New fraud claims leveled at Las Vegas hospital operator

Friday, March 16, 2001 | 11:02 a.m.

SUN STAFF AND WIRE SERVICES

HCA-The Healthcare Co., the biggest U.S. hospital chain and a large operator in Las Vegas, defrauded Medicare of "hundreds of millions of dollars" by inflating cost reports and paying doctors kickbacks to refer patients, the U.S. government charged Thursday.

The government filed complaints in eight whistle-blower lawsuits, the Department of Justice said. The government didn't specify how much HCA allegedly overbilled Medicare. Lawyers for two whistle-blowers assisting the government said yesterday the government would claim overbilling of more than $400 million and could seek triple damages.

The complaints may speed a settlement by HCA, which already has agreed to pay a record $840 million in fines and payments to settle other allegations in the five-year-old health-care fraud case. The filing lays out what the government would try to prove if the rest of the case goes to trial.

HCA agreed Dec. 14 to plead guilty to 14 criminal counts and pay criminal fines and civil payments to settle charges that it overbilled Medicare for laboratory and home health-care services and exaggerated the severity of pneumonia cases to get higher payments from the government. That settlement didn't resolve the cost report and kickback allegations.

The claims may push total settlement costs to more than $1 billion for HCA, which changed its name from Columbia/HCA Healthcare Corp. last year. The company owns Sunrise and MountainView hospitals in Las Vegas.

Shares of Nashville, Tennessee-based HCA rose 9 cents to $36.49 in early morning trading today.

The kickback lawsuits allege that HCA engaged in a pattern of awarding doctors financial incentives for referring Medicare patients to its hospitals after Columbia Hospital Corporation was formed in El Paso, Texas, in 1987. The government said the practice violates anti-kickback laws.

HCA also inflated cost reports by including improper charges, shifting home health-care expenses to cost reports filed by its Miami area hospitals, moving costs for wound-care centers operated in 56 hospitals -- including Sunrise and MountainView -- to cost reports and shifting costs for some hospital departments that were paid flat rates to cost reports so the hospitals could get more reimbursement.

The government has said the kickback allegations involve almost 40 hospitals, primarily in Texas and Florida, from 1988 to 1998. The cost report allegations involve more than 41,000 items on 3,460 cost reports filed by HCA hospitals from 1987 to 1997, the government has said.

The complaints also say HCA improperly billed Medicare for more than $100 million in costs associated with its spinoff of 104 hospitals in 1987 to form HealthTrust Inc., according to Stephen Meagher and Peter Chatfield, attorneys for two whistle-blowers.

HCA was headed at the time by Thomas Frist Jr., co-founder of the company. Frist stepped down as chief executive in January and remained HCA's chairman. HCA bought back HealthTrust in 1995.

The two lawyers represent James Alderson and John Schilling, two former HCA employees who filed lawsuits alleging fraud by the company. Both may get a share of any money the government recovers.

In a statement issued today, HCA said, "These actions do not introduce any new suits or new legal theories."