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Quorum settles Medicare dispute
By KRIS HUNDLEY © St. Petersburg Times, published October 3, 2000 Ten years after being fired as a hospital accountant by Quorum Health Group Inc., James Alderson is finally getting his pay day. And it's going to be a big one. On Monday Quorum said it has agreed to pay the government $95.5-million to settle two whistle-blower lawsuits. The biggest portion of that settlement, $77.5-million, addresses Alderson's claims that Quorum routinely filed false Medicare cost reports for its hospitals, resulting in millions of dollars in overpayments. Alderson, who became a whistle-blower after losing his job as chief financial officer at a Montana hospital managed by Quorum, stands to receive up to 25 percent of the award, or more than $19-million. "It proves that I did the right thing by reporting this to the government," said Alderson, 54, who now lives outside Portland, Ore. "I don't feel a bitterness or vindictiveness, just a relief that it's over." James E. Dalton Jr., president and chief executive of Quorum, maintained the company had acted "in a proper and ethical manner," but said the settlements "made business sense." "We continue to defend the honor and integrity of our company," he said. "We have come to these understandings with all parties because we believe it is in the best interest of our associates, our company and our shareholders." In the two years since the Department of Justice joined Alderson's lawsuit, Quorum has spent about $10-million on legal fees, a company spokeswoman said. Quorum's decision to settle Alderson's claims may well have a ripple effect on its co-defendant in the case: Columbia/HCA, now known as HCA -- The Healthcare Company. Alderson included HCA in his suit because he claimed the practice of filing false cost reports traced back to Quorum's roots in two companies, Hospital Corporation of America and HealthTrust, that are now part of HCA. While most of Quorum's legal troubles centered on Alderson's case, HCA has spent the last three years working through a thicket of civil and criminal allegations. In May, HCA said it agreed to pay $745-million by year-end to settle government allegations of wrongdoing in three areas. Falsifying Medicare cost reports was not one of them. "We hope this settlement with Quorum is going to have a major impact on HCA," Alderson said. "It shows the government can win a cost-report case. And since HCA has 10 times the revenue and 10 times the number of hospitals as Quorum, we're hoping that settlement is 10 times the size of this one." An HCA spokesman said that while the company was pleased Quorum was able to resolve the lawsuit, it has no bearing on HCA. "Their cost report settlement amount doesn't have any correlation really to our potential cost report amount," said HCA's Jeff Prescott. Quorum, based in Brentwood, Tenn., owns 21 hospitals and manages 233 others. Five of its managed hospitals are in Florida, though none are in the Tampa bay area. In August, Quorum said it was exploring strategic alternatives, including a possible sale. In addition to Alderson's claims, Quorum faced a lawsuit by a former employee involving home health issues at a hospital in Dothan, Ala. The company agreed to pay $18-million to settle that lawsuit, which is still under seal. Alderson filed his claim against Quorum and Columbia in 1993 but waited more than five years for the government to join the complaint. In 1997 his lawsuit was moved to Tampa, where the FBI was investigating separate Medicare cost report claims against HCA's hospital in Port Charlotte. That investigation later led to the criminal conviction of two HCA executives. Since filing his lawsuit, Alderson has changed jobs frequently, uprooted his family four times and raided his children's college savings accounts to finance the long legal battle. Alderson, a CPA, now does general accounting work and management seminars. "Basically I was blackballed by the hospital industry," said Alderson, who felt stung by a friend of the court brief filed by the American Hospital Association on behalf of Quorum. "They tipped their hand that they were much more interested in protecting Quorum than correcting the situation. If you can kill the messenger, everything will be okay." Alderson said negotiations with Quorum, which began in June 1999 and were mediated by Peter Grilli, a Tampa lawyer, went slowly until just three months ago. "I think they finally realized the evidence was there and the government was ready, willing and able to take them to court," he said. After having his life disrupted for a decade, Alderson said he's looking forward to a return to normalcy. "The first thing I'll buy is a house and a dog," he said. "My son was a freshman in high school when I filed this lawsuit and last month I went to his wedding. That's a lot of water under the bridge." Despite the settlement with Quorum, he's not counting on a quick resolution to the HCA part of the lawsuit. "When I hear it might happen by year-end," he said, "I ask "Which year?' "
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From the Times Business report
From the AP
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