News in brief - April 24, 2006

United: No large mergers planned - Mistrial declared again in Tenet kickback case

United: No large mergers planned

A rumored merger between two of the nation's largest health insurers is not likely to take shape -- at least for now.

UnitedHealth Group, the nation's second largest private-pay health insurer, said in a filing with the U.S. Securities and Exchange Commission that it would not pursue a deal with "large, multistate health benefits providers" in 2006.

It had been rumored as early as 1998 that United would merge with Louisville, Ky.-based Humana. But United says it will focus on growing its own internal businesses and the integration of recent acquisitions, such as the $9 billion acquisition of PacifiCare Health Systems, completed in December 2005.

The AMA has come out against large-scale mergers, particularly the United-PacifiCare deal, in which the AMA said the merger would give the newly combined health plans far too much market power over physicians and patients. Although the deal was eventually approved, it came with conditions. Federal and various state regulators required the company to sell certain operations, contribute money to state-level health initiatives, and meet requirements for addressing physician contracting concerns.

Mistrial declared again in Tenet kickback case

For the second time, a mistrial has been declared after a jury was unable to reach a verdict in a trial to determine whether a Tenet Healthcare Corp. hospital in San Diego paid illegal kickbacks to physicians to induce referrals.

U.S. District Judge M. James Lorenz declared the mistrial on April 4 following a seven-month trial and 4½ months of juror deliberations. His order came a little more than a year after jurors deadlocked, causing him to declare a mistrial the first time the case was tried.

Prosecutors alleged that Alvarado Hospital Medical Center and another Tenet subsidiary paid more than $10 million for physician relocation agreements between 1992 and 2002. They claimed a "substantial portion" of the money went to established doctors to induce them to make referrals to Alvarado. Alvarado's former chief executive, Barry Weinbaum, was also named as a defendant.

Tenet said it "continues to believe" that physician relocation agreements, like the ones at Alvarado, are an important tool in helping hospitals bring physicians to communities. Tenet's general counsel, Peter Urbanowicz, said in a written statement that the case "has amply demonstrated that the law surrounding physician relocation agreements is complicated and subject to differing interpretations."

U.S. Attorney Carol C. Lam did not immediately indicate whether she would attempt to retry the case. In a statement, her office said, "The government continues to believe that it is important to address violations of the Medicare anti-kickback statute."