Tenet's Barbakow Turns Tables in WorldCom Loss

"It is difficult to conceive of a way in which Tenet could account for changes in the outlier payment structure or assess its impact on future results of operations without first knowing what its outlier payment revenues actually were," the committee wrote. Barbakow's excuse, "the Wall Street equivalent of 'the dog ate my homework,' lacks credibility not only because of the huge growth in earnings fueled by Tenet's outsized outlier payments (which any CEO would be reckless in failing to understand), but also because of the company's own disclosures that it was actively monitoring outlier payments to determine how changes in the Medicare outlier program would impact future results."

The SEC has since launched a formal investigation of Tenet's outlier payments. In the meantime, the company -- once a cash cow -- has seen its operating profits shrink along with the old outlier loophole. It expects to burn through cash this year, and possibly next, as it sheds hospitals and attempts to recover in a particularly tough industry environment.

Tenet's stock, which traded for $65 when Barbakow made his big sale, inched up 12 cents to $12.82 on Tuesday. Barbakow left the company in disgrace -- with a seven-figure severance package -- just over one year ago.