Tenet in Huge Medicare Settlement

Tenet(THC Quote) took a major step to putting a three-year-old investigation into its Medicare practices behind it Thursday, agreeing to a $725 million settlement of charges that it exploited provisions of the government reimbursement program by overcharging for its sickest patients.

The agreement concludes the Justice Department's investigation into Tenet, the hospital operator whose shares tanked in 2002 when allegations of malfeasance surfaced on several fronts, including so-called Medicare "outlier" fraud. Tenet's stock has hovered in the $10-$15 range for three and a half years after trading above $60 before the scandal broke.

Simultaneous with the settlement, Tenet announced a plan Thursday to sell 11 underperforming hospitals and boost capital spending at its 57 remaining facilities. The hospitals earmarked for divestiture posted revenue of $203 million and a loss before interest, taxes, depreciation and amortization of $3 million in the first quarter of 2006. ...