U.S. Files Claims in 8 Lawsuits Against HCA

The Justice Department said Friday that it filed civil complaints in eight whistle-blower lawsuits alleging hundreds of millions of dollars in fraud, including physician kickbacks and inflated cost reports, by HCA-The Healthcare Co., the largest U.S. hospital chain.

It said the lawsuits allege that HCA, formerly known as Columbia-HCA Healthcare Corp., over the last decade systematically made unlawful claims against Medicare, Medicaid and other federally funded health-care programs.

The Justice Department said the claims are not covered by the agreement HCA reached last year to pay a $745-million civil settlement and $95 million in criminal fines to resolve some of the allegations arising from a federal investigation that began in 1997.

It said the lawsuits mainly involve payments of kickbacks to physicians to increase the numbers of government-insured patients, the inflation of hospital cost reports to increase Medicare and other government reimbursements, and kickbacks and inflated cost reports for wound-care services.

HCA, which is based in Nashville, said the eight cases “all fall within the remaining open civil areas, which have been under discussion with the government” in an effort to reach a settlement.

“The company has, for the past several years, been in good-faith discussions with the government about a reasonable and fair resolution of these matters,” HCA said.

The Justice Department said the lawsuits are pending in federal court in Washington, where 28 whistle-blower lawsuits against HCA have been consolidated.

The department said last year’s partial settlement mainly covered allegations involving laboratory billing, home health overbilling, charging of non-reimbursable home health costs disguised as management fees and community education, and use of billing codes that provided higher payments than those that actually reflected the services furnished to patients.

Under the false claims law, whistle-blowers, such as former company employees, may bring civil lawsuits alleging fraud against the federal government. The government decides whether to join the lawsuit and prosecute the case. The whistle-blowers receive a percentage of any amount awarded to the government.

The complaints filed by the Justice Department Thursday and announced Friday before the market opened were in cases in which the government has intervened.

Since the announcement of the partial settlement with HCA on Dec. 14, the department said it has declined to intervene in a number of other pending whistle-blower cases. It said it asked for the dismissal of claims of five whistle-blowers.

Gary Taylor, an analyst at Banc of America Securities, said the continued prospects of litigation have hurt the value of HCA stock, despite positive operating trends and cash-flow improvements. HCA shares closed at $37.51, up $1.11 on the New York Stock Exchange.

Taylor said he thinks that HCA will settle the remaining issues at some point.