As part of its civil Medicare fraud investigation of Quorum Health Group, the U.S. Justice Department last week served subpoenas on 200 hospitals managed or formerly managed by the Brentwood, Tenn.-based hospital chain.
The subpoenas seek any documents related to Quorum's reserve Medicare cost reporting policies between 1985 and 1995, when Quorum stopped providing Medicare cost reporting services to its managed hospitals.
The Justice Department sent the subpoenas to the hospitals by certified mail on March 30. The hospitals have 30 days to respond unless they negotiate an extension with the government.
In a civil whistleblower lawsuit filed against Quorum and Columbia/HCA Healthcare Corp. in 1993, a former employee of a Quorum-managed hospital in Montana alleges that both for-profit hospital chains deliberately inflated reimbursable costs to Medicare and other federal health insurance programs and kept a second set of more conservative cost estimates in reserve Medicare cost reports.
The case against Quorum and Columbia has been split into individual lawsuits, and the Justice Department has joined both lawsuits as a plaintiff.
Both cases are pending in U.S. District Court in Tampa, Fla.
The subpoenas are part of the government's effort to collect evidence against Quorum in that particular case.
"To date, the government and we have received documents only from Quorum," said Stephen Meagher, the attorney for the whistleblower in the case. "This is the way to go after the rest of the universe of data about their reserve cost reporting practices."
The lawsuit asserts that Medicare and other federal insurance programs overpaid Quorum by at least $70 million over the 11-year period, but that figure could run higher depending on what the subpoenas reveal, Meagher said. Quorum executives said they were not surprised by the subpoenas, although they did not anticipate the timing, a company spokeswoman said.
"It's a shame they jumped the gun instead of waiting until we filed our response to the complaint," Davis said. "That's the orderly way litigation is done."