Department of Justice Seal




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WASHINGTON, D.C. -- The Department of Justice announced today that it has joined a lawsuit alleging that Columbia/HCA Healthcare Corporation and Quorum Health Group, two national hospital chains, defrauded the Medicare program and other federally funded health insurance programs. More than 200 hospitals in at least 37 states are defendants in the suit.

Assistant Attorney General of the Civil Division Frank W. Hunger and U.S. Attorney in Tampa, Fla., Charles R. Wilson said the lawsuit, United States ex rel. Alderson v. Columbia/HCA Healthcare Corporation et al., was unsealed today in U.S. District Court for the Middle District of Florida. The suit alleges that Columbia/HCA and Quorum routinely submitted false claims in their hospitals' cost reports to Medicare, Medicaid & CHAMPUS (the Civilian Health and Medical Program of the Uniformed Services), in order to increase the amount of reimbursement the government paid to the hospitals.

According to the complaint, beginning around 1984, Columbia/HCA and Quorum made false statements to various fiscal intermediaries, the companies that process Medicare cost reports for the government, in their annual cost reports, claiming that they should receive reimbursement of costs that the hospitals knew were unallowable.

The lawsuit claims that Columbia/HCA and Quorum prepared "reserve cost reports," internal documents which included certain unallowable costs contained in their filed cost reports, and kept those reserve cost reports hidden from government auditors. The lawsuit alleges that a purpose of the reserve cost reports was for accounting purposes to reserve funds to repay the government in the event the unallowable costs were eventually discovered by the government.

The suit was initially brought by James F. Alderson, a former employee of Quorum, under the qui tam provisions of the False Claims Act, a federal law that allows private individuals to sue on behalf of the government. The False Claims Act provides for treble damages and civil penalties for violations of the act. In addition, the 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.

Columbia/HCA owns approximately 330 hospitals in 35 states. More than 200 of those hospitals are currently defendants in the suit by the relator. The suit alleges fraud in Medicare cost reports of former HCA and HealthTrust hospitals, which continued after their acquisition by Columbia/HCA. Quorum owns and manages more than 200 hospitals nationwide. In 1989, HCA sold its subsidiary HCA Management to Quorum. Quorum Health Resources, a subsidiary of Quorum also named in the lawsuit, is the nation's largest hospital management company. Columbia/HCA and Quorum are Delaware corporations based in Nashville, Tenn.####