"This debarment or exclusion authority is considered the equivalent of the death penalty, because for major health care corporations and defense corporations which rely on federal contracts, denying them federal contracts would effectively put them out of business."The federal government rarely exercises this authority – although it should more often to deter an ongoing pattern of criminal fraud."
HCA leads the way
The report [PDF download, 295 KB] also ranks the top 100 False Claims Act settlements by amount of the settlement. Leading the list is a $731 million settlement in December 2000 with the Tennessee-based health care giant HCA, which also occupies the number two slot with a $631 million settlement in June 2003. HCA's largest private shareholder is company director Thomas F. Frist, Jr., often named to the annual Forbes 400 Richest Americans list, whose 5,532,259 shares (1.17% ownership valued at approximately $204 million (8-Aug-03)) dwarf the combined 553,903 shares held by the company's top three officers. (Frist was formerly the Chairman, but stepped down in January, 2002.) If the name Frist sounds familiar, it should. Frist is the brother of U.S. Senate majority leader and Tennessee Republican Senator Dr. Bill Frist. Bill Frist's most recent "signature" piece of legislation is of course the pork-laden Medicare prescription drug benefit, from which HCA stands to profit handsomely. Frist has received $990 thousand in campaign contributions from the healthcare industry, including direct contributions from HCA of $24,800, over $9 thousand dollars more than HCA gave to any other candidate. Frist also has a $20 million fortune, most of it in HCA stock.
Whither Dick Cheney?
Among HCA's institutional shareholders is The Vanguard Group, Inc. (9,624,528 shares, 2.03% ownership valued at approximately $355 million). Vanguard also manages the mutual funds Vanguard Specialized-Health Care Fund (6,967,620 shares, 1.47% ownership valued at approximately $246 million (31-Jul-03)) and Vanguard 500 Index Fund (4,284,666 shares, 0.9% ownership valued at approximately $178 million (31-Dec-02)), and almost certainly has investments in HCA in other Vanguard funds. As it turns out, Vanguard also happens to manage between $16.3 and $80.7 million of Vice President Dick Cheney's personal financial assets (15-May-02, Financial Disclosure Report).
Cheney further has a more direct investment (between $500 thousand and $1 million) in HCA via American Express' AXP New Dimensions Fund (8,500,000 shares of HCA, 1.79% ownership valued at approximately $351 million (28-Feb-03)), and has modest investments in seven other American Express funds. He also has modest investments in J.P. Morgan, who ranks in as HCA's third largest shareholder (24,937,532 shares, 5.26% ownership valued at approximately $919 million (30-Sep-03)).
HCA is hardly alone
Of course, HCA is hardly the only healthcare provider to appear on the Corporate Crime Reporter's top 100 list. Indeed healthcare providers occupy the top twelve positions on the list and a full 56 of the judgements appearing on the list are against healthcare providers. Other healthcare providers appearing twice on the top 100 list were Bayer ($271.2 million) and Tenet Healthcare ($72 million).
Defense contractors were also prominent on the top 100 list, occupying 23 spots there. Defense contractors appearing twice on the top 100 list were Northrop Grumman ($191.2 million), Boeing ($129 million), and Teledyne ($112.5 million). Energy giant Shell Oil has the distinction of being the only company appearing on the top 100 list three times ($215 million).
About the top 100 list
The Corporate Crime Reporter top 100 list was compiled from all settlements made since the False Claims Act was last amended in 1986. At that time, the act was amended to reinstate the whistleblower provision and to add provisions for treble damages and protection of the whistleblowers. Since that time, recoveries under the act have skyrocketed, with the government recovering over $12 billion. The top 100 list alone provided a total of $8.2 billion – more than 65 percent – of those recoveries, and in each case in the top 100, the whistleblower(s) received or will receive in excess of $1 million. In the lesser of the two HCA settlements alone, the whistleblower's share of the recovery was over $151 million.
Perhaps even more important to note however is that all recoveries under the False Claims Act were citizen-initiated. None of these cases of fraud were uncovered by government auditors. False Claims Act recoveries thus reflect only a portion of financial fraud recoveries by our government, and certainly, many cases of fraud go undetected entirely. And there is no reason to expect that similar fraud does not take place against group and private health insurance providers.
Think defense is expensive?
The False Claims Act was amended in 1986 in response to public furor over excessive billings by defense contractors ($700 toilet seats, anyone?). Clearly, defense contractor fraud is still a major problem. It has of late however been dwarfed by healthcare fraud.
We have well in excess of 40 million citizens in our country currently without medical coverage, and this number is growing. For those with employer-provided coverage, that coverage is steadily shrinking even as co-pays and employee contributions are rising. For those privately insured, annual premium increases of over 40% are being reported.
The movement for a single-payer healthcare system for our country that covers every citizen is once again gaining steam, being buoyed for these obvious reasons. Detractors of course say that we cannot afford it, ignoring the evidence that we are already paying for it, but simply not getting it. One of many ways to pay for a single-payer system is obvious via this Corporate Crime Reporter publication. Cutting back on health provider fraud will provide literally billions of dollars a year towards this goal. But how can a single-payer system help to do this? Two ways, in fact.
First, a great expense for any medical office or hospital lies in the billing process. There are literally thousands of medical insurance providers, each with their own unique requirements for processing medical claims. All of these offices and hospitals are required to develop a billing staff with expertise in handling all of this. The medical profession itself has been complaining about this for over two decades because developing this expertise costs them money. A single-payer system almost entirely eliminates the need for and the money required to develop this level of expertise. And money removed from this billing process is money that can go into the actual delivery of healthcare.
The second way is actually twofold. First, government auditors will benefit from this single method of paying claims by being better able to better hone their skills at detecting fraud. Second, all basic medical payments will be brought under this single-payer system and this single audit function. Fraudulent billing wherever it occurs will be audited centrally and with a consistency that we simply cannot have under our current system.
Will this alone pay for a single-payer system that covers all of our citizens? It will be a big step, but most likely not. But this is only one of many ways that a single-payer system can wring tens billions of dollars annually out of our current system without at all affecting the healthcare already being provided to those currently covered. Single-payer is simply an idea whose time has arrived.
Post a Comment