Originally created 08/13/97

Securities officials question Columbia/HCA stock sales

NEW YORK - Two Columbia/HCA executives indicted in Florida for overstating Medicare costs were also in charge of informing investors about costs, according to documents provided to securities regulators.

The National Association of Securities Dealers declined to say whether it has launched a formal probe, but the regulators have been asking whether the executives gave investors accurate figures, according to Peter Young, a Florida health care consultant who provided information to the NASD this week.

A broker who knowingly misinforms investors about the finances of a venture is in violation of securities regulations, an area overseen by federal and state regulators, including the NASD.

NASD spokesman Michael Robinson confirmed that the two Columbia executives indicted in Florida last month, Jay A. Jarrell and Michael T. Neeb, are both registered representatives for the Columbia Hospital Securities Corp. Columbia Hospital Securities sells stakes in regional hospital groups - typically to doctors who practice there.

A filing with the NASD urged prospective investors to contact Mr. Neeb, who oversaw Columbia's North Florida division as its chief financial officer.

Mr. Neeb and Mr. Jarrell were charged with knowingly preparing documents that inflated costs for reimbursement by the federal government to Fawcett Memorial Hospital in Port Charlotte, Fla. They also prepared the documents that informed doctors and other investors who put money into holding companies such as Fawcett. Those documents included information on costs.

Peter Young, a Florida health care consultant, said he had spoken with NASD officials and gave them documents detailing the involvement of the indicted Columbia executives in the securities operation.

Attorneys for Columbia, Neeb and Jarrell did not return a call seeking comment.

The NASD, a private organization, was given authority under federal laws passed in the 1930s to oversee brokers and stock sales and issue sanctions against violators.

Since federal agents raided more than 50 Columbia and affiliated sites in seven states last month seeking documents on alleged overbilling of the government for Medicaid and Medicare patients, the company has been beset by investigations. Several federal agencies, three states and a group of private insurers are now probing the nation's largest for-profit hospital chain for overbilling.

"What you've got is the fallen dog and the flies are gathering like crazy," said Jeffery Alexander, a Boston lawyer representing health care companies.

The way Columbia lets doctors invest in hospitals is through limited partnerships, of which Columbia's public stockholders own 80 percent and doctors who buy private shares own 20 percent.

Following the federal probe, the company said it will abandon the controversial practice, which critics say encourages doctors to refer patients for treatment at Columbia facilities, increasing revenues for the doctors' investments.

Many Columbia officials played multiple roles in the limited partnerships.

Richard Scott, the chief executive ousted following the probe, was listed as a director of the brokerage, Columbia Hospital Securities Corp. Columbia general counsel Stephen Braun was also described in securities filings as secretary of the brokerage and a director of Florida Gulf Coast GP, which formed a limited partnership with Columbia as a holding company for a group of hospitals. Braun was also described as secretary of the Columbia Hospital brokerage.

One partnership filing noted that financial information was unaudited and prepared by Florida Gulf Coast and is based on "certain assumptions concerning the revenues, expenses and resulting cash flow" of the facilities.


Trending this week:


© 2017. All Rights Reserved.    | Contact Us