Columbia/HCA settles Medicare suit, the largest in health care fraud history
But it isn’t over yet; cost report and kickback issues still pending
In what is the largest (by 50%) health care fraud settlement ever won by the U.S. Department of Justice (DOJ), Columbia/HCA Healthcare Corp., the nation’s largest health care company, has agreed to pay $745 million in civil penalties. The settlement stems from a three-year-old Medicare fraud investigation that examined whether the company’s success was due in part to cheating federal health programs. The settlement, which is contingent upon the resolution of pending criminal investigations, requires additional approvals from the DOJ and execution of the corporate integrity agreement.
If approved, the settlement would resolve charges related to DRG coding, outpatient laboratory billing, and home health issues. However, those claims that are related to cost reports and alleged kickback violations are still pending.
While it may appear that the end is in sight for this long-running investigation, that might not be the case. As reported in the May 19 issue of The New York Times Online, the deal "included an unusual structure that would put immense pressure on both Columbia and the government to resolve the entire case before the end of this year. Under the terms of the agreement, the criminal cases against Columbia must be settled by Dec. 31. If that does not happen — or if the government does not grant certain extensions of time for negotiations — Columbia can withdraw the settlement offer. If the two sides do not resolve the criminal case this year, the government stands to lose hundreds of millions of dollars, while Columbia would return to square one in the negotiating process or be on its way to trial."
When news of the settlement reached Wall Street, the New York Stock Exchange stopped trading Columbia stock, which was trading at $30.50 a share (up 9%) and with a trading volume of more than 2 million shares.
It’s not just the government that stands to benefit from this settlement. Two Utah physicians, Robert Rothfeder, MD, and Dennis Wyman, MD, may also find themselves sharing in the wealth. In 1995, the two filed suit against a Utah hospital, which was then owned by Columbia’s predecessor, HealthTrust, for billing Medicare for unnecessary and unordered lab tests.
Columbia still has other problems to contend with: The company recently agreed to pay $156 million in additional federal income taxes to the Internal Revenue Service as part of a series of ongoing disputes with the department. According to a May 11 filing with the Securities and Exchange Commission, "The settlement relates to the IRS’ proposal to disallow certain Columbia costs related to acquisitions, executive compensation, and systems conversion."
Bent but not broken, Columbia also announced that it would close one of the three hospitals it owns in San Jose, CA. The 327-bed San Jose Medical Center is set to close in 2005 and will switch its services to the 192-bed Regional Medical Center of San Jose. Over the next five years, Columbia plans to spend $200 million upgrading the remaining hospitals it owns in the city.
Additionally, Columbia has completed the buyout of four London hospitals, which were part of a four-year-old joint venture with the company’s United Kingdom partner, PPP Healthcare, a division of Britain’s Sun Life & Provincial Holdings. The cost of full ownership for Columbia was $110 million in a deal that was finalized a day after the announcement of the DOJ settlement.
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content