Nation’s Largest Healthcare Fraud Settlement Doesn’t Stop Medical Behemoth

False Claims Act , Healthcare Fraud

Even fifteen years after their colossal 2002 payout, which is still recognized as the largest fraud settlement in United States history, Hospital Corporation of America (HCA) remains a frequent topic of discussion at the Department of Justice. Surely, it’s not hard to see why; HCA owns and operates 162 hospitals and 113 surgery facilities, the majority of which are located in the US – and with the ever-growing healthcare fraud crisis that seems to plague the nation, HCA and its subsidiaries commonly find themselves in hot water.

At the heart of the ever-present scrutiny that HCA faces lies their infamous and lengthy fraud allegations stemming from a 1997 investigation, among which were countless examples of upcoding, kickbacks, and record falsifications. The complaints, many which were brought forward by whistleblowers within the company, were filed in five separate federal court districts in Texas, Georgia, Florida, and Tennessee, and resulted in a massive discovery of the various fraudulent schemes occurring in the facilities.

According to the complaints filed in Texas, HCA regularly solicited kickbacks in exchange for physician referrals, but to an egregious extent; the hospital chain would offer various inducements to doctors, including free rent, free renovations to medical offices, free drugs from pharmacies owned by the corporation, and sizeable loans with no expectation of repayment. In return, these practitioners would funnel referrals for Medicare and Medicaid beneficiaries to a number of their facilities, though care could have been provided elsewhere.

Consequent allegations involved upcoding, a common practice when attempting to defraud federal healthcare, which requires a deliberate exaggeration of patient conditions in order to receive maximum reimbursement from the healthcare program in question. Oftentimes, HCA would perform tests or treatments that were medically unnecessary and later certify that the patient had a condition which warranted such services. HCA also admitted to intentionally misrepresenting marketing expenses as patient costs in order to receive reimbursement, in some cases denoting that unusable or empty spaces in their facilities were being utilized for patient care and filed claims as such.

After five years, a settlement was reached in 2002 that resulted in HCA paying out over $2 billion in restitutions, fines, and penalties; of this sum, the United States government received $631 million plus interest, state Medicaid programs were paid $17.5 million, and an additional $250 million was paid to settle Medicare overbilling claims. Under the provisions that allow for whistleblowers to file suits on behalf of the government, many relators were rewarded with sizeable compensations for their roles in the takedown, many of which were quoted in the multi-million dollar range. The three-part settlement involved numerous other payouts, together totaling the outrageous multi-billion dollar figure.

Though hard to fathom that a lesson could go unlearned through such an intensive and costly set of charges, HCA’s name has continued to make press in the years that have passed; though none comparable to the enormity of the first case, many of the facilities owned by the massive chain have come under fire for various other cases of fraud.

HCA was required to enter into an 8-year federal Corporate Integrity Agreement following the massive suit, and was thus required to undergo frequent and thorough audits that ensured its compliance with federal regulations. However, it didn’t take long for problems to arise; in 2004, a Florida hospital under HCA ownership was found to have an alarmingly large number of cardiac stents being implanted. After internal review, it was found that over 43% of the procedures were outside of “reasonable and expected medical practice.” HCA, in compliance with the stipulations in the federal agreement, brought the matter to authorities, placing all blame on its employees. This resulted in a civil defamation case between the conglomerate and the accused, who claimed their reputations were tarnished in HCA’s attempt to avoid federal implications.

The issue continues in 2010, where an internal whistleblower disclosed that over the course of eight years, over 1,200 procedures at another Florida facility were deemed to be medically unnecessary; these treatments took place exclusively in the catheterization laboratory of the hospital, which suspiciously accounted for roughly 35% of the hospital’s profits. Upon further analysis, many of the recipients of the invasive cardiac procedure had no diagnoses that would have warranted such a dangerous and expensive treatment.

Though settlements were not reached on either of the two cardiac cases, another whistleblower suit just two years later resulted in HCA paying $16.5 million following a violation of Stark Law; it was discovered that a Chattanooga-based hospital entered into inappropriate financial relationships with a local physician group in exchange for referrals. In return, HCA paid the group rent for an office space at a rate well above market value in a thinly-veiled attempt to cover the scheme. As a result of the settlement, the whistleblower (who remains unnamed) received an 18.5% share, a figure landing at roughly $3 million.

2015 yielded another whistleblower against HCA and another subsequent settled suit, regarding the administration of unnecessary testing and double-billing to Medicare for fetal testing at four separate hospitals in Florida. These blatant violations of the False Claims Act resulted in a $2 million payout by the organization, of which $400,000 was rewarded to the former employee who blew the whistle.

Twice more, in 2015 and 2017, HCA shelled out millions to settle further claims, both of which involve ambulance fraud. The first case, which involved four HCA-affiliated hospitals in Florida, resulted in a $2.37 payment following the exposure of a scheme to bill Medicare for non-emergent ambulance rides. The second, also involving four facilities, directly violated the Anti-Kickback Statute by entering into “swapping” agreements in which the hospitals received free or heavily discounted emergency transportation in exchange for referrals; HCA paid $8.6 million to resolve this case.

Following their initial settlement fifteen years ago, the government structured the massive deal in such a way that would not bar the Hospital Corporation of America from Medicare, claiming that such a restriction would be comparable to a “corporate death sentence.” However, given the numerous and egregious schemes in which HCA has had involvement since 2002, the question begs to be asked: were they let off too easy? Clearly, HCA is a medical behemoth with no intention of restructuring their facilities in a way that would prevent fraud; even if such standards were put in place, it is hard to say whether it could hinder such activity solely because of the sheer size of the company itself. For this reason, the information brought forward by relators has never been so integral to the hindrance of healthcare fraud as a whole; in a broken system so often fueled by greed, we rely on those who selflessly prioritize what is right in an effort to make a difference.

Whistleblower Justice Network Can Help You

Whistleblower Justice Network partners with whistleblowers to bring those who knowingly defraud federal healthcare programs to justice. Under the qui tam provisions of the False Claims Act, we assist individuals who bring forth information about fraudulent schemes in filing cases against those who thoughtlessly bilk these programs in the pursuit of personal gain.

If you have meaningful information regarding hospital fraud, ambulance fraud, or any other healthcare fraud that you believe is in violation of the False Claims Act, Whistleblower Justice Network can help. Working alongside world-class legal counsel, we will ensure you are protected to the fullest extent of the law and that you receive credit for the information you bring to the U.S. government. Partnering with whistleblowers is all we do. Visit us at www.whistleblowerjustice.net, or call us at 844-WJN-4ALL.

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