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Talk of the Bay

The inside story of HCA's 'giantkillers'

By KRIS HUNDLEY, Times Staff Writer
Published January 5, 2004

[Last modified January 4, 2004, 10:08:45]

It's been a year since HCA, the nation's largest hospital chain, agreed to pay a landmark $1.7-billion fine to settle government claims of Medicare fraud. A book about the law firm that propelled that long-running federal investigation into HCA gives some insight into the high-stakes poker game that resulted in the biggest false claims settlement in history.

In Giantkillers, Henry Scammell praises the work of the Washington firm of Phillips & Cohen in revitalizing the False Claims Act, which dates back to the Civil War. The lawyers represented Jim Alderson and John Schilling, two hospital accountants who filed separate whistleblower claims accusing HCA of deliberately and routinely overbilling Medicare.

Their lawsuits, which the Justice Department joined, resulted in FBI raids at 35 HCA locations, including 24 in Florida, in July 1997. The 14,000 boxes of documents seized filled two floors of a former bank building in Tampa, creating a rat's maze 5 feet high.

And though the sheer volume of paper was overwhelming, the documents showed HCA had billed Medicare for items such as tickets to the Kentucky Derby, country club dues and a hospital cafeteria miles from the offices of the employees it was supposed to serve.

Though HCA publicly said it wanted to settle, the book claims that privately the company's attorneys were digging in their heels, ignoring settlement proposals. Finally, as the date for the deposition of HCA's top officials grew closer, HCA settled.

Alderson and Schilling together received $100-million of HCA's fine, a record whistleblower reward. About 35 percent of that went for federal taxes and another chunk went for attorneys' contingency fees.

In addition, Phillips & Cohen and its co-counsels received $28.4-million in legal fees and expenses from HCA. Their tab: more than 85,000 hours of legal work and $7-million spent out of pocket on the case, which had taken 10 years.

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