The Department of Justice (DOJ) recently announced the settlement of a lawsuit that was filed against hospital chain Tenet Healthcare Corporation (“Tenet”) in relation to the company’s violation of the federal False Claims Act (“FCA”) and Georgia’s False Medicaid Claims Act (“FMCA”). Specifically, the settlement is the result of a qui tamlawsuit that alleged that four of Tenet’s hospital subsidiaries conspired with pre-natal healthcare clinics in a kickback scheme that paid the clinic for referring its Medicaid eligible patients to Tenet hospitals. These clinics mainly service undocumented Hispanic women who are only qualified to receive Medicaid coverage due to their pregnancy status. Tenet has agreed to settle the civil claims of the lawsuit for a substantial $514 million dollars.

Tenet Healthcare Corporation is a leading healthcare services company headquartered in Dallas, Texas. Founded in 1967, the company has expanded to include over 75 hospitals and more than 470 outpatient centers across 12 states, and even operates 9 facilities in the United Kingdom. In 2015, the company boasted total sales of $18.63 billion. In 2013, Tenet purchased Vanguard Health Systems in a deal valued at $4.3 billion that established Tenet as the third -largest for-profit hospital chain in the United States based on the number of hospitals that it owns.

In his lawsuit, qui tam relator Ralph Williams alleged that the Atlanta Medical Center Inc., North Fulton Medical Center Inc., Spalding Regional Medical Center Inc., and Hilton Head Hospital, which at the time were owned by Tenet subsidiaries, engaged in a fraudulent scheme that directly violated the Federal Anti-Kickback statute. This statute “prohibits a person or entity from paying another individual or entity to induce that individual or entity to refer items or services which may be reimbursed by a Federal health care program.” In his Third Amended Complaint, Williams contended that the aforementioned hospitals paid pre-natal clinics in Georgia and South Carolina to refer their Medicaid eligible patients to their facilities in an effort to receive reimbursements and payments from the government regarding the obstetrics treatments that were administered to these patients.

Under normal circumstances, non-U.S. citizens are not eligible to receive Medicaid coverage. However, women who are undocumented but pregnant are able to receive treatment under the Emergency Medicaid Program, which frames pregnancy as an emergency medical condition. Hospitals can thus submit claims to Medicaid for the services that are provided to these pregnant women during labor and delivery. These patients’ babies are also eligible for Newborn Medicaid coverage. Tenet ultimately received over $145 million from the government for the fraudulent claims that its hospitals submitted to Medicaid and Medicare.

For his efforts in exposing Tenet’s kickback scheme, Williams is set to receive over $84 million of the total amount that the government was able to recover in the settlement. Two of the hospitals that are named in the lawsuit have also agreed to plead guilty to the criminal charges that they conspired to defraud the government by illicitly paying for Medicaid referrals and submitting false claims to the government for payment. Both medical facilities have agreed to repay $145 million to the government, which is the amount of money that they received from Medicare and Georgia Medicaid programs for the treatments that were administered to the referred patients.

Tenet, which was formerly known as National Medical Enterprises, has been hit with numerous FCA lawsuits in the past, including prior cases alleging kickback schemes. For example, in 2006, Tenet agreed to pay $900 million to settle a case alleged Medicare billing improprieties, including kickbacks.  In 1994, Tenent (then known as National Medical Enterprises) payed $324 million to settle a case that also alleged kickbacks.  In more recent years, Tenet has also settled a series of smaller cases, including a case filed in 2009 alleged that Tenet was leasing offices to physicians at below-market rates to incentivize these providers to refer their patients to Tenet-owned medical facilities. The case settled in 2014 for $5 million, although Tenet admitted no wrongdoing. In 2012, Tenet agreed to pay close to $43 million to settle a lawsuit that alleged that the company overbilled Medicare for the treatment that was given to patients who were not qualified to be admitted to Tenet-owned in-patient rehabilitation facilities.