Document:

Exhibit 10.1

 

Summary of Officers’ Incentive
Plan

(April 1 - December 31, 2006)

 

Purpose

 

                The
purpose of this plan is to provide executive officers with a financial
incentive to encourage them to perform in a manner that is aligned with the
Company’s objectives and performance goals, and to contribute to the Company’s
ability to hire and retain quality executives.

 

Eligibility and Participation

 

                Eligible
employees in this plan include all corporate officers recommended for
participation by the Chief Executive Officer and approved by the Compensation
Committee.  Participants include the
following positions:

 

	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
  Executive Vice
  President and Chief Operating Officer

  
	
   

  	
   

  	
  Senior Vice President
  and Chief Financial Officer

  
	
   

  	
   

  	
  Senior Vice President and President, International
  Division

  
	
   

  	
   

  	
  Senior Vice President and President, N.A. Division

  
	
   

  	
   

  	
  Senior Vice President, Marketing

  
	
   

  	
   

  	
  Vice President, Human Resources

  

 

                New
officers hired during the fiscal year are eligible to participate during that plan
year on a prorated basis if participation is recommended by the Chief Executive
Officer and approved by the Compensation Committee.  To receive a bonus award, the participant
must be actively employed at the time the awards are paid unless otherwise
recommended by the Chief Executive Officer and approved by the Compensation
Committee.  Participation in the plan
does not confer a right on the participant to participate in any subsequent
year or the right to continue in the Company’s employment.

 

Bonus Target Percentages

 

                The
target percentage used to calculate the bonus is expressed as a percentage of
base salary.  The annual target
percentage varies from 35% to 100% based on the officer’s position.  The target award represents the level of
bonus payment the participant may earn if the plan performance is achieved at
target and acceptable organizational standards are met.  Participants may receive bonus awards above
or below the target based on performance levels that exceed or fall below expectations.

 

Bonus Calculation

 

                The
bonus payment is based on three measures: Financial Performance, Operational
Performance and Individual Performance. 
Financial Performance is based upon earnings per share of the Company
and earnings before taxes for the applicable division of the Company.  Operational Performance is based upon the
incident rate of recordable injuries and lost time accidents.  Individual Performance is determined based
upon the participant’s individual contribution to the Company’s performance.

 

Under the plan, each officer’s
bonus amount is first
calculated based on an objective analysis of our Financial Performance and
Operational Performance, with approximately 90% of this amount based on the
Financial Performance and 10% based on the Operational Performance.  An Individual Performance multiplier, which
can range from 0 to 1.25 times, is then applied to the bonus to account for
each executive officer’s individual performance.  The bonuses are calculated after the end of
the plan year for the Compensation Committee’s review and approval.  Under the plan, determination of actual
performance awards is the responsibility of the Compensation Committee, which
reserves the right, in its sole discretion, to increase or decrease awards to
participants.Exhibit
10.1

CIVIL SETTLEMENT AGREEMENT
(Redacted)*

I.              PARTIES

This Settlement Agreement (“Agreement”) is entered into between the
following (hereinafter “the Parties”) through their authorized representatives:

(a)  the
United States of America, acting through the United States Department of
Justice and on behalf of the Office of Inspector General (“OIG-HHS”) of the
Department of Health and Human Services (“HHS”); the TRICARE Management
Activity (“TMA”) (formerly the Office of Civilian Health and Medical Program of
the Uniformed Services (“OCHAMPUS”)), through its General Counsel; and the
Office of Personnel Management (“OPM”), which administers the Federal Employees
Health Benefit Program (“FEHBP”) (collectively, “the United States”); and,

(b)  Tenet
Healthcare Corporation, on behalf of its predecessors, and current and former
affiliates, divisions, and direct and indirect subsidiaries (“Tenet”); Tenet
HealthSystem HealthCorp.; Tenet HealthSystem Holdings, Inc.; Tenet HealthSystem
Medical, Inc.; OrNda Hospital Corp.; and the 165 hospitals listed in Exhibit 1
hereto (referred to herein as the “Settling Hospitals”) (collectively the “Tenet
Entities”).

II.            PREAMBLE

As a preamble to this Agreement, the Parties agree to the following:

A.          Tenet
is a Nevada corporation with headquarters in Dallas, Texas. Tenet, through its
predecessors, subsidiaries, and/or affiliates, operates or has operated the
Settling Hospitals during some or all of the time period January 1, 1990 to the
present.

B.           The United States has filed three
actions against certain Tenet Entities in the Central District of California
(collectively the “DRG Complaints”), captioned as follows:

(1)          U.S. v. Tenet Healthcare  et al., CV03-206 GAF

(2)          U.S. v. Tenet Healthcare  et al., CV04-857 GAF

(3)          U.S. v. Tenet Healthcare  et al., CV04-859 GAF

	
  *

  	
   

  	
  Confidential portions of this document have been omitted and
  separately filed with the Securities and Exchange Commission pursuant to an
  application for confidential treatment under Rule 24b-2 under the Securities
  Exchange Act of 1934, as amended, as indicated by the notation “[**]” on
  pages 2, 4, 5, 7, 8, 10 and 15.

  

 

 

The
DRG Complaints allege that these Tenet Entities engaged in “upcoding” as
further described in Paragraph II.E(2) below.

C.           [**]

D.           The Tenet Entities
submitted or caused to be submitted claims for payment to the Medicare Program
(“Medicare”), Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395ggg
(1997); the Medicaid Program (“Medicaid”), 42 U.S.C. §§ 1396-1396v; the TRICARE
Program (“TRICARE”), 10 U.S.C. §§ 1071-1107; and the FEHBP, 5 U.S.C. §§ 8901 et.
seq. (collectively the “Government Health Care Programs”).

E.           The United States
alleges that it has certain civil claims against the Tenet Entities, as
specified in Paragraph III.4 below, for engaging in the following conduct
(hereinafter the “Covered Conduct”):

(1)            Outlier Payments:

From October 1, 1995 through
August 7, 2003, the Tenet Entities allegedly submitted or caused to be
submitted claims to the Government Health Care Programs for inpatient and
outpatient outlier payments that the Tenet Entities were not entitled to
receive because (a) the Tenet Entities allegedly had artificially and purposely
inflated the charges billed for inpatient and outpatient care substantially in
excess of any increase in the costs associated with that care, (b) as a result,
the Tenet Entities allegedly improperly received outlier payments that were
further inflated because they were computed pursuant to statewide average
cost-to-charge ratios that should not properly have applied, and (c) the Tenet
Entities allegedly billed for inpatient and outpatient services and supplies
not provided to patients. [**]

 

2

 

As a result of these artificially inflated and allegedly
false claims, the Tenet Entities allegedly caused the Government Health Care
Programs to pay to Tenet money that lawfully belonged to the United States in
that it exceeded the amount Tenet would have received had these claims not been
artificially inflated and false.

(2)          DRG
Upcoding:

(a)  From January 1, 1992 through December 31,
1998, Tenet and the Settling Hospitals listed in Exhibit 2 allegedly submitted
or caused to be submitted claims to Medicare that assigned diagnosis codes for
inpatient discharges that were not supported by physician documentation in the
patient’s medical records or were otherwise improper for the following
diagnosis related groups (“DRG’s”): 79, 106, 124, 415, 416, 475 and 483; and,

(b)  Between January 1, 1992 and December 31, 1998,
Tenet annually certified compliance with its obligations under its Corporate
Integrity Agreement notwithstanding its alleged knowledge of claims of the type
described above.

(3)          Physician
Relationships:

From
January 1, 1992 through October 12, 2005, the Tenet Entities allegedly
submitted or caused to be submitted claims to Medicare for items and services
delivered by those Tenet Entities that were ordered by a physician, a member of
a physician group practice, a professional corporation, or other legal entity
owned at least in part by a physician with whom the Tenet Entities had a
financial relationship, directly or through a family member. The United States
alleges these claims were false because (a) Section 1877 of the Social Security
Act (“SSA”), 42 U.S.C. § 1395nn (also known as the Stark Law) prohibited the
Tenet Entities from billing Medicare for items or services referred or ordered
by physicians with whom the Tenet

 

3

 

Entities
had improper financial relationships, (b) the Tenet Entities forfeited the
right to bill Medicare for such items and services by allegedly paying
remuneration to physicians intending that remuneration to induce those and
other referrals in violation of the Anti-kickback Statute, 42 U.S.C. §
1320a-7b(b), and (c) the Tenet Entities were required to and did certify on
cost reports submitted to fiscal intermediaries for the applicable fiscal years
that items and services identified or summarized in each cost report were not
provided or procured through the payment directly or indirectly of a kickback
or billed in violation of federal or state referral laws (e.g., the
Stark Law). [**]

(4)          Tiered
Charges:

From January 1, 1996 through September 30, 2005, Tenet and the Settling
Hospitals listed in Exhibit 3 allegedly submitted or caused to be submitted
claims to Medicare that used higher charges for inpatient than outpatient
services, when those charges were required to be uniform. [**]

(5)          Centinela
Hospital Medical Center Claims:

From
January 1, 1999 through December 31, 2005, Centinela Hospital Medical Center
allegedly submitted or caused to be submitted claims to Medicare for cardiac
catheterizations that were not medically necessary.

(6)          Desert
Regional Medical Center Claims:

(a) From January 1, 1997
through May 31, 2004, Tenet and Desert Regional Medical Center allegedly
submitted or caused to be submitted claims to Medicare for outpatient

 

4

 

care
rendered at the Comprehensive Cancer Center (i) with the following billing
codes that were inaccurate and resulted in excessive reimbursement: modifiers
25, 27, and 59, and diagnostic codes related to screening and diagnostic
mammograms, and (ii) for diagnostic laboratory and imaging services that were
not supported by appropriate documentation. [**] and

(b) From January 1, 1997 through May 31, 2001, Tenet and Desert
Regional Medical Center allegedly submitted or caused to be submitted cost
reports to Government Health Care Programs that sought reimbursement for
excessive management fees paid to the Comprehensive Cancer Center.

(7)          Brookwood
Medical Center Claims:

From
January 1, 1997 through May 1, 2000, Brookwood Medical Center submitted claims
to Government Health Care Programs for reimbursement for (i) units of blood
that allegedly were not administered and (ii) blood filters that allegedly were
not used. [**]

(8)          People’s
Health Network Claims:

From
January 1, 1999 through August 23, 2005, People’s Health Network (“PHN”), an
entity in which Tenet had an ownership interest, allegedly failed to provide
services and provided services not consistent with the standard of care
required under applicable regulations and statutes to patients that were
included in the capitated rate paid by Medicare to PHN.

F.              The United States also contends that it has certain
administrative claims against

 

5

 

the Tenet Entities for the
Covered Conduct under the provisions for permissive exclusion from Medicare,
Medicaid and other Federal health care programs, 42 U.S.C. § 1320a-7(b), the
provisions for permissive exclusion from TRICARE, 32 C.F.R. § 199.9, and the
provisions for civil monetary penalties, 42 U.S.C. § 1320a-7a.

G.           The Tenet Entities deny the
contentions of the United States set out in Paragraphs II.E and II.F above.

H.            To avoid the delay, uncertainty,
inconvenience and expense of protracted litigation of these claims, the Parties
reach a full and final settlement as set forth in this Agreement. The settlement
amount required to be paid by the Tenet Entities pursuant to this Agreement
reflects limitations on the Tenet Entities’ ability to pay occasioned by the
financial condition of the Tenet Entities.

III.           TERMS AND CONDITIONS

NOW,
THEREFORE, in consideration of the mutual promises, covenants, and obligations
set forth below, and for good and valuable consideration as stated herein, the
Parties agree as follows:

1.             The Tenet Entities
agree to pay to the United States a total of $900 million, plus applicable interest,
as follows (the “Settlement Amount”):

(a)
The Tenet Entities agree to pay the United States $450 million, plus interest
accruing at a simple rate of 4.125% from November 1, 2005, within ten (10) days
after the Effective Date of this Agreement. The payment shall be made by
electronic funds transfer pursuant to written instructions to be provided by
Michael F. Hertz, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice.

(b)
 The Tenet Entities agree to waive, and
not assert any claim for, additional

 

6

 

Disproportionate Share
Hospital (“DSH”) program payments related to Medicaid eligible patient days and
SSI patient days to which the Tenet Entities may be entitled for all cost
reporting periods beginning on or before December 31, 2001, which claims and
potential claims have a value of $50 million.

(c)
The Tenet Entities agree to waive, and not assert any claim for, any additional
outlier payments from any Government Health Care Program to which the Tenet
Entities may be entitled for any period prior to August 7, 2003, which claims
and potential claims have a value of $125 million.

(d)
The Tenet Entities further agree to pay the United States $275 million, plus
interest accruing at a simple rate of 4.125% from November 1, 2005, in
quarterly installments from November 1, 2007 through August 1, 2010 in
accordance with the schedule of payments attached as Exhibit 4. All quarterly
payments shall be made by electronic funds transfer pursuant to written
instructions to be provided by Michael F. Hertz, Director, Commercial
Litigation Branch, Civil Division, United States Department of Justice.

2.              The principal portion of the Settlement Amount is
attributable to the Covered Conduct as follows (with interest to be allocated
on the same pro rata basis):

(a)  Outlier Payments: $788,851,228 [**]

(b)  DRG Upcoding: $46,886,882

(c)  Physician Relationships: $47,533,514 [**]

 

7

 

(d)           Tiered Charges: $822,577 [**]

(e)           Desert Regional Medical Center Claims: $452,417 [**]

(f)            Brookwood Medical Center Claims: $30,065 [**]

(g)           People’s Health Network Claims: $15,423,316

3.              If the Tenet Entities fail to make any of the payments
described in Paragraph III.1 above at the specified time, upon written notice
to the Tenet Entities of this default, the Tenet Entities shall have ten (10)
calendar days to cure the default. If the default is not cured within the
ten-day period: (a) the remaining unpaid principal portion of the Settlement
Amount shall become accelerated and immediately due and payable, with interest
at a simple rate of 4.125% from November 1, 2005 to the date of default, and at
a simple rate of 9.5% per annum from the date of default until the date of
payment; (b) the United States may pursue any and all actions for collection as
it may choose, including, without limitation, filing an action for specific
performance of this Agreement; and (c) the United States may offset the
remaining unpaid balance of the Settlement Amount (inclusive of interest) from
any amounts due and owing to any of the Released Tenet Entities (defined in
Paragraph III.4 below) by any department, agency, or

 

8

 

agent of the United States.
The Released Tenet Entities agree not to contest any collection action
undertaken by the United States pursuant to this Paragraph III.3, and to pay
the United States all reasonable costs incurred in any such collection action,
including attorney’s fees and expenses.

4.              Subject to the exceptions in
Paragraph III.11 below, in consideration of the obligations of the Tenet
Entities set forth in this Agreement, conditioned upon the Tenet Entities’
payment in full of the Settlement Amount, and subject to Paragraph III.18 below
(concerning bankruptcy proceedings commenced within 91 days of the Effective
Date of this Agreement or any payment under this Agreement), the United States
(on behalf of itself, its officers, agents, agencies, and departments) hereby
releases Tenet, together with its current and former parent corporations, each
of its direct and indirect subsidiaries including the Settling Hospitals,
brother or sister corporations, divisions, current or former owners,
partnerships or other legal entity in which Tenet or a Tenet subsidiary has or
had an ownership interest, and the successors and assigns of any of them (the “Released
Tenet Entities”), from any civil or administrative monetary claim the United
States has or may have under the False Claims Act, 31 U.S.C. §§ 3729-3733; the
Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a; the Program Fraud Civil
Remedies Act, 31 U.S.C. §§ 3801-3812; any other statutory cause of action for
civil damages or civil penalties which the Civil Division has actual and
present authority to assert and compromise pursuant to 28 C.F.R. Subpart I,
Section 0.45(d) (2004); or the common law and/or equitable theories of payment
by mistake, unjust enrichment, restitution, recoupment, disgorgement of illegal
profits, and fraud, for the Covered Conduct.

5.              Within 30 days of the Effective Date of this Agreement,
the United States will seek dismissal with prejudice of (a) the claims stated
in the United States’ Complaints and

 

9

 

Amended Complaints in the Civil Actions identified in Paragraph II.B
above; (b) claims asserted against the Tenet Entities in [**]. The stipulations
of dismissal will be conditioned upon receipt by the United States of the
Settlement Amount, and if necessary, will request that the courts retain
jurisdiction to resolve issues of relators’ share and attorney’s fees.

6.              Should this Agreement be challenged by any relator as
not fair, adequate or reasonable pursuant to 31 U.S.C. § 3730(c)(2)(B), the
United States and the Tenet Entities agree that they will take all reasonable
and necessary steps to defend this Agreement. If a court concludes that the
Agreement is not fair, adequate or reasonable as to the claims of a particular
relator, then the Agreement shall be null and void as to the Covered Conduct
asserted by those claims; the Agreement will otherwise remain in full force and
effect; and that portion of the Settlement Amount allocated to the excluded
Covered Conduct (the “Allocated Amount”) will be held by the United States to
be used as follows upon entry of a final judgment resolving (whether by
settlement or otherwise) the amount the Tenet Entities must pay on the
particular relator’s claims (the “Judgment Amount”): (a) if the Judgment Amount
is greater than the Allocated Amount, the Allocated Amount shall remain
allocated to those claims, with the Tenet Entities responsible for payment of
the difference between the Judgment Amount and the Allocated Amount; (b) if the
Judgment Amount is less than or equal to the Allocated Amount, the portion of
the Allocated Amount equivalent to the Judgment Amount shall remain allocated
to those claims, while the difference between the Allocated Amount and the
Judgment Amount shall be reallocated to the remaining Covered Conduct in an
amount proportionate to the original allocation set forth in Paragraph III.2 above.

7.              In consideration of the obligations of the Tenet
Entities set forth in this

 

10

 

Agreement, conditioned upon
the Tenet Entities’ payment in full of the Settlement Amount, and subject to
Paragraph III.18 below (concerning bankruptcy proceedings commenced within 91
days of the Effective Date of this Agreement or any payment under this
Agreement):

(a)          TMA hereby releases and agrees to
refrain from instituting, directing, or maintaining any administrative action
seeking exclusion from the TRICARE/CHAMPUS Program against the Released Tenet
Entities under 32 C.F.R. § 199.9 for the Covered Conduct, except as reserved in
Paragraph III.11, below, and as reserved in this Paragraph III.7(a). TMA
expressly reserves authority to exclude the Released Tenet Entities from the
TRICARE/CHAMPUS program under 32 C.F.R. §§ 199.9 (f)(1)(i)(A), (f)(1)(i)(B),
and (f)(1)(iii), based upon the Covered Conduct.

(b)          OPM agrees to release and refrain from
instituting, directing, or maintaining any administrative action seeking
exclusion from the FEHBP against the Released Tenet Entities under 5 U.S.C. §
8902a or 5 C.F.R. Part 970 for the Covered Conduct, except as reserved in
Paragraph III.11, below and except if excluded by the OIG-HHS pursuant to 42
U.S.C. § 1320a-7(a). Nothing in this Paragraph III.7(b) precludes OPM from
taking action against entities or persons, or for conduct and practices, for
which claims have been reserved in Paragraph III.11, below.

8.             The Released Tenet Entities fully and finally release,
compromise, acquit and forever discharge the United States, its agencies,
officers, agents, employees, and contractors (and their employees) from any and
all claims, causes of action, adjustments, and set-offs of any kind (including,
without limitation, any claims for additional outlier payments for any period
prior to August 7, 2003; any claims for additional DSH payments related to Medicaid
eligible patient days and SSI patient days for cost reporting periods beginning
on or before December 31,

 

11

 

2001;
and any attorney’s fees, costs, and expenses of every kind and however
denominated) which the Released Tenet Entities could have asserted, or may
assert in the future, against the United States, its agencies, officers,
agents, employees, and contractors (and their employees) arising out of or
pertaining to the Covered Conduct, including the United States’ investigation,
prosecution, or settlement thereof.

9.             The Tenet Entities have provided financial information
to the United States and the United States has relied on the accuracy and
completeness of this financial information in reaching this Agreement. If the
United States learns that this financial information either (a) failed to
disclose a material non-contingent asset or assets in which the Tenet Entities
had an interest (a “Material Nondisclosure”); or (b) contained any other knowing,
material misrepresentation or omission regarding the financial condition of the
Tenet Entities (a “Knowing Material Misrepresentation”), the United States may
at its option pursue relief under this Paragraph III.9 as follows: (a) the
United States shall provide Tenet with written notice of the nature of the
Material Nondisclosure or Knowing Material Misrepresentation; (b) within ten
(10) calendar days of the date of the written notice, Tenet shall provide the
United States, in writing, with any explanation it may have regarding the
Material Nondisclosure or Knowing Material Misrepresentation referenced in the
written notice; (c) if unsatisfied with Tenet’s explanation, as determined in
its sole and absolute discretion, the United States may file an action seeking
relief under this Paragraph III.9 in which action the United States shall bear
the burden of establishing by a preponderance of the evidence the Material
Nondisclosure or Knowing Material Misrepresentation; (d) if the court finds a
Material Nondisclosure or Knowing Material Misrepresentation, then — (i) the
Settlement Amount shall be increased by one hundred percent (100%) of the
amount of the Material Nondisclosure or Knowing Material

 

12

 

Misrepresentation; (ii) the
remaining unpaid principal portion of the Settlement Amount (including the
increase specified in subparagraph (d)(i) above) shall become accelerated and
immediately due and payable, with interest at a simple rate of 4.125% from
November 1, 2005 to the date of the court finding, and at a simple rate of 9.5%
per annum from the date of the court finding until the date of payment; (iii)
the United States may offset the remaining unpaid balance of the Settlement
Amount (inclusive of interest and the increase specified in subparagraph (d)(i)
above) from any amounts due and owing to any of the Released Tenet Entities by
any department, agency, or agent of the United States; and (iv) the Tenet
Entities shall immediately pay the United States all reasonable costs incurred
in the action seeking relief under this Paragraph III.9, including attorney’s
fees and expenses.

10.            OIG-HHS expressly reserves all rights to institute,
direct, or maintain any administrative action seeking exclusion against the Tenet
Entities, and/or its officers, directors, and employees from Medicare,
Medicaid, or other Federal health care programs (as defined in 42 U.S.C. §
1320a-7b(f)) under 42 U.S.C. § 1320a-7(a) (mandatory exclusion), or 42 U.S.C. §
1320a-7(b) (permissive exclusion). The Tenet Entities and OIG-HHS are engaged
in the negotiation of a potential Corporate Integrity Agreement (“CIA”) and
have reached a common understanding on the basic terms of such a CIA. The Tenet
Entities shall use their best efforts and negotiate in good faith to execute a
CIA with OIG-HHS within 90 days after the Effective Date of this Agreement
(defined in Paragraph III.27 below). Upon execution of the CIA, OIG-HHS shall
provide a release to the Tenet Entities pursuant to which OIG-HHS will agree
not to institute, direct, or maintain an administrative action seeking an
exclusion against the Tenet Entities under 42 U.S.C. § 1320a-7(b)(7)
(permissive exclusion for fraud, kickbacks, and other prohibited activities)
for the Covered Conduct.

 

13

 

11.          Notwithstanding any
term of this Agreement, specifically reserved and excluded from the scope and
terms of this Agreement as to any entity or person (including the Released
Tenet Entities) are any and all of the following:

a.            Any civil, criminal
or administrative claims arising under Title 26, U.S. Code (commonly referred
to as the Internal Revenue Code);

b.            Any criminal liability;

c.            Except as explicitly
stated in this Agreement, any administrative liability, including mandatory
and/or permissive exclusion from the Government Health Care Programs;

d.            Any liability to the
United States (or its agencies) for any conduct other than the Covered Conduct;

e.            Any claims based
upon such obligations as are created by execution of this Agreement;

f.             Any liability for
express or implied warranty claims or other claims for defective or deficient
products or services, including quality of goods and services;

g.            Any claims for
personal injury or property damage, or for other similar consequential damages,
arising from the Covered Conduct;

h.            Any liability for
failure to deliver goods or services due;

i.             Any claims against
individuals (including, without limitation, current or former directors,
officers, employees, agents, or shareholders of any of the Tenet Entities),
provided, however, that if the United States pursues claims based on the
Covered Conduct against any individual, if the United States obtains a judgment
against or enters into a settlement with any individual based on such claims,
and if a court determines that the Tenet Entities have an obligation to
indemnify the individual for the judgment or settlement amount (or any part

 

14

 

thereof) (an “Indemnification
Obligation”), then the United States shall seek to recover from the individual
on the judgment or settlement only an amount such that the amount required to
be paid by the Tenet Entities on their Indemnification Obligation to that
individual, when summed with all amounts paid by the Tenet Entities on prior
Indemnification Obligations to other individuals, results in an aggregate total
no greater than $75 million;

j.               Any claims of any State arising
under the Medicaid Program, or any other provision of law, based on the Covered
Conduct;

k.              Any claims against any Settling
Hospital, Tenet subsidiary, affiliate, or division, or any partnership or other
legal entity in which Tenet or any Tenet subsidiary has or had an ownership
interest, and the partners or other shareholders in any such partnership or
other legal entity, for a time period that the Tenet Entity, partnership, or
other legal entity was not directly or indirectly owned by Tenet.

l.               Any liability for the Covered
Conduct set forth in Paragraph II.E(3) above for claims submitted by or on
behalf of the hospitals identified by the relators’ Complaints in U.S. ex
rel. Meshel v. Tenet (W.D. Tex.) [**]

m.               Any liability to the United States of any entity other
than a Released Tenet Entity for the Covered Conduct set forth in Paragraphs
II.E(6) and II.E(8) above, and in connection with any investigation of any
entity other than a Tenet Entity for such Covered Conduct, Tenet shall make
reasonable efforts to facilitate access to and encourage the cooperation of its
directors, officers, and employees for interviews and testimony consistent with
the rights and privileges of such individuals.

12.            Subject to the provisions set forth below, the Released
Tenet Entities agree to

 

15

 

provide to the Department of
Justice, within no more than 120 days (with production beginning within 30 days
and proceeding on the schedule set forth below), all documents falling within
the following categories, regardless of whether the Released Tenet Entities
have asserted, and/or continue to assert, that such documents are protected
from disclosure by the attorney-client privilege and/or work product doctrine
(as used in this Paragraph III.12, the term “document” is to be given its
broadest meaning, and includes any type or form of communication, including any
electronic communications, but excludes “documents” previously produced to the
Department of Justice by the Released Tenet Entities in connection with the
Department of Justice’s investigation of the Covered Conduct):

a.           all documents created prior to
October 31, 2002, to, from, or prepared at the request of, any attorney
employed or retained by the Released Tenet Entities that refer or relate to (i)
the Released Tenet Entities’ request or receipt of Medicare outlier payments;
(ii) the Released Tenet Entities’ analysis of Medicare’s outlier payment rules
and regulations; and/or, (iii) the Released Tenet Entities’ charges, charge
increases, or cost to charge ratios;

b.           all documents created prior to
December 31,1998, to, from, or prepared at the request of any attorney employed
or retained by the Released Tenet Entities that refer or relate to coding
compliance audits conducted by the Released Tenet Entities between March, 1997
and October, 1998;

c.           all documents created prior to June
30,1999, to, from, or prepared at the request of, any attorney employed or
retained by the Released Tenet Entities that refer or relate to the Released
Tenet Entities’ obligations under, and compliance with, the Corporate Integrity
Agreement (“CIA”) executed by Tenet’s predecessor with the OIG-HHS on June
29,1994;

d.           those documents previously withheld
as privileged in United States ex rel.

 

16

Barbera v. Amisub. et al., Case No. 97-6590-CIV (S.D.Fl.), and identified by
Bates numbers as set forth in Exhibit 5 hereto;

e.            all documents created prior to
August 23, 2005, that (i) were requested by the United States Attorney’s Office
for the Eastern District of Louisiana or the Department of Justice in
connection with the investigation of allegations that PHN failed to provide
services and provided services not consistent with the standard of care
required under applicable regulations and statutes to patients that were
included in the capitated rate paid by Medicare to PHN and/or (ii) are
otherwise relevant to the foregoing allegations;

f.            the Released Tenet
Entities will produce the documents described in this Paragraph III.12
according to the following schedule —

(i)        with respect to the documents described
in subparagraph (a) above: substantially all documents that were identified on
any privilege log provided to the United States Attorney’s Office for the
Central District of California or the Department of Justice within 30 days;
substantially all documents that were identified on any privilege log provided
to the Securities and Exchange Commission within 60 days; substantially all
documents that were identified on any privilege log provided to Congress within
90 days; and all remaining documents within 120 days;

(ii)       with respect to the documents described
in subparagraph (b) above: substantially all documents within 30 days, and any
remaining documents within 120 days;

(iii)       with respect to the documents described
in subparagraph (c) above: substantially all documents that were identified on
any privilege log provided in

 

17

 

the DRG Upcoding litigation
described in Paragraphs II.B and II.E(2) above within 60 days, and all
remaining documents within 120 days;

(iv)   all documents described in subparagraph (d)
above within 30 days; and,

(v)    with respect to the documents described in
subparagraph (e) above: substantially all documents within 60 days, and any
remaining documents within 120 days;

g.            the Released Tenet Entities shall
mark any document produced to the Department of Justice pursuant to this
Paragraph III.12 that they continue to assert is protected from disclosure by
the Released Tenet Entities to third-parties with the legend “Privilege
Asserted and Produced Subject to Confidentiality Agreement” (such marked
documents are referred to as “Privilege Asserted Documents”);

h.             the Department of Justice agrees to
maintain the confidentiality of all Privilege Asserted Documents and not to
disclose them to any third party, except to the extent the Department of
Justice, in its sole and absolute discretion, determines that disclosure is
required by law or court order or would be necessary to protect the safety or
welfare of the public or any individual or would be in furtherance of the
discharge of the Department of Justice’s duties — thus, for example, this
Paragraph III. 12 does not prevent the Department of Justice from disseminating
any Privilege Asserted Document to any other governmental entity of the United
States in connection with any potential violation of law or regulation or
regarding any matter within that entity’s jurisdiction or to the United States
Congress pursuant to a Congressional request;

i.               the Department of Justice, and
any individual or entity to whom a Privilege Asserted Document is disclosed by
the Department of Justice pursuant to subparagraph (h)

 

18

 

above, may use any Privilege
Asserted Document as it deems appropriate in any criminal, civil,
administrative, or contractual investigation or proceeding;

j.              subject to the provisions of this
Paragraph III.12 above, by producing any Privilege Asserted Document to the
Department of Justice, the Released Tenet Entities do not intend to waive as to
any third-party any protection of such Privilege Asserted Document under the
attorney-client privilege and/or the work product doctrine.

13.           The Released Tenet
Entities waive and will not assert any defenses they may have to any criminal
prosecution or administrative action relating to the Covered Conduct, which
defenses may be based in whole or in part on a contention that, under the
Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the
Excessive Fines Clause in the Eighth Amendment of the Constitution, this
Agreement bars a remedy sought in such criminal prosecution or administrative
action. Nothing in this Paragraph III.13 or any other provision of this
Agreement constitutes an agreement by the United States concerning the
characterization of the settlement amounts for purposes of the Internal Revenue
Laws, Title 26 of the United States Code.

14.         The Amounts that Tenet must pay
pursuant to this Agreement shall not be decreased as a result of the denial of
claims for payment now being withheld from payment by any Medicare carrier or
fiscal intermediary, any State payor, TRICARE, or FEHBP related to the Covered
Conduct. The Released Tenet Entities agree not to resubmit to any Medicare
carrier or fiscal intermediary, any State payor, TRICARE, or FEHBP any
previously denied claims related to the Covered Conduct, and agree not to
appeal any such denials of claims.

15.         The Released Tenet Entities agree to
the following:

a.               Unallowable Costs Defined: All costs (as
defined in the Federal

 

19

 

Acquisition
Regulation, 48 C.F.R. § 31.205-47 and in Titles XVIII and XIX of the Social
Security Act, 42 U.S.C. §§ 1395-1395ggg and 1396-1396v, and the regulations and
official program directives promulgated thereunder) incurred by or on behalf of
a Released Tenet Entity, in connection with the following are unallowable costs
on government contracts and under the Medicare, Medicaid, TRICARE, Veterans
Affairs (“VA”) or FEHBP programs:

(1)           the matters covered by this
Agreement;

(2)           the Government’s audit(s), civil and
any criminal investigation(s), and litigation of the matters covered by this
Agreement;

(3)           any Released Tenet Entity’s
investigation, defense, and corrective actions undertaken in response to the
Government’s audit(s), civil and any criminal investigation(s), and litigation
in connection with the matters covered by this Agreement (including attorneys’
fees);

(4)           the negotiation and performance of
the Agreement;

(5)           the payments made pursuant to this
Agreement, and any payments that the Tenet Entities may make to any relator
and/or relator’s attorney; and,

(6)           the negotiation of the CIA referenced
in Paragraph 10 above, and any obligations undertaken pursuant to such a CIA
to: (i) retain an independent review organization to perform reviews as
described in the CIA; and (ii) prepare and submit reports to OIG-HHS.

(All costs described or set
forth in this Paragraph III.15.a are hereafter, “Unallowable Costs.”)

b.                  Future Treatment of
Unallowable Costs: These Unallowable Costs shall be separately determined
and accounted for in non-reimbursable cost centers by the Released Tenet
Entities, and the Released Tenet Entities will not charge such Unallowable
Costs directly

 

20

 

or indirectly to any contracts with the
United States or any State Medicaid Program, or seek payment for such
Unallowable Costs through any cost report, cost statement, information
statement or payment request submitted by the Released Tenet Entities, to the
Medicare, Medicaid, TRICARE, VA or FEHBP programs.

c.           Treatment of Unallowable Costs
Previously Submitted for Payment: The Released Tenet Entities further agree
that within 90 days of the Effective Date of this Agreement they shall identify
to applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or
contractors, and Medicaid, VA and FEHBP fiscal agents, any Unallowable Costs
included in payments previously sought from the United States, or any State
Medicaid Program, including, but not limited to, payments sought in any cost
report, cost statements, information reports, or payment requests already
submitted by any of the Released Tenet Entities, and shall request, and agree,
that such cost reports, cost statements, information reports or payment
requests, even if already settled, be adjusted to account for the effect of the
inclusion of the Unallowable Costs. The Released Tenet Entities agree that the
United States, at a minimum, will be entitled to recoup from the Released Tenet
Entities any overpayment plus applicable interest and penalties as a result of
the inclusion of such Unallowable Costs on previously submitted cost reports,
information reports, cost statements, or requests for payment. If any Released
Tenet Entity fails to identify such costs in past filed cost reports in
conformity with this Paragraph, the United States may seek an appropriate
penalty or other sanction in addition to the recouped amount. Any payments due
after the adjustments have been made shall be paid to the United States
pursuant to the direction of the Department of Justice and/or the affected
agencies. The United States reserves its rights to disagree with any
calculations submitted by any Released Tenet Entity, on the effect of inclusion
of Unallowable Costs on the cost reports, cost statement, or

 

21

 

information reports of the
Released Tenet Entity.

d.             Nothing in this
Agreement shall constitute a waiver of the rights of the United States to
audit, examine, or re-examine the books and records of any Released Tenet
Entity to determine that no Unallowable Costs have been claimed in accordance
with the provisions of this Paragraph III.15.

16.          The Released Tenet
Entities waive and agree that they shall not seek payment for any of the health
care billings covered by this Agreement from any health care beneficiaries or
their parents, sponsors, legally responsible individuals or third party payors.
The Released Tenet Entities waive any causes of action against these
beneficiaries or their parents, sponsors, legally responsible individuals or
any third party payors based upon the claims for payment covered by this
Agreement.

17.          The Tenet Entities expressly
warrant that they have reviewed their financial situations and that they are
currently solvent within the meaning of 11 U.S.C. § 547(b)(3), and
548(a)(l)(B)(ii)(I), and will remain solvent following payment to the United
States hereunder. Further, the Parties expressly warrant that, in evaluating
whether to execute this Agreement, they (a) have intended that the mutual
promises, covenants and obligations set forth herein constitute a
contemporaneous exchange for new value given to the Tenet Entities, within the
meaning of 11 U.S.C. § 547(c)(l), and (b) have concluded that these mutual
promises, covenants and obligations do, in fact, constitute such a
contemporaneous exchange. Further, the Parties warrant that the mutual
promises, covenants, and obligations set forth herein are intended and do, in
fact, represent a reasonably equivalent exchange of value which is not intended
to hinder, delay, or defraud any entity to which the Tenet Entities were or
became indebted to on or after the date of this transfer, within the meaning of
11 U.S.C. § 548(a)(l).

 

22

 

18.         In the event the Tenet
Entities commence, or a third party commences, within 91 days of the Effective
Date of this Agreement, or of any payment made hereunder, any case, proceeding,
or other action (a) under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have any order for relief of
any Tenet Entity’s debts, or seeking to adjudicate any Tenet Entity as bankrupt
or insolvent, or (b) seeking appointment of a receiver, trustee, custodian or
other similar official for any Tenet Entity, or for all or any substantial part
of a Tenet Entity’s assets, the Tenet Entities agree as follows:

a.            No Tenet Entity’s obligations under
this Agreement may be avoided pursuant to 11 U.S.C. §§ 547 or 548, and no Tenet
Entity will argue or otherwise take the position in any such case, proceeding
or action that: (i) the Tenet Entity’s obligations under this Agreement may be
avoided under 11 U.S.C. § 547 or 548; (ii) the Tenet Entity was insolvent at
the time this Agreement was entered into, or became insolvent as a result of
the payment made to the United States hereunder; or (iii) the mutual promises,
covenants and obligations set forth in this Agreement do not constitute a
contemporaneous exchange for new value given to the Tenet Entity.

b.           If any Tenet Entity’s obligations
under this Agreement are avoided for any reason, including, but not limited to,
through the exercise of a trustee’s avoidance powers under the Bankruptcy Code,
the United States, at its sole option, may rescind the releases in this
Agreement, and bring any civil and/or administrative claim, action, or
proceeding against the Tenet Entities for the claims that would otherwise be
covered by the releases provided in Paragraphs III.4, III.7, and III.8 above.
The Tenet Entities agree that (i) any such claims, actions, or proceedings
brought by the United States (including any proceedings to exclude any Tenet
Entity from participation in Medicare, Medicaid, or other Federal health care
programs)

 

23

 

are not subject to an “automatic
stay” pursuant to 11 U.S.C. § 362(a) as a result of the actions, cases, or
proceedings described in the first clause of this subparagraph, and that the
Tenet Entities will not argue or otherwise contend that the United States’
claims, actions, or proceedings are subject to an automatic stay; (ii) the
Tenet Entities will not plead, argue, or otherwise raise any defenses under the
theories of statute of limitations, laches, estoppel, or similar theories, to
any such civil or administrative claims, actions, or proceeding which are
brought by the United States within 120 calendar days of written notification
to any Tenet Entity that the releases have been rescinded pursuant to this
Paragraph III.18, except to the extent such defenses were available on May 13,
2005; and (iii) the United States has a valid claim against the Tenet Entities
for the Covered Conduct, and the United States may pursue its claims in the
cases, actions, or proceedings referenced in the first clause of this
subparagraph, as well as in any other case, action, or proceeding.

c.              The Tenet Entities acknowledge
that their agreements in this Paragraph III.18 are provided in exchange for
valuable consideration provided in this Agreement.

19.           Except as expressly provided to the
contrary in this Agreement, each Party shall bear its own legal and other costs
incurred in connection with this matter, including the preparation and
performance of this Agreement. This Agreement shall in no way be construed or
considered as an admission of liability or wrongdoing in any legal or
administrative proceeding.

20.          The Tenet Entities represent that this
Agreement is freely and voluntarily entered into without any degree of duress
or compulsion whatsoever and they have been advised with respect hereto by
counsel prior to entering into this Settlement Agreement.

21.          This Agreement is governed by the laws
of the United States. The United States

 

24

 

and
the Tenet Entities agree that the exclusive jurisdiction and venue for any
dispute arising between the United States and the Tenet Entities under this
Agreement will be the United States District Court for the Central District of
California.

22.         This Agreement constitutes the complete
agreement between the Parties. This Agreement may not be amended except by
written consent of the affected Parties.

23.         The individuals signing this Agreement
on behalf of the Tenet Entities represent and warrant that they are authorized
to execute this Agreement. The United States signatories represent that they
are signing this Agreement in their official capacities and that they are
authorized to execute this Agreement.

24.         This Agreement may be executed in
counterparts, each of which constitutes an original and all of which constitute
one and the same agreement.

25.         This Agreement is binding on the Tenet
Entities’ successors, transferees, heirs and assigns.

26.         All Parties consent to the United
States’ disclosure of this Agreement, and information about this Agreement, to
the public.

27.         This Agreement is effective on the date
of signature of the last signatory to the Agreement (“Effective Date”).
Facsimiles of signatures shall constitute acceptable, binding signatures for
purposes of this Agreement.

 

25

 

IN WITNESS WHEREOF, the
parties hereto affix their signatures:

 

FOR THE UNITED STATES OF
AMERICA

 

	
  DATED: June 28, 2006

  	
  BY:

  	
  /s/ George S. Cardona, Chief AUSA for 

  	
   

  
	
   

  	
  DEBRA WONG YANG

  
	
   

  	
  United States Attorney

  
	
   

  	
  Central District of California

  

 

 

	
  DATED: 6/29/06

  	
  BY:

  	
  /s/ Michael D. Granston 

  	
   

  
	
   

  	
  MICHAEL GRANSTON 

  
	
   

  	
  Assistant Director 

  
	
   

  	
  Commercial Litigation Branch 

  
	
   

  	
  Civil Division 

  
	
   

  	
  United States Department of Justice

  

 

 

FOR HHS-OIG

	
  DATED: 6/28/06

  	
  BY:

  	
  /s/ Gregory E. Demske

  	
   

  
	
   

  	
  GREGORY E. DEMSKE

  
	
   

  	
  Assistant Inspector General for Legal Affairs

  
	
   

  	
  Office of Counsel to the Inspector General

  
	
   

  	
  U.S. Department of Health and Human Services

  

 

FOR OPM

	
  DATED: June 28, 2006

  	
  BY:

  	
  /s/ Kathleen M. McGettigan

  	
   

  
	
   

  	
  KATHLEEN MCGETTIGAN

  
	
   

  	
  Deputy Associate Director

  
	
   

  	
  Center for Retirement and Insurance Services

  
	
   

  	
  Office of Personnel Management

  

 

	
   

  	
  BY:

  	
   /s/ J. David Cope

  	
   

  
	
   

  	
  J. DAVID COPE

  
	
   

  	
  Debarring Official

  
	
   

  	
  Office of Personnel Management

  

 

FOR TRICARE

	
  DATED: 28 June 2006

  	
  BY:

  	
  /s/ Laurel C. Gillespie

  	
   

  
	
   

  	
  LAUREL C. GILLESPIE

  
	
   

  	
  Deputy General Counsel

  
	
   

  	
  Tricare Management Activity

  
	
   

  	
  United States Department of Defense

  

 

26

 

FOR THE SETTLING HOSPITALS

 

	
  DATED: 6/28/06

  	
  BY:

  	
  /s/ Douglas E. Rabe

  	
   

  
	
   

  	
  DOUGLAS E. RABE

  
	
   

  	
  Vice President

  
	
   

  	
  Tenet Healthcare Corporation

  
	
   

  	
  (for each of the Settling Hospitals identified in Exhibit 1)

  

 

FOR TENET HEALTHCARE CORPORATION

 

	
  DATED: 6/28/06

  	
  BY:

  	
  /s/ Douglas E. Rabe

  	
   

  
	
   

  	
  DOUGLAS E. RABE

  
	
   

  	
  Vice President

  
	
   

  	
  Tenet Healthcare Corporation

  

 

	
  DATED: 6/28/06

  	
  BY:

  	
   /s/ David Schindler

  	
   

  
	
   

  	
  DAVID SCHINDLER

  
	
   

  	
  LATHAM & WATKINS

  
	
   

  	
  Counsel for Tenet Healthcare Corporation

  

 

	
  DATED: 6/28/06

  	
  BY:

  	
  /s/ Roger Goldman

  	
   

  
	
   

  	
  ROGER GOLDMAN

  
	
   

  	
  LATHAM & WATKINS

  
	
   

  	
  Counsel for Tenet Healthcare Corporation

  

 

FOR TENET HEALTHSYSTEM HEALTHCORP

 

	
  DATED: 6/28/06

  	
  BY:

  	
  /s/ Douglas E. Rabe

  	
   

  
	
   

  	
  DOUGLAS E. RABE

  
	
   

  	
  Vice President

  
	
   

  	
  Tenet Healthcare Corporation

  

 

FOR TENET HEALTHSYSTEM HOLDINGS, INC.

 

	
  DATED: 6/28/06

  	
  BY:

  	
  /s/ Douglas E. Rabe

  	
   

  
	
   

  	
  DOUGLAS E. RABE

  
	
   

  	
  Vice President

  
	
   

  	
  Tenet Healthcare Corporation

  

 

27

 

FOR TENET HEALTHSYSTEM MEDICAL, INC.

 

	
  DATED: 6/28/06

  	
  BY:

  	
  /s/ Douglas E. Rabe

  	
   

  
	
   

  	
  DOUGLAS E. RABE

  
	
   

  	
  Vice President

  
	
   

  	
  Tenet Healthcare Corporation

  

 

FOR ORNDA HOSPITAL CORPORATION

 

	
  DATED: 6/28/06

  	
  BY:

  	
  /s/ Douglas E. Rabe

  	
   

  
	
   

  	
  DOUGLAS E. RABE

  
	
   

  	
  Vice President

  
	
   

  	
  Tenet Healthcare Corporation

  

 

[Exhibits
omitted.]

 

 

28

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}]]