Lawsuits Filed to Recover Money Plundered From AHERF Endowment Funds.

Business Editors & Legal/Health/Medical Writers

SANTA BARBARA, Calif.--(BUSINESS WIRE)--Feb. 23, 2000

Tenet Healthcare Corp. (NYSE:THC), through its subsidiary Tenet HealthSystem Philadelphia Inc., today filed in United States Bankruptcy Court in Pittsburgh two major lawsuits in connection with the bankruptcy of the Allegheny Health, Education and Research Foundation (AHERF).

The suits were filed against the officers and trustees of AHERF and against Mellon Bank to recover restricted endowment funds misappropriated for operational uses.

"Today's filings represent an important step in restoring the charitable endowments raided by the AHERF organization, and the support of the Attorney General's office in this effort will be very valuable," said Barry A. Wolfman, senior vice president of operations for Tenet's Pennsylvania region.

"The officers and trustees of AHERF had a duty to use these funds for their intended purposes -- research, medical education, indigent care, or other specific use the donor intended. The donors never intended these funds to be used to keep a bankrupt organization operating so it could pay off its bankers."

The first suit was filed jointly by Pennsylvania Attorney General D. Michael Fisher and Tenet on behalf of two non-profit charitable organizations, Philadelphia Health and Education Corp. (PHEC) and the Philadelphia Health and Research Corp. (PHRC). The suit against the officers and trustees of AHERF seeks to recover $70 million or more that was diverted from charitable restricted assets of these organizations to fund AHERF's distressed operations.

The multimillion-dollar endowment shortfall affected indigent care, research, supplies, equipment purchases and medical education provided by PHEC and PHRC. These restricted endowment accounts were held in trust at Mellon Bank.

In the spring of 1998, in one glaring example of the misuse of funds, AHERF had defaulted on paying its medical malpractice insurance premiums and was having trouble paying for essential supplies such as blood. The officers and trustees named in the lawsuit allowed AHERF to pay for more than $1 million for private golf club memberships and for tickets to sporting events.

The second suit, filed by Tenet, PHEC and PHRC, seeks to recover damages from Mellon Bank and its parent, Mellon Financial Corp. According to the lawsuit, Mellon aided and abetted the scheme of AHERF's senior management to finance AHERF's distressed operations by misappropriating charitable restricted assets. Further, much of the looting of the endowment funds was accomplished through inter-company loans of the restricted assets.

Thus, prior to the commencement of the looting, AHERF established a new internal loan committee to oversee and approve such loans. The committee was chaired by Mellon's chairman emeritus, and two other Mellon executives also sat on the committee. According to the lawsuit, while Mellon Bank was allowing these funds to be raided, AHERF was repaying its $87 million loan obligation to the bank group headed by Mellon.

Tenet Healthcare, through its subsidiaries, owns and operates 113 acute care hospitals with 27,707 beds and numerous related health care services. The company employs approximately 118,100 people serving communities in 17 states and services its hospitals from a Dallas-based operations center.

Tenet's name reflects its core business philosophy: the importance of shared values among partners -- including employees, physicians, insurers and communities -- in providing a full spectrum of health care. Tenet can be found on the World Wide Web at www.tenethealth.com.

Certain statements in this release may constitute forward-looking statements. They are based on management's current expectations and could be affected by numerous factors and are subject to various risks and uncertainties. Certain of those risks and uncertainties are discussed in the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K and quarterly reports on Form 10-Q. Do not rely on any forward-looking statement, as the company cannot predict or control many of the factors that ultimately may affect its ability to achieve the results estimated. The company makes no promise to update any forward-looking statement, whether as a result of changes in underlying factors, new information, future events or otherwise.