Columbia/HCA agrees to settle fraud allegations for $745 million

NEW YORK - Columbia/HCA Healthcare Corp, the nation's largest hospital chain, has agreed to pay the federal government $745 million to settle allegations that it submitted fraudulent bills to Medicare and other government programs, the company said Thursday.

The Justice Department said it has resolved most, but not all, of the issues it had been investigating since at least 1997 and made clear it will be seeking more money.

The deal must still be approved by more Justice Department officials, a federal judge and other federal agencies. Further, the settlement would not be final until all criminal investigations are resolved.

Analysts have speculated that Columbia will have to pay at least $1 billion overall to settle the probe.

The government has been investigating allegations that Columbia submitted false claims and doctored cost reports that determine how much its hospitals are paid under federal programs such as Medicare, a health insurance program for the elderly, and Medicaid, an insurance program that covers the poor.

Columbia/HCA is not admitting any wrongdoing in the deal, said spokesman Jeff Prescott.

The government's fraud probe targeting Nashville-based Columbia/HCA became public in 1997 with a series of raids on several hospitals. Last year, two Columbia middle managers in Florida were convicted of defrauding several government health insurance programs.

The investigation led to wholesale changes at Columbia/HCA, which once sought to become the McDonald's of hospital care. The company has ousted its top executives, stopped an aggressive hospital acquisition program and began a major downsizing, trimming from a high of 345 to 205 hospitals and other facilities.

The government and Columbia have been trying to negotiate a settlement for more than two years.

''We are pleased to have reached an understanding on these issues and today's announcement signals that a significant step in this process is complete,'' said Thomas F. Frist, Jr., chairman and chief executive officer.

Investors were also elated by the news, pushing shares of Columbia up $2.25, or 8 percent to $30.50 on the New York Stock Exchange.

''This is a step in right direction for Columbia and the industry,'' agreed Jim Baker, an analyst with SunTrust Equitable Securities in Nashville, Tenn. ''The big news is not so much the dollar figures, but people had been questioning if this thing would ever get settled.''

In connection with the settlement, Columbia/HCA said it plans to take an after-tax charge of about $498 million in the quarter ending June 30.

In addition, the company said it has a deal with the Department of Health and Human Services that would allow the company to continue to treat Medicare patients. Medicare fees often make up at least 25 percent of revenues at most Columbia hospitals.


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