To be fair, Mileikowsy is embroiled in a legal
battle with Tenet. Still, in July of 2003, the feds
began investigating physician contracts at Century
City and six other Tenet-owned hospitals in Southern California.
Four months later -- even before laying out plans to sell a number
of California hospitals -- Tenet decided against renewing its
lease at Century City.
"The Department of Justice clearly knows about the
medical directorships at Century City," Mileikowsky
says. "They have known for many years."
Power Struggle
Very soon, Tenet will test the government's powers.
In a criminal trial set to begin on Wednesday, the
company's Alvarado Hospital Medical Center will seek to show
that it offered lucrative contracts to physicians in
order to relieve doctor shortages in San Diego. The
feds are trying to prove that Alvarado inked the deals to reward
established doctors with high referral rates.
If the government succeeds, Alvarado could face
both monetary penalties and exclusion from the
Medicare program. In addition, two hospital executives
charged with arranging the contracts could wind up in
jail.
But Tenet expects to win.
"Tenet has not attempted to settle this case,"
says company spokesman Steven Campanini, "because we
believe strongly that these are unjustified
allegations, and we intend to vigorously defend
ourselves."
So far, all defendants involved have proclaimed
their innocence. But the government has nevertheless
identified a number of contracts that it views as
questionable. In court documents, it describes a
$435,000 income guarantee for a brand-new
ophthalmologist -- joining his brother's existing
practice -- as just one example.
Alvarado CEO Barry Weinbaum "signed this
relocation agreement despite data that revealed a
surplus of ophthalmologists in the Alvarado service
area," the court filing states. "Weinbaum also was
responsible for obtaining corporate approval of this
huge relocation agreement from Tenet's corporate
offices."
The government claims that Weinbaum arranged such
deals to satisfy existing practices that pocketed most
of the funds.
The government's Tenet probe has ranged on for a few years, as
noted in previous stories in TheStreet.com, and is especially complex -- involving
far more than physician contracts. The federal
government is also seeking to discover whether Tenet
used an aggressive pricing strategy to bilk Medicare.
In addition, the government wonders if the company
charged Medicare for procedures that were unnecessary
in the first place.
Melissa Davis
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