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The HCA fraud trials set the stage for the growing emphasis on health care fraud in the past few years, but the story has taken another odd twist with the recent reversal of convictions that put two HCA executives in prison.
For health care executives jittery about the possibility of ending up in jail for fraudulent billing, this could be good news, especially in light of the reasoning that led the court to overturn the convictions. There was no evidence that the executives intentionally made false statements and knowingly defrauded the federal government, the court said.
In July 1999, Jay A. Jarrell and Robert W. Whiteside were convicted in Tampa, FL, of making false statements in Medicaid reimbursement cost reports. The charges related to their work with Fawcett Memorial Hospital in Port Charlotte, FL, part of the HCA hospital chain, one of the biggest in the country. They also were convicted of conspiracy to defraud the government. Prosecutors said Jarrell and Whiteside repeatedly billed expenses as capital outlays when they should have been listed as administrative and general expenses, which would have resulted in lower reimbursement rates.
But in its recent ruling, the 11th U.S. Circuit Court of Appeals in Atlanta said that the government failed "to prove that the alleged statements were knowingly and willfully false." Walter Dellinger, JD, attorney for the defendants, called the ruling "a clear vindication of Bob Whiteside, Jay Jarrell, and HCA."
Jarrell was head of HCA’s southwest Florida division. He had been sentenced to 33 months in prison and ordered to pay nearly $1.7 million restitution, along with a fine of $10,000. White-side was a senior reimbursement executive from Brentwood, TN. He was sentenced to two years in prison and fined $7,500. Neither man had yet gone to prison, remaining free while their cases were appealed.
The investigation of HCA began in 1997 and illustrated the government’s determination in rooting out health care fraud. HCA fired its top executives, and the company pleaded guilty to defrauding government health care programs. The company has paid $840 million in fines, civil penalties, and damages.