An angry Thomas Scully, administrator for the Centers for Medicare and Medicaid Services, cried foul at a U.S. senator's suggestion that he may be stonewalling the government's investigation of HCA. In an exclusive interview with Modern Healthcare, Scully said he was "blindsided" at a committee hearing by Sen. Charles Grassley (R-Iowa), who asked Scully to detail disagreements he had with the U.S. Justice Department over its ongoing fraud probe of the for-profit hospital chain.
"I'm outraged," he said. "It's abundantly clear that someone at Justice leaked this to Sen. Grassley's Finance Committee to lob a grenade at HHS, and I don't appreciate it." While Grassley implied that Scully's disagreements with the Justice Department could jeopardize the department's ongoing civil and criminal fraud investigation into HCA, Scully vehemently denied that the dispute had anything to do with the Nashville-based healthcare giant. After publicly scolding Scully at a Senate Finance subcommittee hearing last week, Grassley wrote a letter to him asking him to detail his objections. At the hearing, Scully had conceded "significant legal differences" with the Justice Department regarding interpretations of the federal False Claims Act and antikickback law.
Before joining the CMS, Scully was president and chief executive officer of the Federation of American Hospitals, a lobbying group representing the nation's investor-owned hospitals. HCA is the federation's biggest member. While at the federation, Scully publicly challenged the government's case against HCA, but he did not detail his disagreements during the hearing.
"Mr. Scully's comments greatly concerned me," Grassley said. "The Justice Department is the nation's lawyer. As such, the Justice Department is responsible for protecting the taxpayers against fraud. The CMS absolutely cannot undermine the Justice Department's ability to police healthcare fraud. We're not going to let some bureaucracy that's got a cozy relationship with the industry it regulates...tell Justice what to do."
At the hearing Scully said the CMS is cooperating with the investigation. But that wasn't enough for Grassley, who co-authored a modernization of the Civil War-era False Claims Act in 1986.
"It is my concern that ... these disagreements may hinder the CMS' full cooperation with the Justice Department in attempting to resolve the remaining liability," Grassley said.
"This disagreement had nothing to do with HCA," Scully said. "It's dirty pool, and I never conduct business that way." He pointed out that while he has not formally recused himself from any HCA issues, he is not involved in any HCA-related matters because of his relationship with the federation.
Scully said the CMS has resolved its disagreements with the Justice Department over technical interpretations of the False Claims Act and the federal antikickback law. He said the CMS would send Grassley whatever information he requested.
Grassley asked Scully to list within 10 days any meetings he or CMS officials have had with HCA. The HCA investigation began in 1993 with a whistleblower lawsuit alleging Medicare cost-reporting fraud. In December 2000, the company paid $840 million to settle various criminal and civil allegations, but civil allegations of cost-reporting fraud and physician kickbacks remain unresolved. In January, HCA halted the interrogations of nearly 80 of its current and former employees and officers, citing concern that they might expose themselves to criminal liability.
Representatives for HCA and the Justice Department declined to comment on the imbroglio.