COLUMBIA: Feds Indict Fourth Executive In Florida
A U.S. grand jury in Florida indicted a Columbia/HCA Healthcare Corp. executive yesterday, charging him with defrauding the Medicare program. Carl Lynn Dick, charged with conspiring to "defraud Medicare and making false statements," is the fourth Columbia executive to be charged in the federal government's "massive criminal probe of the nation's largest hospital chain," Bloomberg News/Tampa Tribune reports. The three other executives -- Jay Jarrell, Michael Neeb and Robert Whiteside -- were charged about a year ago with "five counts of conspiracy and making false statements," to which they have pleaded not guilty. Yesterday's indictment adds two more counts to the charges against the other three defendants (Stobbe, 7/23). The new charges allege that Dick, finance director of Columbia's East Florida division, and the three others engaged in a $2.8 million conspiracy against Medicare as far back as the early 1990s. The AP/Orlando Sentinel reports that the new charges involve Fawcett Memorial Hospital in Port Charlotte, FL. The affidavit says that while working for Fawcett Memorial's parent company, Basic American Medical Inc., Dick and the three other executives tried to cheat Medicare by "lying on Medicare claims, setting up a reserve bank account to repay the money if caught and trying to mislead an auditor" (Pack, 7/23). Dick's attorney, Bill Junge, declined to comment (Wall Street Journal, 7/23).
While yesterday's charges did not produce any surprises -- the charges were laid out in an unsealed court document about a year ago -- they "do offer new details about what prosecutors believe was a complex scheme to cheat" Medicare. The investigators found that hospitals can inflate certain costs on "cost reports" to receive higher rates of reimbursement. The New York Times also reports that the yesterday's charges accuse Fawcett's accountants -- KPMG Peat Marwick -- of "participating in meetings at which efforts by the hospital to benefit from inaccurate expense claims were discussed." KPMG spokesperson George Ledwith, however, "said that the firm was cooperating with the investigation, and was confident that its services to Columbia 'were appropriate and professional'" (Eichenwald, 7/23).
The Wall Street Journal reports that amidst the federal government's massive, year-long probe, there were rumors that the Florida indictment "would offer proof of 'systemic' fraud inside Columbia." However, "yesterday's indictment didn't quite match that billing" as Dick and the others are only midlevel managers "in Columbia's $20 billion empire." And many contend that what the government regards as conscious attempts at fraud are merely unconscious mistakes in a complicated billing system. "This is a case about a dispute of complicated health care accounting rules," said Jarrell's attorney, Peter George. "You ask yourself why they chose to make this a criminal case, of all the thousands and thousands of cost report items?" he added.
The Journal reports that yesterday's indictment "was seen as an indication that Tampa and Fort Myers prosecutors had gotten bogged down in a convoluted case involving reimbursement issues dating back more than a decade, and including alleged infractions committed in years before Fawcett was even owned by Columbia." Bear, Stearns & Co. A.J. Rice asked, "Where's the beef? After all the fanfare, this is a far cry from what we were looking for last fall when the original indictments were handed down. It leaves you wondering what the excitement was about." Columbia spokesperson Victor Campbell said, "There was absolutely nothing introduced that was new." But Monte Richardson, executive assistant U.S. attorney for Florida's Middle District, said, "The indictment speaks for itself. It was voted on by a federal grand jury, and the grand jury's vote is basically saying there is probably cause a crime has been committed" (Ladnando, 7/23).