Tenet Healthcare Lawsuit shows Ramp-Up in Aggressive Fraud Prosecution

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The DOJ has taken a strong stance on aggressively pursuing healthcare executives who may have been involved in fraud cases to hold them personally responsible.

Tenet Healthcare, based in Dallas, Texas agreed to pay nearly $514 million in October of 2016 to resolve allegations that the company paid kickbacks in exchange for patient referrals. While Tenet settled the suit, the federal government attached a name to the case last week when a former Tenet executive was charged for his alleged involvement in the kickbacks scheme.

In an indictment filed in late January, John Holland, previously senior vice president of operations for Tenet’s Southern States Region and as CEO of North Fulton Medical Center in Roswell, Ga., is charged with one count of healthcare fraud and two counts of major fraud against the United States.

Per the Department of Justice, Mr. Holland and the other co-conspirators bypassed Tenet’s internal accounting controls to pay illegal kickbacks and bribes to a clinic that referred undocumented pregnant patients to Tenet hospitals for Medicaid-covered deliveries. Federal prosecutors allege that the scheme helped Tenet bill the Georgia and South Carolina Medicaid programs for over $400 million.

The case against Mr. Holland, who has pleaded not guilty to the charges, highlights the government’s interest in holding individuals, not just the organizations they work for, responsible for fraud.

In the past, healthcare companies were only expected to provide information about the underlying facts of the situation in a fraud investigation. But these investigations have become more complicated, as the DOJ has taken a strong stance on aggressively pursuing healthcare executives who may have been involved in fraud cases to hold them personally responsible.

In a memo issued to federal prosecutors in September 2015, the DOJ provided guidance on steps it is taking to strengthen its pursuit of individual corporate wrongdoing. The repercussions of the memo — which has been dubbed the “Yates memo” after former Deputy Attorney General Sally Yates — are significant. One key change is that to be eligible for any cooperation credit, companies must provide the names of individuals involved in the fraud, no matter where they sit within the company.

Although it has been more than a year since the Yates memo was distributed, Linda Baumann, a partner with Arent Fox, told Bloomberg BNA there has been a recent increase in the number of healthcare fraud prosecutions against individuals. Ms. Baumann attributed the pause between the Yates memo and the ramp-up in individual fraud prosecutions to the time it takes to develop cases against those involved in healthcare fraud. She also said the recent uptick in fraud prosecutions may be due to the federal government’s desire to finish investigations before the administration changed.

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