A second whistleblower is suing Columbia/HCA Healthcare Corp. and KPMG Peat Marwick, the accounting firm that helped the hospital chain prepare its Medicare cost reports, according to a court document obtained by MODERN HEALTHCARE.
John Schilling, a former Columbia executive who worked in the company's Fort Myers, Fla., office, has filed two separate whistleblower lawsuits under the federal False Claims Act, one against his former employer and one against Peat Marwick, the document said.
Schilling's lawsuit against Columbia, filed in 1997 and pending before U.S. District Judge Steven D. Merryday in Tampa, Fla., is slated to be unsealed by Dec. 30. The lawsuit names at least one other defendant, but specifics were unavailable at deadline.
Columbia spokesman Jeff Prescott said at deadline that he had not been told about Schilling's lawsuits.
Merryday also is hearing the case against Columbia and Quorum Health Group brought by whistleblower James Alderson, a former chief financial officer at a Quorum-managed hospital in Montana. Alderson's case, unsealed Oct. 5, was the driving force behind investigations of the two Nashville-based hospital chains (Oct. 12, p. 4).
In his lawsuit, Alderson accuses the 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. The U.S. Justice Department has joined Alderson's suit as a plaintiff.
Alderson's attorneys had indicated in past interviews with MODERN HEALTHCARE that part of the reason they had the case moved to federal court in Tampa was the existence of other witnesses, possibly other whistleblowers. Alderson attorney Stephen Meagher, in the San Francisco office of Washington-based Phillips & Cohen, said Alderson is not a witness in the criminal case against Columbia and would not confirm or deny the existence of Schilling's lawsuits.
Schilling's lawsuit against Peat Marwick, filed in 1998, is sealed at least through March 22, 1999, the court document said. That case is pending before U.S. District Judge Elizabeth Kovachevich in Tampa.
Peat Marwick spokesman Tim Gay said the firm had no knowledge of such a lawsuit and had no further comment.
Peat Marwick has done and continues to do auditing and consulting for Columbia. Its relationship with Columbia was the subject of a Dec. 18, 1997, article in the New York Times. The article suggested that in helping Columbia hospitals prepare their Medicare cost reports, Peat Marwick advised the facilities to set up reserve funds in case the inflated cost reports were audited by HCFA.
Peat Marwick works for a property management subsidiary of Quorum but does not work for Quorum hospitals, Gay said.
According to the court document, the federal government may have joined both of Schilling's cases as a plaintiff.
Details of Schilling's allegations against Columbia and Peat Marwick were unavailable because both cases are sealed.
When Alderson's complaint and case file were partially unsealed last month, some information was deleted. That information relates to Schilling's case against Columbia, the court document said.
Schilling's name first emerged in criminal court proceedings against four Columbia executives indicted on charges of Medicare fraud in Fort Myers, where Schilling worked in Columbia's division office until August 1995.
Earlier this month, attorneys for the four executives facing trial-Carl Lynn Dick, Jay Jarrell, Michael Neeb and Robert Whiteside-subpoenaed records from two law firms representing Alderson and Schilling, which are, respectively, Phillips & Cohen and Tampa-based James Hoyer Newcomer Forizs & Smiljanich.
The subpoena request made reference to Schilling and linked him to Phillips & Cohen. Attorneys for Schilling could not be reached for comment.
The law firms last week filed a court motion in response to the subpoenas, requesting clarification about which documents to turn over because some documents are still under seal. The law firms also asked for a deadline extension to comply with the subpoena.