Greatly expanding a hospital executive's personal responsibility for a facility's financial stability, a jury in U.S. Bankruptcy Court in Dallas found a former hospital chief executive officer liable for breaching his fiduciary duty, filing 141 false claims, unjust enrichment and other illegal acts. He was ordered to pay $1 million to Medicare and $9.8 million to the trustee of the south Dallas hospital he defrauded.
Randolph Gillum, 69, was chairman and CEO of now-shuttered Tri-City Health Centre from 1988 to 1994. Gillum, already a millionaire, was found liable for using his position to add to his personal wealth, rigging competitive bids on construction projects and medical equipment so his company, Texas Summit Corp., would win. The company then charged grossly inflated prices.
The trial focused on two transactions. For years, Tri-City's board consisted of Gillum, his sister Karen and an administrator handpicked by Gillum. Through Texas Summit, Gillum purchased a used computed tomography scanner for $145,000 in 1988 and sold it to Tri-City two years later for $893,000, said Assistant U.S. Attorney Peter Winn. Medicare reimbursed the hospital for its costs.
In the second transaction, Texas Summit completed hospital renovation work at a cost of $5 million and charged the hospital-and consequently Medicare-$12 million. Texas Summit had no other clients than Tri-City.
Gillum's deals helped drive Tri-City into Chapter 11 bankruptcy in 1998. Saddled with debt from bond issues, the not-for-profit hospital, serving the city's African-American and Hispanic poor, closed last June.
Gillum could not be reached for comment.
The case is among a handful involving civil False Claims Act charges against an individual hospital executive, and it is only the second Medicare cost-reporting case to go before a jury, healthcare legal experts said.