Tenet Agrees to Settle Unfair Pricing Class-Action Lawsuits
March 10, 2005
LOS ANGELES - Attorneys representing healthcare consumers today announced they have reached a proposed nationwide settlement with Tenet Healthcare Corporation (NYSE: THC). Originally filed in December 2002, the lawsuit claimed that patients not covered by insurance plans were charged excessive prices at 114 hospitals owned and operated by Tenet subsidiaries in 16 different states.
The lawsuit claimed that as a result of a scheme to boost its Medicare outlier payments Tenet increased its "gross charge." The gross charge is that charged only to uninsured or underinsured patients who do not have the economic leverage to negotiate lower rates. The lawsuit charged that this increase in gross charges violated California's consumer protection and unfair competition laws.
The settlement class includes any uninsured patient who received medically necessary services at any of its hospitals between June 15, 1999 and Dec. 31, 2004, and paid for services based on the hospital's gross charges. Under the terms of the proposed settlement, Tenet has agreed to refund amounts paid in excess of certain thresholds. During the class period, Tenet collected approximately $400 million from uninsured patients. The specific percentage of reimbursement varies depending on the year the patient was treated.
Going forward, Tenet will also offer uninsured patients the rate that it offers its managed care clients for a period of four years at all of Tenet's facilities.
The settlement is subject to certain conditions, including court approval. As part of the settlement agreement, the company has made no admission of wrongdoing and continues to vigorously deny the allegations made by the plaintiffs. Tenet has established a reserve that it believes will be sufficient to cover the claims and expenses associated with the settlement.
Reed Kathrein, one of the lead counsel for plaintiffs, stated, "We are pleased to accomplish this settlement for the uninsured. It offers not only restitution to those who need it, but in the future it guarantees that uninsured patients will receive significant discounts." Kathrein noted the settlement provides uninsured patients with market power equal to that of insurance companies who are able to obtain reduced rates.
Under the proposed settlement, Tenet has also agreed to do the following for a period of four years:
1. Provide financial counseling to all uninsured patients, including help in understanding and applying for governmental financial assistance and charity care programs. Subject to applicable legal requirements, Tenet will also post information on the availability of such financial assistance on hospital Web sites and at certain locations in its hospitals.
2. Treat uninsured patients fairly and with respect during and after treatment, and regardless of their ability to pay for the treatment they receive.
3. Offer uninsured patients reasonable payments and payment schedules, with no interest for the first 120 days after a patient is discharged. If a patient has applied for financial assistance, Tenet will not attempt to collect fees from the patient while an eligibility determination on the patient's completed application is pending.
4. Follow a uniform credit and collection policy, including, among other things, a commitment not to pursue legal action for nonpayment of bills against any patient who is unemployed or without other significant assets or to place a lien on a patient's home.
5. Disclose to uninsured patients the estimated charges for anticipated treatment, subject to applicable legal requirements.
6. Offer uninsured patients discounted pricing at rates comparable to the hospital's current managed care rates.
"These terms will also assist uninsured patients in obtaining financial aid if they qualify and secures fair collection practices for them," Kathrein noted.
The class notice that details the settlement's terms is available at www.reedk.com.