Atlanta appeals court overturns convictions of 2 former HCA executives

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Posted 7:29AM on Monday, March 25, 2002

ATLANTA - A federal appeals court in Atlanta has overturned the convictions of two former executives of Nashville, Tenn.-based HCA who were accused of defrauding government health care programs at a company-owned hospital in western Florida. Jay A. Jarrell and Robert W. Whiteside were convicted in Tampa, Fla., in July 1999 of making false statements in Medicaid reimbursement cost reports and for conspiracy to defraud the government by those false statements. The case focused on billing from Fawcett Memorial Hospital in Port Charlotte, Fla. Prosecutors charged expenses were repeatedly billed as capital outlays when they should have been listed as administrative and general expenses carrying lower reimbursement rates. During the trial, the men testified that they believed the payment requests were accurate. The 11th U.S. Circuit Court of Appeals in Atlanta agreed. In its ruling published Friday, it said the government failed "to prove that the alleged statements were knowingly and willfully false." Whiteside's attorney, Walter Dellinger, said Sunday that his client was pleased with the court's ruling. "The 11th circuit's opinion is a clear vindication of Bob Whiteside, Jay Jarrell and HCA," Dellinger said. Jarrell, former head of HCA's southwest Florida division, was ordered to serve 33 months in federal prison, pay nearly $1.7 million restitution and fined $10,000. Whiteside, a former senior reimbursement executive from Brentwood, Tenn., was sentenced to two years in prison and ordered to pay a $7,500 fine. After the investigation began in 1997, HCA ousted its top executives, stopped an aggressive hospital acquisition program and began major downsizing. HCA, the nation's largest for-profit hospital chain, pleaded guilty in 1999 to defrauding government health care programs and to date has paid $840 million in criminal fines, civil penalties and damages. But since then, thanks to a major restructuring led by Dr. Thomas Frist Jr. - who started HCA with his father in 1968 - and health care executive Jack O. Bovender Jr., observers say the company is healthier than it has been in years. Revenues rose to $18 billion in 2001 from $16.7 billion in 2000. HCA stock has rebounded to $42.41 a share after plunging from $44 into the teens in 1997, and analysts predict 15 percent growth in earnings per share over the next several years.