Justice Dept. Joins Lawsuit Against Columbia/HCA

The Justice Department on Tuesday joined a whistle-blower lawsuit against Columbia/HCA Healthcare Corp. that accuses the nation’s largest hospital chain of paying doctors to refer patients to its facilities.

It is the first federal lawsuit to come out of El Paso, where federal agents with search warrants raided Columbia/HCA hospitals and doctors’ offices in March 1997. Much of the public activity in the investigation so far has taken place in Florida, where four Columbia/HCA executives are currently defendants in a trial in which they are accused of defrauding Medicare and other government health-insurance programs.

The lawsuit, filed by former employee Sara Ortega of Nashville, Tenn.-based Columbia/HCA, is the fourth that the Justice Department has joined as part of its Medicare-fraud investigation of the company.

The government’s action may signal that it is not ready to settle the fraud investigation against the company, or that it is pressuring the company for concessions in the negotiations, said Sheryl Skolnick, industry analyst with BancBoston Robertson Stephens.

Columbia/HCA shares rose 44 cents to close at $25.50 on the New York Stock Exchange. Skolnick said the latest lawsuit should be some cause for concern, however. “This is very distracting at a minimum, and at a maximum it is getting expensive” in terms of legal fees, she said.

The company sees the department’s action as another step toward reaching a settlement of the investigation. “We think it facilitates our ability to resolve the outstanding issues” with the government, Columbia/HCA spokesman Jeff Prescott said.

The Texas suit says Columbia/HCA in El Paso “gave physicians investment opportunities in the hospital, medical directorships and multiple other benefits . . . in order to induce referrals,” the department said in a press release.