Former local hospital executives fighting criminal charges

The clinics, which provided pre-natal care to undocumented immigrants in Georgia and South Carolina, had contracts with Tenet to provide translators, marketing and other services at Tenet hospitals in the Atlanta area and in Hilton Head. In exchange, prosecutors say, the clinics referred patients to the hospitals for births that the government’s Medicaid program would pay for.

The long-running case, which is now moving closer to trial, is being watched by the healthcare industry, where doctors, hospitals and other healthcare providers rely on referrals to thrive.

The feds say the payments were actually bribes, or kickbacks.

The defense argues that the executives are innocent and that Tenet paid Clinica for services the hospitals and patients needed — not referrals.

“Any thought that this was a case of a rogue executive scheming to break federal laws or to subvert corporate policies to enrich himself is simply not true, and the facts support it,” said Jamila M. Hall, one of the attorneys at the Jones Day law firm who is on Holland’s defense team. “During all of his dealings with Clinica, as with other company agreements, he always followed company guidelines and federal laws.”

Federal prosecutors in the case first went after Tenet as a corporation — and they prevailed. In 2016, Tenet agreed to pay $513 million to resolve both criminal charges and a civil case. As part of the agreement, two Tenet subsidiaries that were no longer operating hospitals and had no assets — Atlanta Medical Center Inc. and North Fulton Medical Center Inc. — agreed to plead guilty to conspiracy and paying kickbacks and bribes.

After the settlement, federal prosecutors decided to continue the case by going after Holland and Moore individually with criminal charges.

Federal prosecutors handling the case declined to comment.

But the indictment accuses Holland and Moore of a series of misdeeds, including making false and misleading representations in internal documents and reports to hide the true nature of Clinica’s relationship with Tenent.

Holland's lawyers say the prosecution against him has been unusual from the start. Federal prosecutors went all the way to Miami to get a grand jury to indict Holland in 2017. After Holland argued successfully to get the case moved to Atlanta, prosecutors got a new indictment with different charges and added both Moore and former Clinica CEO Edmundo Cota to the case.

“At almost every step, the government has used unusual strategic tactics to purposely disadvantage Mr. Holland, the likes of which our team with over 75 years of federal criminal experience has never seen,” said Hall, a former federal prosecutor. Holland’s defense team also includes Richard Deane, a former U.S. Attorney in Atlanta. Moore also has a former federal prosecutor on his defense team.

Holland’s attorneys say they are ready to clear their client’s name. “He is looking forward to having his day in court,” Hall said.

Unusual prosecution

This case, which began years before today’s crackdown on undocumented immigrants, revolves around allegations that Tenet exploited vulnerable pregnant women who were not in the country legally but whose babies would be American citizens at birth.

At the time of the 2016 settlement with Tenet, then-U.S. Attorney in Atlanta John Horn said Tenet’s actions undermined the ability of the patients to “make an informed choice about where to seek care without undue interference from those seeking to make a profit.”

By sending women to Tenet hospitals, the women in labor often passed closer hospitals, and the longer distances increased the risks, according to the charges. In a recent filing, the prosecution said the defendants viewed the patients “as commodities to be lied to, funneled to Tenet hospitals, and exploited to defraud Medicaid and Medicare.”

Undocumented immigrants aren’t eligible for regular Medicaid coverage, but they can get coverage through a Medicaid program that covers deliveries, which are considered emergencies.

The referral system led thousands of patients to Atlanta Medical Center and North Fulton Hospital, former Tenet facilities that are now owned by the WellStar Health System. Holland served as a CEO at North Fulton and later as an executive for Tenet’s southern states region. Moore was CEO at Atlanta Medical Center.

Brian McEvoy, an attorney representing Moore, said the prenatal and delivery care benefited both the pregnant women and the Medicaid program. “Mr. Moore never broke any law and never personally benefited from any hospital contract,” McEvoy said. “In fact, the medical services provided to Clinica patients not only saved lives and improved outcomes, they undoubtedly saved the federal government substantial amounts of money.”

Atlanta attorney Manny Arora, a former prosecutor who does white-collar criminal defense work, said it is unusual for federal prosecutors to pursue criminal charges in a case involving a giant company such as Tenet.

“Normally, they just take big fines,” he said.

But Arora, who is not involved in the case, said citizens are often frustrated that executives aren’t criminally charged in large cases, and Arora said it makes sense to prosecute if executives are caught orchestrating crimes.

Simply because an executive isn’t caught with a suitcase of cash doesn’t rule out a benefit, he said. Executives who help their companies make more money could be rewarded with promotions or bonuses, he said.

Were contracts a ruse?

A lot of healthcare fraud cases are about billing for services that weren’t provided. But that’s not what this case is about. And that’s one of Holland’s objections.

“One of the central arguments in our motions is that there was no fraud in this case because the government suffered no loss. The government paid for labor and delivery services that were rendered to Clinica patients,” Hall said.

The deliveries were eligible for coverage under the “Emergency Medicaid” program, Hall said. The patients and the pregnancies were real — so if the government did not pay Tenet for the deliveries, it would have paid another hospital.

“Notably, the indictment does not allege that the government suffered any loss,” Hall said.

If the services were provided, then what’s the problem?

The federal Anti-Kickback law outlaws paying for patient referrals. The intent of the law is to make sure medical decisions are made in the best interest of patients, not for the benefit of someone’s bottom line. Drug companies, for example, can’t pay a doctor to prescribe that company’s pills, and a nursing home can’t pay a doctor for sending patients to that facility for rehab. Hospitals can’t pay doctors or other providers to direct patients to their facilities for care, and doctors can’t pay a healthcare system to send patients to them, either.

The central question is this: Did the Tenet executives arrange contracts with the prenatal clinics simply to pay for services and nothing else? Or, were the agreements really made in exchange for a steady stream of patients?

The indictment accused the executives of causing Tenet to pay $12 million in “bribes” to induce Clinica to refer patients and disguising the payments through contracts that suggested the money was for translation services, marketing, Medicaid eligibility paperwork and other services. Tenet hospitals in Georgia and South Carolina“fraudulently” received $127 million for delivering the Clinica patients’ babies, the indictment alleges.

Lawyers on both sides have been filing motions that argue about the fine points of the law. Did Tenet pay fair market value for the services? Were the services paid for needed or substandard? Was even “one purpose” of the payments to induce the referrals?

The defense says the executives were open with the entire Tenet organization about the contracts and asked attorneys and others to review them to make sure they were in compliance.

Those involved agree on this: The case is extraordinarily complex, involving multiple hospitals, millions of dollars, multiple government agencies, a series of grand juries, hundreds of witnesses and millions of pages of documents.

But the defense teams say one aspect is simple — the executives facing prison time didn’t gain through the deal.

“Mr. Holland did not personally benefit in any way from the arrangement with Clinica,” Hall said. “We have filed several motions challenging the government to show some proof of any personal financial gain to Mr. Holland. But the government has not done so because there is no such evidence.”

A HISTORY OF TROUBLE

Tenet hospitals have been under federal scrutiny for more than a decade. Here are some key developments: