HCA To Pay $840M for Fraud Claim

Update: HCA Paid $1.7 Billion Dollars in Fraud Settlements and Criminal Pleas

By MICHAEL J. SNIFFEN

Associated Press Writer
New York Times (censored from archives)
December 15, 2000

District of Criminals - Frist at the inauguration of his successor Senator Bob Corker, Tennessee Senator Lamar Alexander (far right), and former U.S Senator Howard Baker (second to right). Corker was busted hiring dozens of illegal aliens in his construction business. Governor Alexander was accused of rape and attempted murder by CIA coke runner and sexslave Cathy O'Brien (videos), and named as "the sleaziest politician in America" by both Bill Clinton Blythe III and Al Gore Jr. Ambassador Baker owned "The Firm", a Memphis lawfirm alleged to be the model for John Grisham's book and movie starring Tom Cruise, about a Mafia lawfirm in Memphis. During Iran Contra, Baker was White House chief of staff, when Tennessee lawyer JD Lee and 100 other lawyers filed a RICO Act class action for the Christic Institute, charging the Reagan/Bush White House with narcoterror bombings. On the Watergate Committee, along with Tennessee senator Fred Thompson, Baker ran damage control President Nixon's involvement in the CIA assassation of President John F Kennedy, as confessed by convicted Watergate burgler E Howard Hunt (aka Ethan Hunt in Mission Impossible), and convicted White House chief of staff HR Halderman

WASHINGTON (AP) _ HCA-The Healthcare Company, the nation's largest for-profit hospital chain, agreed Thursday to plead guilty to defrauding government health care programs and will pay more than $840 million in criminal fines, civil penalties and damages.

The FBI in Tennessee has scheduled a news conference regarding the criminal investigation for Friday in Nashville. An FBI agent reached by phone wouldn't specify the reason.

The agreement, reached after a seven-year federal investigation triggered by private whistleblowers, is the largest government fraud settlement ever negotiated by the Justice Department.

The company agreed to cooperate with a continuing investigation that Attorney General Janet Reno said could still produce criminal charges. Deputy Assistant FBI Director Thomas Kubic called the case ``one of the FBI's highest priority white-collar crime investigations.''

The agreement did not settle civil allegations that HCA inflated charges to the government and paid kickbacks to doctors so they would refer Medicare and Medicaid patients to its facilities.

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.

Separately, HCA agreed to pay $745 million in civil penalties for its alleged false billing practices _ a figure negotiated last spring but not finalized until the criminal settlement was announced Thursday.

``Health care fraud impacts every American citizen,'' Reno told a news conference. ``If you overbill the U.S. taxpayer, then we are going to make you pay it back and then some.''

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 co-founder and chief executive Thomas Frist Jr., the brother of U.S. Sen. Bill Frist, R-Tenn., said from the company's Nashville headquarters: ``Today's action represents one of the last steps needed to put the Columbia investigation behind us and allows us to move forward, maintaining our focus on providing quality patient care.''

Frist ousted Richard L. Scott as chief executive in July 1997 and began a restructuring of the company. HCA got out of the home health care business and sold or consolidated more than 100 hospitals. The chain currently has about 200 hospitals.

Reno said the civil settlement covers allegations the company overbilled government health care programs for services it performed, charged for services it did not perform and for costs that were not eligible for reimbursement.

In the criminal case, the two units agreed to plead guilty to filing false cost reports; fraudulently billing Medicare for home health care workers and management and wound care center workers; fraudulently billing Medicare and other health programs by inflating the seriousness of pneumonia diagnoses; paying kickbacks in the sale of home health agencies; and kickbacks to doctors to refer patients.

The guilty pleas will be filed in Miami, Atlanta, Nashville, Tampa, Fla., and El Paso, Texas.

Assistant Attorney General David Ogden said that $731.3 million of the civil settlement would to go the federal government, but some portion of that, up to a maximum of 25 percent, would be allocated through negotiations to private whistleblowers _ 29 have been identified publicly. ``Whistleblowers brought valuable information to the attention of the U.S. government,'' Ogden said.

An additional $13.6 million of the civil settlement will be distributed to state governments for their share of losses under the state share of the Medicaid program.

The company, formerly known as Columbia/HCA 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.

Stephen Meagher, a San Francisco attorney who represents several HCA whistleblowers, described the settlement as ``pretty mind-blowing.''

John Schilling, one of the whistleblowers, was a key witness and provided documents in a 1999 criminal trial that resulted in prison sentences for two mid-level HCA executives in Florida. They are appealing. Another executive was acquitted and a fourth pleaded guilty after a hung jury to avoid a second trial.

There have been no criminal convictions of any top HCA executives.

Shares of HCA were down 22 cents to close at $38.54 on the New York Stock Exchange.


On the Net:

Health Care Fraud - NBC News - "The blatant theft fo billions of dollars intended for the elderly and disabled. An estimated $60-Billion a year pilferage of America's healthcare safety net." Federal prosecutor Kirk Ogroskey, "These people have absolutely nothing to do with healthcare. They're thieves who would be committing other types of crimes if they were not committing Medicare fraud."

Interview with John Schilling - Interview with whistleblower author about new book: "Undercover - How I went from Company Man to FBI Spy". Whistleblower John Schilling tells the James Hoyer Law Firm how he helped to expose one of the worst healthcare frauds in U.S. history, returning $1.7 Billion to the federal government. "What the scheme was that the company was preparing two sets of books. The whole comapny maintained reserves. What they put in reserves was money they owed the government."

Undercover: How I Went from Company Man to FBI Spy -- and Exposed the Worst Healthcare Fraud in US History - When John Schilling, an unassuming mid-level accoun­tant, went to work for the Columbia Hospital Corporation, he never expected to become the catalyst for the series of "whistleblower" cases that ripped through the healthcare industry in the late 1990s. But when he unwittingly discovered that the company was siphoning billions of dollars away from Medicare and stealing from American taxpayers, he was faced with a choice: Speak up for what he believed to be right, or remain silent. Undercover tells the story of Schilling's harrowing journey from ordinary citizen to federal informant. The book recounts how Schilling allied himself with the FBI and the Justice Department and--unable to confide in friends or family--journeyed into an undercover world in which he carried a wire and mapped out offices for secret government raids. Suspenseful and provo­ca­tive, Undercover chronicles Schilling's nine-year ordeal that eventually led to the resignation of high-level executives and forced Columbia to return $1.7 billion dollars to the federal government. A compelling account of one man's decision to risk everything for the greater good, this book reveals the personal side of a thankless role that resulted, ultimately, in justice.

Columbia/HCA - Fraud, Settlements and Recovery - When John Schilling, an unassuming mid-level accoun­tant, went to work for the Columbia Hospital Corporation, he never expected to become the catalyst for the series of "whistleblower" cases that ripped through the healthcare industry in the late 1990s. But when he unwittingly discovered that the company was siphoning billions of dollars away from Medicare and stealing from American taxpayers, he was faced with a choice: Speak up for what he believed to be right, or remain silent. Undercover tells the story of Schilling's harrowing journey from ordinary citizen to federal informant. The book recounts how Schilling allied himself with the FBI and the Justice Department and--unable to confide in friends or family--journeyed into an undercover world in which he carried a wire and mapped out offices for secret government raids. Suspenseful and provo­ca­tive, Undercover chronicles Schilling's nine-year ordeal that eventually led to the resignation of high-level executives and forced Columbia to return $1.7 billion dollars to the federal government. A compelling account of one man's decision to risk everything for the greater good, this book reveals the personal side of a thankless role that resulted, ultimately, in justice.

He blew the whistle, and health giants quaked - James F. Alderson, a client of Phillips & Cohen, was a financial officer with a Montana hospital when he was told that the hospital’s management company routinely filed fraudulent cost reports with Medicare. He was fired after he refused to file “aggressive” claims that the company knew were not reimbursable. His False Claims Act lawsuit against that company -- Quorum Health Resources Inc. -- and HCA (then known as Columbia/HCA Healthcare Corp.) helped lead to the largest government investigation of Medicare fraud ever. Quorum paid $85.7 million to settle the whistleblower lawsuit in 2001. A judge awarded Alderson 24 percent of the recovery. HCA later paid $631 million to settle three qui tam lawsuits, including Alderson’s and one brought by John Schilling, another whistleblower represented by Phillips & Cohen. Alderson and Schilling shared a $100 million award for their efforts and the work of their attorneys on the case.

www.PhillipsAndCohen.com - Phillips & Cohen LLP is the nation’s most successful law firm representing whistleblowers in qui tam lawsuits. On behalf of whistleblowers, our lawyers bring Medicare fraud cases and qui tam cases involving other types of fraud under federal and state false claims laws. Phillips & Cohen also represents whistleblowers who have information about federal tax fraud and tax underpayments. Under a new law, whistleblowers who provide information about tax fraud or tax underpayments that leads to more than $2 million in recoveries, may receive a reward of 15 percent to 30 percent of the amount the federal government recovers.

HCA whistleblower uses reward money from qui tam case to establish college program - HCA whistleblower James Alderson and his wife, Connie, have given some of the reward money from his qui tam case to Montana State University's College of Business to establish the Alderson Program in Entrepreneurship. The amount of the gift is undisclosed. But the university said the size of the gift puts funding for the entrepreneurship program "on par with some of the most prestigious programs in the country." Phillips & Cohen LLP represented Alderson in a qui tam lawsuit against HCA, the nation's largest for-profit healthcare provider. The qui tam lawsuit, brought under the False Claims Act, alleged a deliberate scheme of Medicare fraud and launched the nation's largest healthcare fraud investigation. Alderson's qui tam case and a related one returned more than $500 million to the federal government. ". . . My experience in whistleblowing taught me what a good education I had at MSU and it prepared me to compete at any level," Alderson said in an MSU press release. "I want to see that expanded." Rich Semenik, dean of the business college, expressed gratitude for the Aldersons' gift. "Their generosity will affect students immediately and for generations to come," he said in the press release. The money will be used for scholarships, field research grants and other funding needs. Entrepreneur magazine this month recognized the Alderson program as one of the best programs in the U.S. that offer minors or an emphasis in entrepreneurship.

www.all-about-qui-tam.org - If you know about a company or individual defrauding the government, there are steps you can take to stop the fraud and receive a reward. A whistleblower law known as the False Claims Act allows whistleblowers to bring "qui tam" lawsuits — basically civil fraud lawsuits filed on behalf of the government — against companies and individuals that are cheating the government. Liable defendants in qui tam cases must pay the government for its losses and pay penalties for fraud. A whistleblower who brings a successful qui tam case under the False Claims Act is entitled to a reward, which is based on the amount of money the government recovers. The False Claims Act benefits whistleblowers in other ways: Whistleblowers who bring qui tam lawsuits have some job protection. The government must investigate whistleblower allegations in a qui tam lawsuit. Some of the types of fraud against the government that can be the basis of a qui tam lawsuit include Medicare fraud, Medicaid fraud, defense contractor fraud, customs fraud, bid-rigging on government projects, environmental fraud and research fraud. Twenty-three states and the District of Columbia have laws similar to the federal False Claims Act. In those places, whistleblowers also can bring qui tam lawsuits against companies and individuals defrauding state and local governments and agencies. This web site is intended to educate whistleblowers and the general public about the False Claims Act and qui tam lawsuits. It is not intended to offer legal advice.

U.S. DEPARTMENT OF JUSTICE PRESS RELEASE - U.S. JOINS LAWSUIT AGAINST COLUMBIA HEALTHCARE - The Department of Justice announced today that it has joined a lawsuit alleging that Columbia/HCA Healthcare Corporation, the largest health care services provider in the nation, defrauded the Medicare program and other federally funded health insurance programs. Columbia/HCA owns approximately 300 hospitals in 32 states. More than 100 of those hospitals are included in the suit, which also alleges fraud by five former Basic American Medical, Inc. (BAMI) hospitals in their Medicare cost reports, which continued after the company's acquisition by Columbia/HCA in 1992. The suit was initially brought by John Schilling, a former Supervisor of Reimbursement for the West Florida Division of Columbia, under the qui tam provisions of the False Claims Act, a federal law that allows private individuals to sue on behalf of the government. Under the False Claims Act, a company can be fined up to three times the amount of the fraudulent billings and assessed civil penalties. In addition, under certain circumstances, a whistle blower can recover up to 15 to 25 percent of the government's recovery in a case that the government joins.

Giantkillers: The Team and the Law That Help Whistle-Blowers Recover America's Stolen Billions - Henry Scammells latest offering is an interesting read from a couple of different perspectives. Students of history will enjoy reading about the emergence of the "False Claims Act." in the 1860's and how a handful of individuals recognized how it might become relevant again in the late twentieth century. This law, supported by President Abraham Lincoln and enacted by the Congress during the Civil War was designed to encourage citizens to "blow the whistle" on fraud. It had been quite effective in the mid to late nineteenth century but its provisions were hopelessly out of date and the law had essentially been dormant for fifty years. John Phillips, a talented and committed young lawyer who founded the Center for Law in the Public Interest became aware of the law in 1983 and immediately recognized its potential. Phillips knew that if the law was revised properly that it would have a major impact on public interest law. He found a pair of powerful allies in the Congress who helped shepherd through the needed changes to the law. They were strange bedfellows indeed. Chuck Grassley, the conservative Republican senator from Iowa and Howard Berman, a liberal Democratic congressman from California played key roles in getting the revised "False Claims Act" passed. Most of the book, however, is devoted to the trials and tribulations of those courageous individuals who felt morally bound to stand up and risk everything to challenge practices and procedures they believed to be illegal and immoral. Those cited in this book came from a wide range of industries. Jim Alderson recognized fraud in the health care industry.

Ethics Solutions LLC - John W. Schilling, CPA - John W. Schilling is a former Medicare Fraud Investigator and Medicare cost report Auditor. He coordinated healthcare fraud investigations working closely with the Department of Health and Human Services Office of Inspector General (OIG), and the Federal Bureau of Investigation (FBI). With his Medicare reimbursement expertise he conducted numerous Medicare cost report training sessions for federal law enforcement and, multiple Assistant United States Attorneys. John has 18 years of healthcare financial experience, including Medicare reimbursement management at Columbia/HCA and Community Care of America. His expertise includes cost report accounting fraud and forensic accounting. John has had two successful qui tam actions. He was a relator in the Columbia/HCA case, and instrumental in the successful FBI probe as a confidential undercover informant and served as a key witness in the Whiteside & Jarrell criminal trial. Columbia/HCA agreed to a $1.7 billion civil settlement to resolve the case. He was also the relator in the KPMG case which settled for $9 million. In both cases Mr. Schilling alleged Medicare, Medicaid, and Champus cost reporting fraud and improper cost shifting. With our vast whistleblowing experience we can provide you with guidance and support in your effort to prevent, remedy, or report fraud. We are successful whistleblowers. We have real world experience and work with the government and qui tam attorneys on fraud cases.

UNITED STATES OF AMERICA versus ROBERT W. WHITESIDE, JAY A. JARRELL - UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT, Nos. 99-15197, 00-12759, D. C. Docket No. 97-00052 CR-FTM-24D. In Appeal No. 99-15197, appellants Robert Whiteside and Jay Jarrell appeal their criminal convictions and sentences for making false statements in Medicare/Medicaid and CHAMPUS reimbursement cost reports and for conspiracy to defraud the government by making false statements in those cost reports. In Appeal No. 00-12759, the defendants appeal the district court=s order denying them access to sealed documents. Based on our review of the voluminous record in Appeal No. 99-15197, we reverse the defendants= convictions and sentences in light of the government=s failure to prove that the alleged statements were knowingly and willfully false. In Appeal No. 00-12759, we affirm the district court=s order denying access. In February 1995, Schilling contacted a law firm about filing a claim pursuant to the qui tam provisions of the False Claims Act. Schilling did not inquire whether he should disclose the interest issue to the FI. Schilling resigned from Columbia in August 1995, but before he left, he collected four boxes of evidence and sent these to an attorney. Subsequently, Schilling filed qui tam actions against Columbia and KPMG, which the government joined. Three months later, Schilling met with a Federal Bureau of Investigation agent and an Assistant United States Attorney and eventually agreed to cooperate in a criminal investigation. Later, Schilling returned to Columbia to obtain general information about Columbia for the FBI. A grand jury indicted Whiteside, Jarrell, and Neeb for conspiracy to commit an offense against or to defraud the United States, in violation of 18 U.S.C. ' ' 371 and 2. The grand jury also indicted the defendants for making false statements in applications for Medicare/Medicaid benefits and payments to a department of the United States, in violation of 42 U.S.C. ' 1320a-7b and 18 U.S.C. '' 1001 and 2. A second grand jury re-indicted the defendants and added Dick to the conspiracy charge. The grand jury also charged Whiteside, Jarrell, and Neeb with false statement offenses and obstructing or impeding a federal auditor in performance of the auditor=s official duties, in violation of 18 U.S.C. '' 1516 and 2. The indictment alleged that the conspiracy lasted from at least 1990 to July 1998, and it based the substantive charges upon specified cost reports filed for 1992 and 1993.

International Association of Whistleblowers - The International Association of Whistleblowers (IAW) promotes and encourages laws seeking to oppose hazardous, illegal and unsafe conditions as well as waste, fraud and abuse of authority in government and government funded entities. We also advocate the fundamental premise that laws should effectively protect all valid truth tellers, including those who speak up on public concerns, public safety, and to protect our nation's security, health, environment, civil rights, and the welfare and liberty of the American public. We enlist citizens throughout the world to make our concerns known to the U.S .Congress, the media,and the public; and to generally assist our quest for positive change.

Is Bill Frist Fit to Govern Tennessee? - As former Senate Leader Bill Frist eyes a run for the Tennessee Governorship in 2010, a new report by NNOC Tennessee—the state’s affiliate of the National Nurses Organizing Committee—finds that his record on healthcare issues disqualifies him from leading the Volunteer State. The RNs, along with other healthcare activists, will release the report this Thursday outside the HCA headquarters, and will then travel to California for a second release timed to coincide with Frist’s speech at a June 19th convention of health insurance corporations. Despite his background as a physician, Frist’s years in elected office have only served to worsen the healthcare tragedy that is afflicting Tennessee families. Key elements of his healthcare record include: Failure as Senate Majority Leader to secure more money for Tennessee to reduce the TennCare cuts that denied coverage to 200,000 state residents. Massive fundraising from healthcare corporations, healthcare PAC’s, and executives at HMO, pharmaceutical, and insurance firms. It is no coincidence that Frist has supported numerous proposals to protect these donors, including unsuccessful efforts “to protect drug companies from thimerosal-related litigation while eliminating legal recourse for families of vaccine-injured, mercury-toxic children” and to limit patient rights to sue healthcare corporations, as well as a successful effort to limit enrollment in Medicare part D. A political career jump-started by funds from HCA, the family-owned Hospital Corporation of America, known for cutting corners on patient care.

HCA: www.HCAhealthcare.com

"While in medical school, Senator Frist was involved in a lab project which entailed dissecting feline remains. In a 1989 autobiography, Frist described how he "spent days and nights on end in the lab, taking the hearts out of cats, dissecting each heart." After some time, Frist said "[he] lost [his] supply of cats." The project, which needed to be completed as part of the medical school curriculum, could not be finished without another supply of cats. Frist several times obtained cats from animal shelters, falsely suggesting that he wanted to adopt them as pets. In his autobiography, Frist attributed his behavior, which he described as "heinous and dishonest", to the pressures of school."
-Wikipedia, Bill Frist, Main article: Bill Frist medical school experiments controversy

"It costs only $100,000 to kill 2-million Americans."
—Senator Dr. Bill Frist, MD, MSNBC "Hardball" with Chris Mathews



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