U.S. v. Weinbaum et al

Know the Implications!

U.S. v. Barry Weinbaum, Tenet Health Systems, Alvarado Hospital

U.S. District Court Southern District of California, San Diego, CA

(Indictment July 2002: Conspiracy; Offering and Paying Remunerations;

Aiding and Abetting) (Criminal Case No. 03-CR-1587L)

The Ricardo Group, Inc. provided expert testimony on Community Need, Medically Underserved Areas (MUAs), Health Professional Shortage Areas (HPSAs), Physician Relocation Agreements, Physician Practice Establishment Standards and Procedures. 

This case should make every hospital organization, CEO, executive, corporate attorney, and Board reflect on their own physician recruitment policies and programs. It is a case that at first blush makes every hospital shun the idea of aiding in the recruitment of new physicians, even though it has been an industry practice for decades.

A unit of Dallas-based Tenet, its 311-bed Alvarado Hospital Medical Center and former CEO Barry Weinbaum were charged with violating criminal anti-kickback laws and is accused of funneling more than $10 million over a 10 year period to host practices through recruitment and relocation packages for new physicians. According to the government in these criminal proceedings, they are accused of bribing physicians to refer patients to the company's San Diego Hospital. After more than a year and two trials the case resulted with two hung juries.

This outcome just adds to the confusion about the Office of the Inspector General (OIG) and U.S. Government acceptance and understanding of the hospital’s critical role in supporting the establishment of new physicians into private practice. Federal law allows hospitals to pay certain relocation expenses to recruit physicians with needed specialties but forbids hospitals to pay physicians to refer patients. As a result, Hospitals need to carefully walk a fine line.