Florida Probes Tenet Hospital

New complaints against Tenet Healthcare (THC Quote) carry a familiar ring.

The Florida Department of Children and Families has cracked down on the psychiatric unit of Florida Medical Center, a Tenet-owned facility in Lauderdale Lakes, for improperly admitting patients -- particularly the elderly -- against their will. In a letter sent to the hospital Monday and obtained by TheStreet.com, the agency officially barred the unit from future involuntary admissions. The department said it was investigating the hospital for Medicare and Medicaid fraud, violation of patient rights and "unacceptable clinical practices."

Neither Tenet nor Florida Medical Center immediately returned telephone calls Tuesday seeking comment. But hospital spokeswoman Sue Baron told the South Florida Sun-Sentinel the hospital is cooperating and plans to seek reinstatement of involuntary psychiatric admissions when the problems are corrected.

Although Tenet has repeatedly pledged to turn itself around, new problems continue to surface at the company and stir doubts among worried investors. The Florida probe is simply the latest facing Tenet as it once again seeks to resolve allegations and rebuild its reputation.

"The Florida developments are clearly a negative for the repositioning/recovery story at THC," wrote Fulcrum analyst Sheryl Skolnick, who has a neutral rating on the stock. "This is more than an embarrassment, in our view."

Roughly a decade ago, Tenet faced similar charges when it operated as National Medical Enterprises. The company paid big settlements for allegedly locking juveniles in its psychiatric hospitals just to bilk their insurance policies. It ultimately wound up shedding its psychiatric division -- then a core unit -- as part of a government deal.

The Tenet Shareholder Committee, a group long critical of company management, expressed a sense of deja vu.

"A government agency reviewing psychiatric admissions at a Tenet facility!" the group declared on its Web site, www.tenetshareholdercommittee.org. "Anyone who knows the scandal-plagued history of Tenet, operating under its earlier name, NME, will find this item a disturbing reminder of the company's dark past."

Shares of Tenet slipped 6 cents Wednesday to $10.40.