“[Tenet journeyed] from scandal-plagued company to Wall Street darling and back again”
— Associated Press, Jan. 12, 2003
Our inability to effectively punish corporate crime has led to unsafe working conditions, environmental destruction, and economic downturn. This lack of deterrence for corporate criminals has, in the case of Tenet Healthcare Corporation, even had a hand in the skyrocketing cost of health care.
In 1994, the Santa Barbara-based Tenet Healthcare Corporation (then National Medical Enterprises) pled guilty to federal conspiracy charges for paying kickbacks and bribes to doctors, and related medical professionals, to induce them to direct patients to Tenet’s psychiatric hospitals. In some cases, patients were committed without ever having seen a doctor and were typically held at the hospitals, often against their will, until their insurance benefits expired. Tenet paid $375 million in fines and penalties to settle the charges, the largest ever paid at the time in a health care fraud case. Tenet had paid $200 million the year before to settle legal disputes with insurers over the same actions, and in 1997 settled civil lawsuits by patients against the company for an additional $100 million.
Yet these fines did nothing to discourage Tenet’s criminal behavior. At the end of 2002, Tenet came under another barrage of state and federal investigations in California. The company has again been accused of Medicare fraud, this time through inflated pricing. An analysis done by the Service Employees International Union of Tenet’s 2000 charges show that the company’s average charge for a hospital stay was 63% higher than the rest of the state. Data gathered by the California Office of Statewide Health Planning and Development shows that Tenet’s pharmaceutical markup for patients is twice the national average.
The corporation paid $4.2 million on February 11, 2003 to settle government claims similar to those in California that its five Florida hospitals were overbilling Medicare. And it paid $395 million to patients and their families after the Federal Bureau of Investigation raided its Redding, California hospital due to allegations of false diagnoses and unnecessary heart surgeries.
Tenet’s repeated crimes have devastated the patients it abused. Yet many California citizens will be Tenet victims twice, first paying for their criminal acts as patients, and again as taxpayers who foot the bill for dishonest Medicare claims. However, Tenet has proven it knows well how to rebound from scandal, and has no incentive to change its criminal ways when slap-on-the-wrist fines are its only punishment. Strong corporate accountability reform — with the Corporate Three Strikes Act — can help ensure companies like Tenet do not return to their criminal ways.