Originally created 12/15/00

HCA hit with fine

NASHVILLE, Tenn. - HCA - The Healthcare Company, the nation's largest for-profit hospital chain, has agreed to pay the federal government $95.3 million in fines and penalties to settle criminal fraud charges.

Combined with the Nashville-based company's agreement in May to pay $745 million in civil fines and penalties, this becomes the largest government fraud settlement in history.

The U.S. Department of Justice accused HCA of conspiring to defraud government health care programs, paying kickbacks to doctors and submitting false bills. The criminal charges were related to the company's hospitals in Florida, Georgia, Texas and Tennessee.

HCA operates Doctor's Hospital in Augusta, but the hospital was not involved in the criminal charges.

HCA issued a statement early Thursday saying that it had reached an understanding "in principle" with the Justice Department and said it would provide more details later in the day.

Attorney General Janet Reno, Human Service Department Inspector General June Brown Gibbs and FBI officials were expected to hold a 4:15 p.m. EST news conference in Washington on Thursday to officially announce the settlement.

The company, formerly known as Columbia/HCA Healthcare Corp., this spring settled civil fraud allegations that it overbilled for lab and home health care services and overstated patient illnesses to get more money from the government, called upcoding.

The civil settlement, which also included hospitals in Utah and Pennsylvania, was contingent on the government and HCA reaching a consensus on the criminal fines and penalties by Dec. 31.

It was unclear whether the company would admit guilt to any of the criminal allegations.

The settlements end a five-year investigation into allegations by whistle-blowers and others in the health industry that HCA conspired to defraud government health insurance plans, including Medicare, which covers the elderly; Medicaid, which covers the poor; and Tricare, which covers the military and their families.

The government alleged that HCA gave doctors kickbacks to refer patients to its hospitals and filed false annual cost reports for government health care programs.

Stephen Meagher, a San Francisco attorney who represents several HCA whistle-blowers, said the criminal settlement was in line with what he expected.

Mr. Meagher described the settlement as "pretty mind-blowing," but said it apparently leaves unresolved the allegation of fixed cost reports, he said.

"Exactly what HCA would plead guilty to remains a mystery," he said.

The fraud investigation became public in March 1997, when FBI agents raided HCA hospitals and offices in several states.

Two mid-level Florida HCA executives were found guilty of fraud in 1999 and are appealing their convictions. Another executive was acquitted and a fourth pleaded guilty after a hung jury to avoid a second trial.

There have been no criminal convictions of any top executives.

HCA co-founder Thomas Frist Jr., the brother of U.S. Sen. Bill Frist of Tennessee, ousted Richard L. Scott as chief executive in July 1997 and began a restructuring of the company.

HCA got out of the home health care business and sold or consolidated more than 100 hospitals. The chain currently has about 200 hospitals.

Shares of HCA were trading Thursday at $38.89, up 13 cents.


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