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Tenet to Pay $54M to Surgery Settle Probe

Aug 7, 2003 | AP Tenet Healthcare Corp. will pay $54 million to settle allegations that at least two of its doctors subjected patients to unnecessary heart operations and defrauded government insurance programs.

The settlement covers heart procedures performed between 1997 and 2002 at Redding Medical Center in northern California. The money will reimburse Medicare, Medicaid and the military's Tricare program that were billed, U.S. Attorney McGregor Scott said Wednesday.

The $54 million is a record for federal medical fraud settlement involving unnecessary tests, lab reports and surgeries, the Justice Department said.

As part of the settlement, Tenet and Redding Medical Center avoid further civil or criminal charges, but agreed to change its operations. Among the measures will be a new, outside auditor to conduct random checks of Redding's cardiology program and agreeing not to perform unnecessary operations.

Tenet didn't admit wrongdoing in the settlement, and chief executive Trevor Fetter said the company made a strategic business decision to put the matter behind it.

Tenet, the hospital and doctors still face scores of lawsuits filed by former patients.

"Tenet Healthcare and Redding Medical Center have been in a constant state of denial, indicating there was nothing wrong with their heart program," said Robert Simpson, an attorney representing more than 100 former patients. "If you're not wrong, you don't pay."

The company also agreed to cooperate in related civil and criminal probes.

Federal and state authorities launched an investigation last fall into allegations that two doctors at the Redding hospital were operating unnecessarily to boost earnings.

FBI agents raided the offices of Dr. Chae Hyun Moon, who was director of cardiology, and Dr. Fidel Realyvasquez Jr., who was chief of cardiac surgery, after a healthy Catholic priest misdiagnosed in Redding nearly underwent triple-bypass surgery in Las Vegas.

Between July 2001 and June 2002, the two doctors were among the highest paid by Medicare in the state, both charging more than $3.5 million to the program.

The FBI said it was investigating whether they committed health care fraud, made false statements and conspired to commit fraud. They allegedly performed needless catheterizations, angioplasty and open heart surgeries.

Both doctors suspended their practices in February. Moon said he couldn't get malpractice insurance and his license to practice was suspended in June.

Medicare records show 167 patients treated by the physicians in a 3 1/2-year period died, but it was not clear if that number was unusual based on the amount and type of operations performed.

While the settlement prevents further civil or criminal action against the hospital or its parent company, the same does not apply to the doctors. No charges have been filed against Moon or Realyvasquez.

"The doctors are not in any way, shape or form affected by this settlement," Scott said.

The medical center, 180 miles north of Sacramento, was among Tenet's most profitable hospitals, largely because of its extensive cardiac program. After news of the investigation, patient revenue plummeted 33 percent and the hospital said it would have to lay off 150 of its 1,200 workers.

Santa Barbara, Calif.-based Tenet, the nation's second-largest hospital chain, owns and operates 114 hospitals in 16 states.

The settlement was reached between the government, Tenet Healthcare Corp., the medical center and Tenet HealthSystems Hospitals Inc.

Tenet also has been struggling since last October under a federal audit of its Medicare billing practices. The company's stock has plunged along with its revenue as it adopted new guidelines severely restricting supplementary payments, called "outliers," that it would accept as reimbursement for costs normally covered by Medicare.

The troubles led to the resignation in May of longtime chief executive Jeffrey Barbakow.

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