Lately the Orlando newspapers and on air commentary has been focused on the race for governor between the incumbent Rick Scott and Charlie Crist. Notwithstanding the comedic argument over “fangate”, both politicians have been lobbing accusations at each other over their pasts. In the case of Rick Scott, the election campaign commercials attacking him are focused on his past association with the Columbia/HCA Healthcare System scandal. You all might remember the spectacle of the FBI and other federal law enforcement agents swarming the Columbia/HCA facilities in El Paso on March 19, 1997. By the time the dust settled, Columbia/HCA had changed its name, paid fines for medical billing fraud and Rick Scott, its chairman and CEO, had resigned with a sizable settlement package.
As you all know, I’ve been collecting data on El Paso political shenanigans and criminal investigations for many years. Today, I thought I’d share with you some of the information I have on the medical fraud that had everyone’s attention in El Paso in the 90’s.
Rick Scott, an attorney, was elected governor of Florida in 2011. Prior to that, on October 1987, he cofounded Columbia Hospital Corporation. He and his partner, Richard Rainwater, put up $125,000 each to form the company. In 1988, they bought their first two hospitals. Both were in El Paso. In 1989, Columbia merged with Hospital Corporation of America. By the time, the buying spree was over, Columbia/HCA owned over 300 hospitals across the nation and was generating over $20 billion a year. It was the largest for-profit healthcare provider in the nation.
Richard Rainwater referred to the Columbia/HCA as the “Walmart of healthcare” when describing what their company was doing. Basically, the concept behind Columbia/HCA was to provide healthcare through volume buying and price controls. The more healthcare facilities under their control the more pressure they could impose on service providers to lower costs.
On March 19, 1997 the FBI, along with IRS and military criminal investigators raided the El Paso facilities of Columbia/HCA. That raid led to additional raids across the country and criminal charges soon followed. By July 1997, Scott had resigned as Chairman and CEO. Media reports, of the time, claim that he was forced to resign. Scott’s severance package included 10 million shares of the company and $9.88 million in cash.
Rick Scott was never indicted with wrongdoing in the far-reaching criminal investigation that ended with the company pleading guilty and paying fines. The company pleaded guilty to 14 felonies. By 2003, the company had paid settlements totaling about $1.7 billion to settle all local, state and federal charges against it.
The charges for which the company pleaded guilty for involved Medicare and Medicaid billing fraud including unnecessary tests, false diagnosis codes and billing for advertising fees, among other medical fraudulent billing.
I remember that much of the commentary, at the time of the company’s criminal investigations, centered on the debate about how for-profit hospitals were threatening the viability of non-profits. Interestingly, if you look at the El Paso Children’s Hospital website you will notice that they first approached Providence Memorial Hospital about creating a children’s hospital in 1993. According to the website, Providence “commissioned the first study” looking into the viability of a children’s hospital. Tenet, a Columbia/HCA competitor, bought Providence in 1995, effectively ending that quest for a children’s hospital.
The proponents for a children’s hospital then turned to Columbia/HCA in 1995 to conduct a second feasibility study. Columbia/HCA, according to the Children’s Hospital website, purchased land and “held a groundbreaking ceremony”. However, and this is according to the website, “Columbia faced a fairly cataclysmic financial disaster that impacted Columbia-owned hospitals nationwide”, [emphasis is mine] derailing the children’s hospital plans again.
I find it interesting that as late as last Friday, October 17, 2014, the Children’s Hospital still refers to the Columbia/HCA debacle as a “cataclysmic financial disaster” instead of what it really was, a criminal investigation into fraud perpetuated upon the taxpayers. Did you notice that part where Columbia/HCA was raided by law enforcement in 1997, at about the time the groundbreaking for a children’s hospital was happening? I guess having to pay billion in fines and pleading guilty to fraud is just a “cataclysmic financial disaster” in the eyes of propagandists hiding the truth.
The whole Columbia/HCA fraud consisted of phantom billings, fake prescriptions and unnecessary medical procedures gaming the taxpayer-funded medical programs to ensure a larger share of the limited monies for the organizations involved.
Today, Rick Scott is not only rich as a result of his involvement with Columbia/HCA scandal but the El Paso Children’s Hospital still sees their first attempt at building a children’s hospital come to an end because of a “cataclysmic financial disaster”. It makes me wonder why.