Tenet to Settle Claims of 700 Former Patients

The taint of past scandal has revisited Tenet Healthcare Corp., which agreed to pay about $100 million to about 700 former patients to settle claims of abuse and false imprisonment at psychiatric hospitals during the late 1980s and early 1990s, Tenet executives and legal sources confirmed Wednesday.

The settlements were reached over the last several weeks as Santa Barbara-based Tenet pursued merger talks with rival Columbia/HCA Healthcare Corp., which is reeling from a major scandal of its own. Earlier this week, those talks were put on hold by Columbia/HCA after a major management shake-up at the firm.

Tenet, the nation’s second-largest for-profit hospital chain after Columbia, is expected to disclose some details of the agreement today when it reports financial results for its fiscal year ended May 31, sources said.

The patient lawsuits represent about 70% of roughly 1,000 claims that were pending against Tenet as a result of a scandal that rocked the company in the early 1990s.

Sources said Tenet paid about $83 million to settle about 650 cases filed in Conroe, Texas, and about $13 million to settle about 60 lawsuits filed in Fort Worth. They said a group of Dallas doctors, mostly psychiatrists, agreed to pay about $17 million in compensation to their former patients.

The settlement included strict confidentiality terms sought by Tenet and the doctors, Tenet executives said. The settlement was first reported Wednesday by the New York Times.

In 1994, Tenet, then called National Medical Enterprises, pleaded guilty to federal conspiracy charges for paying kickbacks and bribes to doctors in the late 1980s through 1991. The company paid about $375 million in fines and penalties--the largest health fraud settlement in U.S. history to date.

Tenet was forced to sell its psychiatric hospital division, Psychiatric Institutes of America, as a condition of its federal settlement.

Sources said there was no admission of wrongdoing by Tenet or the doctors in the settlement.

Among its past settlements of hundreds of patient lawsuits alleging physical mistreatment, kidnapping and abuse, Tenet is known to have admitted responsibility for any wrongdoing in only one instance. That came in a 1994 settlement reached with the parents of a 13-year-old San Diego girl, Christy Scheck, who killed herself at a National Medical psychiatric facility in Chula Vista.

The latest settlements are a significant step in Tenet Chairman Jeffrey Barbakow’s four-year-long effort to resolve legal liabilities stemming from the company’s psychiatric scandal. But even as Tenet resolved one big problem, others remain.

In April, the attorney general of Ontario, Canada, filed a civil lawsuit in Toronto that seeks $130 million in damages from two U.S. hospital chains, including Tenet, for an alleged conspiracy to recruit Canadian patients to U.S. psychiatric hospitals for treatment of drug, alcohol and eating-disorder problems.

The Canadian suit alleges that, from 1988 to 1992, Tenet paid “headhunters” to recruit patients at jails, halfway houses and Alcoholics Anonymous meetings and refer them to U.S. facilities for treatment--sometimes paying the patients’ air fare. It alleges that patients were given “excessive and unnecessary” treatment” or charged for services not provided.

In addition to the patient lawsuits, the Timberlawn Psychiatric Hospital in Dallas is suing Tenet for $50 million plus triple damages. The hospital accuses Tenet of trying to corner the market on psychiatric patients in the Dallas-Fort Worth area through a “systematic pattern of racketeering,” kickbacks and other illegal activities. A trial is set on the 3-year-old suit for Nov. 10 in Dallas.

Spokesman Anderson said Tenet will “vigorously defend” against the Timberlawn suit.

Robert Andrews, a Fort Worth attorney who represents about 25 former psychiatric patients yet to reach agreement with Tenet, said he has been discussing terms of a settlement with the firm.

Some of the same Texas doctors involved in the just-announced settlement have also sued two of their former patients and their lawyer, Andrews. That unusual Texas suit alleges that two former patients defamed and libeled the doctors by stating publicly that they were falsely imprisoned and forced to sit motionless in a chair for hours.

The case is set to go to trial in the fall, Andrews said.