Tenet Healthcare agrees to $30M whistleblower settlement over alleged kickbacks at Detroit Medical Center

Tenet Healthcare has agreed to a $29.7 million civil settlement over whistleblower claims of physician kickbacks in exchange for patient referrals at its Detroit Medical Center subsidiary, the Department of Justice (DOJ) announced Wednesday.

The government alleged that the False Claims Act violations occurred between 2014 and 2017 and involved two DMC hospitals—Sinai Grace Hospital and Harper University Hospital—providing the services of mid-level, employed practitioners to 13 physicians “at no cost or below fair market value in violation of the Anti-Kickback Statute,” DOJ wrote in a press release.

These physicians were allegedly selected due to the large number of patients they referred to the hospitals and for the purpose of increasing Medicare referrals to DMC’s facilities, DOJ said.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded programs. 

“This outcome makes clear that when doctors refer patients for care at hospitals, they must do so based on their own professional judgment and the medical needs of their patients, not personal financial benefit,” U.S. Attorney Dawn N. Ison for the Eastern District of Michigan said in a release announcing the settlement. “Our office stands ready to scrutinize even the most complicated financial arrangements and to pursue justice wherever appropriate.”

DMC, along with other hospitals and outpatient facilities, has been a part of Tenet since the large for-profit acquired its parent Vanguard Health Systems in late 2013. DMC is currently the largest healthcare provider in southeast Michigan.

The settlement resolves the allegations of the qui tam case without determination of the organizations’ liability.

The whistleblower case was brought by the government in 2015 on behalf of Jay Meythaler, M.D., who was a former employee with DMC-affiliated Wayne State University Medical School, according to the release and legal case filings. Meythaler is set to receive over $5.2 million of the settlement funds.

“The Justice Department will pursue improper arrangements that have the potential to compromise physicians’ medical judgment,” Deputy Assistant Attorney General Michael D. Granston of the Justice Department’s Civil Division said in a release announcing the settlement. “Physicians should evaluate where to send patients for medical services based on the quality of care the patients will receive, not the financial benefits that the physicians will reap.”

DMC and its subsidiaries have previously settled with the government over alleged False Claims Act violations. In 2010, the organization agreed to pay $30 million regarding alleged misconduct related to its impending sale to Vanguard.

In a statement provided to The Detroit News, a spokesperson for DMC said that the system and its former and current owners “admitted no liability in settling the matter. … Once we became aware of the allegations, Tenet and DMC fully cooperated with the government throughout its investigation. The matter was resolved fully to avoid the expense and operational distraction. We remain committed to full compliance with all state and federal health care program requirements and providing high-quality care to serve our community.”