3 Columbia/HCA executives indicted in federal probe

By KARIN MILLER / Associated Press

NASHVILLE, Tenn. - Three Columbia/HCA executives were charged Wednesday with cheating Medicare out of at least $1.8 million in the first indictment to come out of a sweeping federal investigation of the nation's largest for-profit hospital chain.

The charges against two regional officials in Florida and one headquarters executive in Nashville were contained in an indictment returned by a federal grand jury June 25. It was unsealed Wednesday in Fort Myers, Fla.

All three were charged with conspiracy and making false statements and could get up to 25 years in prison and $1.25 million in fines.

Just two weeks ago, FBI agents led a dramatic seven-state raid of more than 35 hospitals, offices and other Columbia/HCA-connected locations. Federal agents are said to be investigating billing fraud in home health care and laboratory work.

The three were accused of overbilling Medicare in the way they requested reimbursement for expenses at Fawcett Memorial Hospital in Charlotte County, Fla.

Prosecutors claim certain expenses were classified as capital outlays, which get reimbursed at a higher rate, when they actually fell under administrative and general expenses.

The three received 100 percent reimbursement even though the expenses were eligible for just 39 percent, prosecutors said. The resulting overpayments to Medicare and a military health program totaled about $1.8 million, according to the indictment.

Robert Whiteside, 47, director of reimbursement for Medicare-related expenses at Columbia hospitals, will plead innocent, said his lawyer, Hal Hardin.

The indictment "was quite a surprise to us. We look forward to clearing it up," Hardin said.

Also charged were Jay A. Jarrell, 42, head of the company's southwest Florida division; and Michael T. Neeb, 35, chief financial officer of Columbia/HCA's northern Florida operations.

"I am innocent and I have no comment at this time" Jarrell told reporters as he left the federal courthouse in Fort Myers. He was released on $100,000 bond.

The indictment alleges the illegal acts occurred both before and after Fawcett was purchased by Columbia/HCA in 1992.

During the raids earlier this month, federal agents searched locations in Florida, Tennessee, North Carolina, Texas, Oklahoma, Utah and Georgia. Documents were seized, but officials disclosed nothing about what they found.

The raids caused Columbia/HCA's stock to lose 18 percent of its value within three days and helped prompt last week's ouster of founder and chairman Richard Scott and president David Vandewater.

Thomas F. Frist Jr., who took over as chairman and chief executive last week, vowed to cooperate with investigators.

Columbia/HCA, with revenue of more than $20 billion per year, has 342 hospitals, 150 outpatient surgery centers and more than 570 home health care centers in 36 states, England, Switzerland and Spain.

Its second-quarter earnings, released hours before the indictment, appeared unaffected, although some analysts have warned of possible future disappointments.

The company matched analysts' expectations with earnings of $412 million, a 15 percent increase over the year-ago quarter.

Columbia/HCA shares fell 68.8 cents to $33.813 Wednesday on the New York Stock Exchange.