WSJ uncritically quoted former CEO of scandal-plagued hospital firm attacking Obama on health care

››› ››› SIMON MALOY

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.

On February 26, 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, and quoted Scott saying: "What you see is when the government gets involved, you run out of money and health care gets rationed." The Journal failed to note, however, that according to a July 26, 1997, Los Angeles Times article, Scott resigned "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." On December 15, 2000, Forbes reported that HCA -- The Heathcare Company, formerly Columbia/HCA Healthcare, "pleaded guilty to a variety of fraud charges. It admitted to bilking various government programs and agreed to pay a total of $840 million in fines and penalties." Forbes also reported that "Scott was forced to resign in the wake of the initial fraud charges in 1997."

In contrast to the Journal, the Politico noted on March 3 that "[p]ro-health reform activists also have begun circulating information in an effort to discredit Scott," citing the December 2000 Forbes article on Scott's resignation and HCA's subsequent plea. Politico further reported that HCA "eventually paid over $880 million to reach a settlement with the Justice Department in 2002 on the charges." According to a December 18, 2002, Justice Department press release, "When added to the prior civil and criminal settlements reached in 2000, this settlement would bring the government's total recoveries from HCA to approximately $1.7 billion."

From the February 26 Wall Street Journal article:

Industries from health care to agribusiness to mining that stand to lose under President Barack Obama's policy agenda are ramping up lobbying campaigns to derail or modify his plans.

The day after Mr. Obama formally laid out his policy goals in his first address to Congress, the former chief executive of HCA Inc. unveiled a $20 million campaign to pressure Democrats to enact health-care legislation based on free-market principles.

"What you see is when the government gets involved, you run out of money and health care gets rationed," former CEO Richard Scott said Wednesday, after announcing the creation of Conservatives for Patients Rights.

Mr. Obama's ambitious agenda -- ranging from expanding health-care coverage to cutting farm subsidies to cutting wasteful defense projects -- touches almost every part of the U.S. economy. It threatens to disrupt the business models of a broad swath of America's biggest companies.

From the 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.

Scott and No. 2 executive David Vandewater, who also resigned, denied any wrongdoing. Company officials likewise denied that their departure was prompted by suspicions of wrongdoing and said Columbia is cooperating with federal investigators.

A Justice Department official would not comment on whether any Columbia executives, including Scott or Vandewater, are targets of the investigation.

From the December 15, 2000, Forbes article:

Yesterday, the nation's largest hospital chain, known until recently as Columbia/HCA Healthcare, pleaded guilty to a variety of fraud charges. It admitted to bilking various government programs and agreed to pay a total of $840 million in fines and penalties. The fraud settlement is the largest in U.S. history, breaking the old record held by Drexel Burnham. Even so, parts of the investigation into the company's practices remain unsettled.

The guilty plea follows a seven-year federal investigation that resulted in charges being filed in five different federal courts in Florida, Texas, Georgia and Tennessee, where HCA is headquartered. The fraud revealed by that investigation ran deep within HCA's way of doing business. Speaking at a news conference yesterday, U.S. Attorney General Janet Reno said about the plea deal, "It's a simple message--if you overbill the U.S. taxpayer, we're going to make you pay it back, and then some."

The company admitted to systematically overcharging the government by claiming marketing costs as reimbursable, by striking illegal deals with home care agencies, and by filing false data about how hospital space was being used.

[...]

The investigation and the plea is an obvious blow to a company that became a Wall Street darling by promising to bring first-class business practices to the hospital sector, still dominated by not-for-profits. Under former Chief Executive Richard Scott, it bought hospitals by the bucketful and promised to squeeze blood from each one.

Scott was forced to resign in the wake of the initial fraud charges in 1997. Dr. Thomas Frist Jr., a founder of the original Hospital Corp. of America and the brother of U.S. Sen. Bill Frist, R-Tenn., was brought in to replace him as chairman and CEO.

From the March 3 Politico article:

Pro-health reform activists also have begun circulating information in an effort to discredit Scott, a move that underscores the huge stakes involved in the issue.

According to a 2000 article in Forbes, Scott was forced to resign as head of what became known as Columbia/HCA after fraud charges against the massive health care company in 1997. He was replaced by Thomas Frist Jr., the original founder of HCA and brother of future Senate Majority Leader Bill Frist (R-Tenn.)

The company eventually paid over $880 million to reach a settlement with the Justice Department in 2002 on the charges.

Posted In
Health Care, Health Care Reform
Network/Outlet
Wall Street Journal
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