News in brief - Sept. 8, 2003

Ex-NCFE exec pleads guilty to fraud - More claims filed against Tenet

Ex-NCFE exec pleads guilty to fraud

A former executive of National Century Financial Enterprises Inc., the now-bankrupt Ohio firm that was once the national leader in accounts-receivable financing for hospitals, clinics, nursing homes and physician practices, pleaded guilty in August in U.S. District Court in Columbus, Ohio, to conspiracy to commit securities fraud.

Sherry L. Gibson, according to a news release by the U.S. Attorney's Office, admitted that she took part in a scheme by NCFE to take money out of the troubled company, hide the shortfall through transfers between subsidiary bank accounts, and cover up the scam so investors and auditors wouldn't notice. The Securities and Exchange Commission also has sued Gibson, accusing her and other top NCFE executives of improperly giving $1 billion in advances in the form of unsecured loans to distressed health care companies. Many were owned in whole or in part by NCFE itself or its executives.

Gibson, who faces a maximum of five years in prison and a $250,000 fine, admitted that NCFE kept two sets of bookkeeping records -- one labeled "actual" and another marked "reported." Gibson served in various executive positions, including executive vice president for compliance from 1999 to 2002.

More claims filed against Tenet

Hundreds more patients have filed legal claims against Tenet Healthcare Corp. for alleged unnecessary cardiac procedures at a hospital in northern California.

A joint complaint, filed Aug. 15 in Shasta County (Calif.) Superior Court, claims doctors at the Redding Medical Center performed hundreds of unnecessary invasive heart procedures to boost profits at the Tenet subsidiary. Fifty-one of the 366 patients represented in the complaint died, some allegedly as a result of the procedures. Eight physicians are being sued, along with the medical center, Tenet and a subsidiary.

The latest legal claims, which seek punitive and other damages, follow a wave of similar lawsuits filed in April on behalf of 105 patients. Russell Reiner, an attorney for the plaintiffs, said additional lawsuits were expected.

Santa Barbara, Calif.-based Tenet has been at the center of several government investigations in the last year, including a probe of how it bills Medicare and another regarding its physician relocation agreements.

On Aug. 6, Tenet agreed to pay the federal government $54 million to settle claims that unnecessary heart procedures at the Redding hospital were billed to government programs. Tenet did not admit any wrongdoing.

Two weeks later, Redding Medical Center announced that its chief executive officer, Hal Chilton, would be transferred to a regional position with Tenet, and veteran hospital executive Candace L. Markwith would take over his job. Also, an outside heart specialist, Satyendra Giri, MD, was appointed to take over the hospital's cardiovascular program.