It's lasted longer than the U.S. involvement in World War II.
In the past five years, the federal government has issued roughly 40 search warrants, more than 10 administrative subpoenas and at least six civil investigative demand letters in its ongoing fraud investigations of Columbia/HCA Healthcare Corp. and Quorum Health Group. Investigators have collected millions of pages of documents. Four men stand indicted on fraud charges.
And it's not over yet.
In fact, lawyers for the indicted Columbia executives suggested in a court motion last week that there is at least one more whistleblower lawsuit under seal.
An attorney representing whistleblower James Alderson, whose 1993 lawsuit set the investigations of Columbia and Quorum in motion, has also said that there are "other witnesses" with evidence of Medicare fraud-possibly other whistleblowers.
Since 1993, the federal government has faced numerous obstacles in its civil fraud investigations of Columbia and Quorum and its separate criminal fraud probe of Columbia.
Court documents unsealed last month reveal how investigators have had to contend with staff shortages, delays by the companies and their own inexperience with the complex Medicare billing system.
What the unsealed case file does not show is that the case was moved from federal court in Butte, Mont., to Tampa, Fla., primarily so that the whistleblower and the government could take advantage of a favorable legal precedent in that jurisdiction concerning Medicare cost reports.
In his whistleblower lawsuit, Alderson, a former chief financial officer at a Quorum-managed hospital in Whitefish, Mont., accuses three hospital companies of bilking Medicare of "many millions of dollars" over 14 years by inflating reimbursable costs and including unallowable claims on their annual Medicare cost reports (Oct. 12, p. 2).
The suit named Hospital Corporation of America and HealthTrust-The Hospital Company, both now part of Nashville-based Columbia, and Quorum Health Group, an HCA spinoff.
The lawsuit alleges that the companies prepared "reserve cost reports" and kept internal documents that identified the sham claims on the padded cost reports the companies filed with fiscal intermediaries.
In the early stages of the investigation, which commenced with the filing of the whistleblower lawsuit in January 1993, the government struggled to get its arms around the issues raised by Alderson.
At first, there were personnel-related delays. A declaration filed in June 1993 by Marie O'Connell, a U.S. Justice Department attorney working on the Alderson case, describes how she and her counterpart at HHS had difficulty meeting because of their hectic schedules and obligations to other pending cases.
In November 1993, one HHS attorney working on the case caused a setback by leaving his government job, with his replacement scrambling to get up to speed, court records show.
The staff at HHS' inspector general's office, stretched thin by the Alderson case, could hardly keep up with other whistleblowers who inundated them with referrals of potential healthcare billing fraud by other providers, court records show.
"This increased volume of citizen complaints has placed considerable strain upon the inspector general's investigative resources," O'Connell wrote in her November 1993 declaration, in which she asked that the case remain under seal while the investigation proceeded.
At that time, the case was so overwhelming that the FBI offered its support so the civil division of the Justice Department could meet its court-appointed deadlines, the case file shows.
Government officials also were bogged down by the burden of three separate investigations of HCA, Quorum and HealthTrust. The 1994 merger of HCA with Columbia Healthcare Corp., and the combined company's purchase of HealthTrust a year later further complicated matters for investigators.
For example, HCA's headquarters moved from Nashville to Louisville, Ky., following the Columbia merger, hampering follow-up meetings with government officials, a government motion filed in June 1995 said.
Similarly, when HealthTrust merged with Columbia in 1995, it requested time to brief Columbia's management on how it was handling the investigation, the June 1995 motion said.
The government also had requested millions of pages of documents that had to be audited and reviewed by accountants well-versed with federal health programs.
Initially, government investigators subpoenaed "cost reports, reserve cost reports and numerous other documents for all of over 250 hospitals owned or managed by Quorum for the past six years (1987 to 1993)," court records show.
The government scaled down its request to two years' worth of records from a representative sample of 12 hospitals at each company, for a total of 36 facilities. Compliance with the subpoenas took months.
When all 36 hospitals eventually turned over their double sets of cost reports, each numbering between 500 and 1,000 pages, federal investigators had to sift through all of them, plus supporting documents and other records from fiscal intermediaries.
In early 1996, the government also was gathering testimony from three former HealthTrust reimbursement officials who started working at Columbia after the 1995 merger, court records show.
A real break for the government came in October 1996, in a wholly separate case from Alderson's lawsuit.
The 11th U.S. Circuit Court of Appeals in Atlanta decided a case involving John Calhoon, a reimbursement director for Macon, Ga.-based Charter Medical Corp., who was convicted on 11 counts of fraud relating to the preparation of Medicare cost reports.
In the appeals court's decision, Judge William Schwarzer said that false statements in a Medicare cost report may be considered material to a case even if the government or its intermediaries did not rely on those statements in determining reimbursement.
"False statements must simply have the capacity to impair or pervert the functioning of a government agency," Schwarzer wrote. "That the costs were ultimately reimbursed does not make the statement true when made."
The court also ruled that concealing the nature of the costs can constitute falsity.
"While it is true that a provider may submit claims for costs it knows to be presumptively nonreimbursable, it must do so openly and honestly, describing them accurately while challenging the presumption and seeking reimbursement," Schwarzer wrote. "Nothing less is required if the Medicare reimbursement system is not to be turned into a cat-and-mouse game in which clever providers could, with impunity, practice fraud on the government."
That decision played right into the hands of federal investigators, who were building their case on allegedly false or misleading statements made in Medicare cost reports. Prosecutors can rely on the Calhoon decision as a legal precedent.
In August 1997, a federal judge agreed to move Alderson's lawsuit from Montana to Tampa, which was under the jurisdiction of the 11th U.S. Circuit Court of Appeals and subject to the Calhoon precedent.
Another reason for the move is that the U.S. attorney's office in Tampa has had more experience in dealing with healthcare fraud than its Montana counterpart, said Alderson's attorney, Stephen Meagher of Phillips & Cohen in San Francisco.
Meagher added that there are "other witnesses," and possibly related whistleblower cases, in the Tampa area.
A second whistleblower could be John Schilling, a former Columbia executive who worked in Fort Myers, Fla., until August 1995. A motion filed by attorneys for the indicted Columbia executives cites a document linking Schilling to Phillips & Cohen, the law firm representing Alderson.
Meanwhile, Quorum has filed two motions in federal court in Tampa supporting the unsealing of the rest of the Alderson case file, company spokesman Michael Wiley said at an analysts' conference in Atlanta.
"We'd like to see all the information the government has so that we can get this thing moving toward a resolution," said Shea Davis, a Quorum spokeswoman.
The government, on the other hand, wants some parts of the case file to remain sealed, fearing that going public would jeopardize its investigation.
Columbia spokesman Jeff Prescott said the company neither opposes nor has joined Quorum's motions.
The government has until the end of January to file an amended complaint against the companies which would specify the Alderson allegations they plan to pursue.
-With Patricia B. Limbacher