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Another Probe Touches Troubled Tenet

An executive at a Tenet hospital in California is indicted.

Bruised

Tenet

(THC) - Get Tenet Healthcare Corporation Report

has another black eye.

The embattled hospital chain announced Friday that the CEO at one of its hospitals has been indicted for allegedly violating physician recruitment rules. Tenet also said the hospital itself -- Alvarado Hospital Medical Center in San Diego County -- could face similar charges.

Offering its customary response, Tenet stood behind the hospital executive and vigorously denied any wrongdoing.

"We believe in the personal and professional integrity of

Alvarado CEO Barry Weinbaum, and we expect him and the hospital to be fully vindicated from these unfortunate allegations," said Trevor Fetter, Tenet's president and acting CEO.

Weingaum was arraigned late Thursday as part of a federal investigation launched six months ago. The Alvarado chief, described by Tenet as "ethical and admired," stands accused of orchestrating improper payments to physicians who relocated to the area four years ago. Last December, federal authorities raided the Alvarado facility in search of evidence that the hospital had engaged in improper physician recruitment, relocation and consulting practices. Tenet blamed the resulting indictment, issued against Weinbaum by the U.S. attorney's office in San Diego, on a former Tenet physician who's trying to negotiate his way out of harsh punishment for his own unrelated crimes.

Tenet said the former physician, a California internist named Paul Ver Hoeve, was indicted on 64 felony Medicare charges -- carrying maximum prison sentences of five years apiece -- three years ago and is now working with authorities to hammer out a deal.

"To avoid a jail sentence, Ver Hoeve agreed in 2001 to provide information in return for a sentence of probation, community service and restitution of $50,000," Tenet stated. "It's also important to keep in mind that these allegations apparently relate to claims by one disgraced physician and are no reflection on the hundreds of dedicated and ethical doctors who practice at Alvarado."

Tenet investors, by now accustomed to scandals, shrugged off news of the indictment. In early trading, the company's shares actually tacked on a few cents to hit $16.03.

Jeffries analyst Frank Morgan shared the general market's lack of alarm.

"The company has much larger issues to deal with," said Morgan, who rates the stock a hold and doesn't own any shares himself. "We view this as more of a hospital-specific issue than a systemic problem."

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Bigger Problems

Morgan pointed to Tenet's loss of Medicare "outliers" -- generous payments for high-risk procedures -- along with its rising hospital costs, its increasingly unionized workforce and its shareholder litigation as much bigger concerns right now. He went on to describe the Alvarado investigation as "totally different" from those dogging Tenet hospitals in places such as Palm Beach and Redding, Calif.

In the last two cases, Tenet stands accused of providing inadequate -- and even unnecessary -- medical treatment to hundreds of unhappy patients. Jim Moriarty, a Houston attorney representing dozens of Redding patients and their survivors, dismisses any notion that Tenet's problems are isolated instead of systemwide. He says the company never truly reformed itself after being slapped down roughly a decade ago for locking up juvenile patients for psychiatric treatment they didn't really need. And he went on to insist that Tenet's link to scandalized doctors is no accident.

"Good doctors don't generate as much revenue as bad doctors," said Moriarty, who landed a huge settlement for Tenet psychiatric patients in the 1990s and expects even bigger payouts -- surpassing $1 billion -- for patients at Redding. And "Tenet sees patients as billing opportunities."

But in many cases, Moriarty said, Tenet's hospital physicians "left a trail of bodies behind them."

Trail of Tears

At Tenet's Western Medical Center in Santa Ana -- operator of the biggest head trauma center in Orange County -- top neurosurgeon Israel Chambi faces multiple complaints for allegedly performing botched or unnecessary brain surgeries. Chambi is an extremely busy surgeon in one of the hospital's most lucrative divisions.

"When he is out of town, the hospital census drops significantly," William Loudon, head of the hospital's pediatric neurosurgery unit, told the

Orange County Register

last month.

But Chambi's surgeries often fail, the publication reported. The paper stated that Chambi is sued 10 times more often than the average Orange County neurosurgeon, and that his unit holds "so many comatose patients ... that the nurses call it 'Dr. Chambi's Garden.'"

In an interview with the newspaper, Chambi "laughed softly" at the nickname and claimed that most of the patients were already comatose when he had tried to help them.

For now, Tenet's biggest scandals remain elsewhere. The company faces more than 100 lawsuits in Palm Beach, where patients suffered severe chest disfiguration -- and even death -- after contracting serious infections blamed on unclean operating rooms. And in Redding, two of the hospital's most productive heart surgeons have essentially gone out of business amid allegations of performing unnecessary, and sometimes fatal, heart operations.

On Wednesday, one of those surgeons -- Chae Hyun Moon -- was accused of corrupt acts, fraudulent claims, gross negligence and incompetence by his own state medical board. Moon and another former Redding cardiologist, Fidel Realyvasquez, are currently under investigation by federal authorities for their past practices at Redding. Meanwhile, Redding's cardiac surgery center -- once a huge profit center -- has shut down indefinitely after a steep, hospitalwide drop in patient admissions.

Tenet has consistently denied any wrongdoing while describing patient care as its top priority. But the California Nurses Association, perhaps Tenet's most vocal critic, simply scoffs at such claims. The union expressed no surprise about the new indictment at Alvarado, where it is attempting to organize registered nurses.

"Virtually every arm of the government -- with the possible exception of the Department of Fish and Game -- is investigating Tenet," said CNA spokesman Chuck Idelson. "It's pretty apparent that Tenet is in a world of trouble."