Bank, endowment sued – Hospital chain claims funds misused

Tenet Healthcare Corp., the second-largest U.S. hospital chain, has filed two lawsuits to recover $70 million plus damages from Mellon Bank and a charitable foundation, Bloomberg News reports.

Tenet claims the Allegheny Health, Education and Research Foundation used restricted endowment funds to repay its $87 million loan to the bank group headed by Mellon instead of using it for research, medical education and the care for the poor.

The endowment accounts were held in trust at Mellon Bank, which Tenet accuses of aiding and abetting the foundation by misappropriating the restricted assets.

In 1998, Tenet claims, foundation officers and trustees allowed more than $1 million to be used for private golf memberships and tickets to sporting events.

That same year, the hospital chain says, the foundation defaulted on paying its medical malpractice insurance premiums and was struggling to pay for essential supplies such as blood.

Joining Tenet in the suits are two charitable organizations — Philadelphia Health and Education Corp. and Philadelphia Health and Research Corp. — that were affected by the multi-million dollar endowment loss.

The Pennsylvania Attorney General’s Office supports the suits, Tenet says.

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