Ethics board fines Davis, Tenet

Health care chain paid hotel room bills

Wednesday, August 18, 2004
By Paul Bartels
St. Tammany bureau

The state Board of Ethics has fined Tenet HealthSystem Inc. and St. Tammany Parish President Kevin Davis $2,500 each for ethics violations arising from a 2001 trip Davis took to California.

Davis was a nonvoting member of the Slidell Memorial Hospital board from 2000 until fall 2003. It was during that time -- in 2001 -- that Tenet began laying the groundwork for its ultimately ill-fated effort to take over the public hospital.

In separate opinions dated Aug. 12 and made public Monday and Tuesday, the ethics board determined:

-- Tenet, headquartered in Santa Barbara, Calif., violated the Louisiana governmental ethics code by paying $1,605 in hotel room bills for Davis between May 31 and June 5, 2001.

-- Davis violated the code by accepting the free lodging and by inaccurately reporting, on his campaign finance report for the year, a reimbursement to Tenet as a contribution to charity.

Davis described Tenet's payment for lodging and the financial reporting discrepancy Tuesday as "an oversight" that he was unaware of until ethics officials pointed them out.

"We're glad it was brought to our attention," he said. "I thought we had done all the reimbursements. I was shocked when we discovered (they) hadn't been. . . . I take responsibility for it. It was my fault."

Davis and Tenet signed consent agreements acknowledging the violations and agreeing to pay the fines in a case that has been under investigation since November 2002, when a complaint was filed by then-Tenet critic K.B. Forbes of Consejo de Latinos Unidos in Los Angeles. By signing the agreements, Davis and Tenet avoided a trial-like hearing in which the parties involved and other witnesses could be called before the board to testify.

While in California, the ethics board found, Davis received "things of economic value" from Tenet -- the free lodging -- while Tenet "was seeking to have a relationship" with the hospital board. The hospital board was unaware of the trip at the time, according to then-board Chairman Al Hamauei.

George Saucier, Tenet's regional director of operations, also bought an airline ticket for Davis "to save all travelers time and effort." Davis promptly reimbursed Saucier $429 from his campaign funds, but the payment was listed on Davis' 2001 report as a "contribution to charity fund-raiser."

Notified by the ethics board of this inaccuracy in May 2003, Davis filed an amendment to the 2001 report to reflect the payment as "reimbursement for airfare to Los Angeles," according to the board ruling.

The board also notified Davis -- the ruling doesn't say when -- of the violation for accepting the free lodging, and Davis reimbursed Tenet the $1,605 from personal funds.

Davis' trip to California included visits with Tenet officials, a tour of a former nonprofit hospital now owned by Tenet in San Pablo, and talks with public officials about the impact of the change.

Davis also has disclosed he was in California at the time for surgery of an undisclosed nature at a non-Tenet hospital. He was accompanied on the trip by parish Coroner Peter Galvan, a close friend and personal doctor.

Davis told ethics officials he was acting in his "official capacity as parish president" when he made the trip. He said he thought it was his responsibility to explore all options for helping the then-financially strapped Slidell Memorial. Several private health care chains, including Tenet, were interested in taking over the troubled hospital.

Davis told ethics officials that he thought he had paid Tenet for the hotel bills and that he was unaware he hadn't until informed by the board.

"Despite careful legal review and the best of intentions," Tenet spokesman Steve Campanini said Tuesday, "this matter arose due to a misinterpretation of a part of a section in the Louisiana ethics code. It has now been resolved to all parties' satisfaction."

Forbes has organized efforts in recent years to fight alleged hospital price-gouging of the uninsured and to oppose attempts by chains to take over nonprofit hospitals. "While we all had to pinch our noses at the unethical behavior of Tenet and Davis, we are pleased with the long-overdue ruling," he said Tuesday.

In October 2002, Tenet seemed to have a virtual lock on acquiring Slidell Memorial for $130 million. Despite escalating federal and state investigations of Tenet's financial and other practices, the paperwork executing the sale was signed at the end of that year.

However, voters overwhelmingly rejected the sale in an April 2003 referendum.

Tenet's stock has since plummeted. The chain has been forced to consolidate or put up for sale a number of its hospitals, including several in the New Orleans area. Tenet-owned NorthShore Regional Medical Center in Slidell isn't for sale.

Meanwhile, Slidell Memorial's financial health has improved significantly. A new reform board created by state legislation was installed last fall, and voters approved a $22.4 million tax-backed bond issue to refinance most of the hospital's debt at a lower interest rate.

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Paul Bartels can be reached at or (985) 645-2854.


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