Tenet's

(THC) - Get Report

former CEO is getting a taste of his own medicine.

Jeffrey Barbakow -- who cashed in $111 million worth of Tenet options before the stock collapsed in 2002 -- is now complaining that he feels he was misled about the health of another company.

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According to the

Los Angeles Times

, Barbakow has filed a lawsuit seeking unspecified damages to help cover "tens of millions of dollars" worth of losses he suffered as

WorldCom

(now

MCI

) spiraled into bankruptcy two years ago. Barbakow claims he would have sold his WorldCom stock if he hadn't been tricked into believing that the company was "vibrant" and "financially secure," the newspaper reported. He targets company outsiders -- investment banking firm Citigroup Global Markets, former Citigroup analyst Jack Grubman and former WorldCom auditor Arthur Andersen -- for allegedly abetting "massive financial and accounting frauds," the newspaper added.

The big players surrounding the demise of WorldCom are certainly no strangers to criticism. Founder Bernie Ebbers has pleaded innocent to federal fraud charges, and Citi and Grubman have been named as defendants in numerous class-action suits. Andersen, for its part, told the

Times

that Barbakow "should direct his fire toward the WorldCom board and management" instead.

But what makes Barbakow's claim ironic is his standing as the leading target of Tenet shareholder invective. The Tenet Shareholder Committee, loudly critical of the company for years, this spring even ran a newspaper ad demanding that Barbakow return huge sums of money -- including his stock option profits -- to the struggling company.

"Mr. Barbakow, give that money back!" declares the ad, which ran in Barbakow's hometown newspaper in the resort community of Santa Barbara, Calif. "Our company needs this money now. ... Shareholders lost $18.7 billion in value. Is this fair?"

Steve Morrissey, Barbakow's attorney, declined to comment on either Barbakow's lawsuit or the Tenet Shareholder Committee's complaints when contacted by

TheStreet.com

on Tuesday.

Barbakow cashed in a huge slug of Tenet stock just two weeks after touting the company's strengths in January 2002. In an appearance on

CNBC's

"Squawk Box," Barbakow celebrated Tenet's quarterly performance as "sensational" and portrayed the company's growth strategy as a sustainable one that would deliver strong results for years to come.

"We're in a sensational period right now in terms of our operations," Barbakow gushed. "Everything is going really well for us. And it's a real exciting, fun time."

But the fun didn't last. Tenet found itself accused of bilking Medicare -- and even performing unnecessary surgeries -- before the year came to an end.

As a result, Barbakow's claims to

CNBC

ring hollow to some ears. Barbakow portrayed Tenet's Medicare business as safe even though the company was quietly -- and aggressively -- exploiting a Medicare loophole to achieve much of its spectacular profit growth. He claimed the company was "driving customers to our hospitals," particularly for lucrative business like cardiology, when indeed some patients found themselves lured in for dangerous heart procedures that may have never been necessary. He said the company had found a way to offer patients "an experience in our facility that's different from all other facilities."

Barbakow also insisted that Tenet "very seldom discontinues services," even though it has done just that and closed down some hospitals entirely. He pointed to Tenet's turnaround of a bankrupt Philadelphia hospital chain -- including a landmark hospital it has been fighting to shut -- as proof that the company was some kind of savior. The same chain is now weighing on the company's results.

"What we've done in that community is staggering," Barbakow declared at the time. "The Oprah show ... had one of our patients who recently received the artificial heart on the show. And it brought tears to my eyes."

"Squawk Box" anchor Bill Griffeth sounded almost apologetic -- saying, "I'm not criticizing" -- when asking Barbakow questions about Tenet's business strategies. One quarter later, among the last when Tenet's results would go unchallenged, an analyst also stopped short of pressing the company.

Frank Morgan of Jeffries asked whether "prior-year settlements" had affected Tenet's revenue. Negative settlements can occur when Medicare determines that it has been overbilled and demands repayment. Tenet executives, long-winded through much of that April 2002 conference call, suddenly had little to say.

"Nothing unusual there, Frank," one said.

"I think he hung up," said another.

"Oh. Well, hopefully he heard that," one said. "No. The answer's nothing."

The company took one more question and then ended the call. But UBS analyst Kenneth Weakley exposed Tenet's aggressive Medicare billing just six months later. And the tough questions kept on coming after that.

By January 2003, the Tenet Shareholder Committee had asked the

Securities and Exchange Commission

to step up its investigation of the company and its leaders for allegedly misleading investors. Specifically, the group complained that Tenet had failed to disclose its unusual dependence on special Medicare "outlier" payments and that its audit committee -- also silent -- wasn't nearly as independent as the company claimed.

"Medicare outlier payments comprised 45% of Tenet's total earnings in fiscal 2001 and 41% in fiscal 2002," the committee wrote. "Yet nowhere in Tenet's public disclosures for those periods is the significance of this revenue stream even mentioned."

Instead, the committee said, Tenet simply reassured investors that proposed changes in outlier rules would not significantly impact the company. By addressing this issue at all, the committee claims, Tenet had to know about the outlier revenue that supposedly took some company leaders -- including Barbakow -- by surprise.

"It is difficult to conceive of a way in which Tenet could account for changes in the outlier payment structure or assess its impact on future results of operations without first knowing what its outlier payment revenues actually were," the committee wrote. Barbakow's excuse, "the Wall Street equivalent of 'the dog ate my homework,' lacks credibility not only because of the huge growth in earnings fueled by Tenet's outsized outlier payments (which any CEO would be reckless in failing to understand), but also because of the company's own disclosures that it was actively monitoring outlier payments to determine how changes in the Medicare outlier program would impact future results."

The SEC has since launched a formal investigation of Tenet's outlier payments. In the meantime, the company -- once a cash cow -- has seen its operating profits shrink along with the old outlier loophole. It expects to burn through cash this year, and possibly next, as it sheds hospitals and attempts to recover in a particularly tough industry environment.

Tenet's stock, which traded for $65 when Barbakow made his big sale, inched up 12 cents to $12.82 on Tuesday. Barbakow left the company in disgrace -- with a seven-figure severance package -- just over one year ago.