CHRONOLOGY-Tenet Healthcare hit on many regulatory fronts

Reuters, 07.09.03, 5:30 PM ET

NEW YORK, July 9 (Reuters) - Tenet Healthcare Corp. (nyse: THC - news - people), the No. 2 U.S. hospital operator, was a highflying stock during much of 2000 through 2002 as investors exited technology shares and banked on the stability of health care investments.

The stock was trading as high as $52.50 in October 2002, but fell to the $12 range after it was hurt by a series of accusations by regulators and questions about the sustainability of its growth.

The following is a chronology of events at Tenet Healthcare since October 2002:

*Oct. 28, 2002 -- UBS downgrades Tenet shares to "reduce" from "hold" and said the Department of Health and Human Services Office of Inspector General is poised to investigate Medicare "outlier" payments used to reimburse hospitals for costly patients. Outlier payments accounted for $762 million of Tenet's $13.9 billion in revenue for fiscal 2002. Tenet said it is "confident that its hospitals are fully compliant with Medicare rules and regulations" and reaffirms earnings targets.

*Oct. 31 -- FBI alleges in an affidavit made public on this date that Drs. Chae Hyun Moon and Fidel Realyvasquez performed unnecessary heart surgeries at Redding Medical Center, a Northern California hospital owned by Tenet. This spurs patient lawsuits against the company and the two physicians.

*November 2002 through January 2003 -- Tenet is named in 20 securities class action lawsuits. Tenet claims the lawsuits are without merit. Additionally, the company is facing derivative lawsuits filed against the board of directors and senior management on behalf of shareholders.

*Nov. 5 -- Tenet receives subpoena from U.S. Federal Trade Commission regarding the merger between two Missouri hospitals.

*Nov. 6 -- Tenet receives an audit request from the U.S. Department of Health and Human Services.

*Nov. 7 -- Chief Operating Officer Thomas Mackey and Chief Corporate Officer and Chief Financial Officer David Dennis resign. A lack of earnings guidance during a conference call and an acknowledgment that "aggressive pricing strategies" created higher outlier payments erode investor confidence. Tenet fell to $19.50 a share in after-hours trading from a $27.95 closing price.

*Nov. 18 -- Tenet said it met with Securities and Exchange Commission officials about its billing practices. A letter to shareholders says the operator of 114 hospitals will review pricing strategy.

*Dec. 2 -- Tenet reaches hospital reimbursement agreement with Health Net (nyse: HNT - news - people) that moves to a "per diem" payments and Tenet says the agreement will be a template for addressing reimbursement matters.

*Dec. 3 -- Tenet lowers earnings per share guidance and plans a new pricing strategy that proposes discounts to the uninsured and aims to address regulatory concerns. The pricing changes reduced the amount of outlier payments received by hospitals.

*Dec. 19 -- Tenet said it remains "far apart" in discussions with the Department of Justice on settling certain Medicare coding issues over reimbursements paid between September 1992 and December 1998. Federal investigators seize records from two administrative offices at the Alvarado Medical Center.

*Jan. 2, 2003 -- The Department of Justice subpoenaed documents regarding outlier payments from Tenet and 19 of its hospitals. The administrative investigative demand subpoena focuses on a period ranging from Jan. 1, 1997 through January 2003.

*Jan. 6 -- Tenet voluntarily adopts policy that cuts monthly outlier reimbursements to $8 million from $65 million
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*Jan. 9 -- The U.S. Department of Justice indicated that it would file a lawsuit against Tenet over Medicare coding, Tenet said.

*Jan. 28 -- Tenet said it plans to offer discounts to uninsured patients. The company also settles 10 lawsuits that were coordinated by civic group Consejo de Latinos Unidos.

*Feb. 10 -- Five Tenet hospitals in Southern Florida settle Medicare coding issues between 1993-1997 with the Justice Department for $4.15 million.

*March 18 -- Tenet announces plan to close or sell 14 of its hospitals and cut $100 million in costs
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*April 8 -- CEO Jeffrey Barbakow plans to drop chairman title as of the company's annual meeting in July. Tenet sets program to add independent directors and establishes new corporate governance rules.

*April 17 -- Office of Inspector General issues Tenet a civil subpoena about its relationship with a physician group associated with five of its California and Nevada hospitals.

*May 2 -- Tenet enters agreement allowing workers to vote whether join SEIU and AFSCME labor unions. The California Nurses Association, a union representing nurses, opposes the arrangement.

*May 27 -- Chief Executive Jeffrey Barbakow resigns. Trevor Fetter, who returned to Tenet in November, is named acting chief executive.

*June 2 -- Internal Revenue Service is seeking $269 million in additional back taxes for 1995, 1996-and 1997, Tenet announced in a Securities and Exchange commission filing.

*June 6 -- Barry Weinbaum, chief executive of Tenet's Alvarado Hospital Medical Center, is charged with offering kickbacks and bribes to physicians to win patient referrals.

*June 13 - Tenet says it will cut 300 jobs in a plan to consolidate business offices
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*June 23 - Tenet says its earnings will fall short of forecasts and its difficulties could continue until the middle of 2004. This earnings warning led Moody's to downgrade the company's credit rating.

*July 9 - Tenet receives a subpoena from the Securities and Exchange Commission about its billing practices.