In a case fraught with implications for healthcare, four executives of Columbia/HCA Healthcare Corp. are scheduled to go on trial this week in federal court for conspiring to defraud Medicare.
A key issue in the criminal trial will be whether the defendants tried to bilk the government by filing false Medicare cost reports. Those reports are at the heart of a spate of lawsuits charging that hospitals used the forms to systematically defraud Medicare.
The long-awaited and complex trial, which could last longer than two months, will be held in U.S. District Court in Tampa, Fla.
The defendants-all certified public accountants-are Carl Lynn Dick, 54, of Orlando, Fla., who was chief financial officer of Columbia's Central Florida division; Jay Jarrell, 43, of Indianapolis, who most recently served as chief executive officer of Columbia's Southwest Florida division; Michael Neeb, 36, of Jacksonville, Fla., former CFO of Columbia's Northern Florida division; and Robert Whiteside, 48, of Brentwood, Tenn., who served as director of Columbia's single- markets division.
They constitute the second group of hospital officials who have recently been charged with Medicare fraud and faced highly publicized criminal trials.
On April 5, a federal court jury in Kansas City, Kan., convicted two hospital executives and two osteopathic doctors in an illegal kickback and patient referral scheme. They face possible prison terms of 10 to 40 years at their Aug. 16 sentencing hearing.
Jarrell, Neeb and Whiteside are charged with seven counts of defrauding Medicare and CHAMPUS-the Civilian Health and Medical Program of the Uniformed Services, which is the federal health insurance program for military personnel-as well as making false statements and obstructing a federal auditor. Prosecutors charged them with schemes that resulted in illegal overpayments of more than $1.8 million.
If convicted, the three face 25 years in prison and $1.25 million in fines.
Dick faces a single count of conspiracy to defraud government programs, punishable by up to five years in prison and a fine of $250,00. He was charged with lying to a federal auditor investigating the alleged fraud.
The four pleaded not guilty and will contest the charges.
Charges stemmed from what the government called fraudulent Medicare cost reports filed at Columbia's 249-bed Fawcett Memorial Hospital in Port Charlotte, Fla., which Columbia acquired when it purchased Basic American Medical in 1992.
Dick and Jarrell worked for Basic American Medical before Columbia acquired the company's Florida, Georgia and Kentucky hospitals, and they remained to climb the ranks at Columbia.
The first indictments were issued in 1997 against Jarrell, Neeb and Whiteside. The case was refiled in July 1998, adding new charges and another defendant, Dick, to the group.
The initial indictments jolted officials at the country's largest hospital chain.
A key affidavit in the case revealed that the Fort Myers, Fla., FBI office began investigating Columbia in September 1996, uncovering "a systemic corporate scheme perpetrated by corporate officers and managers of Columbia's hospitals, home health agencies and other facilities in Florida, Georgia, Tennessee, Texas and elsewhere to defraud Medicare, Medicaid and CHAMPUS."
One of the cooperating witnesses who was cited but not named in the affidavit was former Columbia reimbursement manager John Schilling, who filed a whistleblower lawsuit against Columbia in 1997 detailing many of the same charges. Schilling worked under Whiteside. Two other unnamed Columbia accountants corroborated charges.
Monte Richardson, a spokesman for the U.S. attorney's office in Tampa, said the case has received widespread media attention, in part, because of "the magnitude of the fraud alleged and the substantial weight Columbia carries in the healthcare industry."
Assistant U.S. Attorneys Kathleen Haley and Robert Mosakowski, who have tried several prominent Florida healthcare fraud cases, will prosecute the Columbia defendants.
Richardson said his office cannot disclose how many witnesses the government will call, but defense attorneys said the government lists 64 potential witnesses.
The defendants continue to be employed and paid by Columbia, but remain on leave.
Lawyer Edward Hopkins, who specializes in healthcare fraud and abuse cases at Steel, Hector & Davis in West Palm Beach, Fla., said the federal government's aggressive prosecution of what it considers fraud in Medicare cost reports is sending shivers throughout the industry.
"The larger bubbling undercurrent here is on the civil side under the False Claims Act, where the government is taking some aggressive positions about what constitutes a false claims action and false cost report," he said.