WASHINGTON - The Justice Department says it might join more whistle-blower lawsuits against HCA-the Healthcare Co. because settlement negotiations over alleged physician kickbacks at its hospitals have stalled.
The Justice Department said yesterday that it is preparing complaints against the biggest U.S. hospital chain and will decide by March 15 whether to join more suits that claim HCA paid doctors to send patients to its hospitals from 1988 to 1998.
The impasse, revealed in a court document filed last week, might expose HCA to more lawsuits and extend a five-year investigation of health-care fraud that already has led to $840 million in civil payments and criminal fines against the company.
HCA also has pleaded guilty to 14 criminal counts and two of its executives were convicted of criminal charges in Tampa, Fla., in July 1999.
"Obviously, the investigation is not completely done, but it's highly likely that the biggest charges are behind the company and reflected in the stock price," said John Hindelong, a Credit Suisse First Boston Inc. analyst, who has a "buy" rating on the stock.
Shares of HCA fell 8 cents yesterday to close at $38.55 on the New York Stock Exchange. The stock has risen 77 percent in the past 12 months.
The Justice Department and HCA, formerly known as Columbia/HCA Healthcare Corp., are trying to settle civil allegations that the company paid kickbacks and routinely inflated annual cost reports it filed with government health-insurance programs including the Medicare program for the elderly.
The government has asked for a meeting next month with HCA on cost reports and expects to make a settlement demand then, according to the Feb. 15 document. If lawyers can't come to terms, the government also could join more whistle-blower suits that concern inflated cost reports.
Meanwhile, negotiations on settling kickback allegations have bogged down because the two sides disagree over whether HCA is entitled to keep reimbursement for medical claims that violated kickback laws.
Jeff Prescott, an HCA spokesman, said the government has said it is open to further discussions on kickbacks and the company doesn't view the impasse as the final word.
"We're going to continue to have discussions about that," he said. "There just isn't anything happening at the moment."
Prescott also said the company considers its negotiations with the Justice Department to be on a separate track from any decision involving whistle-blower suits.
Justice Department officials weren't available for comment.
The kickback allegations involve hundreds of relationships with physicians at about 40 hospitals, primarily in Florida and Texas, the government said. The allegations are contained in at least six whistle-blower lawsuits, the government said.
It isn't easy to set damages in kickback cases because it isn't clear how the government has been harmed, said Larri A. Short, a Washington attorney who specializes in health-care fraud.
In similar cases, the government has taken the position that paying a kickback taints any related reimbursement claims filed by hospitals, she said, meaning the money must be repaid.
"It's a pretty extreme position, that every penny is owed," Short said.
The Justice Department also said in the court document that it is evaluating whether to join other whistle-blower suits that take up civil issues the government says are not covered in a Dec. 14 settlement.
The two sides agreed in December to settle the entire criminal case, as well as civil allegations that the company overbilled Medicare for laboratory and home health services and exaggerated the severity of pneumonia cases to get higher payments from the government.
HCA agreed to pay $95 million in criminal fines and a $745 million civil payment, the largest health-care fraud settlement in U.S. history.
Judge Royce C. Lamberth, of U.S. District Court in Washington has jurisdiction over the whistle-blower suits and ordered the government to decide whether to intervene in other suits by March 15.
HCA said Feb. 6 that it paid the criminal fine in the first quarter and would pay the civil settlement in the first or second quarter. The company already has taken charges for both payments.
Since the investigation became public in March 1997, the company has sold or spun off more than 100 hospitals, left the home-health business and stopped aggressive national marketing campaigns.