USA TODAY
By Julie Appleby
December 18, 2002
HCA, the largest hospital chain, said Wednesday that it has agreed to pay $648.5 million to settle final charges in a long-running federal investigation.
Including previous civil and criminal settlements, reached in 2000, the total paid by HCA will hit about $1.7 billion, by far the largest health fraud settlement in history, the Justice Department said in a statement.
Tenet, the No. 2 hospital chain, also is under government scrutiny over allegations that it raised charges to take advantage of a loophole in Medicare law and garner higher-than-average payments.
The HCA investigation grew out of lawsuits filed by former employees, starting in 1993, and focused on whether the company improperly billed Medicare for hundreds of millions of dollars.
During the investigation, HCA was acquired by Columbia Healthcare and continued its rapid expansion under founder Richard Scott. He resigned in 1997 amid mounting evidence that HCA had kept two sets of books, one to show the government and one with actual expenses listed. Thomas Frist — a co-founder of HCA and brother of Sen. Bill Frist, R-Tenn. — replaced Scott and remains on the board.
Under the agreement, HCA must pay the government $631 million, plus interest, and pay $17.5 million to state Medicaid agencies. As previously announced, HCA also has to pay $250 million to resolve outstanding Medicare expense claims.
HCA said it expects to record a charge of $445 million in the fourth quarter to cover settlement costs. It also expects to record an additional charge to cover legal fees brought by attorneys for the whistle-blowers. "We are pleased to have successfully negotiated a settlement," said Jack Bovender Jr., HCA's chief executive officer.
Critics of the settlement say HCA executives involved in the scandal deserved jail time. "When people engage in crimes this large, it is not enough to just settle for large amounts of money," says Sidney Wolfe of advocacy group Public Citizen. "Examples need to be set, and people need to go to jail."