Originally created 12/31/98

Justice joins Medicare fraud suit against Columbia/HCA



WASHINGTON -- The Justice Department joined a second lawsuit alleging the country's largest health care provider defrauded Medicare and other federally funded insurance programs by filing false reimbursement claims.

The suit, unveiled Wednesday, alleges that Columbia/HCA Healthcare Corp., which owns 308 hospitals in 32 states, routinely submitted false documentation to Medicare, Medicaid and CHAMPUS, a civilian health-insurance program for the military.

About a third of the company's hospitals are named in the suit, the department said. The complaint, unsealed in Tampa, Fla., is limited to hospitals owned by Columbia prior to its merger with HCA in 1994.

Jeff Prescott, a spokesman for Columbia/HCA, said the company is cooperating with the investigation, which he said largely involves disagreements in accounting practices.

"We've been involved in discussions with the government on all fronts over a year and are hopeful we will be able to reach a resolution," Prescott said in a telephone interview from the company's headquarters in Nashville, Tenn.

The health care company has been the target of a yearlong investigation by the Justice Department and 11 states into allegations of Medicare fraud.

Last summer four of the company's middle-level executives were indicted in Florida on charges of conspiring to defraud the government of $2.8 million by disguising Medicare claims to get higher reimbursements. A trial is expected early in the year.

The two civil suits involved similar allegations, although the Justice Department announcement did not say how much money was involved.

The lawsuit, unsealed Wednesday, was filed initially by John Schilling, a former supervisor for reimbursement at Columbia's West Florida Division, under a federal law that allows citizen whistle-blowers to sue on the government's behalf. A whistle-blower is entitled to as much as 25 percent of the amount the government recovers.

The lawsuit alleges that Columbia and another health care provider, Basic American Medical Inc., filed false reports as far back as 1986 that allowed them to collect reimbursements on costs that the hospitals knew were not allowed.

Columbia acquired BAMI in 1992 and allowed the fraud to continue at five of that company's hospitals, the complaint alleged.

A separate lawsuit filed last October by another whistle-blower made similar allegations against HCA and HealthTrust, two hospital chains purchased by Columbia in 1994 and 1995.

That suit, brought by James Alderson, former chief financial officer at North Valley Hospital in Whitefish, Mont., alleged that a management company, owned by HCA, was brought in to provide financial management for the Montana hospital and began filing improper claims.

"Taken together these lawsuits reveal that the heart of the case against Columbia is pervasive cost-reporting fraud," said Stephen Meagher, an attorney in San Francisco, who represents both whistle-blowers.

The lawsuit unveiled Wednesday claims that Columbia purchased a number of home health care agencies in Florida and elsewhere and then improperly billed Medicare for inflated or improper management fees.

In one case, Columbia purchased several Florida home health agencies at artificially low prices, then paid the agencies inflated management fees that were charged to Medicare as legitimate costs for reimbursement. The lawsuit claims the management firms occasionally double-billed Medicare.