Former Exec Facing Jail for $400 Million Tenet Healthcare Fraud Scheme

A former senior executive of Tenet Healthcare Corporation has been indicted for his alleged role in a scheme to defraud federal and state healthcare programs of over $400 million.

The indictment alleges that 60-year-old John Holland schemed to defraud the U.S. government, the Medicaid programs in Georgia and South Carolina, as well as prospective patients of Tenet-affiliated hospitals by paying millions in kickbacks in exchange for patient referrals.

Holland, who currently resides in Dallas, was charged in the Tenet healthcare fraud indictment filed on Jan. 24 in the Southern District of Florida with one count of mail fraud, one count of health care fraud and two counts of major fraud against the U.S. He made an initial appearance on Wednesday before Judge Edwin G. Torres of the Southern District of Florida, entering a not guilty plea on all charges.

Mr. Holland was once a senior vice president of operations for Tenet Healthcare Corporation’s Southern States Region and chief executive officer of Roswell, Georgia-based North Fulton Medical Center Inc.

According to the Department of Justice, between 2000 through 2013, Holland engaged in a scheme to defraud the federal government and state Medicaid programs in Georgia and South Carolina by causing bribes and kickbacks to be paid in exchange for patient referrals to North Fulton Medical Center Inc. and other Tenet hospitals throughout the southern states, including Atlanta Medical Center, Hilton Head Hospital and Spalding Regional Medical Center.

DOJ further alleged that between 2007 and 2013, Tenet maintained and operated an accounting facility in Florida that assisted in processing the allegedly fraudulent government healthcare billings for these hospitals.

Holland allegedly tried to hide the Tenet healthcare fraud scheme by circumventing internal accounting controls and falsifying Tenet’s records and reports. The bribes and kickbacks allowed Tenet to bill the Medicaid programs in Georgia and South Carolina for over $400 million, according to DOJ. Of that sum, Tenet allegedly obtained more than $149 million in ill-begot Medicaid and Medicare funds based on the patient referrals that came from the bribes and kickbacks, the indictment alleges.

In order to pull off the alleged healthcare fraud, Holland, among other things, made false statements to the Department of Health and Human Services Office of Inspector General (HHS-OIG) in connection with a Corporate Integrity Agreement (CIA) that Tenet signed in 2006.

According to DOJ, Holland falsely certified to HHS-OIG that Tenet was complying with the CIA and the terms of participation in the Medicare and Medicaid Programs, when he knew that Tenet was paying kickbacks for patient referrals, violating both the terms set in the company’s CIA and the terms for participating in government healthcare programs.

Holland’s false statements were included in Tenet’s annual reports to HHS-OIG for the duration of the CIA, which remained in effect between 2007 and 2011. During this time, Tenet benefited from over $10 billion in payments from government health care programs—money that Tenet never would have received if the company had been excluded from participating in Medicare and Medicaid.

The indictment against Mr. Holland are only allegations. The defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

“These charges underscore our continued commitment to holding both individuals and corporations accountable for their fraudulent conduct,” said Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division. “We will follow the evidence where it takes us, including to the corporate executive ranks.”

Last October, Tenet and two subsidiaries, Atlanta Medical Center Inc. and North Fulton Medical Center Inc., agreed to pay over $513 million to resolve civil and criminal allegations related to the Tenet healthcare fraud scheme against federal and state healthcare programs. Atlanta Medical Center and North Fulton Medical Center pleaded guilty to conspiring to defraud the U.S. government and conspiring to violate the Anti-Kickback Statute.

The civil settlement resolved claims initially brought by a whistleblower in United States ex rel. Williams v. Health Mgmt. Assocs., Tenet Healthcare, et al. The whistleblower lawsuit was filed by Georgia resident Ralph D. Williams under qui tam provisions of the False Claims Act, which allows for private citizens to file suit on the government’s behalf for false claims and share in the amount recovered.

In his Tenet whistleblower lawsuit, Mr. Williams alleged that Tenet and its subsidiaries created false contracts and financial records in an effort to conceal bribes and kickbacks paid to a prenatal clinic chain called Clinica de la Mama.

According to Williams, the kickbacks were offered in exchange for referrals of tens of thousands of undocumented Medicaid patients, which were the majority of Clinica de la Mama patients.

Mr. Williams’ share of the combined civil settlement amounted to approximately $83.43 million.

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