Uncle Sam wants you -- to play by the rules or pull out the checkbook.
Federal authorities made their most impressive show of force in recent memory in 1998, and their resolution for 1999 is to keep up the pace.
The top legal story for 1999 will continue to be the soap opera known as Columbia/HCA Healthcare Corp., with two new characters embroiled in the saga: Quorum Health Group and accounting giant KPMG Peat Marwick.
For starters, a second whistleblower lawsuit accusing Nashville-based Columbia of bilking Medicare was scheduled to be unsealed Dec. 30 (Nov. 23, p. 4).
That suit will likely include similar, possibly more detailed, allegations against the company than those made by James Alderson, a former chief financial officer at a Quorum-managed hospital.
In his suit, unsealed last October, Alderson charges Columbia and Brentwood, Tenn.-based Quorum -- a spinoff of Columbia predecessor Hospital Corporation of America -- with manipulating Medicare cost reports to receive higher reimbursement.
The second whistleblower, ex-Columbia executive John Schilling, also has a suit under court seal, this time fingering Peat Marwick for its role as a consultant to Columbia. The specific allegations are still unknown.
The government does not seem to be at a point where it can begin settlement talks with either Columbia or Quorum. It is still gathering evidence against the two companies.
The biggest mystery is the seriousness of the allegations against Quorum. Right now, the case remains civil, not criminal. Columbia, however, faces both criminal and civil investigations.
While fraud and abuse have been the buzzwords for the latter half of the decade, the feds are also putting together an aggressive game plan for tax and antitrust issues.
With the Federal Trade Commission's initial victory in the Poplar Bluff, Mo., hospital merger case, the antitrust agencies have regained their confidence and are looking for the next monopoly to halt.
Which one that will be is anyone's guess.
On the tax front, the Internal Revenue Service may be getting kinder and gentler with individual taxpayers, but it's going to get tougher on tax-exempt organizations in 1999, and that means hospitals should beware.
The Great Plains case, in which the not-for-profit hospital manager in Kansas is facing revocation of its 42-year-old exemption, proved that no one is immune from revocation (June 8, p. 2).
But soon the IRS will have a new weapon to keep not-for-profits in line. Regulations implementing intermediate sanctions should be published in final form by 2000 but are retroactive to September 1995.
With intermediate sanctions, the IRS will have a way to punish the individuals who benefit at the organization's expense, discouraging misuse of charitable assets without incurring ill will from the community.
The IRS is also exposing not-for-profits to more public scrutiny with tax form 990 reporting requirements due for release by the end of 1998.
In recent speeches, IRS officials and tax experts have said the new reporting requirements will subject not-for-profits to unprecedented public scrutiny. Tax-exempt healthcare organizations should prepare to handle the piqued interest in their financials.
State and local governments are also becoming more interested in tax issues, particularly as they look for new tax revenues. Hospitals will be targeted, as they were in 1998. One state Legislature, North Carolina's, already has the issue on its agenda for its next session.