Tenet faces new probe, will buy back stock

Thursday, Dec. 12, 2002 | 11:08 a.m.

SUN NEWS SERVICES

SACRAMENTO -- A California Senate panel will investigate allegations that Tenet Healthcare Corp. overcharged in workers' compensation cases, said Senate leader John Burton, D-San Francisco.

The Senate Labor and Industrial Relations Committee is scheduled to hear the issue Jan. 15. It will review charges by a nurses' group that Tenet hospitals in Stanislaus and Shasta counties charged employers twice the amount billed by other California hospitals for workers' compensation claims requiring hospitalization.

The committee also will look into charges by the California Nurses Association's Institute for Health and Socio-Economic Policy that Tenet's markup on drugs is significantly higher than both California and the national average.

"This kind of behavior Tenet is alleged to have been involved in is what drives up workers' comp costs in California, not the benefits that are among the lowest in the nation," Burton said in a prepared statement. "It is imperative that we get to the heart of this matter immediately."

A Tenet spokesman said his company was unaware of Burton's announcement.

"We haven't heard anything, we haven't seen anything on this issue, so we don't have any comment on it at this time," said Steven Campanini, a Tenet spokesman.

This is the second state legislative hearing announced into Tenet's pricing practices. The chairman of the Assembly Health Committee also has announced a January hearing, but no date has been set.

Separately, Santa Barbara-based Tenet said its board of directors has approved the repurchase of up to 30 million shares of common stock.

Wednesday's announcement by the company means that it will use free cash flow to buy back its shares and will not enter the market until it reports second-quarter results on Jan. 13.

The nation's second-largest hospital chain, which owns or operates 113 hospitals and related businesses in 16 states including Nevada, Tenet has been under intense public scrutiny after it reported a higher-than-average number of costly procedures, such as heart surgeries.

The departure of two top executives and investigations into its practices and pricing regimes have shaved off more than 60 percent off its stock price since late October.

The company maintains its shares are now priced much too low and backed up that claim with the buyback announcement. The repurchase includes 13.7 million shares remaining under a previous authorization.