Rick Scott's business record central in Fla. gubernatorial

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WEST PALM BEACH, Fla. — Before Rick Scott was ousted from the company he founded, before FBI agents fanned across the country to scour its offices, before a $1.7 billion settlement was reached with the government, he stood stoic in a Nashville hotel listening to investors’ relentless complaints.

The federal probe of Columbia/HCA Healthcare Corp. was already well known on that day in May 1997 — long before Scott entertained the thought of running for governor of Florida — and its stockholders wanted to know why the hospital chain was targeted, why the stock price had plunged, why truckloads of documents had been hauled away.

Scott scolded them, telling them to sit down. Protesters shouted “shame on you.” A van full of guards waited to whisk the CEO away safely.

Two months later, the company’s board met late into the night and sent Scott packing. His successor said it was time for a new management style and promised he’d ensure the law was followed. Scott got a $300 million severance package and vanished from the national scene for a decade.

Now in the thick of a gubernatorial election in which the economy is king, Scott’s business acumen has drawn voters to his side in droves. But the Republican’s experience poses questions about how he did business, what he knew about massive fraud that occurred under his leadership and why he insists his dealings are private when he touts them as his main qualification for public office.

Scott has never been charged with wrongdoing in the Columbia fraud case which, after his departure, resulted in a settlement that became the largest in the history of the Medicare and Medicaid programs.

He insists he did nothing wrong and denies knowing anything of any wrongdoing at Columbia. Still, he says he accepts responsibility for anything that occurred under his leadership and says the lessons he learned — trust your employees but verify what they do — would help him as governor.

“We could have done a much better job of making sure there were no mistakes,” Scott said at the first debate with his Democratic rival Alex Sink.

Critics question whether Scott really had no idea what was happening beneath him — and if he didn’t, whether he is really fit to govern the state.

“His only qualification was his tenure as CEO,” said Michael McAuliffe, the Palm Beach County state attorney and a supporter of Democratic candidate Alex Sink. “And he failed in that function.”

The wrongdoing at Columbia/HCA has literally become a textbook case of fraud, studied in business ethics classes around the U.S. All of it fueled the bottom line, helping it grow into the world’s largest health care company.

In one widespread scheme to which Columbia pleaded guilty, workers responsible for filing claims to government programs including Medicare were taught to change billing codes so that the reimbursement would be greater. Managers were trained to choose diagnoses, including severe pneumonia, that were considered good for “upcoding” and were pressured to have their employees do the same.

Goals were set for the number of cases of severe illness claims, according to Columbia’s guilty plea; at a Texas hospital those aims were revealed to employees in a seminar entitled “Cash is King.” Bonuses, promotions, public recognition and cuts of the proceeds were given to those who complied; bad evaluations, reprimands, public admonishments and firings came to those who didn’t.

It was so pervasive, prosecutors said one vice president cautioned staffers “to refrain from using the F-word.” They meant fraud. One billing coder told an auditor Medicare “was not smart enough” to catch them.

The wrongdoing didn’t stop with the upcoding. The company’s home nursing care division was a huge source of fraudulent billings. And the entire scheme was kept together by a constant flow of patients from doctors who were rewarded with a variety of kickbacks.

There were trips to Alaska and the Amazon. There was free rent and office remodeling. The government says the Columbia even gave doctors free drugs that at least one physician sold, in turn, to patients at a profit.

Columbia managers made lists of potential physicians to attract into their scheme, scrawling notes in the margins including “big $ practice — this would be a big catch” and “wrong specialty for revenue.”

The Justice Department said Scott knew about the kickbacks, claiming in its lawsuit that he promised doctors their payments would increase along with the number of patients they referred. He says he knew nothing.

John Schilling was an accountant at Columbia/HCA when he became aware of questionable practices. He tried to get managers to stop and when they wouldn’t, he quit. He later went back to work — as a source for the FBI — and ultimately filed a successful whistleblower suit.

Schilling, who lives in Naples, just miles from Scott, said he doesn’t believe the candidate knew of all the schemes that were occurring, but that he was extensively involved in maintaining relationships with doctors, the subject of the kickback allegations.

“I believe he trusted individuals to carry out the operations and management and so, of course, he probably didn’t now all the issues that were out there, all the particulars,” he said. “But I believe he was a hands-on CEO and should have been aware of some of them.”

Schilling, who went on to document his ordeal as an FBI informant in a book titled “Undercover,” was a Republican until Scott won the primary. He changed his registration to independent, in disgust, after Scott’s win.

Still, many others say they’re able to look past the accusations.

Andy Sanfillipo, 51, of Jacksonville, was drawn to Scott because of his outsider status and his successful business career. Sanfillipo runs an aviation company and says he believes he can count on another business leader to keep the budget balanced and to hold people accountable. He says if Scott had committed a crime, he would have been punished.

“If somebody does something really wrong they’re going to be under investigation, they’re going to be brought before the right people in a hearing and they’re going to be put in jail,” he said.

In response to Sink’s attacks, Scott’s campaign has tried to link her to scandal. His commercials have blamed Sink for losses in the state’s pension fund and accused her of deceptive sales practices at a bank she once worked at. He’s been hammering her for approving insurance licenses for ex-felons, though it appears Sink was following state law and there’s no sign the insurance agents went on to scam anyone.

Scott’s supporters even used the candidates’ first debate to hand out folders full of information on purported scandals involving Sink, with “Alex Stinks” scrawled in black on the front and whoopee cushions and packets of foul-smelling powder scattered in the press room.

Sink calls the charges “lies, falsehoods and smears.”

Scott’s own depositions in cases his companies have faced have sparked some of the intrigue surrounding his dealings. In a July 2000 deposition in a Columbia/HCA case unrelated to the fraud allegations, Scott invoked his Fifth Amendment right 75 times, even to questions as simple as “Are you employed?” Another deposition, given six days before Scott filed to run for governor, has never been released.

The latter deposition stems from a contract dispute involving another company Scott founded, Solantic, a chain of urgent care centers in Florida. The case — over a doctor’s allegations Solantic filed false medical information — was ultimately settled, with its terms confidential. But attempts to motivate Scott to release the deposition — including those by hecklers at numerous campaign stops — have met anger from the candidate.

In one of the most heated exchanges of the gubernatorial primary, Scott was repeatedly asked about it in a press conference in which he repeatedly clashed at reporters.

“You can ask the same question 100 times, I’ll give you the same answer,” he snapped at one point. “It’s a private matter.”

When it became clear Scott wasn’t budging, one veteran member of the Tallahassee press corps returned to questions about the way the candidate had characterized the fraud that triggered the $1.7 billion fine at Columbia.

“You call that a mistake?” asked Bill Cotterell of the Tallahassee Democrat.

“That’s what I called it,” Scott replied.

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