Tenet’s $55.8-Million Payment Settles Claims

Tenet Healthcare Corp., the second-biggest U.S. hospital chain, will pay $55.8 million to settle several allegations of Medicare fraud, including a whistle-blower lawsuit claiming that Tenet’s Brotman Medical Center in Culver City filed false cost reports.

The Santa Barbara-based company took reserves for the settlement before Feb. 28, the end of its fiscal third quarter, Tenet said.

Tenet’s settlement is the latest in a series involving hospitals that overbilled Medicare. The top hospital chain, HCA Inc., and Quorum Health Group Inc., now part of Triad Hospitals Inc., in recent months have reached multimillion-dollar settlements with the government.

“These settlements mean the hospitals are giving money back to the Medicare program that was improperly taken,” said San Francisco lawyer Mary A. Inman of Phillips & Cohen.

The law firm represented the whistle-blower William Noll in the 1998 lawsuit against Brotman. Noll, Brotman’s former controller, will receive as much as 30% of the $9.75 million that Brotman will pay to settle the matter. Tenet acquired Brotman from OrNda Corp. in 1997.

Tenet also said Tuesday that it will pay $17 million to resolve allegations that its hospitals overcharged Medicare and other government health-care programs for laboratory services.

And in a third settlement that was packaged in Tuesday’s announcement, Tenet said it will pay $29 million in a case that accused Palmetto General Hospital in Florida of billing and cost-report violations for home health services once operated by that hospital. Tenet acquired Palmetto General in 1995.

The bond-rating firm Standard & Poor’s, noting that the total settlements Tuesday are small compared with Tenet’s cash flow, said there is no effect on the ratings or outlook for Tenet’s bonds.

Shares of Tenet rose $1.84 to $76.54 on the New York Stock Exchange. The stock has gained 30% this year.