Who Is HCA Whistleblower James Alderson?
James F. Alderson, a client of Phillips & Cohen, was a financial officer at a Montana hospital managed by Quorum Health Resources Inc. Alderson alleged that Quorum, formerly HCA Management Company, routinely submitted false cost reports to Medicare. HCA originally stood for Hospital Corporation of America and was known as Columbia/HCA Healthcare Corp. during the period discussed in this case.
What Fraud Did James Alderson Report?
Alderson alleged that HCA, Quorum and related companies sought Medicare reimbursement for inflated or otherwise non-reimbursable expenses through annual cost reports. He also alleged that the companies maintained separate confidential records tracking expenses they knew should not be reimbursed.
Alderson was fired in 1990 after refusing to include expenses he believed were not reimbursable in a Medicare cost report. In January 1993, he filed a qui tam lawsuit under the False Claims Act against HCA, Quorum and other HCA-related companies.
What Was the Outcome of the HCA Whistleblower Case?
Quorum agreed to pay $85.7 million to settle Alderson’s whistleblower lawsuit in 2000. In 2001, a federal judge awarded Alderson 24 percent of that recovery.
In 2003, HCA paid $631 million to resolve allegations raised in nine False Claims Act whistleblower lawsuits, including cases brought by Alderson and John Schilling, another Phillips & Cohen client. Alderson and Schilling received a combined $100 million whistleblower award. Across the broader HCA investigation, the government recovered a total of $1.7 billion from HCA.
National Coverage of James Alderson’s HCA Whistleblower Case
The New York Times profiled Alderson’s pursuit of the HCA whistleblower case on October 18, 1998. CBS’s “60 Minutes” also reported on Alderson and the allegations against the hospital chain. An excerpt from The New York Times article appears below.
He blew the whistle, and health giants quaked
James F. Alderson maneuvered his nine-year-old Ford Tempo through the snow, parking beside the Federal courthouse in Butte, Mont. Mr. Alderson, a small-town hospital accountant, left the heat on, telling his wife, Connie, to wait in the car. He was sure it would only take a moment to file his lawsuit on behalf of the United States, charging four giant hospital companies with fraud.
For years before that January morning in 1993, Mr. Alderson stewed with the belief that the companies — the huge Hospital Corporation of America and three of its corporate spinoffs — had cheated the government with bogus expense claims. While working at a Montana hospital run by one of those companies, Mr. Alderson himself had been asked to create a second set of books recording different expenses than those reported to the government. He had refused, saying it was unethical.
Then his world fell apart. Mr. Alderson was forced out of his job. No longer able to afford the comfortable life of his resort hometown of Whitefish, his family moved to a cramped apartment in rural Montana. Some college savings for his two teen-age children were eaten up. His career in hospital financial management seemed to be dwindling to an uncertain end.
Yet, he could not let go of his anger at the hospital giants for actions he felt sure were illegal. So when a friend described the Federal whistle-blower law that allows private citizens to file fraud actions on behalf of the United States, Mr. Alderson decided to act, drafting his own lawsuit against the companies and then making this drive to Butte to file it under seal in court.
. . . The filing of his lawsuit — known as a qui tam, or false claims, case — was the flash point for an almost six-year legal battle, one that led to criminal and civil investigations that have rocked the entire hospital industry.
Those efforts culminated this month with the unsealing of Mr. Alderson’s lawsuit and the announcement by the government that it was joining him as a plaintiff against the Columbia/HCA Healthcare Corporation and the Quorum Health Group — the corporate defendants that emerged from years of industry consolidation.
Lost amid the tumult was the story of Mr. Alderson, now 52.
. . . “Here, a discovery made by one man at a small rural hospital ultimately unraveled a nationwide, systemwide scheme,” Stephen Meagher, a former prosecutor [now with Phillips & Cohen LLP] who was eventually hired by Mr. Alderson to handle the case. “It shows how one person can truly make a difference.”
To read the entire story, which provides details of James Alderson’s pursuit of the case, his difficulty convincing the government to join the lawsuit and the role Phillips & Cohen played in “putting new life in the case,” see “He blew the whistle, and health giants quaked.”
Contact Phillips & Cohen’s Whistleblower Attorneys
Reporting suspected fraud involving HCA or another hospital system can be a difficult decision. Before taking action, potential whistleblowers can learn how to be a whistleblower, review available whistleblower protections, and consider whether they may have a case.
Phillips & Cohen is the most successful law firm representing whistleblowers, with recoveries from our cases totaling over $12.3 billion. Our work has been recognized with numerous awards and the praise of our whistleblower clients. Blowing the whistle can be a difficult decision. With more than 30 years of experience with whistleblower cases, Phillips & Cohen can help prepare you before you blow the whistle so that you know what to expect after your case is filed. We are there for our clients. Contact us for a free, confidential consultation.