Olsten Corp., the nation's largest publicly traded home-care company, reached a $61 million civil and criminal fraud settlement with the federal government last week. In doing so, it agreed to provide the government with information that could implicate Columbia/HCA Healthcare Corp. in a wide-ranging web of Medicare fraud.
The government has joined the 1997 whistleblower lawsuit against Columbia that detailed Melville, N.Y.-based Olsten's alleged collusion with Columbia in several home health fraud schemes. That information could be used to force a settlement in the growing list of civil whistleblower fraud suits against Columbia.
The Olsten settlement resolves the company's part in the civil suit but also requires an Olsten subsidiary to plead guilty to felony charges filed in three U.S. district courts on the day the settlement was announced.
A Columbia spokesman said Olsten's admission of criminal fraud came as no surprise.
"I don't know that (the Olsten settlement) is a significant milestone in terms of our settlement discussions with the Department of Justice," said Columbia spokesman Jeff Prescott.
A former Olsten executive filed the civil lawsuit in 1997 in U.S. District Court in Atlanta. The suit alleged that Olsten and Columbia conspired to subsidize Columbia's acquisition of home health agencies from Olsten and other home health companies by submitting false Medicare claims. The claims involved nonreimbursable purchase costs disguised as management payments.
The civil whistleblower case against Columbia and Olsten prompted the federal government to conduct a criminal fraud investigation. The government filed criminal charges as part of the settlement.
The settlement, which resolves civil and criminal charges, mentions Columbia purchases of home health agencies in only Alabama, Florida and Georgia. But Marlan Wilbanks, the Atlanta-based lawyer representing the whistleblower, said he believes the scheme was nationwide and bilked hundreds of millions of dollars from Medicare.
"The practices that we are talking about we believe were widespread throughout (Columbia's home health network)," Wilbanks said.
The civil complaint was unsealed last week after the government intervened in the lawsuit. It's one of five pending civil whistleblower fraud lawsuits against Columbia that the government has joined as a plaintiff.
Under the the complex criminal settlement, an Olsten subsidiary will plead guilty to:
* Federal kickback charges in U.S. District Court in Atlanta.
* Conspiracy charges in U.S. District Court in Miami.
* Mail fraud charges in U.S. District Court in Tampa, Fla.
The subsidiary, Kimberly Home Health Care, will also pay a $10.1 million fine to be divided equally among the three districts.
In addition, Olsten Corp. will pay $40.9 million in civil fines connected with the Columbia scheme and $10 million to settle an unrelated set of civil Medicare fraud charges.
Kimberly, which is barred from Medicare participation under the agreement, is not currently conducting any business, an Olsten spokeswoman said.
But Kimberly was involved in home health management when the fraud was committed, according to Assistant U.S. Attorney Robert Monk, of Tampa.
Olsten operates 254 home health branch offices throughout the U.S.