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The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that all of the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made.

Columbia/HCA Overview
(now called HCA)

Part three

Fraud, Settlements and Recovery

Private citizen whistleblowers have helped the government recover more than $3.5 billion from companies that allegedly defrauded the taxpayers, thanks to a surge in health care fraud and a law encouraging private citizens to report false claims.
Almost half of all the private whistleblower cases and more than half of the total recovered money involve health care fraud.
''It took us 12 years the end of fiscal year 1998 to recover $2 billion in civil fraud cases brought under the whistleblower provisions,'' said Acting Attorney General David W. Ogden, head of the department's civil division. ''We have reached the $16 billion mark just 16 months later.''
Govt's False Claim Recoveries Rise Associated Press Online February 25, 2000

The three parts give a broad view of Columbia/HCA's unsavoury conduct. Many of their unethical and antisocial practices were legal. The fraud investigations unearthed additional material. The finally paid US $1.7 billion but no one went to prison.

Part 1 (written in 2000) describes Columbia/HCA's history as it became the largest and most successful hospital chain in the world until the first of the FBI raids on the company. Its disturbing practices and the anger which they engendered are described.

Part 2 (written in 2000) tells the second part of the Columbia/HCA saga. The story of the government investigation and prosecution of Columbia/HCA after the FBI raids in July 1997. It lists the allegations made.

Part 3 (written in 2003) examines the 10 year investigation, its problems, the role of whistle blowers, its outcome, the criminal guilty plea, the US $1.7 billion settlement and the company's recovery under its new name HCA. It looks at Olsten and KPMG who played a part in the fraud.


The Investigation

In the Columbia/HCA case the country's investigators and enforcers were tied up for 10 years in a mass of paperwork and legal complexity that almost overwhelmed them. They had to bring in more staff and abandon or quickly settle other investigations. There were over 30 whistleblowers who lodged Qui Tam lawsuits and the entire prosecution depended on their assistance. There were multiple lawsuits and somehow the matter had to be brought to a conclusion as it could not be allowed to drag on for ever. No one went to prison. There was no attempt to force the company out of business and no attempt to fundamentally change management. No penalties were imposed on the individuals responsible. The only outcome was a fine with so much time to pay it that the impact was muted.

The investigation of HCA's cost reporting began in 1993, when James Alderson, a former chief financial officer of one of its former hospitals, filed a whistle-blower suit contending that the expense documents were rife with fraud. HCA Said to Reach Deal on Settlement of Fraud Case NY Times 18 Dec 2002

She said it was the largest health care fraud investigation in history. It involved 30 U.S. attorneys' offices, 22 FBI field offices, inspectors general from the Health and Human Service Department and the Office of Personnel Management, Defense Department investigators and state fraud units.
HCA To Pay $840M for Fraud Claim New York Times December 15, 2000

Even harder, critics say, is prosecuting those who do commit health-care fraud. Some cases, including like the Columbia/HCA case, have dragged on for longer than World War II - the government drowning in documents, the penalties hopelessly weak.

"It’s the antithesis of what you want to do in law enforcement," says Eichenwald at the Times. "You don’t want to create the impression that if you create enough crime, if its thousands and thousands of documents, well, the government can’t handle it."
Health-care industry rife with fraud MSNBCNews Nov. 12, 2002

Agreement on Donald S. McLendon's $24.96 million award was reached Wednesday with high-ranking officials of the Department of Justice, according to McLendon's lawyer, Marlan B. Wilbanks. - - - - - - is in addition to $9.8 million that McLendon was awarded out of a $41 million civil fine paid by his former employer, Olsten Corp.
McLendon, who came forward as a whistleblower in 1997, says it has been "four very long years, to the point where you're just numb." He says he's pleased with the agreement, but adds that "I was lucky to a large extent."

Wilbanks and McLendon have spent the months since the fraud settlement negotiating with the government over the value of information that McLendon provided. More than 30 whistleblower, or qui tam, suits involving HCA were consolidated in multi-district litigation in Washington.
"It's high risk at its highest level," Wilbanks says. "Extraordinarily high risk for extraordinarily high return." For McLendon, it meant losing a lucrative executive career in the health-care industry and a comfortable home. It meant cashing out his life insurance policies for cash to live on, and putting his family's financial well-being in jeopardy. For a time he had no health insurance for his wife and four young children, one of whom has Down's syndrome. He didn't have the option of getting other employment, since he had a time-consuming but unpaid job -- helping the government decipher massive amounts of financial information.
McLendon is a rarity among whistleblowers: a top executive with access to the company boardroom.
He says he was forced to resign and later settled with Olsten for about $300,000 over what he said was retaliation for his cooperation with the government.
Medicare Fraud Tipster to Get $25 Million Fulton County Daily Report February 23, 2001

U.S. District Judge Royce Lamberth said the government would then have about three weeks to pay whistle-blowers more than $65 million of the money it collects from HCA Inc. Judge Orders HCA to Pay Government Associated Press August 7, 2001

The Guilty Plea

The investigation of Columbia/HCA, which commenced with James Alderson's Qui Tam suit in 1993 dragged on for 10 long years and ended with the company paying US $1.7 billion dollars in fraud settlements and criminal pleas. Although three executives were found guilty they appealed and won. The chairman Richard Scott walked away with US $17 million and in spite of the extent of the fraud he was never charged. The fraud was settled in two stages, the first in 2000 and the second in 2003. The criminal settlement was made in the name of two defunct subsidiaries as a conviction in Columbia/HCA's name would have resulted in automatic exclusion from Medicare funding - perhaps one of the perks of political influence.

The company, formerly known as ColumbiaHCA Healthcare Corp., was alleged by whistleblowers and others in the health industry to have defrauded Medicare, which covers the elderly; Medicaid, which covers the poor; Tricare, which covers the military and their families; and the Federal Employees' Health Benefits program, which covers civilian federal workers. HCA To Pay $840M for Fraud Claim New York Times December 15, 2000

The nation's largest hospital company, which for much of a decade awed Wall Street with its ability to wring huge profits out of a once-staid industry, has agreed to pay $95 million in criminal penalties and plead guilty to charges that it obtained some of its money by cheating government health care programs, the Justice Department announced yesterday.

The settlement with the company, HCA- the Healthcare Company - formerly known as the Columbia/HCA Healthcare Corporation - is a partial resolution of sprawling criminal and civil investigations into its business practices. With yesterday's announcement, HCA has agreed to pay a total of $840 million in criminal and civil penalties so far this year. While that amounts to the largest fraud settlement in American history, large portions of the civil investigation are left to be resolved.

In its criminal settlement, which is subject to approval by the courts, HCA will admit to submitting inflated bills and expenses to the government for reimbursement, illegally structuring business deals so that Medicare picked up the cost of corporate expenses, and providing doctors with kickbacks for patient referrals.
The criminal complaints - filed in five different federal court districts in Florida, Texas, Georgia and Tennessee - spell out an array of criminal activity by the hospital giant, with the company intentionally misidentifying marketing expenses as reimbursable patient costs, haggling with home care agencies to strike illegal deals, and claiming on a reimbursement form that idle space in a hospital was being used for patient care.

Much of the information came from company whistle-blowers, some of whom provided the government with taped evidence of criminal activity inside HCA. The criminal complaints contain details from some of those tapes, including quotes - - - - . Was he expected, the executive is quoted as saying, to tell his superiors that the expense claims to the government needed to be decreased by $40 million? "Dream on," the executive said, according to the complaint.

The criminal complaint filed in Texas dealt with one of HCA's most controversial business practices: providing partnership investments in company hospitals to doctors - - . In its guilty plea, HCA will admit that there were also kickbacks to induce doctors to refer more patients.

In addition to the investments, the Texas complaint says, HCA provided other inducements to win favor with doctors, including loans provided without an expectation of repayment, free rent, free office remodeling and free drugs from hospital pharmacies. At least one doctor sold those drugs to his patients and kept the money for himself, the complaint says. In another instance, to induce a group of doctors to refer to HCA hospitals, the company bought a business owned by one of the group's partners.

The Tennessee complaint describes a crime known as upcoding, in which hospitals increase Medicare billings by inflating the seriousness of illnesses they treat. A 1997 computer analysis by The New York Times of more than 30 million billing records found that many Columbia hospitals billed Medicare for high- paying treatments far more often than competing hospitals - - - .

Although the practices involve widespread criminal actions in HCA's hospital system, the guilty pleas will be formally entered by two inactive subsidiaries. The government agreed to structure the deal in that way to allow HCA to avoid an automatic bar from Medicare, a step that is required for any company that admits to criminally defrauding the program. Because of the role played by Medicare in the company's finances, such a bar would be tantamount to a corporate death sentence.
"Today's announcement is not the end of the investigation," Mr. Kubic said. "It will continue as one of the highest priority health care fraud investigations."
As part of the settlement, HCA will enter into several side agreements with the government. They include an eight-year corporate integrity agreement, which will require stiff compliance procedures.
HCA to Pay $95 Million in Fraud Case The New York Times December 15, 2000

The fraud revealed by that investigation ran deep within HCA's way of doing business. Disaster Of The Day: HCA December 15, 2000

The agreement -- reached after a seven-year federal investigation triggered by private whistleblowers -- is the largest government fraud settlement ever negotiated by the Justice Departmen
The two HCA units that pleaded guilty -- Columbia Homecare Group Inc. and Columbia Management Companies Inc. -- agreed to pay more than $95 million in criminal fines and were barred from further participation in federal health care programs.
HCA To Pay $840M for Fraud Claim New York Times December 15, 2000

Government leniency

The company had plenty of time to find the money without crippling itself and while the sum is large it must be seen in the context of the size of the company. To understand the relative amounts of money Forbes listed Frist's net worth in 2001 as US $1.4 billion, almost enough to pay the fines himself. Senator Grassley who crafted the legislation used against Columbia/HCA, and has chaired several committees investigating health and aged care matters doubted that it was adequate or that taxpayers were being repaid for what Columbia/HCA had stolen.

"Within a few days we'll pay the amount (US $745million),'' said HCA spokesman Jeff Prescott, who added that the company has budgeted for the expense. "It won't affect the operations of this company one bit.'' Judge Orders HCA to Pay Government Associated Press August 7, 2001

And the fact that Sen. Charles Grassley (R-IA) fears that the $880 million tentative settlement between the government and hospital chain HCA could represent getting off easy shows just how seriously some in Congress are still taking health care fraud.
- - - Centers for Medicare & Medicaid Services analysts have suggested that HCA is responsible for up to $1.8 billion in single damages, the Senator argues that the HCA settlement "has been crafted in the dark for apparently a fraction of the damages‚" the Nashville, TN-based company actually owes.

Criminal proceedings against individuals
The government's attempt to put executives in jail failed when an appeal court overturned their conviction. About 70 senior executives had taken the 5th amendment and refused to give evidence in court in case it incriminated them. The government finally abandoned this effort and concentrated on further civil settlements in which these people would now give evidence.

The Justice Department has closed its criminal investigation of HCA executives, clearing the way for them to testify in civil Medicare fraud cases against the nation's largest for-profit hospital company.
In 1999, two former HCA executives ˜ Jay Jarrell and Robert Whiteside ˜ were convicted of conspiring to defraud the government and making false statements in Medicare reimbursement cost reports for a hospital in Port Charlotte, Fla. The convictions were overturned this year on appeal.
Justice Department Closes HCA Probe The New York Times Jul 17, 2002

The Second Fraud Settlement

The second set of settlements did not occur until 2003, bringing the total to US $1.7 billion. Senator Grassley did not think this enough either.

Under the terms, HCA would pay $630 million in fines and penalties to resolve all outstanding civil litigation with the Justice Department. An additional $250 million would be paid by HCA to the Medicare program to resolve expense claims submitted by the company to the government.
Combined with previous settlements HCA has negotiated with the government involving fraud accusations ‚(including its agreement in 2000 to plead guilty to 14 felonies‚) the company will be paying a total of more than $1.7 billion in civil and criminal penalties, by far the largest amount ever secured by federal prosecutors in a health care fraud case.
The new settlement addresses charges raised in eight civil lawsuits, brought under the federal whistle-blower statute, that HCA engaged in schemes to defraud government health care programs of hundreds of millions of dollars.

The accusations fall into three categories. The largest and most complex of the cases involve accusations that the company's hospitals intentionally overstated their expenses in filings with the government to increase their compensation from federal programs like Medicare. Such expense statements, known as cost reports, generated hundreds of millions in payments each year.

The second category involves the submission of expenses by what is known as wound-care centers that were operated at HCA hospitals by another national company, Curative Health Services of St. Louis Park, Minn.

The government contended that Curative reached an agreement with HCA to submit bills to Medicare that included management fees and marketing expenses that were not eligible for reimbursement. Earlier this year, Curative reached its own settlement with the government, agreeing to pay $16.5 million.

The third category involves accusations that HCA paid kickbacks to doctors in at least three parts of the country to induce them to refer their patients to its hospitals. Such payments for referrals are prohibited by federal law.
HCA Said to Reach Deal on Settlement of Fraud Case NY Times 18 Dec 2002

Sen. Charles E. Grassley (R-Iowa), the incoming chairman of the Senate Finance Committee and a leading proponent of the False Claims Act, also questioned whether the settlement was large enough.

"The most important question is unanswered. That's whether the taxpayers will get their money back from any fraud perpetrated by HCA," he said in a statement. "Until I see the math, I'll remain skeptical."
HCA, U.S. Agree to Fraud Settlement Washington Post December 19, 2002

The U.S. Justice Department on Wednesday gave final approval to a Medicare fraud settlement with HCA Inc. (HCA.N), the leading U.S. hospital operator, a U.S. Department of Justice spokesman said on Wednesday.
Justice Dept Says Approves HCA Settlement The New York Times May 7, 2003

Creating a new image

Thomas Frist who had presided over the fraudulent practices from 1984 to 1994 was not fired. Instead he was hailed as a hero for saving and reforming the company. Frist sold off a large part of the empire to pay the settlements and other related costs. He brought back many of the HCA staff who had run the fraudulent HCA, including Jack Bovender Jr. He put them into powerful positions creating the illusion that the original HCA had been a model company and was now restored. When Frist stepped down as chairman in 2001, Bovender replaced him. HCA's underlying culture is therefore likely to remain intact

The consensus is that the most important step in overcoming the ignominy of the massive federal probe of the company's Medicare billing practices and the resulting $840 million in fines so far was the restoration of Thomas Frist Jr. as chairman and chief executive officer.
The new consensus view exists, despite the fact that the Justice Department contended in an amended complaint against the company that the long and deep roots of the billing fraud began in 1987 at Hospital Corporation of America, the mother of for-profit hospital companies that Frist and his father, the late Thomas Frist Sr., founded in 1968 (March 19, 2001, p. 6).

Both the anticlimactic ending to the criminal case and the shrugging reaction to it signal that the specter of big, bad Columbia/HCA has all but faded from the national landscape.
End of an era: Justice Department ends nine-year criminal probe of Columbia/HCA executives, but company recovery began earlier Modern Healthcare July 29,2002

Frist portrayed himself as Columbia's savior, although he had been vice chairman during Scott's tenure and had run HCA, which spawned many of the allegations of wrongdoing prior to the Columbia merger. He quickly replaced a dozen Scott underlings, rolled out a corporate mission statement with much fuss and signed on Jack Bovender, who had been his number two at HCA. Bovender joined in August 1997 and became chief executive in January 2001. Healing Thyself Forbes Magazine February 28, 2003

A kindly face and compliance processes

As Tenet Healthcare had done in 1995 Frist marketed the company as kinder, less aggressive and a socially conscious organisation. The company prospered and not for profits accepted this new image. They entered into relationships and mergers with it rather than Tenet Healthcare which was seen as dishonest. When Tenet re-offended in 2002 Thomas Frist and HCA were held out as role models. Instead of condemning HCA when it agreed to a criminal plea and massive penalties in 2000 the market welcomed this and supported the company.

HCA entered into a maze of agreements and processes. The problem with all of these integrity and ethics agreements is that they are directed down the chain at employees, when the actual problems lie at the top, with people who are handsomely rewarded and never convicted.

The Tenet case shows that complaints about senior staff are likely to be ignored and the justice department will not insist they be addressed. One wonders too at the vast excess of integrity, compliance and ethics processes. Where does all the money for this come from; nursing or profits? Wouldn't it be easier to create a non-competitive not for profit system which is at less risk? It couldn't possibly be as expensive.

HCA is also a much smaller company from when it was Columbia-HCA, scaling back its total hospitals to about 200 from 340 at its peak. In 1996, the company made 150 different acquisitions. HCA in $95 Million Deal to Settle U.S. Criminal Claims Reuters December 14, 2000

HCA got out of the home health care business and sold or consolidated more than 100 hospitals. The chain currently has about 200 hospitals. HCA To Pay $840M for Fraud Claim New York Times December 15, 2000

Columbia/HCA Healthcare Corp.'s first quarter operating profit rose a better-than-expected 13 percent, driven by strong admissions at its hospitals owned for at least a year, the company said Tuesday. Columbia/HCA Earnings Beat Estimate The Associated Press April 25, 2000

Analysts said the settlement removed uncertainty from investors minds about the timing and breadth of the penalty. ''It will give people comfort that (the company) has put these issues to rest and can continue to focus on the improving fundamentals of their core hospitals,'' said Matthew Ripperger, a UBS Warburg analyst in New York. Columbia/HCA in Tentative Settlement With US Reuters Friday May 19, 2000

HCA-Healthcare Corp. (HCA.N), the largest U.S. for-profit hospital operator, said on Monday that its third-quarter operating profits rose 20 percent, beating estimates, on improved patient enrollment trends.
HCA - Healthcare Profits Beat Estimates REUTERS October 23, 2000

"What I call the new HCA that has evolved from the prior Columbia/HCA is a company that has become known for its principles and professional values,'' Williams said. ``That perception has changed as a result of the leadership coming back into the company, and the expectations and values that were set forth by new management.''

The management team under Frist and Bovender is viewed favorably by not-for-profit hospitals that are looking to sell because they are trusted by the investment community that advises sellers, cementing the consensus, Williams said.
I think HCA has changed its own prospects long before that,'' Montalvo said. ``The leadership style of Tommy Frist meant that the company was so much more cooperative and much less arrogant the last few years.'

To not-for-profit hospitals looking to sell, the rehabilitated HCA is on a par with well-respected Tenet Healthcare Corp., Santa Barbara, Calif., the second-largest for-profit chain, Montalvo said.
David Cyganowski, co-head of the not-for-profit investment banking unit at Salomon Smith Barney, said the cooling down of the anti-Columbia fervor among not-for-profit hospital executives has had a positive effect on the industry as a whole. With the specter of the buy-you-or-bury-you Columbia faded, not-for-profit executives and local communities are much more open to joint-venture opportunities with investor-owned companies.
End of an era: Justice Department ends nine-year criminal probe of Columbia/HCA executives, but company recovery began earlier
Modern Healthcare July 29,2002

HCA spokesman Jeff Prescott said the Nashville-based company eliminated cash bonuses in 1997, shortly after it became embroiled in a massive Medicare fraud investigation. "We wanted to get rid of short-term profit incentives," he said. Tenet's Aggressive Corporate Culture Fed Crisis, Insiders Say The hospital operator's business practices, profit-based pay incentives come under scrutiny LA Times December 12, 2002

HCA chairman and chief executive Jack O. Bovender Jr. said he hoped that the settlement will close out a sordid chapter of the company's history. The company has taken steps to ensure it has "corporate integrity," he noted, and a "culture that is focused on the delivery of quality patient care in the communities we serve." Shares of HCA closed
HCA, U.S. Agree to Fraud Settlement Washington Post December 19, 2002

Last spring an anonymous tipster dialed a toll-free line at the infamous hospital chain formerly known as Columbia/HCA to accuse a supply clerk of stealing medical gear and reselling it on Ebay. - - - - The in-house cops relayed the tip to the compliance officer at the Southwestern hospital where the alleged theft occurred. The officer went online and bought microscopes and other items from a woman who, it turns out, ordered such stuff for that hospital.
Under HCA's do-right bureaucracy, its board boasts an ethics and compliance committee of independent directors. Below that two separate corporate committees draft ethics policy and monitor its use. A 20-member department implements their programs. Twenty-six execs with related duties oversee ethics and compliance for everything from taxes to pollution to the Americans with Disabilities Act.
"The training is a waste of time and money," says a nurse at a Florida HCA hospital. "Anyone with two brain cells could figure out the stuff they're teaching us, and besides, the fraud that supposedly happened was high up in the company."
All told HCA spends $4 million a year on its ethics department and millions more for on-site overseers and ethics training for all 175,000 employees. A compliance officer works at each of HCA's 175 hospitals, 80 outpatient centers, 20 regional offices and HCA-owned practices for 400 doctors. Hospital executives and billing specialists get ethics training. HCA vets employees and physicians for clean ethical records and demands contractors comply with its rules, too. It notifies the Department of Health & Human Services anytime it buys or sells a facility. And it documents ethics and compliance personnel and policies hospital by hospital, storing the documents for years.
Healing Thyself Forbes Magazine February 28, 2003

Market apologists

Columbia/HCA's practices are still admired by sections of the powerful right in the USA - looking at what might have been. A Forbes magazine article minimises the extent of the fraud by pointing out that the regulations are complex and fraud prone, that no one went to prison hinting that the company has been vindicated. It quotes blatantly inaccurate and misleading statements

Never mind that, to some extent, the wrongs resulted from what was ill-conceived regulation from the start--a health care system so convoluted and ripe for gaming that it makes the tax code look elegant. And never mind, too, that the six-year effort resulted in just two criminal convictions of midlevel managers, both of which were overturned on appeal.
"A lot is lost because Justice Department and Medicare investigators have reeled in HCA and other for-profit hospital chains," says Scott Gottlieb, a physician and fellow at the American Enterprise Institute. "They proved adept at holding down costs, and there's a lot of empirical evidence indicating they improved patient outcomes, too."
Healing Thyself Forbes Magazine February 28, 2003

Marketplace progress

Columbia seemed to do very well after Frist took control for a while but as things began to shake out, particularly after the HealthSouth and Tenet dramas its profits started falling again. It responded by buying back shares. It will be interesting to see if it can maintain its softer more caring self in a more competitive environment and still survive.

HCA Inc., the nation's largest hospital operator, warned Tuesday that its first-quarter earnings will fall far below expectations, citing a mild flu season and the closure of several obstetrics and skilled nursing units. Hospital Operator HCA Has Earnings Woes AP Apr 26, 2003

Is the old Columbia/HCA still lurking there?

There are still some indications that the old aggressive HCA is not far below the surface. There are allegations of price gouging. A merger with Health Midwest, a community not for profit in Missouri and Kansas has aroused the ire of the attorney generals in those states. However most of this seems to be directed at the directors of Midwest.

I also have accounts of a number of smaller fraud settlements at various HCA facilities. US $1.25 million in 1999 for overbilling for adolescent psychiatric services, and billing for services rendered by unqualified employee. US $650,000 in 2000 for billing Medicare and Medicaid for charity care. Two settlement for US $1,929,255 and over US $5.4 million in 2001 for billing federal health care programs for procedures using experimental devices. It is not clear how much was prior to 1997.

The hearings (in California), expected to start in January, - - - - . The committee also will look into the actions of health-care provider HCA Inc., another system already under federal scrutiny. Legislators to eye billings by hospitals The Sacramento Bee December 5, 2002

Missouri Attorney General Jay Nixon asked a state court to dissolve Health Midwest, Kansas City, Mo., and fire its 21-member board of directors. Nixon and Kansas Attorney General Carla Stovall have been reviewing Health Midwest's agreement to sell its assets to for-profit HCA, Nashville, for $1.1 billion. - - - - Nixon accused Health Midwest directors of "gross abuse of authority or discretion with respect to the corporation." Health Midwest under fire Modern Healthcare December 9, 2002

A study for the California Nurses Association said that investor-owned hospitals account for 82 of the top 101 acute-care hospitals as ranked by charge-to-cost ratio, including 64 hospitals operated by Tenet Healthcare
HCA, Nashville, had the second-highest number of hospitals on the list, with eight.
For-profits lead in charges exceeding costs: CAN Modern Healthcare's June 11, 2003

Nashville-based HCA, the nation's largest for-profit hospital chain, overcharged uninsured patients $2.1 billion last year for care, a report by a Hispanic advocacy group says.  Consejo de Latinos Unidos, a Los Angeles-based nonprofit organization, released its 41-page report Wednesday.

The House Energy and Commerce Committee is asking the 20 largest hospital systems for information about their pricing systems. "The people who can least afford it are paying full sticker price for some hospital services," said committee spokesman Ken Johnson.
(Latino representative) contends HCA hospitals place liens on property, garnish wages and take legal action against those who have no means of paying. HCA overcharged uninsured patients, group says AP Newswires July 17, 2003

A 41-page investigative report released Wednesday by the Consejo de Latinos Unidos recommends a federal probe of the nation's largest for-profit chain, HCA.

"Either Congress or the Bush administration must conduct a thorough probe into the billing and collection practices against the uninsured by HCA," says the report written by the Latino advocacy group.

The Consejo, using Medicare and SEC data, claims HCA overcharged the uninsured $2.1 billion last year. The advocacy group says it has been contacted by more than 600 families since January, who say they were victims of hospital price gouging.
"The most incredible finding during this entire investigation is HCA appears to demand that some uninsured patients sign a nondisclosure agreement after a significant deposit for hospital services is made," the report says.
Pressure mounts for federal probe of HCA Orlando Business Journal July 16, 2003

Olsten and KPMG

Two other groups were caught up in the scandal. Olsten was involved in the same scandal and paid separately. Quorum was affiliated with HCA and indulged in the same practices exposed by the same whistleblower. KPMG was Columbia/HCA's auditor and allegedly cooperated.

Olsten Corp. paid $40.9 million to settle allegations that it and Columbia/HCA disguised unallowable acquisition costs as allowable management fees when Columbia/HCA bought home health agencies in several states. Govt's False Claim Recoveries Rise Associated Press Online February 25, 2000

Donald Steven McLendon alleges in his suit that Columbia/HCA and Olsten Corp., participated in elaborate schemes to submit false claims to Medicare. Olsten allegedly sold HHAs to Columbia at below market value and then had a management agreement at an excessive rate, and then the HHA claimed the higher cost management fee on it cost reports. The U.S. Attorney's office in Atlanta said on July 19 that Olsten Corp. has agreed to pay $51 million to settle charges and is no longer part of the lawsuit.
Columbia also billed Medicare for home care visits to residents of assisted-living facilities and costs of sales, marketing and other activities that are not reimbursable under the regulations, according to the lawsuit.

Another Olsten subsidiary, Kimberly Home Health Care, agreed to plead guilty Monday to kickback charges in Atlanta and Florida, and will pay a criminal fine of $10 million. The government says Kimberly paid kickbacks to another corporation for ordering or arranging services reimbursable by Medicare.

The Quorum Health Group, the nation's largest hospital management company, has agreed in principle to pay $95.5 million in civil penalties to settle two lawsuits that accused it of defrauding federal health care programs like Medicare.

Both suits involved an arcane accounting practice known as cost reporting, which has been at the center of widespread criminal and civil investigations in the hospital industry.

The larger of the two Quorum settlements, for $77.5 million, resolves
(whistleblower initiated) accusations that the company systematically misrepresented reimbursable expenditures for the purpose of cheating the government. The remaining $18 million will settle a suit accusing the company of misallocating costs from a single Alabama hospital, again for the purpose of inflating federal reimbursement.
The larger of the two suits involving Quorum was filed under seal in January 1993 by James F. Alderson, formerly the chief financial officer for a hospital that the company managed in Whitefish, Mont. Mr. Alderson was dismissed from his job 10 years ago, soon after refusing to follow the company's cost-reporting tactics, which he considered illegal.
Big Hospital Manager to Pay a Fraud Settlement of $95 Million New York Times October 3, 2000

The Justice Department joined a whistle-blower lawsuit yesterday against KPMG, the giant accounting firm, which accuses it of aiding in a client's scheme to defraud government health care programs by submitting bogus expense claims.

Legal experts said that the decision by prosecutors would make the KPMG case the highest profile - and potentially even the first - instance in which the government held an accounting firm liable under the federal whistle-blower statute for participating in the fraudulent actions of a client.
Justice Department Joining in Lawsuit Against KPMG New York Times December 5, 2000

In the first case against a big accounting firm under the False Claims Act, KPMG denied wrongdoing but paid $9 million to the government to settle a whistle-blower lawsuit in which the feds were a co-plaintiff
Healing Thyself Forbes Magazine February 28, 2003

On the one hand, in the late 1990's, the international accounting giant was publicly implicated as a participant in a huge fraud on the Medicare system. A lawsuit sought to recover the money the government had lost. And two officials with the firm were named as unindicted co-conspirators in a related criminal case.

Earlier this year, the situation attracted the attention of some members of Congress, who demanded an inquiry. Yesterday, the General Accounting Office released a report detailing how the government allowed KPMG to work as a federal fraud investigator even as it was at the center of a federal fraud inquiry.
The Times article, quoting from KPMG work papers and other documents, said the accounting firm had assisted Columbia in misrepresenting hospital expenses, for the purpose of improperly inflating federal reimbursement through a system known as cost-reporting.
U.S. Report Details KPMG's Odd Dual Role New York Times December 1, 2000

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This page created August 2003 by Michael Wynne