Nelson Mandela

Detecting the Scam



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Obama, Osama and Trump — And Nelson Mandela's Ghost

(May 7, 2011)


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negotiating skills:

Rick Scott is an unlikely leader of the opposition to health-care reform, although he does know how the system works—and how the system is worked. He also does remind us of how there really are two Americas…

In the world of traditional crime, drugs, sex and family, we have no tolerance for lying and cheating. When it comes to career advancement, however, we live in a different America. Here there is an epidemic of lying and cheating in high schools, colleges and large corporations, but there is no great accompanying outcry. This is probably why the story of Hospital Corporation of America is not widely known. This might change—thanks to Rick Scott and the blogosphere…

In February 2009, Rick Scott founded Conservatives for Patients’ Rights, which he said was intended to put pressure on Congress to enact health care legislation based on free-market principles. He said at that time, “[When] the government gets involved, you run out of money and health care gets rationed.” There was a touch of irony and more than a touch of chutzpah in his statement. In an earlier life, when he was president of what was then Columbia/HCA, the patients under his hospitals’ care truly needed a patient’s bill of rights. And in his case, when the government did get involved in the health care system, it certainly benefited the public because it uncovered massive fraud…

Rick Scott was a mergers and acquisition lawyer from Dallas. Prior to 1987, he had no experience in running hospitals. In 1987, however, he started a company named Columbia Hospital Corporation. In 1995, his company merged with Hospital Corporation of America and became Columbia/HCA. By 1997, he ran 350 hospitals, 150 outpatient surgery centers and more than 570 nursing homes. It operated in 36 states, as well as in England, Switzerland and Spain. A year earlier, in 1996, Time named him one of the “25 most influential Americans” for “transforming how American hospitals do business,” with an operation that “consolidates operations and imposes cost controls.” No kidding…

In her book, Money-Driven Medicine, Maggie Mahar described the frugality of his business. She described how nurses complained of the “filthy conditions” and how the hospitals slashed the ratio of nurses to patients. One nurse reported apparently having to watch 72 patients’ heart monitors at a time. Hospital executives were paid enormous bonuses for meeting financial targets. Meanwhile, Scott showed little compassion towards patients. Instead, he focused on the bottom line and created a business climate in which, irony of ironies – and to use his own words, “health care gets rationed.” In a recent post, this is how Maggie Mahar described the climate in which Scott’s executive team worked:

But if you brought in the money, you were rewarded handsomely. Internal hospital records would later show that hospital executives were paid enormous bonuses, not for reducing infections or lowering mortality rates, but for meeting financial targets such as “growth in admissions and surgery cases.” In 1995 one-fourth of Columbia’s administrators won bonuses equaling 80 percent of their salaries—or more. When bonuses become that large, some critics charge, they no longer function simply as incentives. They invite fraud. Scott also did his best to avoid needy patients, questioning whether hospitals should throw their doors open to one and all. “Do we have an obligation to provide health care for everybody? Where do we draw the line? Is any fast-food restaurant obliged to feed everyone who shows up?”

Even prior to the HCA merger, Rick Scott had to have known about the False Claims Act. Since 1986, the government has recovered $12 billion from information received under the Act. And it was clear in which industries the offenders were operating. Of the top one 100 False Claims settlements, 56 were with heath care corporations.

Rick Scott had to have known about this Act… After all, the Act was having an enormous impact on the health-care industry in which he was a major player.

This Act offered an incentive to whistle-blowers and was designed as a deterrent for those who were defrauding the government. The Act invited people to come forward and report companies that were defrauding the government. If the claims could be substantiated, those reporting the fraud would share up to 30% of the amount recovered. The Act also offered the government the power to prohibit companies convicted of serious crimes from doing business with it—thereby effectively putting them out of business. In the case of an industry that relied heavily on relationships with Medicaid, Medicare and Tricare, this was serious business. If the government found claims against the company to have merit, it could have put the company out of business…

When his company merged with HCA in 1995, he and his colleagues must have known about the pre-merger 1993 raids on 19 HCA offices in which evidence was sought of overcharg ing and fraud. This was major news within the company. It couldn’t possibly have been hidden from Scott. As the senior executive of the new merged company, and as a sophisticated attorney, Scott couldn’t possibly claim ignorance — particularly in the face of possibly looming indictments. In the unlikely event that Scott was ignorant, the New York Times reminded him of what he faced. In 1996, numerous stories began appearing in the New York Times of improper business practices at Columbia/HCA. It appeared that Rick Scott had done little to change the culture of cheating at HCA. In the spring of 1997, federal agents conducted document raids on several Columbia/HCA facilities and seized records from more than two dozen facilities in seven states. There was no way Scott could plausibly claim ignorance…

By July 1997, the writing was on the wall. A Florida grand jury issued indictments against three executives. Rick Scott was forced out by the board of directors and was replaced by Dr. Thomas Frist, Jr., the co-founder of HCA and the brother of Senator Bill Frist, soon to become Majority leader of the United States Senate. He might have been ousted as the company’s senior executive, but the results of the investigation would forever tarnish his moral authority to be an advocate of patients’ rights…

After one of the longest investigations of its kind, HCA pleaded guilty in 2001 to 14 felonies and paid $840 million in penal ties—at that time the largest fraud recovery in history. What followed, however, was astonishing. New charges were announced against the company. Apparently, no steps had been taken to prevent the same behavior and policies being repeated. There were again charges of kickbacks, overbilling and improper physician investment arrangements. The govern ment’s case was that the company was fraudulently keeping two sets of books to overbill the government.

As HCA made millions, the Los Angeles Weekly offered some details of how it operated:

“What did HCA do? It inflated its expenses and billed the government for the overrun; it billed the government for services ineligible for reimbursement (like advertising and marketing costs).”

According to Forbes magazine, HCA violated both law and medical ethics when,

“the company increased Medicare billings by exaggerating the seriousness of the illnesses they were treating. It also granted doctors partnerships in company hospitals as a kickback for the doctors’ referring patients to HCA. In addition, it gave doctors ‘loans’ that were never expected to be paid back, free rent, free office furniture —and free drugs from hospital pharmacies.”

On December 18, 2002, a sudden settlement was announced. The company pleaded guilty to 14 felonies. It agreed to pay another massive fine—this time $631 million. Under the agreement, the company and its executives avoided criminal charges. This settlement was coincidentally five days before Senator Bill Frist’s election as majority leader of the US Senate. His father, Thomas Frist senior had founded HCA. His brother, Thomas Frist junior, had controlled the company for the past two decades. According to Forbes magazine, they had built a personal fortune of around $2 billion off the company.

LA Weekly takes up the account:

“The Bush Justice Department suddenly ended a near-decade long federal investigation into how HCA for years had defrauded Medicaid, Medicare and Tricare (the federal program that covers the military and their families), giving the greedy health-care behemoth’s executives a sweetheart settlement that kept them out of the can.

The government’s case was that HCA kept two sets of books and fraudulently overbilled the government. The deal meant that HCA agreed to pay the government $631 million for its lucrative scams—which, on top of previous fines, brought the total government penalties against the health-care conglomerate to a whopping $1.7 billion, the largest fraud settlement in history, breaking the old record set by Drexel Burnham. The deal also meant that HCA can continue to participate in Medicare.”

When the settlement with HCA was announced five days before Senator Bill Frist’s election as Senate majority leader, Charles Lewis of the Center for Public Integrity told Newsweek magazine—

“I think it looks like hell. It’s not some obscure company he owns stock in. … It is the source of his wealth … you’ve got to wonder: If there was substantial fraud committed in that company, what did the Frist family know and when did they know it?”

Two days after the settlement was announced, Rep. Pete Stark (D—Calif.) said:

“Senator Frist has close family and financial ties to HCA. I find it remarkable that at the same time as the Republican Party is coalescing around Senator Frist’s candidacy for Senate majority leader, the administration is poised to strike a potentially unjustifiable bargain that would benefit his family’s company at the expense of American taxpayers.”

Had the HCA executives been charged, they would have had little choice but to offer Ken Lay’s idiot defense by claiming that they had no idea what the company had done under their watch to have been fined $731 million in December 2000 and that they had no idea at all that the company was continuing its practices through June 2003…

Neither Rick Scott nor the other Columbia/HCA executives were convicted of any offense, but, as we listen to Rick Scott leading the charge against health-care reform, we would do well to ask ourselves what we are looking at and hearing:
Is it a beautiful, knowledgeable swan speaking with great moral authority? Or is it perhaps a duck with little or no moral authority?

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