Three civil fraud lawsuits representing more than 50 private health insurers and seeking as much as $500 million in damages have been drafted against Columbia/HCA Healthcare Corp., MODERN HEALTHCARE has learned.
Three law firms have notified Columbia, the nation's largest hospital chain, of their intent to file the lawsuits in federal court following Columbia's much-anticipated civil Medicare fraud settlement with the U.S. Justice Department, according to sources, who spoke on the condition of anonymity.
That global settlement, which would resolve 26 pending civil whistleblower fraud lawsuits against Columbia, could come as early as the first quarter of this year. Last month, a special federal judicial panel allowed the 26 cases to be consolidated before the U.S. District Court in Washington (Dec. 13, 1999, p. 2).
Columbia has set aside a $1 billion letter of credit for a possible settlement of the cases, many of which the federal government has joined as a plaintiff representing Medicare, Medicaid and other government health insurance programs.
Although much is known about the whistleblower cases alleging fraud against the government, little is known about allegations that Columbia defrauded private-sector health insurers.
Columbia has not disclosed the threatened litigation on any filings with the Securities and Exchange Commission. Columbia spokesman Jeffrey Prescott declined to comment on the existence of such suits.
In such cases, private insurers let the government do much of the legwork and make allegations against a company after it reaches a settlement with the government. Often the company settles the allegations before the private insurers file lawsuits.
That strategy became evident after dozens of insurers, including many of the nation's largest managed-care companies and Blue Cross plans, sued or threatened to sue Caremark International, National Medical Enterprises and SmithKline Beecham after each company entered into multimillion-dollar fraud settlements with the federal government (May 18, 1998, p. 28).
The three law firms representing the private insurers in the threatened lawsuits against Columbia are Porter, Wright, Morris & Arthur in Washington; Shipman & Goodwin in Columbus, Ohio; and Wiley, Ryan & Fielding in Washington.
"We are looking at everything the government is looking at," confirmed a lawyer who is close to the cases and asked not to be identified.
Some of the firms have been examining their clients' relationships with Columbia for nearly two years, conducting data analysis and large-scale national field investigations.
Lawyers Alison Duncan of Porter, Wright, Morris & Arthur and Kirk Nahra of Wiley, Ryan & Fielding declined comment. T.J. Jones, a lawyer with Shipman & Goodwin, confirmed that his firm represents a number of insurers trying to determine whether they were defrauded by Columbia, but he declined further comment.