Tenet Healthcare Corp. said Tuesday that it would pay $7 million to settle all charges brought by the Florida attorney general against the hospital chain, including claims of bilking the government's Medicare and Medicaid insurance plans.
Tenet, whose shares rose more than 3%, said it would record the payment as a charge in the 2005 fourth quarter.
Florida had sued the nation's No. 2 U.S. hospital company under racketeering laws, charging it with inflating profit in the Medicare program and, separately, overbilling Medicaid, the federal health insurance program for the poor.
For the last several years, the Dallas-based company has been mired in lawsuits over various issues, including a federal government probe of Medicare payments, a Securities and Exchange Commission investigation and criminal charges surrounding physician recruiting in San Diego.
Tuesday's deal is a modest positive for Tenet, but bigger legal challenges remain, most notably a continuing federal investigation into Medicare billing, analysts said.
"The biggest one out there is the federal one," said Ryan Beck & Co. analyst Rob Mains. And Florida's settlement doesn't say anything about how the U.S. Department of Justice will act, he said.
Tenet has said it will restate its 2000-04 earnings results.
Chaos at the company led to a management shake-up, including the resignation of Chief Executive Jeffrey Barbakow in 2003 amid several scandals.
Shares of Tenet rose a quarter Tuesday to $8.06.