Tenet Healthcare Corp. agreed yesterday to pay a $10 million penalty to settle Securities and Exchange Commission charges that it inflated its earnings by fraudulently billing the Medicare system, company and federal officials said.
The accord closes the book on government actions against the nation's second-largest hospital operator related to its alleged Medicare fraud, which took place while it was based in Santa Barbara, Calif.
Tenet, now based in Dallas, admitted to no wrongdoing in the settlement but said in a press release that the company "has undertaken dramatic changes in its operations, financial safeguards, governance and compliance" since the allegations surfaced in late 2002.
The SEC also charged four former Tenet officers with fraud: former Chief Operating Officer Thomas B. Mackey, 58, of Keswick, Va.; former general counsel and Chief Compliance Officer Christi R. Sulzbach, 52, of Santa Barbara, Calif.; and former chief financial officer David L. Dennis, 58, and former Chief Accounting Officer Raymond L. Mathiasen, 63, both of Los Angeles.
Mathiasen agreed to pay $240,000 in penalties and be barred from serving on the board of a publicly traded company for five years. Dennis agreed to pay $150,000.
The cases against Mackey and Sulzbach are continuing, federal officials said. Last summer, Tenet agreed to pay $900 million to settle charges that it had bilked Medicare, the federally funded insurance program for the elderly and disabled. The SEC charges alleged the scheme also affected Tenet shareholders because it artificially inflated the company's value.
Daniel Yi writes for the Los Angeles Times.