NASHVILLE, Tenn., Dec. 18 /PRNewswire-FirstCall/ -- HCA (NYSE: HCA) today
announced the company has reached an understanding with attorneys of the Civil
Division of the Department of Justice (DOJ) to recommend an agreement to
settle, subject to certain conditions, the litigation brought by DOJ against
the company. This resolution would include the remaining outstanding issues
of cost reports and physician relations.
The understanding, which is subject to approval by senior officials at
DOJ, the execution of definitive settlement documents, the approval by DOJ of
the understanding entered into between HCA and the Centers for Medicare and
Medicaid Services (CMS) in March 2002, and court approval, would effectively
end DOJ's investigation of the company.
"We are pleased to have successfully negotiated a settlement to the
remaining two civil issues, cost reports and physician relations," said Jack
O. Bovender, Jr., Chairman and CEO of HCA. "Today, we are a stronger company
with a corporate integrity agreement, a corporate compliance initiative that
has set the standard for many in our industry and a culture that is focused on
the delivery of quality patient care in the communities we serve."
The understanding provides that, in exchange for releases by DOJ, the
company will pay DOJ $631 million. In addition, interest would accrue on this
$631 million beginning on February 3, 2003, at an interest rate of 4.5
The company also has reached an agreement in principle with a negotiating
team representing states that may have similar claims against the company.
Under this agreement the company would pay $17.5 million to state Medicaid
agencies to resolve any such claims.
As a result of today's announced settlement understanding with DOJ, HCA
expects to record an after-tax charge of approximately $395 million in the
fourth quarter of 2002. The net after-tax cash effect on HCA is estimated to
be approximately $445 million after considering the resolution of certain
Medicare receivables and allowances and the related deferred taxes.
In addition, the company will be obligated by law to pay reasonable legal
fees of the whistleblowers' attorneys. The company expects to record a charge
for these fees in the fourth quarter of 2002.
Under the previously announced CMS understanding, HCA would pay $250
million to resolve non-related outstanding Medicare cost report issues with
CMS. The company previously recorded a charge for the CMS understanding in
the fourth quarter of 2001.
In accordance with the understanding, DOJ would release the company's
remaining $250 million standby letter of credit to the government.
This press release contains forward-looking statements based on
management's current expectations. Numerous risks, uncertainties and other
factors may cause actual results to differ materially from those anticipated
in the forward-looking statements, including: (i) the ability to enter into
definitive written agreements with regard to, and to consummate, the
understanding with attorneys of the Civil Division of the DOJ and CMS, (ii)
DOJ and court approval of the understandings, (iii) any examination by the
Internal Revenue Service of the tax treatment of the settlement amounts and
any related adjustments, and (iv) other factors detailed from time to time in
the Company's filings with the Securities and Exchange Commissions.
Readers should not place undue reliance on forward-looking statements,
which reflect management's views only as of the date hereof. The Company
undertakes no obligation to revise or update any forward-looking statements,
or to make any other forward-looking statements, whether as a result of new
information, future events or otherwise.
All references to "company" and "HCA" as used throughout this document
refer to HCA Inc. and its affiliates.