U.S. ex rel. Hockett v. Columbia/Hca Healthcare

• Citation: 498 F.Supp.2d 25
• Decision Date: 17 July 2007
• Docket Number: Misc. No. 01-50 (RCL).,Civil Action No. 99-3311 (RCL).
• Parties: UNITED STATES ex rel. Debra HOCKETT, M.D., et al., Plaintiffs, v. COLUMBIA/HCA HEALTHCARE CORP., et al., Defendants.
• Court: U.S. District Court — District of Columbia

498 F.Supp.2d 25

UNITED STATES ex rel. Debra HOCKETT, M.D., et al., Plaintiffs, v. COLUMBIA/HCA HEALTHCARE CORP., et al., Defendants.

Misc. No. 01-50 (RCL).

Civil Action No. 99-3311 (RCL).

United States District Court, District of Columbia.

July 17, 2007.

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Craig A. Gillen, Gillen, Dailey, Cromwell, Withers & Brantley, L.L.C., John G. Malcolm, Malcom & Schroeder, L.L.P., Marian B. Wilbanks, Harmon, Smith Bridges & Wilbanks, Benjamin S. Williams, Atlanta, GA, John P. Panneton, Friedman, Collard, Cutter & Panneton, Sacramento, CA, Steven C. James, Thomas A. Spieczny, El Paso, TX, C. Thomas Miller, Whitlow, Roberts, Houston & Straub, Paducah, KY, Ronald G. Sheffer, Sheffer, Hutchinson, Kinney, Louisville, KY, M. Clay Alspaugh, Hogan, Smith & Alpaugh, P.C., Birmingham, AL, Mike Bothwell, Roswell, GA, Linda A. Kontos, Hennigan, Bennett & Dorman, Los Angeles, CA, Monica S. Oh, Hennigan, Bennett & Dorman, Los Angeles, CA, Thomas B. Watson, Hennigan, Bennett & Dorman, Los Angeles, CA, John Homer Cochran, Cochran & Cochran, P.C., Dallas, TX, R. Gaines Griffin, Davidson & Troilo, P.C., San Antonio, TX, Kay Lynn Brumbaugh, Strasburger & Price, L.L.P., Dallas, TX, Mark Tucker Hurt, Abingdon, VA, John L. McGraw, III, McCraw & McCraw, McKinney, TX, Stephen Meagher, Phillips & Cohen, L.L.P., San Francisco, CA, Scott A. Powell, Hare, Wynn, Newell & Newton, Birmingham, AL, Don P. McKenna, Hare, Wynn, Newell & Newton, Birmingham, AL, Jennifer M. Verkamp, Volkema Thomas, LPA, Cincinnati, OH, David L. Perry, Perry & Haas, L.L.P., Corpus Christi, TX, Scott J. Topolski, Rutherford, Muihall & Wargo, P.A., Boca Raton, FL, Robert N. Williams, Meyer & Williams, Jackson, WY, A. Edward Overton, Hudson, FL, John W. Andrews, Andrews Law Group, Henry Paul, Tampa, FL, Lesley Annskillen, Getnick & Getnick, Alexandra A.E. Shapiro, Michele Marie Pyle, Latham & Watkins, New York, NY, Christopher M. Dimuro, Latham & Watkins, LLP, Newark, NJ, Jonathan Kroner, Miami, FL, Andrew Grosso, Andrew Grosso & Associates, Jennifer C. Archie, Latham & Watkins, James A. Moody, Joseph A. Black, The Cullen Law Firm, P.L.L.C., Hamish P.M. Hume, Cooper & Kirk, PLLC, Robert P. Trout, Trout Cacheris, PLLC, Peter Wilson Chatfield, Phillips & Cohen, Robert L. Vogel, Shelley R. Slade, Vogel & Slade, LLP, Mary Louise Cohen, Phillips & Cohen, Elaine A. Panagakos, Nels John Ackerson, Ackerson Kauffman Fex, P.C., John T. Richards, Jr., Trout & Richards, PLLC, George Allen Dale, Law Office of G. Allen Dale, Mary Kay Ogden, Washington, DC, G. P. Hardy, III, Hardy & Johns, Jeffrey S. Thompson, Williams Bailey Law Firm, L.L.P., Houston, TX, for Plaintiffs.

Eric H. Jaso, Latham & Watkins, Newark, NJ, Walter P. Loughlin, Noreen A. Kelly-Najah, Latham & Watkins, Robert A. Alessi, Cahill, Gordon & Reindel, New York, NY, Jennifer C. Archie, Roger Steven Goldman, Alice Stevens Fisher, Edward Jay Shapiro, Everett Clifford Johnson, Jr., Allen M. Gardner, Latham & Watkins, Stuart Michael Gerson, Epstein, Becker & Green, P.C., Sarah P. Swanz, Stephen S. Kaye, Bryan Cave, L.L.P., Robert A. Salerno, Morrison & Foerster LLP, Stanley R. Soya, Jackson Kelly PLLC, William E. Lawler, III, Vinson & Elkins, L.L.P., Shannon Thyme Klinger, Alston & Bird, L.L.P., Andrew Lawrence Hurst, Carol Colborn Loepere, Scot Thomas Hasselman, Reed Smith LLP, Washington, DC, Stephen Craig Holden, Ober, Kaler, Grimes & Shriver, Baltimore, MD, Matthew R. Lewis, Ray Quinney & Nebeker, Salt Lake City, UT, James R. Dennis, Mayfield & Perrenot, P.C., Todd E. Marshall, Ray, McChristian & Jeans, El Paso, TX, Earsa R. Jackson, Jeffrey S. Osgood, Earsa R. Jackson, Strasburger & Price, L.L.P., Jerry L. Beane, Scrasburger & Price, L.L.P., Dallas, TX, John E. Clark, Goode, Casseb, Jones, Choate & Watson, P.C., San Antonio, TX, Noreen Toleshe, Clinical Arts Comprehensive Services, Inc., Covington, GA, John G. Despriet, William Parker Sanders, Smith, Gambrell & Russell, L.L.P., Atlanta, GA, James Edward Maloney, Baker & Botts, L.L.P., Jeffrey

S. Thompson, Williams Bailey Law Firm, L.L.P., Houston, TX, Don P. McKenna, Hare, Wynn, Newell & Newton, Birmingham, AL, Van Huseman, White, Huseman & Pletcher, Corpus Christie, TX, Andrew M. Price, Wheeling, WV, Bryan E. Larson, Brian D. Roark, Bass, Berry & Sims, P.L.C., Amy J. Everhart, Bowen, Riley, Warnock & Jacobson, P.L.C., Nashville, TN, John R. Hellow, Mark S. Hardiman, Hooper, Lundy & Bookman, Inc., Los Angeles, CA, Brien O'Connor, Perry Moriearty, Michael K. Fee, Ropes & Gray, Boston, MA, Christopher A. Myers, Holland & Knight LLP, McLean, VA, Brian L. Smith, Wear ark, Incorporated, Des Moines, IA, Philip H. Lebowitz, Pepper, Hamilton & Scheetz Litigation Department, Michael J. Holston Drinker, Biddle & Reath, Philadelphia, PA, for Defendants.

Rio Grande Physician's Service, Inc., El Paso, TX, pro se.

Richard Bishop, Covington, GA, pro se.

Central Health. Management Services, Inc., Atlanta, GA, pro se.

Centra Health Services, Norcross, GA, pro se.

Clinical Arts Comprehensive Services, Inc., Covington, GA, pro se.

Sun Country Medical Equipment, Inc., El Paso, TX, pro se.

West Texas Radiology Group, El Paso, TX, pro se.

Your House of Oxford, Inc., Oxford, GA, pro se.

Cathy Lloyd, pro se.

MEMORANDUM OPINION

LAMBERTH, District Judge.

I. INTRODUCTION

This case began its life in the Western District of Virginia, and was one of several matters transferred to this Court for consolidated and coordinated pretrial proceedings as part of a multi-district litigation. That litigation has seen some 30 lawsuits come through this Court, which have lasted ten years and spawned thousands of court filings. Only two of these cases remain, and this is one. Today the Court resolves all outstanding motions, dismissing some claims and granting summary judgment as to others. As this case is now almost ready for trial, the Court will order the submission of a joint pretrial statement and will schedule a pretrial conference, in . an effort to help this case reach the point where it can be returned to the court from whence it came for trial.

II. BACKGROUND

1. Factual History

The relator in this case, Chyrissa Staley, brings this qui tam suit under the False Claims Act against Columbia/HCA Healthcare, its former subsidiary, Indian Path Hospital, Summit Home Health, and Horizon Mental Health Management, for allegedly inflating costs at Indian Path Hospital and other HCA-affiliated hospitals in order to defraud the federal Medicare program.

The allegations revolve primarily around the Indian Path Hospital in Kingsport, Tennessee. Two of the original relators were doctors at Indian Path ("IPH"), while the third, remaining relator, Chyrissa Staley, was a nurse there.¹ As the year 1996 approached, IPH was preparing to open a new unit in the hospital dedicated to the treatment of geriatric patients coping with both mental and physical illness. This geriatric/psychiatric unit, known colloquially as the "geropsych" or "GP" unit, was in addition to the Indian Path Pavilion, an HCA-affiliated mental health treatment facility that stood next to IPH.

IPH was to receive reimbursement from the federal Medicare program for patient-care expenses at the GP unit under a special program known as "TEFRA," after the piece of legislation that spawned it, the Tax Equity and Fiscal Responsibility Act of 1982. The GP unit's first year of operation ran from March 1, 1996 until February 28, 1997. For that first year, IPH was to bill Medicare each time a patient was discharged, by sending a UB-92 form that stated how many days the patient stayed at the GP unit. Medicare then reimbursed IPH at a per-day, per-patient rate that the parties had previously negotiated.

At the end of the year, IPH submitted a cost report summarizing all the costs that were incurred at the GP unit for the year. This report was something like a tax return, listing all of the reimbursable costs incurred at the GP unit for the year. Medicare would then reimburse IPH for all costs reflected in the report that had not yet been captured. Most importantly, the cost report for the first year of operation would set the "target amount," "target rate," or "base" rate at which IPH would be reimbursed, per-day and per-patient, in future years, with periodic upward adjustments. In its most basic terms, the cost report would report all costs, which would then be divided by the number of patient days, which would yield the new rate at which Medicare would reimburse IPH, per-patient and per-day, in future years. The total cost of running the GP unit during the first year would be treated as the average cost. "Under this system, hospitals were obligated to absorb operating costs in excess of their target amounts, but they received bonuses if their operating costs were less than their targeted amounts." Sacred Heart Medical Center v. Sullivan, 958 F.2d 537, 540 (3d Cir.1992) (summarizing operation of the TEFRA program).

According to the allegations in the Amended Complaint — the evidence in support of which is discussed more fully infra — the GP unit at Indian Path was halfway through the TEFRA base period when it was determined that the TEFRA rate was too low. A scheme was hatched, or so it is alleged, to improperly inflate the TEFRA rate through a number of devices. IPH made use of a management services company called Horizon, whose employee, Cynthia Culberson, set up shop in the GP unit as its director. There she became a central player in the effort to raise the TEFRA rate.² Culberson, allegedly acting with the knowing cooperation of Robert Bauer, Indian Path's Chief Executive Officer, Jim Matney, its Chief Financial Officer, and Gail Peace, its Chief Nursing Officer, embarked on a scheme to inflate the GP unit's costs beyond what they normally would be. For instance, it is alleged that these conspirators tried to keep patients in the unit longer than was...