Mistrial declared in Tenet kickback case

After nearly four months of testimony and presentations, a mistrial was declared in the federal kickback case against Tenet Healthcare Corp. and one its California hospitals.

U.S. District Judge M. James Lorenz declared the mistrial Feb. 17 after the jury was deadlocked following several days of deliberations.

Jurors had been weighing charges that Alvarado Hospital Medical Center in San Diego paid illegal kickbacks to physicians to boost referrals. Tenet and former Alvarado chief Barry Weinbaum were also defendants in the case.

The fate of the case was unclear immediately following the move. The judge had not yet ruled on the defendants' motion to dismiss the case, and prosecutors said they would not seek a retrial until the motion had been decided.

"The United States remains confident in its case but further comment is inappropriate in light of the motion still pending before the court and the likelihood of a retrial," said U.S. Attorney Carol C. Lam, in a prepared statement.

Tenet's general counsel, E. Peter Urbanowicz, said in written remarks that the for-profit hospital chain hoped prosecutors would decide there was no point in retrying the case, assuming that another jury would produce the same result.

Urbanowicz said, "The fact that the jury struggled with this case demonstrates how much confusion there is regarding the laws that govern physician relocation agreements," which were at the heart of the case.

Prosecutors alleged that Alvarado and another Tenet subsidiary paid more than $10 million to fund more than 100 physician relocation agreements between 1992 and 2002 to recruit medical services to the hospital's service area. But they claimed that a "substantial portion" of the money went to established doctors to induce them to make referrals to Alvarado.

Tenet has denied wrongdoing, saying it stands by its physician recruitment practices.

A former Alvarado administrator, Mina Nazaryan, was also charged in the case, but midway through the trial she agreed to plead guilty to a charge of conspiracy. A spokeswoman for Lam said Nazaryan agreed to cooperate with the government and later testified for the prosecution.

Meanwhile, Dallas-based Tenet announced on Feb. 14 that its regional subsidiary, Tenet California, reached a settlement to resolve payment disputes with Health Net Inc. Under the agreement, the managed care company agreed to pay Tenet $28.5 million to resolve the old claims.