The American Hospital Association is parlaying a raid on a rural Tennessee hospital into a lobbying effort to convince Congress that federal fraud-fighting has gone too far.
The AHA and other provider groups have long contended that stricter guidelines are needed to keep federal agents in line during investigations of healthcare facilities suspected of Medicare billing fraud.
The association hopes to prove its point by using Woods Memorial Hospital District, a county-owned group of facilities that includes a 160-bed hospital in Etowah, Tenn., as an example of what it calls overzealous fraud enforcement.
The AHA wants federal law enforcement agencies to use kid gloves during hospital billing investigations rather than engage in high-profile raids and other aggressive tactics typically associated with criminal investigations in other industries. And the AHA is prepared to use some political muscle to get such parameters in place.
"The issue is not what the investigation is about but how it was conducted," said Mary Grealy, the AHA's chief Washington counsel. "What are the standards for executing a search warrant?"
The AHA has written letters and paid visits to several members of Congress to persuade them that government agents acted irrationally and jeopardized patient care when they descended on Woods on Feb. 24. Grealy attended those meetings.
The Tennessee Hospital Association, which represents Woods Memorial and 144 other hospitals, also sent a letter to Vice President Al Gore, a Tennessee native. Gore is seeking support for his 2000 presidential bid.
THA President Craig Becker promised that the hospital groups would "go all out" to rein in hospital investigations conducted by HHS' inspector general's office and the U.S. Justice Department-something the AHA failed to do last year.
The political push shows that the hospital lobby has not forgiven the Justice Department for squelching an AHA-backed bill that would have limited the government's use of the False Claims Act in punishing healthcare fraud (June 15, 1998, p. 2).
The Justice Department and HHS' inspector general's office short-circuited the bill by releasing their own sets of guidelines spelling out a "kinder, gentler" way to pursue civil investigations. The guidelines do not include protocols for criminal investigations.
On Feb. 3, after a six-month review of the Justice Department guidelines, Deputy Attorney General Eric Holder Jr. sent a memo to all U.S. attorneys stating that current guidelines on the use of the False Claims Act did not need revision.
Three weeks later, on Feb. 24, three dozen federal agents executed seven search warrants at Woods Memorial Hospital, three of its home health agencies and a storage facility, said Judy Holtz, a spokeswoman for HHS' inspector general's office.
Hours after the raid, Woods Memorial officials contacted the THA, which in turn told the AHA about the raid and set the lobbying wheels in motion.
The hospital offers the AHA a victim to parade around Capitol Hill while the hospital industry is reeling from negative publicity generated by high-profile fraud cases. In a Kansas City, Kan., kickback case, two hospital executives were convicted in April in a patients-for-cash scheme. And four Columbia/HCA Healthcare Corp. executives are on trial in Tampa, Fla., on charges that they tried to bilk Medicare.
Woods Memorial seems to be an ideal victim: a small rural hospital with 53% of its 1998 admissions coming from Medicare.
According to an account prepared for the congressional meetings by Alvin Hoover, Woods Memorial's chief operating officer, the agents allegedly:
* Intimidated hospital staff by bringing firearms to the raid.
* Walked through patient-care areas without wearing protective clothing to prevent infection.
* Removed documents from the hospital, including billing records and Medicare cost reports, which are needed for future Medicare billings.
Hoover called the raid a "complete surprise."
"I don't know anyone in this organization who would say, 'Let's go out and cheat the government,' " Hoover said.
But maybe Woods Memorial shouldn't have been too surprised.
Hospital officials knew that one of their former home health managers had filed a whistleblower lawsuit against the facility several years ago and that the suit might have been linked to the raid.
According to a Feb. 24 article in the Daily Post-Athenian, hospital attorney Chris Trew said he knew of one complaint filed against the hospital but that he was uncertain whether it had led to the raid.
Hoover confirmed a lawsuit had been filed against the hospital but declined to comment on its allegations or origin.
Holtz, the inspector general's spokeswoman, also declined to comment on the source of the allegations or the nature of the investigation.
The fact that agents raided the hospital and its home health agencies to seize evidence indicates that a criminal investigation is likely.
In civil matters, the government typically issues subpoenas or civil investigative demands for information, instead of using search warrants to make on-site raids.
HHS' inspector general disputes Woods Memorial's account of the raid.
Holtz said the agents who carried firearms wore jackets over them so they would not be visible. Some agents did not carry weapons, and no guns were drawn, Holtz said.
The inspector general's policy allows its agents to carry weapons to control the environment if necessary.
"We tried to do the raids with minimal disruptions," Holtz said. "When we have allegations at this level, we have to take them seriously."
Agents also complied with requests to wear booties over their shoes when walking through the hospital's dialysis area, Holtz said. They took 300 boxes of financial records but no patient records, she said.
Some lawmakers seem to be buying the hospital lobby's story.
Rep. John Duncan Jr. (R-Tenn.), who represents the district that includes Etowah, sent a letter to Attorney General Janet Reno May 6 "to express serious concerns" about the way the raid was conducted. Duncan met with Hoover and officials from the THA and the AHA April 20.
In his letter, Duncan asked Reno for a meeting to "justify the expense and need for 40 federal agents using heavy-handed and callous tactics."
Judy Whitbred, Duncan's chief of staff, said the congressman is not directly involved with the investigation and does not know what agents were looking for.
"There is no question that medical facilities should be monitored and should not engage in improper conduct," Whitbred said. "Rep. Duncan is passing on concerns from Woods Memorial as Woods Memorial describes them."
Sen. William Frist (R-Tenn.) seized an opportunity to quiz government officials about the raid when they testified about patient privacy before the Senate Health, Education, Labor and Pensions Committee April 27.
At the hearing, Frist asked officials from the Justice Department and the FBI to explain "disturbing" reports about the raid that had been published by Tennessee newspapers.
John Bentivoglio, who testified for the Justice Department about law enforcement's need for access to patient records in some criminal cases, defended the government.
"As a matter of general principle, agents know not to disrupt the operations of a healthcare facility," said Bentivoglio, the Justice Department's special counsel for healthcare fraud. "We have looked at that situation (at Woods Memorial), and the allegations (of agent misconduct) are way out of line."
One month after their meetings on Capitol Hill, Woods Memorial and its well-connected advocates are waiting for the political pressure to build.