Tenet Healthcare Medicaid Kick-Back Settles for $514M

Mac Matarieh
Associate Editor
Loyola University Chicago School of Law, JD 2018


On October 3, 2016 Tenet Healthcare Corporation (Tenet) announced that they have reached a settlement with the United States Government for $514 million. The settlement stems from a violation of the anti-kickback law by four of Tenet’s hospital subsidiaries. The hospitals allegedly paid kickbacks for the referrals of low-income patients from an operator of prenatal clinics which allegedly referred women to the hospitals, who would then charge Medicaid for the services performed.

In May of 2016, Tenet raised its reserves to $407 million for the potential payouts to resolve the False Claims Act lawsuit after the Georgia attorney general’s office rejected a $238 million settlement offer. Atlanta Medical Center and North Fulton Hospital in Georgia each pled guilty to conspiracy to violate anti-kickback laws and to defraud the United States which led to Tenet’s settlement.

How did the investigation begin?

In February of 2014 The United States Department of Justice released a statement announcing that the government intervened in a False Claims Act lawsuit against Tenet and four of its hospitals. The U.S. Attorney for the Middle District of Georgia, Michael J. Moore, stated, “In a time when too many people were struggling to get health care for themselves and their children, Tenet and these hospitals plundered a system set up for those truly in need. This kind of scheme drives up costs for everyone, not just the vulnerable patients and groups like those targeted in this case.” This statement is a clear indication of why the government takes these matters seriously. In a time where the cost of healthcare is a hot topic in the United States, it is important to hold health care providers responsible for their disruptive actions.

What is the law that prohibits this action?

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving money paid for a service to induce referrals of items or services covered by Medicaid and other federally funded programs.

The Compliance Plan

The settlement agreement includes a three-year non-prosecution agreement, within that agreement Tenet and the DOJ will select a compliance monitor for three years to oversee Tenet’s compliance with the Federal Anti-Kickback Statute and Stark laws relating to referral source arrangements. Further, Tenet has conceded that the relationship with the hospitals that were involved in the Medicaid fraud violated the requirements of their compliance program and were inconsistent with Tenet’s strong culture of compliance. Because of this, Tenet has amended and expanded existing polices relating to referral source arrangements in their compliance program.

The settlement between Tenet and the government highlights the importance of a strict compliance program. The deviation from such programs continually proves costly and results in negative effects for years after a violation such as Tenets.  Employees should be trained vigorously around the compliance program that has been implemented in order to avoid issues such that Tenet has experienced.