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Tenet

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whistleblower is now making noise about the federal government.

Patrick Campbell, a California internist who helped the government's case against Tenet, wants federal prosecutors to justify their recent "record-setting" deal with the company. Campbell believes the government may have accepted far too little when it agreed to let Tenet pay $54 million to settle allegations that its hospital in Redding, Calif., profited handsomely from unnecessary heart surgeries. So he's asking a federal judge, in a hearing that began this week, to review whether the settlement is fair.

Michael Hirst, the U.S. attorney who negotiated the deal, has already defended the settlement as "highly favorable" for the government. He also insists that Campbell -- whose case was dismissed because another whistleblower filed suit first -- has no legal right to challenge the deal. And he even questions Campbell's motives for exposing Tenet in the first place.

But Campbell, who has raised concerns about Redding for years, nevertheless continues to challenge the government.

"If the settlement is as great as the government claims it is, the government should be ready, willing and able to demonstrate to this court and to the taxpaying public why it is so great and get the required court approval," Campbell's recent court filing states. "However, the fact that the government is resorting to unjustified character assassination of the principal source of the evidence set forth in the FBI's search warrant, that enabled the government to seize the records and put an end to the needless human suffering and the resulting fraudulent claims paid by Medicare, serves only to establish a powerful inference that there must be something wrong with the settlement."

The government, which relied on Campbell for evidence against Redding, has since turned against the physician. After Campbell questioned the size of the Redding settlement -- which pushed Tenet's stock immediately higher -- federal authorities described Campbell as a greedy physician who was actually more interested in profiting from a whistleblower lawsuit than protecting the public. They say Campbell never alerted a single state or federal agency about the problems at Redding -- only talking when federal authorities contacted him -- but instead "relentlessly tried to find an attorney to file a

qui tam

complaint on his own behalf so that he could share in any recovery in the case."

But Campbell insists that he tried to expose the problems at Redding before he even knew about whistleblower lawsuits or the rewards that they promise. Moreover, he points to a letter from his former attorney indicating that authorities looked the other way when he did raise questions.

"The Medicare people ... were not really interested unless someone handed them a case fully worked up, both medically and legally," Campbell's attorney wrote in 1999. "The local authorities at first, predictably, reacted virtually the same as Medicare. ... Curiously, a number of my contacts knew of the problems, wished any whistleblower well, but would undoubtedly disappear when the first shot was fired."

War of Words

Still, the government has grown increasingly critical of Campbell. In his own court filings, Hirst essentially portrayed Campbell as a liar and a hypocrite who referred patients to Redding heart surgeons even after he suspected they were up to no good.

"Long after 1995, for reasons only Campbell may know, he continued to refer numerous patients to the same physicians he believed were performing unnecessary procedures," Hirst wrote. "Instead of someone whose conduct 'broke the conspiracy of silence that was allowing the defendants to butcher patients with unnecessary surgeries,' Campbell's failure to speak out allowed the surgeries to continue unabated for years."

To support his claims, Hirst included records showing that Campbell had referred at least five patients to Chae Hyun Moon -- Redding's former cardiology chief -- even after voicing concerns about the doctor.

But Campbell has fired back. The physician insists that he referred three of the five patients to Moon before he grew highly suspicious of the doctor, and because they had obvious heart disease and had already been operated on by Moon in the past.

"There was no way those patients were going to be treated by anyone else," Campbell's attorney, David Rude, told

TheStreet.com

on Tuesday. "And

Campbell was in no position to attack the godfather of the cardiology department" at that point.

Campbell denies referring the other two patients to Moon. He claims Moon regularly treated patients who were never really referred to him. And Campbell suggests that prosecutors have now set out to punish him just because he's challenging the settlement with Redding.

"The government was extremely appreciative of and complimentary of Dr. Campbell's efforts and contributions, and it was not until Dr. Campbell filed his objection to the settlement and this petition for judicial review that the U.S. attorney's office suddenly turned on Dr. Campbell and threatened to destroy his reputation if he persisted in his objections to the settlement," the court filing states. "Now the government has followed through on its threat and has publicly denounced Dr. Campbell as a virtual criminal in an attempt to protect their secret settlement from scrutiny."

Senate Finance Committee Chairman Charles Grassley has already worried aloud that whistleblowers are being mistreated. The Iowa Republican, who 17 years ago retooled the False Claims Act to encourage whistleblowers, hopes to strengthen the act going forward. Indeed, Grassley pointed to a "detailed checkup" of the False Claims Act as his top priority this year.

"I believe it is a simple fact that without the courage of individual whistleblowers to come forward and devote time, effort -- and sometimes their whole livelihood -- to the prosecution of fraud, the United States taxpayers would today be $6 billion poorer," Grassley said in a February address to the National Congress on Health Care Compliance. "Yet despite its obvious successes, the False Claims Act is under attack. ... And it is under attack in the Justice Department itself, where an institutional distaste for whistleblowers and their representatives is corroding the working partnership between the government and the whistleblower Congress envisioned in 1986."

Grassley went on to raise concerns about secret settlements, such as the one recently inked with Redding.

"The stakes in these kind of long-running, nationwide cases worth potentially billions of dollars to the government are simply too high, in my view, to trust any one institution, including the Justice Department," he stated. "Because of the brick walls surrounding the Justice Department's settlement procedures, I will propose that Congress be given an explicit right to review the facts and figures behind any proposed False Claims Act settlement before it is approved and forwarded to the court for closure."

Behind the Math

In the meantime, Campbell is requesting that a federal court at least examine reasons behind the Redding settlement to determine if they're valid. Clearly, Campbell suspects they are not.

For example, Campbell's filing shows, the government attempted to justify the $54 million settlement by showing how it dwarfs the $2.88 million in profits the average Tenet hospital has posted annually over the past six years. But the filing argues that Redding was "by far the most profitable hospital" in the Tenet chain before federal authorities raided it last year.

Indeed, it states, Redding earned 32.5 times more than Tenet's hospital average before government payments for big-ticket procedures -- such as the heart surgeries under scrutiny -- dried up late last year.

"For just the last quarter before the raid

July 1, 2002 -- Sept. 30, 2002, the net income for just that one quarter was $32,975,407," the filing states. "After the raid on Oct. 30, 2002, the net income for the last quarter of 2002 dropped to $10,341,445. The only thing that changed was that the government's raid put an end to the unnecessary cardiac procedures."

Meanwhile, Tenet's stock has plummeted. Tenet shares, which gained 16 cents Wednesday to hit $15.67, fetch less than a third of the price they commanded before the Redding scandal blew up.

But Campbell worries that Tenet itself has gotten off cheap. The physician believes the Redding settlement -- representing just over half of the hospital's 2002 profits -- falls well short of what the government could have actually collected. He is, therefore, asking the court to demand documents showing how the secret deal was reached.

"Since all the evidence available to Dr. Campbell

and the general public strongly suggests inadequacy and prematurity of the settlement," the filing states, "Dr. Campbell is obligated under the False Claims Act to object to the settlement so that the court can conduct a hearing and determine whether or not the settlement is as great as the government claims it is."

Grassley has expressed similar frustration about the secrecy surrounding such deals.

"I can say that, as a whistleblower advocate and a senator who's focused on compliance, I encounter some of that same resistance myself when I ask for explanations and information regarding False Claims Act cases," he stated in a speech earlier this year.

Since then, Grassley has launched his own -- very public -- investigation of Tenet. But other government agencies continue to operate behind closed doors. Meanwhile, doctors at Redding are trying to shut down access to court documents as well.

Keeping Secrets

In a filing late last month, two heart surgeons -- so far unnamed in criminal probes -- asked a judge to seal all discovery in lawsuits against them so they can receive a fair trial. Both doctors, who practiced with a Redding surgeon suspected of performing numerous unnecessary procedures, expect to face criminal charges.

"Based upon a conversation I had with one of plaintiff's lead counsel, I am informed and believe, and therefore allege, that both of these physicians are the subject of investigation by the grand jury," wrote an attorney for doctors Kent Brusett and Ricardo Moreno-Cabral. "In fact, in that conversation with plaintiff's counsel, he specifically advised me of the investigation and commented that my clients should be seeking criminal counsel for their defense. ... There is a very strong possibility that if Dr.

Fidel Realyvasquez is charged in any of these criminal cases, Dr. Brusett and Dr. Moreno-Cabral will be charged as well with identical crimes."

In the past, Tenet indicated that only Realyvasquez and Moon were to blame for Redding's problems. The company, in fact, hired Mercer Consulting Group to investigate Redding's entire heart program in an attempt to reassure the public. But nearly a full year later, Tenet has yet to share the results of that independent study. Grassley, for one, is still waiting for the report.

Meanwhile, Campbell is doing his best to take the Redding matter public.

"In a case destined to go down in the annals of American history as one of the most egregious malfunctions of our free enterprise system of all time, there simply can be no justification for allowing the government to sidestep the FCA's settlement verification system enacted by Congress," the filing states. "The government's opposition provides no answer to the fundamental questions: Why settle now? Why settle for so little? And why not explain the basis of the settlement to the court?"