The fraud accusations against Columbia/HCA Healthcare Corp. got personal last week when a former executive at one of its hospitals sued the company, alleging it fired her for refusing to carry out illegal activities.
Columbia spokesman Jeff Prescott said the executive wasn't fired but resigned. He added: "We don't believe her allegations to be accurate."
Valinda Rutledge worked from December 1996 to Oct. 2 in several positions, including chief executive officer, at Columbia's Brandon (Fla.) Regional Medical Center. She filed suit against Columbia Nov. 4 in Hillsborough County (Fla.) Circuit Court. Rutledge alleges she was fired after refusing to carry out directives from upper management that she thought were illegal and would jeopardize patient care at the 225-bed facility.
In her lawsuit, she alleges that:
She was pressured to hire an underling whose job would be to increase referrals to Columbia's home-care services regardless of medical necessity or the legality of the referrals.
She was instructed to cut 150 staff positions at the hospital despite her objections that the layoffs would jeopardize patient care.
She was pressured to threaten physicians with canceling contracts for services if they didn't shorten the costly lengths of stay of neonatal patients.
Promoted to CEO from administrator in April, Rutledge later was demoted by Columbia to chief operating officer and replaced as CEO. She claims she subsequently was fired in violation of Florida's "whistleblower" protection law, which insulates employees from termination for complaining about the activities of their employers.
The lawsuit does not seek a ruling on whether the business actions alleged by Rutledge violated state or federal law.
Rutledge says she wants her job back, lost wages and benefits plus interest, compensation for mental anquish, attorney's fees and other damages allowable.
In other Columbia developments:
Columbia hired Robert Waterman as its new general counsel, replacing Steve Brown, who resigned in September. Waterman headed Latham & Watkins' internal investigation for Columbia. Meanwhile, Frank Houser, M.D., is now Columbia's medical director and senior vice president for quality. He had been president of Columbia's physician services. Both changes are effective immediately.
The U.S. District Court in Albuquerque approved a $12.3 million settlement of a class-action lawsuit against Diagnostek filed by shareholders who alleged the subsidiary of Columbia misled them about its financial health.
The shareholders said Diagnostek, which Columbia acquired through its August purchase of Value Health, never told them it was about to lose two major contracts. A spokesman said the settlement was negotiated before Columbia acquired Value Health. Shareholders who lost money on the stock from April 28 to July 6, 1994, may file claims through December.
At a meeting last week for employees, analysts and other interested parties, Columbia Chairman and CEO Thomas Frist Jr., M.D., updated the company's progress on its 12-point plan. He said two physician syndications have been stopped, and physicians in five other markets have been given their options. More than 200 companies have said they are interested in buying Columbia's home health business. In addition, he said the "no-holds barred" internal audit is about 45 days from completion.
Also last week, Columbia's senior debt and commercial paper programs took another drubbing. Fitch Investors Service, New York, lowered its rating of the Nashville-based chain's $4.2 billion of senior debt to BBB+ from A and knocked its rating of $5 billion in commercial paper to F-2 from F-1.