When John Schilling stepped into the hushed federal courtroom of Judge Susan Bucklew this summer in Tampa, Fla., all eyes focused on the reserved, bespectacled accountant.
Schilling, 37, was the star government witness in the Medicare fraud trial of four Columbia/HCA Healthcare Corp. executives. Now a suburban Milwaukee accountant, he had worked as a reimbursement specialist at several of Columbia's Florida hospitals and was at the heart of the government cost-reporting fraud and conspiracy case against financial executives Carl Lynn Dick, Jay Jarrell, Michael Neeb and Robert Whiteside.
Jarrell and Whiteside were convicted in July and will be sentenced Dec. 3. Neeb was acquitted, and the jury split on Dick, who later signed a plea agreement with the government to avoid another trial.
Schilling testified that those executives knew that 249-bed Fawcett Memorial Hospital in Port Charlotte, Fla., had erroneously received larger reimbursements on Medicare cost reports than it deserved. Rather than returning the estimated $3 million in overpayments, he alleged, they conspired to keep it and hide it from a federally designated auditor. He testified that he reported the overpayments to Columbia officials, whom he said did not act on his information.
The University of Wisconsin graduate and former emergency medical technician filed a civil whistleblower suit against Columbia in July 1996 in federal court. He says he took the bold step out of a growing sense of futility with the lagging response of upper Columbia management.
"It was a frustrating feeling," he says. "I thought there was a very good chance (Columbia officials) would disclose it. They agreed it was improper and wrong and should be disclosed. But it was taking such a long time. I got frustrated when it didn't go anywhere and was concerned that I might be held accountable. I wondered if I had any criminal exposure."
In his suit, which is still pending, he alleges that Columbia and Basic American Medical hospitals, which were later purchased by Columbia, defrauded Medicare of millions of dollars by falsifying cost reports. He stands to gain millions of dollars from any settlements with Columbia.
Schilling says he didn't push Columbia hard at first because he had two children and a pregnant wife.
"I was afraid I wouldn't have a job. But I didn't want to file something if Columbia was going to disclose this. They didn't," Schilling says. "And I was worried if someone else found it, I'd be no better than those who were convicted."
Schilling, who had been cooperating with federal authorities since September 1996, says he felt bad when the Columbia executives were indicted after a series of raids in July 1997 on Columbia facilities in seven states.
"I'd been to their homes. We did family things together and socialized," he remembers. "It was hard for me to sit up on the witness stand and know that they could be convicted. But I also remember they had a choice to make, just like I did. And I feel they made the wrong choice."
Schilling was there working when FBI agents raided a Columbia office in Fort Myers, Fla.
"The staff was quite shocked. I knew the night before that this was going to happen, so I wasn't surprised but had to look shocked to avoid blowing my cover. I stayed with the company another six weeks after that. Nobody knew (that he blew the whistle), but I think somebody suspected me."
His lawyer, Stephen Meagher of the San Francisco firm Phillips & Cohen, told Schilling he would be aggressively cross-examined on the witness stand.
"I knew they'd try to discredit me and call me names," says Schilling, who was grilled on the stand for four days and portrayed by defense attorneys as a snake in the grass who would snitch on friends for money. "It hurt, but I put it behind me. I knew I was telling the truth and had a moral and ethical obligation to come forward and tell the truth. I always think of what I could have done differently. There's nothing I can do about it now. I still think I did the right thing. I'm not ashamed I took the route of filing the (whistleblower suit). That's why the law is there."