Hospital company to pay $631 million
Houston Chronicle News Services
Dec. 18, 2002, 11:25PM
NASHVILLE, Tenn. -- HCA, the nation's largest for-profit hospital chain, announced a $631 million settlement Wednesday with Justice Department attorneys that would end the government's nine-year investigation of health care fraud allegations against the company.
The settlement, which requires formal approval by the Justice Department and the courts, would raise the amount of civil fines and criminal penalties the Nashville-based company has paid the government to $1.7 billion over the past few years.
HCA had pleaded guilty previously to defrauding government health care programs.
In the cases included in the settlement agreement, whistle-blowers alleged the company filed false claims and paid kickbacks to doctors so they would refer Medicare and Medicaid patients to its facilities.
James Thompson, a Texas doctor who filed a whistle-blower suit in 1995 alleging kickbacks and Medicare fraud, said the case cost him his health and his practice. He said other doctors ostracized him, so he practiced alone without a day off for three years, suffering a stroke in 1998.
"I said it then, and I'll say it again: Doctors have a duty to protect the health of the community. They protect their patients first, and profits last," said Thompson, who filed the suit in Corpus Christi and lives in Rockport. "I am proud of what I did, and I'd do it again. But I'm sure glad it's over."
However, attorneys representing other whistle-blowers were not ready to sign off on the settlement. The government has not detailed how the money will be split up or how much will go to the whistle-blowers.
"We have a statutory right and obligation to ensure the settlement is fair, adequate and reasonable," said John R. Phillips of Phillips & Cohen, which represented the whistle-blowers in the cost-report case. "Once we have more information, we intend to fully analyze the settlement."
The firm represents James Alderson, former chief financial officer of a Montana hospital run by a company once owned by HCA. He says he was fired for failing to include aggressive claims on a cost report and filed suit in 1993 charging fraud. That is when the Justice Department began examining the allegations.
Stephen Meagher, another attorney for the whistle-blowers, said attorneys were about to take depositions from HCA Chief Executive Officer Jack Bovender and co-founder Thomas Frist Jr. Bovender was scheduled to testify next month and Frist in February, he said.
The settlement also comes with Sen. Bill Frist, a Tennessee Republican and Thomas Frist's brother, emerging as a candidate to replace Trent Lott as Senate majority leader.
Under the settlement agreement, HCA would pay the Justice Department $631 million beginning Feb. 3 and the government would end its investigation.
Whistle-blowers like Thompson and Alderson may be entitled to a share of that money.
Previously, HCA agreed to pay $250 million to resolve non-related outstanding Medicare cost report issues with the Centers for Medicare and Medicaid Services. The company, formerly known as Columbia/HCA, paid $840 million in 2001 to settle other whistle-blower cases and pay criminal fines.
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. It was the only case that went to trial.
The Justice Department closed its criminal investigation of HCA executives in July, clearing them to testify in the civil Medicare and Medicaid fraud cases.
The company also said Wednesday it has reached an agreement with attorneys representing states with claims similar to the government's. Under this agreement, HCA will pay $17.5 million to state Medicaid agencies.
HCA expects to charge approximately $395 million against earnings after taxes in the fourth quarter of 2002 because of the settlements.
The company also will be obligated by law to pay legal fees of the whistle-blowers' attorneys. The company expects to record a charge for these fees in the fourth quarter of 2002.
"We are pleased to have successfully negotiated a settlement to the remaining two civil issues," said Jack O. Bovender Jr., HCA chairman and CEO.
Justice Department spokesman Charles Miller issued a statement saying, "We have had discussions with HCA about resolving this civil litigation. The staff assigned to this matter has now reached a tentative understanding with HCA for a settlement."
"Until I see the math, I'll remain skeptical," Sen. Charles Grassley, an Iowa Republican who helped rewrite the whistle-blower law, said in a written statement. "This settlement can't be a Christmas gift to HCA and a lump of coal for the taxpayers."
Wall Street liked the news. HCA shares rose 3.4 percent, or $1.39 a share, to close Wednesday at $42.90 on the New York Stock Exchange.
The Senate needs more fraud experience. HCA is all cleaned up now. Bring him on in Jethro.
And your point is? I thought so.
Is Sen. Frist somehow respoinsible for this? Seems to they replaced the founder of the company who was getting slaphappy with the books.
The sins of the father are relevant, correct?