Blowing away the legal cloud that's been hanging over it for the past four years, HCA-The Healthcare Co. last week agreed to a record-setting $840 million civil and criminal Medicare and Medicaid fraud settlement.
The settlement includes guilty pleas to 14 various criminal counts related to defrauding Medicare, Medicaid and other government health insurance programs, and the forced sale of one hospital and the expulsion of another from the Medicare program.
The U.S. Justice Department said the HCA agreement is the largest government settlement ever reached with a company in any industry.
HCA will pay the settlement shortly after a required approval by a federal court, which is expected early in 2001.
"This investigation has been the largest multiagency investigation of a healthcare provider ever undertaken by the U.S. and reflects our commitment to vigorously pursuing all types of healthcare fraud schemes," said U.S. Attorney General Janet Reno.
For Nashville-based HCA, the nation's largest hospital chain, the settlement represents a public relations and financial break from its past as well as for the for-profit hospital sector (See story, p. 14).
That didn't stop HCA detractor Rep. Fortney `'Pete" Stark (D-Calif.) from connecting the former Columbia/HCA Healthcare Corp. to its successor company. In a written statement, Stark said, "For years, this for-profit hospital chain has been the poster child for fraud and abuse."
In fact, as part of the settlement, HCA agreed to an eight-year comprehensive corporate integrity agreement, which requires external and internal reviews of the company's billing practices and financial arrangements with physicians.
The Justice Department announced the settlement at a press conference in Washington last week. Attending the 45-minute event was a who's who of government fraud prosecutors and investigators. In addition to Reno, who opened the press conference, speakers included David Ogden, assistant attorney general for the civil division; HHS' Inspector General June Gibbs Brown; Thomas Kubic, deputy assistant director of the FBI; and Joshua Hochberg, who heads the Justice Department's criminal fraud section.
No top-ranking HCA officials attended the event.
Most of the $840 million settlement is $745 million in civil penalties that HCA and the Justice Department tentatively agreed to in May.
The civil settlement resolves a host of allegations in seven of 27 civil whistleblower fraud lawsuits against the chain that federal officials joined as plaintiffs. Those allegations included falsifying DRG codes, improperly billing for certain lab tests and billing for home-health services that were never provided or medically unnecessary. In some cases, services were provided to patients who were ineligible.
None of the cases has ever gone to trial. Under the civil portion of last week's settlement, HCA admitted no wrongdoing.
The $95 million balance of the settlement is a criminal fine against two nonoperating HCA subsidiaries: Columbia Management Cos., an HCA shell company that, because it had no assets, was expendable for purposes of the settlement plea, and Columbia Homecare Group, a defunct company that acquired and operated HCA's home health services.
Under the False Claims Act and other federal anti-kickback laws, the fine compensates the government and penalizes the companies for their actions in four states: Florida, Georgia, Tennessee and Texas. In those states, the two HCA subsidiaries pleaded guilty to 14 counts of:
* Conspiracy to defraud the U.S. government.
* Violating the Medicare anti-kickback laws in the purchase and operation of home health agencies and fraudulent billing of Medicare for management and personnel costs.
* Conspiracy and the fraudulent pneumonia upcoding.
* Making false statements relating to Medicare cost reports.
* Conspiracy to violate the Medicare anti-kickback statute by paying doctors for patient referrals.
HCA also must divest a south Florida hospital, 233-bed Deering Hospital in Miami, the only remaining hospital owned by Columbia Management Cos. The settlement requires HCA to sell Deering within four months, and Miami's publicly owned 1,376-bed Jackson Memorial Hospital is the expected buyer.
Jackson Memorial would not comment on the negotiations.
The public hospital itself was nearly ousted from Medicare for alleged patient- dumping violations (Dec. 4, p. 4).
HCA also agreed to permanently exclude from Medicare its 133-bed Clearwater (Fla.) Community Hospital, which closed in February 1999. The two hospitals were not accused of any criminal behavior, but because a divestiture was required, ownership of them was transferred to Columbia Management Cos. for the plea agreement, HCA spokesman Jeff Prescott explained. And as the only remaining properties of a company that pleaded guilty to criminal charges, exclusion from Medicare would be required.
If HCA itself had pleaded guilty, it would have been excluded from Medicare and Medicaid.
However, the settlement also is noteworthy for what it doesn't cover -- the culpability of company executives and physician-investors who were responsible for the criminal fraud violations.
In July 1999, two HCA Florida executives were convicted in a Tampa federal court of six counts of Medicare fraud and conspiracy relating to the filing of false Medicare cost reports. The jury couldn't decide the fate of one added executive, who later signed a plea agreement to avoid a second trial. A fourth was acquitted.
Although government officials said last week's criminal and civil settlements do not preclude the prosecution of former or current HCA employees or doctors involved in the fraud, they would not name or comment on any suspects.