HCA-The Healthcare Co.'s record $840 million criminal and civil fraud settlement with the federal government didn't resolve what could be another painful problem for the Nashville-based healthcare company: claims from private insurers.
A group of more than 50 large national insurers is pressing the Nashville-based healthcare giant for hundreds of millions of dollars the companies allege were paid to HCA for fraudulent claims.
Insurers participating in settlement talks with HCA said the federal settlement energized insurers to pool their resources and further consolidate their cases, most of which now are being pursued by the Washington law firm Porter, Wright, Morris & Arthur.
Although no lawsuits have been filed, the government settlement agreements contain a treasure trove of useful and previously unavailable information for insurance company investigators, as well as admissions of wrongdoing by the former Columbia/HCA Healthcare Corp., attorneys said. The company pleaded guilty to 14 counts of fraud and conspiracy covering many of the allegations those private payer insurers contended affected them as well-home healthcare fraud, DRG upcoding and illegal unbundling of laboratory bills.
Sources close to the case said HCA hasn't negotiated any private-payer settlements. Insurers participating in the settlement talks are contractually restricted from publicly discussing the case. But several who asked not to be identified said they've done their homework, interviewed hundreds of witnesses and HCA employees and combed through truckloads of bills and medical records. They said the matter could come to a head within several months.
HCA's fiscal 2000 filings with the Securities and Exchange Commission show that 40% of the company's revenue comes from government payers, with private insurers making up the lion's share of the remainder. Those insurers said HCA needs their revenue and they expect a settlement within six months, rumored to be from $200 million to $500 million.
The insurers said their investigations and the government settlements revealed strong evidence that HCA routinely practiced lab unbundling and DRG upcoding, along with home health fraud, double-billing and billing for services not rendered.
William Mahon, president of the Washington-based National Health Care Anti-Fraud Association, which represents private-payer insurers and government antifraud agencies, said historically the government settlements open the door for private-insurer settlements.
"The criminal plea to Medicare fraud leads me to think that if (HCA) took this kind of risk to defraud the government, where the penalties, like exclusion from Medicare, are much higher, there's no reason to think (it) wouldn't do it to private payers, where the risks of severe consequences are generally much lower," he said.
HCA spokesman Jeffrey Prescott said the company regards the issues resolved in the government settlements as similar but distinct from those raised by private insurers. "The government settlements will probably have little impact on the private-payer issues," he said.