Last November, just days before its

credibility withered,


(THC) - Get Report

made a promise to the market.

The company vowed to follow up on a federal raid at California's Redding Medical Center with an exhaustive probe of its own. To further reassure investors, the company tapped the respected audit team at Mercer Consultants to help explore possible abuses inside Redding's bustling -- and highly profitable -- cardiac center.

But the week would end with yet another surprise, this one big enough to upstage fears about questionable heart surgeries in the Golden State. Tenet had been collecting huge "outlier" payments by aggressively billing Medicare for heart surgeries and other complicated procedures. Without that padding -- likely to shrivel under the glare of exposure -- Tenet's rapid growth would slow.

The stock lost nearly half its value in a single day. And worries about Redding, while nagging, faded into the background.

Since then, Tenet has remained oddly silent about the high-profile probe it loudly announced to the public nearly six months ago.

"Tenet will not be commenting on the status or outcomes of its internal investigation at Redding," spokesman Steven Campanini said when questioned recently by

. And "it's unlikely we'll be releasing the Mercer review when it is completed."

The company has nevertheless hinted that Redding's problems appear to be overblown.

"We have spent a substantial amount of time in that hospital talking with people and doing all the due diligence you would expect us to be doing," Christi Sulzbach, Tenet's general counsel and chief compliance officer, told analysts this month. "I certainly feel better today than I did in January about the hospital's performance."

But the company's stock price just keeps getting worse. The stock set a new 52-week low of $13.51 last week -- wiping out the old low set during the early days of the Redding scandal -- and continued to languish at $14.56 when the market closed Friday.

Critics view the dive as justified. They insist that Tenet would have rushed to share any good news, particularly from the Mercer probe, that could turn the stock around. Instead, they say, Tenet is scrambling to downplay or even hide serious problems that will come out in the end.

Courtroom Drama

As recently as last week, Tenet was offering soothing reassurance about the situation at its most embattled hospital.

In a conference call with analysts, Sulzbach said that only nine people have filed lawsuits that accuse Redding of performing unnecessary heart surgeries. But she danced around follow-up questions meant to clarify whether bigger problems are brewing.

"With respect to notices of intent to sue, I don't have an exact number for you," Sulzbach said. "I think it would be misleading if I tried to speculate on the numbers."

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As it turns out, a Houston attorney -- who's scored big against Tenet before -- had some of those numbers handy. Jim Moriarty told

shortly after the call that his firm has already gotten expert opinions on 100 Redding cases and is retrieving records for hundreds more. Meanwhile, Moriarty remains in contact with other law firms preparing for hundreds of lawsuits of their own.

"They're facing 1,000 to 1,500 cases already, and the cases are going to keep coming," Moriarty said. "I'm firmly convinced that the total liability for Redding is at least $1 billion -- just for the patients.

"It's not going to be below that."

Tenet blames hungry lawyers -- rather than former patients -- for the coming wave of lawsuits. (See a

related story on challenges facing some individual Tenet hospitals.)

"Much of the Redding litigation is a result of advertising campaigns from plaintiff's lawyers, a typical tactic of the plaintiff's bar when there are high-profile situations," said Campanini, the spokesman.

But sometimes, those lawyers prevail.

Doubling Up

Moriarty's last big battle with Tenet ended in a $100 million settlement for psychiatric patients -- many of them juveniles -- locked up for inpatient care they didn't really need. The company also paid a record-setting $379 million fine to settle fraud charges filed by the federal government in connection with the case.

Moriarty predicts that the Redding lawsuits will be easier to prove and win. Already, Moriarty has heard back from outside experts that roughly 70% of his clients underwent dangerous heart surgeries they clearly didn't need.

Meanwhile, Moriarty says, Redding doctors are trying to cover their tracks. Moriarty claims that heart surgeons there have actually fabricated medical records, then backdated them, to lend support to the dangerous procedures they ordered.

Tenet cast doubt on such assertions, saying that Redding employs a strict document retention program and that heart surgeons -- at least the two under investigation -- lost control of their own records during the government raid. But Moriarty claims that other heart surgeons, who still control their own files, are the ones making changes.

So far, some who could dismiss Moriarty's allegations have skipped the invitation to do so. Legal Photocopy Service, the independent firm collecting records from the doctors, said it is restricted from commenting by confidentiality agreements. Meanwhile, the doctors' office itself failed to return a phone message from

asking whether medical files are being altered.

Still, Moriarty insists that the full truth will come out -- and it won't be pretty.

"The scandal regarding the unnecessary surgeries will make the outlier problem look like a misdemeanor," he said. "Redding's just the tip of the iceberg."

Tenet has denied any wrongdoing. The company claims that patient care has always been a top priority and views the situation at Redding as isolated rather than symptomatic of problems systemwide.