Thursday, May 28, 2009

Hospital Corporation of America - LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY

2009-The Wall Street Journal reported that Richard Scott, "the former chief executive of HCA Inc," had formed the non-profit organization Conservatives for Patients' Rights as part of a "lobbying campaign to derail or modify" President Obama's health care proposals, but failed to note that Scott resigned from HCA in 1997 amid a federal investigation into the company's Medicare billing, physician recruiting, and home-care practices. HCA eventually pleaded guilty to fraud charges and paid approximately $1.7 billion in fines and penalties.

HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company)
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.

Why does this matter? The wrath of Richard Scott and friends is to this day still affecting main street America.

Who is Richard Scott? More importantly, who are Richard Rainwater & his wife, Darla Moore?

Before GW Bush was affiliated with Richard Rainwater may I remind you-Richard Scott was the ex-partner of Richard Rainwater with Columbia Homecare Group.

In 1997, Fortune magazine ran a cover story on successful business executive Darla Moore, titled "The Toughest Babe in Business."….She created the corporate bankruptcy finance tool, DIP, debtor in possession while at a Wall Street bank.

Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater and according to Fortune Magazine, the “Toughest Babe in the Business”.
As part of Richard Scott's severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year. His former president, Mr. Vandewater was paid $3.24 million and given a five year consulting contract at $600,000 per year.

Both former executives are allowed to exercise vested stock options within 90 days. Scott owned or had options on 9.4 million shares of Columbia stock as of May, 1997. Vanderwater controlled 617,375 shares. Columbia has agreed to pay attorney's fees and any fines or judgments against the two. In addition, the two former executives get their office expenses paid for two years including secretaries. If they move within the next two years their moving expenses are paid by Columbia/HCA. Not a bad deal for someone who just got fired! Wow! What a surprise!

Rainwater also owned a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country. They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.

Columbia just decided to sell its home health-care business and its head announced she is forming a company of her own. The home care unit is valued at $ 450 million. At least two other top executives of Columbia have resigned.

On Sept 8, 1998 Standard and Poors downgraded the bonds of Charter/HCA to negative bases on poor earnings. Looks like Rainwater and his Crescent Cos' have finally stumbled. One source within the company said it would be a long while before any new high-ticket acquisitions would take place. A previous deal with Prudential is in danger of being jettisoned.

Why does this matter- September 8, 1998?

We must review the case that just ended in December 2008 in Columbus Ohio with National Century Financial Enterprises which was headquartered in Dublin, Ohio. It began in 2002 when FBI raided the offices of National Century Financial Enterprises Dublin, Ohio

National Century Financial Enterprises:
“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

Just a reminder relating to the need for ‘healthcare financial service’ i.e. (NCFE) National Century Financial Enterprises; home health - which was struggling under the Balanced Budget Act of 1997; about 1,400 agencies closed nationwide in 1998.

10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006: Enron litigation. JPMorgan Chase and certain of its officers and directors are involved in a number of lawsuits arising out of its banking relationships with Enron Corp.; the three current or former Firm employees are sued in their roles as former members of NCFE's board of directors

Just a reminder relating to the need for ‘healthcare financial service’ i.e. (NCFE) National Century Financial Enterprises; home health - which is struggling under the Balanced Budget Act of 1997; about 1,400 agencies closed nationwide in 1998.

March 26, 2008; By Jodi Andes; THE COLUMBUS DISPATCH
Nine other executives have been convicted or pleaded guilty in National Century's collapse. Only Poulsen and executive James Happ still await trial.
Only Poulsen and executive James Happ still await trial?

December 18, 2008 - The ONE AND ONLY acquittal; James K Happ!
Prosecutors' case fell short, juror says National Century fraud case produces 1st acquittal ; The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.

Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation. "He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."

To unravel this massive fraud that links FRAUD intertwined with Healthcare, Corporate Bankruptcy and Financial Institutes we can go back to 1979-but I will start with 1997:

July 26, 1997, Los Angeles Times article:
A controversial deal maker whose hard-nosed business tactics have reshaped the medical industry resigned Friday as scandal engulfed the vast hospital empire he had assembled over the last decade.

Richard Scott -- sometimes called "the Bill Gates of health care" -- quit as chairman of Columbia/HCA Healthcare Corp. amid a massive federal investigation into the Medicare billing, physician recruiting and home-care practices of the nation's largest for-profit health care company.

Though the federal probe focuses on other states, Columbia's aggressive expansion has included California, where the company operates 15 hospitals, 13 surgery centers and 10 home-health-care agencies, employing more than 11,000.

July 26, 1997- Where was James K Happ?
SEC Form September 9, 2003 Annual Meeting of Stockholders, Med Diversified Inc.:
Previously, Mr. Happ served for three years as executive vice president of NCFE, during which time he restructured the servicer department to improve operational performance and accelerated the utilization of technology to increase operational efficiency.

Mr. Happ also served as chief financial officer of the Dallas-based Columbia Homecare Group, Inc.,
… In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations

Who purchased the majority of this divestiture in late ’98 & early ’99?
Medshares, Inc. of Memphis, Tennessee
Who financed this divestiture?
National Century Financial Enterprises, Inc.

Sherry Gibson pleaded guilty in 2003 to a lesser charge of securities fraud in exchange for helping prosecutors. Gibson told jurors she told investors "absolutely nothing" about National Century's practices of advancing cash to Memphis, Tenn.-based Medshares, a home-health care provider… July 30, 1999 MEDSHARES INC: Health Care Services Provider Files Chapter 11

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