LOS ANGELES – A group representing more than 650,000 California senior citizens filed a lawsuit this week contending that Tenet Healthcare (NYSE:THC) has engaged in a wide variety of illegal actions - adding exorbitant mark-ups to prescription drugs and other hospitalization charges, as well as conducting unnecessary medical procedures - in an effort to boost corporate profits at the expense of its members and other health care consumers.

The Congress of California Seniors, an umbrella organization for hundreds of affiliated senior groups in California, filed the suit in an effort to reclaim the estimated millions of dollars of illegal profits reaped by Tenet with devastating impact on seniors and other consumers. The litigation is sponsored by Community Catalyst, a national health advocacy organization working with the Congress of California Seniors and consumer groups around the country to improve health care access.

"Many of our members get their care at Tenet Hospitals," said Congress of California Seniors Legislative Director Bill Powers. "So these outrageous prices have hurt many of us directly, by forcing us to pay higher premiums, higher deductibles, higher co-pays. Then they tell us Medicare can't afford to pay for drugs. Well, now we know why. Medicare's getting ripped off by corporations like Tenet, just to feed the company's bottom line."

Health system changes driven by the rise of market-based health care is a major focus for Community Catalyst, which provides support to consumer groups in more than 30 states, ensuring that they have a voice in key health care access issues, including hospital and health plan ownership changes.

"We've warned for years that treating health care as a market commodity means consumer and community interests take a back seat. And it absolutely distorts the health system. This lawsuit is about bringing some corporate accountability to bear on companies that price their services in complete disregard of consumer health needs," said Community Catalyst attorney Dawn Touzin.

The nation's second largest health care company, Tenet racked up more than $2.9 billion in profits during the last 13 years through its aggressive pricing markup practice. Tenet's exorbitant pricing has hurt Medicare, private health plans and other payers, as well as the uninsured, who are forced to pay these inflated prices out-of-pocket. Tenet's practices have led to several government investigations, including a federal audit of its Medicare reimbursements, a probe by the Securities and Exchange Commission (SEC), and a FBI investigation of two leading doctors at the Redding Medical Center.

"We intend to show that Tenet's core business philosophy is to dominate a region in such a way as to create a virtual stranglehold on the health care delivery system," said Steve Berman, managing partner of Hagens Berman, the law firm leading the litigation. "Once they achieve that market dominance, that's when the price-gouging begins."

Berman noted that Tenet hospitals in California charge as much as twice the price other hospitals charge for some procedures. "It is a viciously cynical approach to health care, and one that needs to stop," he said.

The lawsuit filed by Congress for California Seniors claims Tenet also trumped up its profits by using its overwhelming regional market power to charge unlawfully high prices for other aspects of hospital care, including pharmaceutical charges.

"It's clear that within the Tenet system, which seeks to maximize profits through any means possible, the company's doctors and health institutions were promised bonus and incentive programs to the extent that they helped boost Tenet revenue," Touzin noted.

According to the complaint, the price gouging also extended to prescription drug prices, with Tenet setting prices more than 1,000 percent above actual drug costs in California, and twice the drug mark-ups by other hospitals.

Two Tenet physicians, in particular, are being investigated for operating a scheme in which they used a combination of high rates and frequent recommendations of unnecessary surgery to boost profits for Tenet and themselves. According to the suit, both Drs. Chae Hyun Moon and Fidel Realyvasquez billed more than $7 million in Medicare claims during the last year - charging prices four to five times more than average physicians at times.

For example, during 2001, Dr. Moon performed 876 left-side catheterization procedures - several times more than average physicians - in addition to numerous other stent placement procedures and angioplasties. In each instance, the catheterization was being performed outside the hospital, at a Tenet-owned catheterization lab. An independent review of the two doctors' patients and their medical histories revealed that 25 to 50 percent of the patients underwent unnecessary procedures, the complaint states.

The suit claims these excessively high prices for surgeries and drugs force consumers to choose between life-saving medical care and basic needs.

The suit was filed December 17, 2002 in California Superior Court in Los Angeles. The suit asks for a return of all illegal profits received by Tenet as a result of its allegedly unlawful business practices.

Community Catalyst is a national health care advocacy organization dedicated to building consumer and community participation in the decisions that shape our health system. The organization works with state, local, and grassroots consumer groups in over 30 states, providing policy analysis, legal assistance, and community organizing support to ensure access to affordable, quality health care for all.

Congress of California Seniors As an umbrella organization for hundreds of affiliated groups, CCS has a combined membership of over 650,000 Californians. This broad-based coalition includes a variety of senior advocacy organizations such as the California Legislative Council of Older Americans, Gray Panthers, International Senior Citizens Association (ISCA), and Older Women's League (OWL). In addition, CCS represents retired public employee organizations such as the California Federation of Teachers (ATF AFL-CIO), Retired Public Employees Association (RPEA), California School Employees Association (CSEA), the Retired Division of the California State Employees Association (CSEA), and the California Federation of the National Association of Retired Federal Employees (NARFE). Member organizations also include the Federation of Retired Union Members (FORUM), as well as retiree clubs representing many trade unions and international labor organizations.

CONTACTS:

Laurie Covens
(617) 275-2805
Community Catalyst
[email protected]

Kim Shellenberger
(617) 275-2815
Community Catalyst
[email protected]

###

About Hagens Berman
Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with offices in nine cities. The firm has been named to the National Law Journal’s Plaintiffs’ Hot List seven times. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.

Contact
Ashley Klann
[email protected]
206-268-9363