As the government's investigations into the business practices of Columbia/HCA Healthcare Corp. escalated last week, people and properties connected to the embattled Nashville-based company continued to peel away from it.
In addition, court documents connected to the investigation confirmed the company itself, in addition to an undisclosed number of its employees, is the focus of a criminal fraud investigation. The documents also confirmed the government is trying to protect the identity of informants that include Columbia employees as well as people from competing hospitals.
The documents were generated as part of several court proceedings related to the indictments of three Columbia executives and attempts by the media to have sealed records in the case opened to the public.
"Unsealing the affidavit and supporting materials could conceivably notify pertinent Columbia employees in other jurisdictions of the nature and scope of the government's investigation so as to prompt the destruction of evidence of falsification of records," said Kathleen Haley, a prosecutor with the U.S. attorney's office in Tampa, Fla. "The target of the investigation, as well as the press, would have a road map of the investigation."
Three Columbia executives already have been indicted on charges of an alleged conspiracy to defraud the government. They are scheduled to be arraigned at an Aug. 19 hearing in U.S. District Court in Fort Myers, Fla., and are expected to plead not guilty.
But court documents reveal that other Columbia executives with ties to past Florida operations also may be indicted.
"There are other individuals who are culpable in connection with the conduct that's alleged in the indictment," Haley said.
By the end of last week, nearly one-third of former Chairman and Chief Executive Officer Richard Scott's 21-member management team had announced their resignations from the company. Scott himself resigned last month.
Jamie Hopping, 43, resigned as president of Columbia's Western Group. She had been with the company for about eight years, starting with her tenure from 1990 to 1993 tenure as CEO of Deering Hospital, one of Scott's first acquisitions at Columbia Hospital Corp., the chain's predecessor.
At deadline, Hopping couldn't be reached for comment.
The Western division includes all states west of the Mississippi River except Arkansas, Louisiana, Oklahoma and Texas. Hopping worked from the company's Dallas offices and is married to another Columbia executive, Stephen Bernstein, CEO at Columbia Plaza Medical Center of Fort Worth, Texas.
In 1993 Hopping was promoted to chief operating officer of Columbia's South Florida division, and in February of 1994 she was named president of the division.
When she became the top executive in South Florida, Hopping replaced Daniel Moen, who was president from 1994 to 1996. He then moved to the chain's corporate headquarters in Nashville.
As current president of Columbia Sponsored Networks Group, Moen's role is expected to lessen if he survives the flurry of resignations.
Moen was on vacation last week, the company said, and he was unavailable for comment.
Five members of Scott's senior management team had announced their resignations by the end of last week.
Hopping; Herbert Wong, 44, senior vice president of strategic development; and Robert Stearns, 45, senior vice president and chief financial officer, resigned last week. Three others previously announced their departures.
Moen's focus was on integrated delivery systems, and the company may be moving away from that strategy with the expected divestiture of its home-care business (Aug. 11, p. 2).
He handled Columbia's acquisition of the Avon, Conn.-based benefits management company Value Health and was a key figure in an aborted deal to acquire Blue Cross and Blue Shield of Ohio.
Federal government records obtained by MODERN HEALTHCARE*reveal the FBI had requested interviews with Moen in the past about Columbia business practices.
Last year, Moen and Scott were key figures in an investigation by the U.S. attorney's office in Tampa of the actions of David Bussone, former CEO of Tampa General Hospital. The records said the investigation dealt with Columbia's failed attempt to buy the public hospital in 1995 at a "substantially reduced price." Specifically, the investigation looked into allegations that Bussone intentionally tried to devalue the hospital to lower the sale price for Columbia.
Bussone and Columbia denied the existence of any such conspiracy, and the investigation was dropped with no charges filed.
Meanwhile, the company is facing more shareholder lawsuits. For example, New York State Comptroller Carl McCall filed suit against the company in U.S. District Court in Nashville. In his suit, McCall, trustee of the state and local employees' pension fund that owns more than 2 million Columbia shares, claims the recently alleged criminal activity has depressed Columbia's stock price, thereby negatively affecting the pension fund.
The bombardment of investigations and legal woes also is affecting Columbia's hospital deals.
In Chicago, 189-bed Methodist Hospital last week backed out of its pending merger with Columbia. And in Charleston, S.C., Medical University of South Carolina is rethinking its proposed 30-year lease agreement with the hospital chain (See story, p. 24).