A trial date has been set for the four Columbia/HCA Healthcare Corp. executives indicted last year on criminal fraud charges.
Monte Richardson, a spokesman for the U.S. attorney's office in Tampa, Fla., said the trial will begin May 3 in U.S. District Court there. He said the government estimates it will take two months to present its case.
A federal grand jury in Fort Myers, Fla., indicted the executives of the nation's largest for-profit hospital chain last July. Three executives were originally charged in June 1997 but an expanded indictment added a defendant and broadened the charges against the original three.
Charged with conspiracy to defraud and commit federal criminal offenses are Jay Jerrell, 43, chief executive officer of Columbia's southwest Florida division; Michael Neeb, 35, chief financial officer of Columbia's Northern Florida division; Robert Whiteside, 47, director of Columbia's single markets division; and Carl Lynn Dick, 54, CFO of Columbia's central Florida division.
Jarrell, Neeb and Whiteside are also charged with making false statements to Medicare, Medicaid, and the Civilian Health and Medical Program of the Uniformed Services, as well as attempting to obstruct a federal auditor.
All four have been indicted as part of the government's ongoing criminal fraud investigation of Columbia.
Keeping track of the stream of legal actions filed against Nashville-based Columbia is like trying to simultaneously follow multiple events at a track and field tournament. At last count there were seven unsealed civil whistleblower fraud lawsuits filed against the company. In each case, the government has joined the suits.
The latest was unsealed on April 10 in U.S. District Court in Tampa. In his suit, originally filed last June, Joseph Parslow, a CFO at one of Columbia's hospitals in Florida, charged the company with paying kickbacks for wound-care patients and then illegally billing Medicare for those kickbacks, which were allegedly disguised as management fees (April 12, p. 4).
The other six lawsuits make a variety of allegations against Columbia (See box).
In addition to those, an unknown number of lawsuits remain under seal as the government weighs its options.
U.S. Justice Department spokeswoman Chris Watney said whistleblower lawsuits are always filed under seal and remain that way until federal authorities determine whether they want to intervene, or become a party to the suit, or decide not to intervene.
In the latter situation the plaintiff can continue to pursue the suit as an agent of the federal government and can claim a larger share of any settlement. The plaintiff does not have the formidable resources and backing of the government.
Watney said the Justice Department can't confirm the existence of the sealed lawsuits.
"We want to give the government time to investigate, thoroughly review a relator's allegations and make that determination (whether to join the suits, thus unsealing them)," he said.
Watney said the Justice Department, which unsuccessfully sought to have the various whistleblower lawsuits consolidated, will again seek to unite the lawsuits, a move Columbia supports.
"If you can get them (the lawsuits) into one process, that would certainly be an easier way to resolve these issues," said Columbia spokesman Jeff Prescott. "That moves the ball forward."
Consolidating the cases into one would make a lump-sum settlement far more possible.
In February, a federal judicial panel denied the government's motion to consolidate on procedural grounds but allowed it to refile.
"We haven't done that (refiled) at this time," Watney said. Consolidation "would streamline the process, as opposed to having all cases handled separately. We're currently in discussions with Columbia, although we can't discuss the status of those talks."
Columbia's legal troubles don't end with the whistleblower suits.
In its own March 30 10-K corporate annual report filing before the Securities and Exchange Commission, Columbia listed 12 pages of pending state and federal legal actions against it.
It conceded that it is the subject of an SEC investigation relating to "the anti-fraud, insider trading, periodic reporting and internal accounting control provisions of the federal securities laws."
Prescott said the SEC investigates whenever a company's stock takes a rapid or unusual dip the way Columbia's did after news of the criminal and civil actions spread.
"That's a normal course of action for the SEC," he said. "What caused the attention recently is that our lawyers decided we needed to add to the filings 'possible insider trading' to the list of charges the company might be facing. We see nothing out of the ordinary in them doing that."
In its 10-K filing, Columbia acknowledged that many of the suits against it relate to practices, acts and omissions regarding the treatment and billing of Medicare, Medicaid and CHAMPUS patients.
The alleged behavior under scrutiny includes improper DRG upcoding for medical services; illegal outpatient laboratory test unbundling; improper Medicare cost reporting; illegal arrangements with physicians and other parties that include kickbacks, fraud and abuse; and improper acquisitions of home health agencies and excessive billing for home health services.
The report noted that "while it is still too early to predict the outcome of any of the ongoing investigations or the initiation of any additional investigations . . . (Columbia) could be subject to substantial monetary fines, civil and criminal penalties, and exclusion from participation in the Medicare and Medicaid programs" if it was found to violate state or federal laws.