HCA wants to prevent attorneys for the U.S. Justice Department and whistleblowers from deposing more than 80 of its current and former employees for the company's upcoming civil Medicare fraud trial until the Justice Department identifies witnesses who may face criminal charges.
The Nashville-based hospital corporation asked in a motion filed Jan. 28 in Washington federal court that the government name those witnesses it seeks to charge to protect their Fifth Amendment rights against self-incrimination. The company also seeks to postpone the joint government/whistleblower depositions, which include those of Richard Scott, former HCA chairman and chief executive officer, and HCA founder Thomas Frist Jr., M.D., until after Aug. 2 when, HCA argues, the statute of limitations on alleged criminal behavior will have expired. After the deposition testimony of only one witness, HCA Senior Vice President and Controller Milton Johnson, HCA canceled many of the scheduled depositions.
HCA pleaded guilty in December 2000 to criminal Medicare cost-reporting fraud charges and paid a record $840 million in civil and criminal fines, plus $39 million in interest. That settlement resolved civil allegations of home health, laboratory unbundling and DRG upcoding, but did not tackle the civil Medicare cost-reporting or physician kickback issues at the heart of the government's investigation.
HCA argued that the government has been investigating the company for nine years and has not brought any new criminal indictments for more than four years.
"Many deponents are understandably concerned about their uncertain status in the criminal investigation and are considering whether they should invoke their Fifth Amendment privilege against self-incrimination," the company said in its motion.
HCA said it is concerned about the potential liability facing current and former HCA employees if information they give in the civil trial is used against them in future criminal cases. The criminal plea agreement HCA signed does not protect individuals against criminal prosecution.
The still-unresolved civil cost-reporting fraud allegations, which have not been scheduled for trial, stem from a 1993 whistleblower lawsuit filed by James Alderson, the chief financial officer for a Whitefish, Mont., hospital then managed by former HCA subsidiary Quorum Health Resources. Alderson filed suit against the original HCA; HealthTrust, which HCA acquired in 1995; and Quorum. A former Florida HCA reimbursement supervisor, John Schilling, also filed a cost-reporting fraud suit against HCA predecessor companies in 1996. Those suits, which the government joined in 1998 and 1999, have been consolidated. An amended complaint filed Feb. 6 in Washington District Court added an additional $60 million in alleged damages, although the Justice Department has not joined these allegations. Earlier versions of the Alderson and Schilling suits alleged that HCA defrauded Medicare and other government health programs of more than $600 million. HCA allegedly falsely billed the programs for more than 14,000 cost report items from 2,000 cost reports filed from 1987 through 1997, and by preparing reserve cost reports its employees were forbidden to show to Medicare auditors.
The Justice Department offered HCA a settlement agreement rumored to approach $1 billion to resolve the cost-reporting allegations in April 2001, but the company refused and the parties have not negotiated further. They are now pursuing a dual legal track that includes a potential settlement even as they prepare for a lengthy trial (Jan. 14, p. 4).
Attorneys from Washington-based Phillips & Cohen, the law firm representing whistleblowers Alderson and Schilling, last week filed a motion to deny HCA's request to identify the alleged criminal subjects and targets and to postpone the depositions. Arguing HCA has a conflict of interest and no legal standing to represent the witnesses, the whistleblower attorneys moved to resume and expedite the deposition and discovery process.
U.S. District Judge Royce Lamberth in Washington, who set a June 6 deadline for the parties to complete discovery and proceed to trial, is expected to rule on the motions late this month or in early March.