The deposed chief executive officer of one of Columbia/HCA Healthcare Corp.'s Kingsport, Tenn., hospitals sued the Nashville-based company and three top officers last week, charging that they maliciously defamed him to bolster the company's own sullied image.
Robert Bauer, who was fired last month as CEO of 130-bed Indian Path Medical Center, said he's been falsely accused of inflating costs at one unit of the hospital and attempting to cover it up. The suit contends his firing is part of a scheme to deflect media and federal investigators' attention away from the company.
Columbia itself remains the focus of an ongoing federal fraud investigation of company billing practices. That probe began with a raid on company facilities in El Paso, Texas, in the spring of 1997. Three senior executives were later indicted. All have denied the charges.
Columbia disclosed the alleged fraud at Indian Path in a widely circulated memo from Jack Bovender, Columbia's president and chief operating officer. The memo, signed by Bovender and Chairman and CEO Thomas Frist Jr., M.D., was made available to the media.
"(Columbia) fired Bauer and then publicly condemned him in order to portray the image that it has `zero tolerance' for any misconduct and ethical violations," according to the 20-page complaint.
Defendants named in the suit are Bovender; George Asbell, Indian Path's acting CEO; and Jeff Prescott, a Columbia spokesman. It was filed July 9 in Sullivan County Circuit Court.
Frist was not named in the suit because the memo was released by Bovender, said Mike Lattier of the Andersen Firm, which is representing Bauer.
The 11-count suit charges the company and its executives with defamation and invasion of privacy. It also contends Columbia fired Bauer without good cause. Bauer, it says, is owed a total of $304,635 under the company's salary and severance agreements. The suit seeks a jury trial and unspecified total damages.
Gary Koops, who works in Columbia's communications office, said the company stands by its previous statements. At deadline, he had no further comment because the company had not seen the complaint.
Bauer and Jim Matney, Indian Path's former chief financial officer, were dismissed June 15 after Columbia said it turned up evidence of illegal cost-shifting (June 22, p. 6). A company investigation was prompted by an anonymous call to a complaint line. The probe concluded that the hospital improperly allocated costs from other departments to its geriatric psychiatric unit in an attempt to boost future Medicare payments.
Matney's attorney did not return a phone call seeking comment last week. But the former CFO has vehemently denied the charges in interviews with the Kingsport Times-News.
In an interview last month, Asbell, one of the defendants, said the U.S. attorney's office in Knoxville, Tenn., has issued a subpoena seeking information from Indian Path. The U.S. attorney's office had no comment. But Columbia said it would be turning over information gathered in its investigation to federal authorities.
Columbia has agreed to sell Indian Path to Johnson City (Tenn.) Medical Center as part of a 22-hospital deal with a consortium of not-for-profit hospitals and systems.
In related legal developments, a federal magistrate last week recommended dismissing a shareholder lawsuit against Columbia, stating there isn't enough evidence to support the fraud charges. Several large pension funds filed the lawsuit about a year ago, alleging Columbia executives put the company's stock at risk. The suit also alleges that board members and senior executives were involved in insider stock activity. Columbia had asked that the case be dismissed, and the U.S. District Court in Nashville, which is hearing the case, asked federal Magistrate William Haynes for a recommendation. The court isn't required to follow the recommendation.
Also last week, federal prosecutors in Florida said they expect to indict at least one more Columbia executive within the next two weeks and bring more charges in their current case. The prosecutors made their statement during a hearing in U.S. District Court in Fort Myers, Fla. Last year three Columbia executives were charged with conspiring to overbill federal health programs. They have pleaded not guilty.