Department of Justice Seal




(202) 514-2007


TDD (202) 514-1888


WASHINGTON, D.C. -- The Department of Justice today announced that Columbia/HCA Healthcare Corporation has agreed to pay $1.25 million to the United States and the State of North Carolina to settle charges that the company submitted false claims to a Medicaid-funded managed care plan for adolescent psychiatric services.

The settlement, which resolves a lawsuit unsealed July 6 in U.S. District Court in San Francisco, addresses claims that Columbia/HCA's Brunswick Hospital, located in Supply, North Carolina, defrauded a Medicaid waiver program known as "Carolina Alternatives," a managed care plan for adolescent mental health and substance abuse treatment services. The settlement is unrelated to the government's ongoing nationwide investigation of other Columbia/HCA practices.

The government claimed that from at least 1994 to 1996, outpatient programs of Brunswick Hospital's Adolescent Psychiatric Unit billed Medicaid for services provided by unqualified or under-qualified employees as if they were provided by qualified mental health professionals. In addition, the government alleged the hospital billed Medicaid for services that were not rendered, and double-billed Medicaid for certain therapies by failing to subtract amounts included in other claims for those same therapies. The government claimed further that Brunswick Hospital staff altered and falsified medical records to conceal these deficiencies from a Medicaid review in 1996.

Under the settlement agreement, Columbia/HCA will pay the United States $812,500 for its share of the alleged false Medicaid claims and will separately pay the State of North Carolina $437,500 for its share of those claims. Medicaid is a health benefits program for the poor that is funded jointly by the United States Department of Health and Human Services, Health Care Finance Administration and each state. State Medicaid programs are administered locally by agencies of the state governments. The United States contributes approximately 65 cents of every Medicaid dollar spent in North Carolina and the state contributes the remaining amount.

Columbia/HCA assumed responsibility for the operating lease at Brunswick as a result of its merger with HealthTrust in 1995.

The lawsuit initially was brought by Kathy Aldrich, a psychiatric nurse formerly employed at Brunswick Hospital's Adolescent Psychiatric Unit. Aldrich filed her suit, United States ex rel. Aldrich v. Columbia/HCA Healthcare Corporation, et al., (N.D. Cal.)., in 1997 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 private citizen can recover 15 to 25 percent of the United States' recovery in a case that the government joins. Aldrich will receive $138, 125 of the federal government's recovery.

The settlement concludes an investigation undertaken jointly by the Medicaid Investigations Unit of the North Carolina Department of Justice and the Department of Justice in Washington, D.C.