The federal government's probe of Medicare billing practices came to a close last week, a decade after it began.
The U.S. Justice Department and HCA announced they signed the $631 million settlement agreed to last December (Dec. 23-30, 2002, p. 6). Coupled with a December 2000 settlement of all criminal and some civil Medicare fraud allegations, HCA will pay a total of $1.7 billion to settle claims arising out of a series of whistleblower lawsuits that began in 1993. The total amount is the largest healthcare fraud settlement ever won by the government, the Justice Department said.
The final settlement covers eight whistleblower lawsuits alleging that the company falsified Medicare cost reports, paid kickbacks to physicians for patient referrals and submitted false claims for wound-care services. HCA also will pay $17.5 million to state Medicaid departments to resolve similar allegations. In addition, HCA and the Centers for Medicare and Medicaid Services signed their settlement of cost reports filed between the time the investigation became public in July 1997 and July 31, 2002. HCA will pay the CMS $250 million by July 1, the company said.
Both the government and the whistleblowers devoted massive resources to the probe. HHS' inspector general's office estimated in December that the office's lawyers and auditors spent nearly 54,000 hours on the case at a cost of $3.9 million.
The probe was sparked by a whistleblower lawsuit filed by James Alderson in 1993. Alderson had been fired in 1990 as chief financial officer for a Montana hospital operated by Quorum Health Group, Brentwood, Tenn., which had been spun off from Hospital Corporation of America, HCA's main predecessor company. Another key whistleblower was John Schilling, a reimbursement manager with the Florida unit of what was then known as Columbia/HCA Healthcare Corp. when he filed his lawsuit in 1996. The two will split $100 million for their efforts on the case (See chart).
HCA said it took an after-tax charge of $468 million in the 2002 fourth quarter to cover the settlements. Separately, HCA agreed to pay $1.5 million to settle a whistleblower suit alleging that West Paces Medical Center, Atlanta, paid kickbacks for referrals of diabetes patients.