FOR IMMEDIATE RELEASE
FRIDAY, APRIL 9, 1999
WWW.USDOJ.GOV
CIV
(202) 514-2007
TDD (202) 514-1888

JUSTICE DEPARTMENT JOINS LAWSUIT AGAINST COLUMBIA/HCA

AND CURATIVE HEALTH SERVICES

Suit alleges violations of False Claims Act and Medicare/Medicaid Anti-Kickback Act

WASHINGTON, D.C. -- The Department of Justice announced today that it has joined a lawsuit alleging that Columbia/HCA Healthcare Corporation and Curative Health Services, Inc. defrauded the Medicare program.

Columbia/HCA owns 305 hospitals in 32 states. Curative Health Services, based in Hauppauge, New York, manages Wound Care Centers at more than 175 hospitals nationwide, including approximately 42 Columbia/HCA hospitals.

The complaint, which was unsealed today in U.S. District Court in Tampa, Fla., alleges that approximately 42 Columbia/HCA hospitals have charged Medicare since 1993 for excessive management fees Columbia/HCA paid to Curative when those fees were inflated to cover the costs of a Curative product for which Medicare does not reimburse. In addition, the suit alleges that the hospitals charged Medicare for advertising for which Medicare does not reimburse and for kickbacks of $400 per patient that Columbia paid to Curative for referrals.

The suit alleges that Columbia/HCA hospitals included the entire amount of the excessive management fees in their annual Medicare cost reports, in violation of Medicare's requirement that hospitals make reasonable and prudent purchases from their vendors. The suit alleges that in early 1993, shortly after Medicare decided not to pay for Procuren, an experimental product for the treatment of non-healing wounds, Columbia/HCA agreed to amend its contracts with Curative, increasing the fixed management fees paid by over 400%, decreasing the amount charged by Curative for Procuren by more than half, and adding a $400 per patient management fee. The suit alleges that the $400 per patient portion of the management fees violates the Medicare and Medicaid Anti-Kickback Act. In addition, the lawsuit alleges that part of the fees paid by one hospital were for advertising expenses for which Medicare does not allow reimbursement.

The suit was initially brought by Joseph Parslow, Chief Financial Officer at Southwest Florida Regional Medical Center, a Columbia/HCA hospital in Fort Myers, Fla., in 1998 under the qui tam provisions of the False Claims Act. The Act, a federal law that allows private individuals to sue on behalf of the government, provides for treble damages and civil penalties for violations. The False Claims Act provides that under certain circumstances, a whistleblower can recover up to 15 to 25 percent of the government's recovery in a case that the government joins.

The case unsealed today is: United States ex rel. Parslow v. Columbia/HCA Healthcare Corporation and Curative Health Services, Inc. (M.D. Fla.).

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