WASHINGTON — HCA-The Healthcare Company, the nation's largest for-profit hospital chain, agreed Thursday to plead guilty to defrauding government health care programs and will pay more than $840 million in criminal fines, civil penalties and damages.
The agreement — reached after a seven-year federal investigation triggered by private whistleblowers — is the largest government fraud settlement ever negotiated by the Justice Department.
The chain operates six Utah hospitals under the MountainStar banner. They are St. Mark's Hospital, Lakeview Hospital in Bountiful, Ogden Regional Medical Center, Brigham City Community Hospital, Timpanogos Regional Medical Center in Orem and Mountain View Hospital in Payson.
The company agreed to cooperate with a continuing investigation that Attorney General Janet Reno said could still produce criminal charges. Deputy Assistant FBI Director Thomas Kubic called the case "one of the FBI's highest priority white-collar crime investigations."
The agreement did not settle civil allegations that HCA inflated charges to the government and paid kickbacks to doctors so they would refer Medicare and Medicaid patients to its facilities.
The two HCA units that pleaded guilty — Columbia Homecare Group Inc. and Columbia Management Companies Inc. — agreed to pay more than $95 million in criminal fines and were barred from further participation in federal health care programs.
Separately, HCA agreed to pay $745 million in civil penalties for its alleged false billing practices — a figure negotiated last spring but not finalized until the criminal settlement was announced Thursday.
"Health-care fraud impacts every American citizen," Reno told a news conference. "If you overbill the U.S. taxpayer, then we are going to make you pay it back and then some."
She said it was the largest health-care fraud investigation in history. It involved 30 U.S. attorneys' offices, 22 FBI field offices, inspectors general from the Health and Human Service Department and the Office of Personnel Management, Defense Department investigators and state fraud units.
HCA co-founder and chief executive Thomas Frist Jr., the brother of U.S. Sen. Bill Frist, R-Tenn., said from the company's Nashville headquarters: "Today's action represents one of the last steps needed to put the Columbia investigation behind us and allows us to move forward, maintaining our focus on providing quality patient care."
Frist ousted Richard L. Scott as chief executive in July 1997 and began a restructuring of the company. HCA got out of the home health-care business and sold or consolidated more than 100 hospitals. The chain currently has about 200 hospitals.
Reno said the civil settlement covers allegations that the company overbilled government health-care programs for services it performed, charged for services it did not perform and for costs that were not eligible for reimbursement.
In the criminal case, the two units agreed to plead guilty to filing false cost reports; fraudulently billing Medicare for home health care workers and management and wound care center workers; fraudulently billing Medicare and other health programs by inflating the seriousness of pneumonia diagnoses; paying kickbacks in the sale of home health agencies; and kickbacks to doctors to refer patients.
The guilty pleas will be filed in Miami, Atlanta, Nashville, Tampa, Fla., and El Paso, Texas.
Assistant Attorney General David Ogden said that $731.3 million of the civil settlement would to go the federal government, but some portion of that, up to a maximum of 25 percent, would be allocated through negotiations to private whistleblowers — 29 have been identified publicly.
"Whistleblowers brought valuable information to the attention of the U.S. government," Ogden said.
An additional $13.6 million of the civil settlement will be distributed to state governments for their share of losses under the state share of the Medicaid program.
The company, formerly known as Columbia/HCA Healthcare Corp., was alleged by whistleblowers and others in the health industry to have defrauded Medicare, which covers the elderly; Medicaid, which covers the poor; Tricare, which covers the military and their families; and the Federal Employees' Health Benefits program, which covers civilian federal workers.
Stephen Meagher, a San Francisco attorney who represents several HCA whistleblowers, described the settlement as "pretty mind-blowing."
John Schilling, one of the whistleblowers, was a key witness and provided documents in a 1999 criminal trial that resulted in prison sentences for two mid-level HCA executives in Florida. They are appealing. Another executive was acquitted and a fourth pleaded guilty after a hung jury to avoid a second trial.
There have been no criminal convictions of any top HCA executives.