White Collar Criminal Defense Group

Georgia-Based Hospital Group To Pay Over $513 Million To Resolve Civil And Criminal Allegations Related To Illegal Payments For Patient Referrals

On Monday, the DOJ announced the resolution of criminal allegations and a False Claims Act (“FCA”) lawsuit a relating to a scheme to defraud the United States and obtain kickbacks in exchange for patient referrals.  A major U.S. hospital chain, Tenet Healthcare Corporation and two subsidiaries, Atlanta Medical Center, Inc. and North Fulton Medical Center, Inc., will pay over $513 million pursuant to a series of agreements, including a civil settlement agreement, non-prosecution agreement, and plea agreements:

FCA settlement:  Tenet Healthcare and related entities – described in the settlement as “the Tenet Entities – agreed to pay $368 million to the federal government and to Georgia and South Carolina to resolve claims brought by a Georgia whistleblower.  The FCA suit was filed in the Middle District of Georgia and claimed that Tenet Healthcare paid bribes and kickbacks to pre-natal clinics to unlawfully refer Medicare and Medicaid patients to its hospitals.  The whistleblower will receive $84 million under the agreement.  The agreement stated that the Tenet Entities denied any liability regarding the false claims allegations.

Non-prosecution agreement:  Tenet HealthSystem Medical Inc., the corporate parent of Tenet Healthcare, entered into a non-prosecution agreement (“NPA”) with DOJ based on similar allegations to those within the FCA case.  The NPA allows the two companies to avoid criminal prosecution in exchange for following the agreed-upon terms.  The criminal allegations at the heart of the NPA focused on an alleged conspiracy to defraud the United States and to violate the Anti-Kickback Statute, which bars illegal payments that induce patient referrals for services paid for by federal health care programs.  Under the NPA, Tenet HealthSystem and Tenet Healthcare will avoid criminal prosecution if they cooperate with the government’s prosecution and strengthen their internal controls, including their compliance and ethics programs.  The NPA is effective for three years, although it may be extended for an additional year if necessary.

Plea agreements:  Two subsidiaries of Tenet Healthcare, Atlantic Medical Center and North Fulton Medical Center, agreed to plead guilty to a criminal information for their role in the conspiracy, as referenced above, to defraud the United States and violate the Anti-Kickback Statute.  Under the plea agreements, the two healthcare will forfeit over $145 million to the United States, collectively representing the amount paid to the two entities by the federal Medicare and Georgia Medicaid programs for services paid to patients referred as part of the conspiracy.

Additional information, including the FCA settlement agreement, NPA, and criminal information can be found here.

Menendez Trial Will Wait On Supreme Court Petition

The U.S. Court of Appeals for the Third Circuit granted Senator Robert Menendez’s motion to stay its mandate while he petitions the U.S. Supreme Court to review whether the political corruption charges against him are based on constitutionally protected legislative acts.  As previously documented on this blog, Menendez moved to dismiss the indictment filed in the U.S. District Court for the District of New Jersey. He argued in part that the Speech and Debate Clause of the U.S. Constitution insulated him from prosecution on his alleged efforts to influence various government actions on behalf of prominent Democratic Party donor, Dr. Salomon Melgen.

After the district court denied the motion as to the bulk of Menendez’s charges, Menendez appealed to the Third Circuit.  On July 29, 2016, the Court found that Menendez’s acts were “ambiguously legislative” and thus subject to the district court’s determination as to whether they were protected activity based on its evaluation of Menendez’s motive and purpose.  The Court then found “a sufficient basis for the [district] court’s conclusion that the predominant purpose of the challenged acts was to pursue a political resolution to Dr. Melgen’s disputes,” and affirmed the denial of the motion to dismiss.

The affirmance green-lighted Menendez’s trial, but the stay will put the brakes on any further proceedings until (1) Menendez petitions the Supreme Court for a Writ of Certiorari – i.e., the opportunity to be heard – and (2) the high court decides whether to grant cert.  In a typical year, the Supreme Court agrees to review between 1% and 6% of the criminal cases in which a cert petition is filed.  Most successful cert petitions present important questions of federal law that lower courts have answered inconsistently.

In opposing Menendez’s motion for a stay, the government contended that Menendez’s claim was highly unlikely to engender Supreme Court review. “Where, as here, a defendant lacks a meritorious claim to advance further on appeal, the public gains nothing, and potentially loses material evidence, by further delaying trial,” it said.  Menendez, in contrast, characterizes the issue as “a substantial [Speech and Debate Clause] question that has divided the courts of appeals and that is of fundamental importance to bedrock constitutional principles of separation of powers.”