After last week's criminal indictments of three Columbia/HCA Healthcare Corp. executives, the question on everyone's mind is: How far up will this thing go?
"I think they're climbing Mount Everest, and if they can get to the top, they will," said attorney Rebekah Poston, chairwoman of the white-collar crime division at Steel, Hector & Davis in West Palm Beach, Fla.
Poston said she believes the federal government is trying to create a case that shows a nationwide pattern of illegal conduct at Columbia. If so, the company can be held vicariously liable for the acts of its employees.
"If (the federal government) thinks this is a corporate code of conduct, they can go after the corporation in an attempt to close Columbia down," Poston said.
The federal government doesn't usually begin with indictments of senior officials and then move down the corporate food chain, Poston said. Instead, it works its way toward the top. She added that the indictment of three senior executives probably indicates the government is trying to get at the people setting corporate policy.
Last week Charles R. Wilson, U.S. attorney for the Middle District of Florida, said the indictments "represent the first phase of the government's ongoing investigation" of Columbia. Numerous news reports citing unidentified federal officials said dozens more Columbia executives may be indicted.
David Vandewater, Columbia's former president and chief operating officer, has hired Nashville-based defense attorney Jim Neal. Neal, one of the chief prosecutors during the Watergate investigation, said he was hired some time ago.
At deadline it wasn't known whether Richard Scott, the former chairman and chief executive officer of Columbia, had hired legal counsel.
Charged in the five-count indictment unsealed July 30 are Robert Whiteside, 47, director of reimbursement at Columbia's Nashville headquarters; Jay A. Jarrell, 42, CEO of Columbia's southwest Florida division; and Michael T. Neeb, 35, chief financial officer of Columbia's north Florida division.
The indictment, initially returned by the grand jury on June 25, charged the three with conspiracy to submit false cost reports to Medicare and the Civilian Health and Medical Program of the Uniformed Services, the federal insurance program covering members of the military and their dependents.
The indictments said the conspiracy, which involved cost reports submitted by just one hospital, began in 1986 and continued to the present. The hospital is 249-bed Columbia Fawcett Memorial Hospital in Port Charlotte, Fla., which Columbia acquired in 1992 through its purchase of Basic American Medical.
Specifically, the indictment alleges that the three executives failed to notify federal officials of an audit error by a Medicare fiscal intermediary that benefited Columbia. It said the three men, and others, agreed to keep quiet about the error.
The indictment also alleges the three knowingly inflated the hospital's capital costs to be reimbursed by Medicare. That resulted in $1.8 million in Medicare overpayments to the hospital, the indictment claims.
In his hearing before the U.S. District Court in Nashville on July 30, Whiteside said he didn't totally understand the charges against him.
"I understand the words that are here," Whiteside said. "I know that it's conspiracy to defraud the U.S. government."
Whiteside's attorney, former U.S. Attorney Hal Hardin, tried to avoid reporters' questions but did say that he was retained by Whiteside, not Columbia. Whiteside had not spoken to Scott, according to Hardin. He added that Whiteside's indictment "came out of the blue. We had no idea this was coming."
Columbia wouldn't comment on whether the company posted the $100,000 bond required for each of the three executives or whether the three still were employed by the company.
If convicted, they each face up to 25 years in prison and fines up to $1.25 million.
All three executives have denied the charges. Their formal arraignments will be Aug. 19 in federal court in Fort Myers, Fla.