Dodging Sunshine: What Did and Does Rick Scott Have To Hide?

I was in the Air Force for almost eleven years. During that time I learned many things about leadership. That doesn’t mean specifically I am a great, or even a good leader, but will say that almost to a person the people that worked with me, and for me were always loyal. They were loyal beyond the realm of common sense needed in battle, or even simply trying to get a job done. We all felt that if one of us failed, we all failed. We trusted each other to protect each other. We did it out of honor and friendship, but even in the cases where there was dislike you helped the other person when they needed help.
As team leader, I trusted my subordinates, but I always knew I had to keep tabs on them. This was not out of distrust, but it was my responsibility to ensure the job was well done, whatever it was, when I was in charge. So, I made it my business to know what was going on, because that was my business. I knew that if something went wrong, ultimately it would be me held accountable.

The accountability was part of the job, and in accepting the position, I accepted the accountability.

Now…let’s talk about Rick Scott. We will start with some history of the Columbia/HCA fraud case that took place while Ricky was the CEO. He ran the company for ten years resigning in 1997 amid a federal investigation of government fraud.

He was an attorney and decided to go into business for himself. $125,000 got him on the road to financial freedom. He bought two old hospitals in El Paso and started Columbia Healthcare. It didn’t take long for Rick to expand and he came to Florida and bought HCA, founded by the Frist family of Tennessee, bringing him ninety – six more hospitals.

He was known as a tough cookie. He hacked costs to bare minimums, nonprofits became a common hospital target and the company grew exponentially. His deal making was ruthless, even to the point of threatening to open new hospitals if the target wouldn’t concede.

By the time he “resigned” Columbia/HCA had an income of $19 million from 340 hospitals, 55 in Florida, not to mention all the home – health agencies…550 in 37 states. It had become the largest for profit hospital chain in the nation, and the ninth largest employer.

1997 was a banner year for the FBI investigators looking into the fraud case against Columbia/HCA. After the investigation began it became clear there were anomalies that had to be viewed in depth. On March 19th agents raided Columbia’s offices in El Paso carting off boxes of material.

On September 27, 2007 Joseph L. Ford, the forensic accountant on the Columbia/HCA investigation, addressed the American Institute of Certified Public Accountants National Conference on Fraud and Litigation Services in San Diego. He explained his role and the circumstances about the case to the crowd.

“In the late 1990s, I led the investigation of Columbia/HCA Healthcare. This wasn’t the glamorous, door-busting stuff you see on TV. It was several years of painstaking work. During any investigation, including the HCA matter, it is customary to subpoena the auditor’s work papers and review anomalies they encountered during the audit. We subpoenaed multiple years’ worth of audit work papers. As I began poring through the 14-by-17 inch dusty green work papers, the audit process became clearer…and anomalies that tracked the fraud scheme became focused.”

“The auditors discovered the fraud, but did not recognize its significance. The auditors questioned some of the reserves that were linked to the criminal activity but did not pursue their questioning other than to satisfy themselves that proper reserves were established.”

“I poured through work papers AA-1 through HH-47. The work papers told a methodical and impressive story and provided tremendous lead value. We began interviewing the audit staff, and had them recall relevant and incriminating conversations with HCA managers.”

“But there was one hole in the work papers—and it was important. Missing from the reams of bound work papers was DD-55, which referenced a conversation the engagement partner had with his bosses and the HCA managers. We conducted a thorough review of all the work papers to see if the document had been misplaced. No luck. We asked the auditors to conduct a similar review. No luck. A critical piece of evidence, work paper DD-55 was lost.”

“In the end, we convicted HCA without work paper DD-55. Columbia/HCA made amends, and implemented an aggressive compliance program. Not only were FBI CPAs used in the case, but we worked closely with the forensic accountants from Pricewaterhouse Coopers on parts of the investigation. They did a tremendous amount of legwork, and provided the FBI with a blueprint for the investigation. And this collaboration paid off— literally—with numerous convictions and a record $1.6 billion settlement. We not only convicted Columbia/HCA, but we were able to convict Olsten Home Health Care. The problems caused by DD-55 did not end with the Columbia/HCA case. DD-55 was a symptom of a more serious issue…”

“In health-care fraud investigations, financial records act as great portals into the fraud schemes. In the HCA case, we obtained over 13,000 boxes of records. During the course of the investigation, many of those boxes were reviewed not just once, but multiple times. We also had to review terabytes of electronic data, including e-mail. As the fraud scheme unfolded, the subjects took a page out of the “Jerry McGuire” screenplay. We uncovered numerous e-mails signed by managers saying “SHOW ME THE MONEY.” Talk about great evidence of intent.”

Although most of the executives had been on a business trip together, Scott pulled together a number of executives to review the FBI investigation. According to Jerre Frazier, an accountant attorney for Columbia/HCA, Scott stated at the meeting he felt President Clinton was singling them out because of their vocal opposition to healthcare reform. He also stated, “We’re no worse than anyone else.”

Frazier became one of the whistleblowers in the case.

The FBI wasn’t through with gathering information, and on July 16, eighteen hospitals in Florida and five other states became the target of further raids. Nine days later Scott resigned, leaving Frist, one of his partners, to take the heat. Frist publically and repeatedly promised “full cooperation” and also stated Columbia/HCA would be found to be “in full compliance with the law.”

The first raid garnered so much attention “60 Minutes” did a full expose on the FBI Investigation. Mike Wallace was the reporter and was seemingly appalled at how little cooperation Columbia/HCA actually provided.

In Wallace’s own words: “I Have Seldom Seen A Better Orchestrated Stonewall Than That Undertaken By Columbia/HCA.”

The expose itself drew the attention of the magazine “Modern Healthcare” which reported to the healthcare community in April, 1997, “Columbia’s defensive press strategy existed long before federal agents raided the company’s El Paso, Texas.” Mike Wallace of 60 Minutes’ said, “I have seldom seen a better orchestrated stonewall than that undertaken by Columbia/HCA… If they have nothing to hide about the way that they operate, then why in the world would a public corporation stonewall ’60 Minutes’ or everyone else in the press who wants to talk to Richard Scott?”

They further went on to say, “Many journalists who cover Columbia, particularly those in Nashville media circles, view [Lindy] Richardson [Columbia/HCA’s executive director of media relations] as Scott’s primary protector. Richardson, 50, is considered very loyal to Scott. On the rare occasions Scott does interviews, they often are in a controlled environment with Richardson at his side.” [Modern Healthcare, 4/14/97]

It seems that during that time a lot of people became interested in the investigation to include the Memphis, Tennessee based newspaper The Commercial Appeal. They weighed in on the matter with some clear and precise thoughts. Part of their article stated, “Darla Moore, wife of Columbia co-founder Richard Rainwater, “said she was uneasy about Scott’s management style at board meetings, which typically were limited to two hours where Scott presented scripted issues and left little time for debate.” [The Commercial Appeal, 8/27/97]

Scott’s secrecy was becoming more and more obvious. Corporate secrecy is one thing. Companies must protect their product line but this appears to be clear compartmentalizing from the onset. The longer he was there, the better he got. The CIA should be so cautious.

Scott was making a real name for himself during this time. The St. Petersburg Times, a paper near Scott’s hometown of Naples, revealed some other concerns. “Rick Scott, chairman and chief executive officer, refused to respond to numerous questions about the performance of three directors up for re-election to the board. He even ordered one persistent questioner to sit down.” [St. Petersburg Times, 5/16/97]

Alarms were starting to go off all across the country. The Associated Press started following Scott’s actions and reporting regularly and Scott started clamming up even further. In reference to the shareholder’s meeting they stated, “Throughout the meeting, Scott told shareholders to sit down and wait until business was completed. Activist stockholders didn’t like Scott’s attitude, calling his actions a dodge and urging him to come clean on matters that were affecting the value of their holdings.”

“Security was high at the [Columbia/HCA Annual] meeting, which was held in a hotel ballroom instead of the company’s headquarters. Scott was escorted from the building through a side door and into one of two vans full of guards.” [Associated Press, 5/15/97]

Scott was no longer forcing his will on others but having guards do it for him. True, it is my opinion, but that signals to me a bunch of red flags. Everyone else was noticing it too.

Even during the campaign Scott continued his now well honed skills, but this time he got caught blatantly. WKMG reported the following in July, 2010:

At A Campaign Stop, Scott’s Staffers Blocked Reporter Michael Putney From Boarding The Campaign Bus Because Putney Interviewed Scott’s Mother – When Putney Attempted To Board The Bus, He Was Blocked And The Campaign Claimed That He Had “Hip-Checked A Pregnant Woman”, An Assertion That Orlando’s WKMG Said Was Directly Refuted By Video Of The Incident. According to WKMG, in July, 2010, “A veteran political reporter at Local 6?s sister station in Miami says Rick Scott’s campaign staff did a 180 because the reporter interviewed Scott’s mother. Reporter Mike Putney of television station WPLG attended a campaign stop for the Republican gubernatorial candidate Wednesday in Sweetwater, a small town in Miami-Dade.  Putney says the stop went smoothly until he asked Esther Scott a few simple, straight-forward questions… Putney claims staffers insisted he not air the Esther Scott interview if he wanted access to Scott…. A Scott spokesman, Joe Kildea, e-mailed Local 6 a response to the incident insisting Putney was not blocked, but instead pushed the staffer. The e-mail read, “The only thing I saw was Michael Putney hip-check a pregnant woman. Hardly news reporting. The video from the incident directly refutes Kildea’s claim. The “pregnant woman” Kildea refers to is a spokesperson for Rick Scott’s campaign and video shows her purposely positioning herself between Putney and Scott as they walked to the campaign bus.” [WKMG, 7/21/10].
And the news beat does not go on.

Scott dodged questioning during the campaign for the most part, although he did say, he accepted responsibility but never expounded. The most he ever said was, “There’s no question that mistakes were made and as CEO, I have to accept responsibility for those mistakes. I was focused on lowering costs and making the hospitals more efficient,” Scott told the St. Petersburg Times. “I could have had more internal and external controls. I learned hard lessons, and I’ve taken that lesson and it’s helped me become a better business person and a better leader.”

Newspapers all across Florida reported his inaccessibility. Article after article was written about how he wouldn’t release any information except in carefully planned sound bites.

Even now it is reported he is at odds with the state house press corps. Reporters throughout Tallahassee complained since even before the inauguration about carefully controlled press meetings where only handpicked reporters are allowed in, and only certain questions are answered. The press corps find this untenable, especially the choosing of select reporters.

During Scott’s campaign he stated he resigned because he thought the company should fight the charges, but a majority vote on the board wanted to settle.

Here’s my question. Since Scott was CEO why would he not stay and support the board in their decision. He was supposed to be a leader. He had been instrumental in building the company and then suddenly he elopes with his severance package and evacuates the premises with millions.

On February 23, 2010 (in a revised addition of the original article)  Angelfire (http://www.angelfire.com/de/jehudi/hospital.html) reported the following:

“Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater, according to Fortune Magazine.

The new CEO in place of Richard Scott is Thomas Frist, the former head of Hospital Corporation of America. Things are getting so bad that Columbia is considering a name change.”

Richard Rainwater, as noted, was one of the founding partners of Columbia. Additionally on March 20, 2009, Susan Golden ran an article in the Wall Street Journal (http://biggerthanenron.blogspot.com/2009/03/wall-street-journal-richard-scott.html) which included the following: “Scott was recently terminated by Darla Moore, the wife of Richard Rainwater and according to Fortune Magazine, the “Toughest Babe in the Business” (See the full article at the end).

As part of Richard Scott’s severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year. His former president, Mr. Vandewater was paid $3.24 million and given a five year consulting contract at $600,000 per year.

Both former executives are allowed to exercise vested stock options within 90 days. Scott owned or had options on 9.4 million shares of Columbia stock as of May, 1997. Vanderwater controlled 617,375 shares. Columbia has agreed to pay attorney’s fees and any fines or judgments against the two. In addition, the two former executives get their office expenses paid for two years including secretaries. If they move within the next two years their moving expenses are paid by Columbia/HCA. Not a bad deal for someone who just got fired! Wow! What a surprise!

So Rick Scott was making at least $900,000 a year, not including bonuses and any other gratuities Columbia/HCA chose with which to grace him. In place of his salary they tipped well with a $5.1 million in severance. For two years they would also take care of his overhead by virtue of office and secretarial expenses. Did I say in place of his salary? Oh, I forgot about the fifty thousand dollar raise through a five year contracting agreement.  Lastly, I would say the reported $300 million in stock and options should keep him well taken care of should his future business fail.

Yes indeed, that is a pretty nice severance package but surely in the long run he would have made much more. Why leave such a good job especially since he was so instrumental in its development?

He also claims he was unaware of what was going on. If he didn’t know what was going on in his own company, how can we trust him to know what is going on in this state. That alone makes me not trust him.

Since corporate meetings are private…there is no sunshine law providing for open meetings…there are few ways to prove he resigned or was actually fired and it was covered up by the company. Firing him would have been a sort of admission he had been part of the fraud, thus admitting to fraud in a back door way.

John Schilling was another whistleblower in the organization and was overt in his opinions. He stated the charges were true and happened at Columbia/HCA, of course, but he further offered some insight that is very enlightening.

“Three law firms were hired, each undermining the other. There was sort of mass confusion,” he said. “The lawyers did have control over who had access to Rick Scott.”

“CEOs blanket themselves with attorneys,” Schilling said. “They dodge the bullet of not being questioned. He never gave any information or assisted in the investigation.”

Although Scott has stated that he takes responsibility, Schilling doesn’t think that should satisfy voters.

“I give him credit for taking responsibility for those things but again, he stated he wasn’t aware of the fraud,” Schilling said. “I find it somewhat ironic, here you have someone running a multibillion-dollar company and he is not aware of what is going on and yet he wants to be governor. Is he going to not be aware of what is going on in state government? I just wouldn’t trust him.

“It must be an ego thing,” he added, about his theory of why Scott is running for governor. “He must need the ego of being in charge. I don’t know. It’s not for the money so it’s got to be for the ego.”

I’m not sure how accurate that portrayal might actually be, but it makes sense in some ways, although I do believe money was a big part of it. The ego part…probably no doubt.

Keep that in mind as he makes decisions like he has on High Speed Rail.

When all is said the truth is this. Federal investigators found that Scott took part in business practices that were found to be illegal. The biggest of those was medical payola. Columbia/HCA gave kickbacks to doctors for patient referrals…excuse me doctor incentives as it was referred to.

Additionally, Columbia/HCA flagrantly lied about how sick people were, especially those in Medicare. As a result they could bill for more money. They also inflated the price of home healthcare agencies and pawned the costs off to Medicare.

As we are patently, excruciatingly, and acutely aware, Scott was never prosecuted nor were any other high ranking executive buddies of his.

Joe Ford expressed remorse.

“After Columbia/HCA, I realized people, individual corporate officers, had to be held accountable for the actions of their companies,” former Tampa FBI agent Joe Ford said in a whistle-blower’s book about the Columbia/HCA case. “Instead of just giving us [the government] money, people need to go to jail. I learn from my mistakes and this was my first big one.”

Two low level guys out of El Paso paid fines and got probation after pleading guilty for giving office space free or reduced for giving referrals. That was the extent of punishment, except for fines.

Free rent wasn’t the only thing they did to lure doctors into cooperation. Costa Rican fishing trips, dove hunting in Mexico, consulting jobs that didn’t exist except on paper, and discounted pharmaceuticals were the norm according to the feds. Doctors even received stock in some hospitals for free.

To his credit and to partially explain things, Scott wasn’t just a finely tuned businessman. He was an orator as well.

“He could charm a bird out of a tree,” said James Thompson, a retired Corpus Christi doctor who became a whistle-blower. “I guarantee, you meet him, you’ll like him.”

Testimony in the investigation stated that Scott and a partner “told physicians if they referred X number of patients, their expected distribution [from the hospital] would be Y, and that as their referrals increased, so would their distributions.”

According to the lawsuit the execs knew what they were doing was wrong, and as such they were walking on thin ice with their strategy. Even as early as Rick Scott’s second year, one of the company’s attorneys warned that paying doctors for referral could violate the anti-kickback law, but the suit says they ignored the warning.

$6.9 million in illegal payoffs later Columbia/HCA had made $103 million in Medicare federal dollars.

Of course it didn’t stop there. $1.7 billion in fines takes a lot of work and a lot of wrong. There is an exquisite little inconvenience to Medicare called upcoding. This is what I mentioned before as, reporting people sicker than they were. That also served to assist in inflated cost reports for the federal government to reimburse hospitals for overheads.

Columbia/HCA had no problem with upcoding even to the point of ordering managers to keep two sets of books. According to investigation reports, possibly up to one million dollars was kept aside, just in case they got caught, which were shifted later, because they thought they were getting away with the fraud. Surprisingly, the books show that reserve to have been anywhere from 25% to 30% of their profits. Come on, Scott had to have known.

Scott answered that criticism on his website by saying, that proper accounting requires “reserves be maintained. Those reserves are monitored by internal and external auditors and would certainly have covered receivables or billings.” The Feds somehow didn’t believe that from a quarter to possibly almost a third of the profits were held in reserve “for receivables or billings.”

In writing this article, I ran across literally hundreds of pages of information. As you might expect, some of it made great sense, some was questionable, and other parts were…well just stupid. There was a lot to digest. Gleaning information on this was formidable I must say. There is still so much to be said, and in saying that I will offer some of the items I found that will further confuse you, but they are questions that must be brought to bear. The largest healthcare fraud case in history invites many questions.

Ricky is the founder of the anti-healthcare reform group “Conservatives for Patient’s Rights” (http://www.sourcewatch.org/index.php?title=Conservatives_for_Patients_Rights). They are solidly against healthcare reform and in 2009 began fighting the “public option” healthcare bill. Not so oddly Scott owns Solantic. They are a group of low–income, walk in clinics that cater to the same people that need the bill passed.

There are a lot of inconsistencies with Ricky.

THURSDAY, JUNE 26, 2003; WWW.USDOJ.GOV;
WASHINGTON, D.C.
HCA Inc. (formerly known as Columbia/HCA and HCA – The Healthcare Company)
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION NETS RECORD TOTAL OF $1.7 BILLION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.

Why does this matter? The wrath of Richard Scott and friends is to this day still affecting main street America.

Who is Richard Scott? More importantly, who are Richard Rainwater & his wife, Darla Moore?

Before GW Bush was affiliated with Richard Rainwater may I remind you-Richard Scott was the ex-partner of Richard Rainwater with Columbia Homecare Group.

In 1997, Fortune magazine ran a cover story on successful business executive Darla Moore, titled “The Toughest Babe in Business.”….She created the corporate bankruptcy finance tool, DIP, debtor in possession while at a Wall Street bank.

Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater and according to Fortune Magazine, the “Toughest Babe in the Business”.

As part of Richard Scott’s severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year. His former president, Mr. Vandewater was paid $3.24 million and given a five year consulting contract at $600,000 per year.

Both former executives are allowed to exercise vested stock options within 90 days. Scott owned or had options on 9.4 million shares of Columbia stock as of May, 1997. Vanderwater controlled 617,375 shares. Columbia has agreed to pay attorney’s fees and any fines or judgments against the two. In addition, the two former executives get their office expenses paid for two years including secretaries. If they move within the next two years their moving expenses are paid by Columbia/HCA. Not a bad deal for someone who just got fired! Wow! What a surprise!

Rainwater also owned a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country. They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.

Columbia just decided to sell its home health-care business and its head announced she is forming a company of her own. The home care unit is valued at $ 450 million.

At least two other top executives of Columbia have resigned.

On Sept 8, 1998 Standard and Poors downgraded the bonds of Charter/HCA to negative bases on poor earnings. Looks like Rainwater and his Crescent Cos’ have finally stumbled. One source within the company said it would be a long while before any new high-ticket acquisitions would take place. A previous deal with Prudential is in danger of being jettisoned.

Why does this matter- September 8, 1998?

We must review the case that just ended in December 2008 in Columbus Ohio with National Century Financial Enterprises which was headquartered in Dublin, Ohio. It began in 2002 when FBI raided the offices of National Century Financial Enterprises Dublin, Ohio

National Century Financial Enterprises:
“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

Just a reminder relating to the need for ‘healthcare financial service’ i.e. (NCFE) National Century Financial Enterprises; home health – which was struggling under the Balanced Budget Act of 1997; about 1,400 agencies closed nationwide in 1998.

3/9/2006
10-K SEC Filing, filed by J P MORGAN CHASE & CO on
3/9/2006: Enron litigation. JPMorgan Chase and certain of its officers and directors are involved in a number of lawsuits arising out of its banking relationships with Enron Corp.; the three current or former Firm employees are sued in their roles as former members of NCFE’s board of directors.

Posted by Susan Golden at 1:44 PM

Labels: FRAUD; FINANCIAL Institutes in America, HCA FRAUD, HCA/TN Inc, Healthcare FRAUD, JPMorgan Chase, Richard Rainwater, Richard Scott.

So, I am not the only one that is suspicious of Rick Scott. Only one of many angered and disappointed by the man. So those of you that voted for him need to understand all of us must live with this man, I and many others, consider him to be arrogant, self centered, self aggrandizing  and a lying crook. Yes that’s just my opinion. I am allowed that. Oh, you say there’s no proof he’s a crook. Yeah…OJ was innocent too.