Tenet's Day in Court
The old saying "no news is good news" seems particularly apt at scandal-plagued Tenet (THC) these days.
By now, California jurors have gone more than a week without reaching a decision in a high-stakes criminal case about the company's financial contracts with physicians. They are trying to decide whether Tenet-owned Alvarado Hospital Medical Center and the facility's former CEO violated anti-kickback laws by rewarding doctors for patient referrals. A previous jury, considering the same case, could not agree on a verdict.
With the company's battered stock surging 10% last week, investors have clearly started betting on a positive outcome.
"Each passing day with no verdict could seem like a positive and appear vaguely reminiscent of the first iteration of this trial," says Raymond James analyst John Ransom, who has an underperform rating on the company's stock. And "in our view, an acquittal will likely extend some of the stock's current rally, as it would not only serve as a psychological victory for Tenet but also take the company one step closer to overcoming its litigation woes and achieving a much-awaited global settlement with the government."Tenet has spent the past three years trying to resolve a slew of government probes but has been hampered by the criminal charges filed against Alvarado in San Diego. Tenet has defended its physician relationships as appropriate and has pointed to the previous trial -- which ended with a hung jury after four months of testimony -- as evidence that the government has no case. The current trial has now stretched on for nearly twice as long as the original one did. Still, some experts believe that the jury will find Tenet's hospital guilty of at least some of the 18 counts it faces in the end. Notably, they point out, U.S. Attorney Carol Lam has stepped forward to handle this particular trial herself. Lam recently made headlines for bringing down former California Congressman Randall "Duke" Cunningham on bribery and tax evasion charges. She has enjoyed success in the health care arena as well.
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