Report: Hospital operator HCA subject of pay probe by US, British authorities

Report: Hospital operator HCA subject of pay probe

Hospital operator HCA Inc. is being investigated by U.S. and British regulators over whether it faked nursing shift payments at its London hospitals, according to a published report.

An investigation involving the Securities and Exchange Commission and the British agency Her Majesty’s Revenue and Customs is focusing on Nashville, Tenn.-based HCA’s London subsidiary and “whether the company fabricated tens of thousands of payments for phantom nursing shifts,” according to The Washington Post.

The paper said the investigation stemmed from a British employment court dispute in which a former employee alleged that as many as 120,000 nursing shifts “might have been improperly booked and paid for.”

Privately held HCA owns six hospitals in London. It operates a total of 163 hospitals and 112 outpatient centers and also has locations in 20 states.

HCA said in a statement it complied with a “voluntary request” from the SEC for information related to a civil employment lawsuit. It said a former employee in the company’s London payroll department “has made assertions about the accuracy of our nurse scheduling systems and the related compensation paid in our six UK hospitals.

“This former employee has made similar allegations to local authorities in London who have declined to investigate,” the statement said. “Her allegations have no merit, and we are vigorously defending the employment litigation.”

U.S. and British representatives declined to comment or confirm whether there was an investigation.

“We strongly suspect that financial fraud at that scale would be one of the worst kept secrets around, and there have been no whispers about it,” said Pali Capital Managing Director Sheryl Skolnick in a Wednesday morning blog post. Skolnick covers health care services.

Most SEC investigations end with no formal action taken. The agency had more than 5,000 investigations either opened or pending in the fiscal year that ended Sept. 30, 2008, according to its Web site. Of that total, 671 civil actions either were filed in U.S. District Court or before an SEC administrative law judge.

In 2003, HCA paid a combination of $1.7 billion in criminal and civil penalties to resolve a case that involved allegations of paying physicians kickbacks and overcharging Medicare, Medicaid and Tricare, the military health care program.

In September 2005, federal prosecutors and the SEC opened an investigation into former Senate Majority Leader Bill Frist’s order to sell all his stock in the company, which was founded by his father and brother. The sales were completed two weeks before share prices fell 9 percent.

The sales came as Frist was weighing whether to run for the Republican nomination for president, which he eventually decided against. He denied having any insider information about HCA and said he sold the shares to avoid the appearance of a conflict of interest.

The investigation ended without action taken against Frist.