Committee leader Charles Grassley (R., Iowa) blasted the company after it failed to deliver two sets of documents by a deadline that passed on Wednesday. When Grassley initiated the Tenet probe early this month, he ordered the company to supply an independent study of heart procedures conducted at Tenet's hospital in Redding, Calif., as well as business contracts with new heart doctors at the facility, before moving on to more voluminous requests next month.

"As Tenet's new chairman, I expect that you have confidence in [CEO Trevor] Fetter's commitment that Tenet will cooperate with the Committee and that Tenet will comply with future deadlines," Grassley wrote to Edward Kangas. "I am interested to learn, however, whether you share my concerns about the appearance of conflict and lack of a true change in corporate culture at Tenet."

Tip of the Iceberg?

Grassley pointed out that a majority of Tenet board members are still holdovers from the regime of former CEO Jeffrey Barbakow, who profited handsomely before Tenet's stock collapsed on allegations that the company's business model relied on gaming Medicare for risky -- and sometimes unnecessary -- procedures. Citing coverage by TheStreet.com, he went on to question how Tenet directors with financial ties to the company could be labeled independent. In addition, he outlined Fetter's deep ties to Barbakow and Tenet itself as evidence that the newly crowned CEO is no outsider. Finally, he took aim at a "failed" Tenet compliance program that's being led by a longtime Sulzbach sidekick in the wake of Sulzbach's departure.