The U.S. Justice Department last week joined a second whistleblower lawsuit against Columbia/HCA Healthcare Corp., alleging that the company padded its Medicare cost reports to help finance its home health acquisitions.
The lawsuit, unsealed last week in federal court in Tampa, Fla., charges Columbia with tricking Medicare into reimbursing the chain for hefty management fees it paid to Olsten Corp., which sold home health agencies to Columbia at below-market prices.
The lawsuit also charges Columbia with trying to bribe a wary Medicare auditor by offering the person a high-paying job at the company. The suit does not name the auditor.
In addition, the lawsuit names as defendants more than 100 hospitals, all owned by Columbia before its 1994 merger with Hospital Corporation of America.
At deadline, Columbia executives were unavailable for comment.
The whistleblower, John Schilling, is a former reimbursement manager for Columbia's West Florida division in Fort Myers. Schilling worked under Robert Whiteside, one of four Columbia executives indicted in June 1997 on criminal Medicare fraud charges.
Whiteside was director of reimbursement at Columbia's Nashville headquarters. He worked for Jay Jarrell, another indicted executive.
In May, Schilling will testify against his former bosses at the executives' criminal trial in Florida. He was the main source of information in the government's investigation of the four men, said Schilling's attorney, Stephen Meagher of Phillips & Cohen in San Francisco.
Schilling's 1996 complaint also expands on some of the allegations laid out in the 1993 lawsuit filed by whistleblower James Alderson.
Alderson's case, filed in Montana and later moved to Tampa, alleges that Columbia, two predecessor companies and Quorum Health Group fleeced Medicare of "many millions of dollars" by fudging their Medicare cost reports.
Both cases are pending before U.S. District Judge Stephen Merryday, who last week signed an order consolidating the two complaints.
Schilling also filed a whistleblower suit against KPMG Peat Marwick, the accounting firm that helped Columbia prepare its Medicare cost reports (Nov. 23, 1998, p. 4). That suit, filed in U.S. District Court in Tampa, remains under seal through March 1999. It's unclear whether the government plans to join that case.