Bill Frist -- senator, majority leader, and would-be president -- has a far bigger scandal lurking in the wings than whether or not he illegally sold stock in his family's health-care company, Hospital Corp. of America (HCA). It's one that goes back to the very start of his political career in the early 1990s.
Investigative journalists looking, belatedly, at Frist's ties to HCA ought to take notice.
In 1993, Frist, then a millionaire heart surgeon whose father and brother were billionaires, was hardly on the political radar in Tennessee. At the time, the Volunteer State was represented in the Senate by Jim Sasser, a wily Democrat who'd established himself as a leading expert on health-care policy. In the spring of '93, Sasser began holding investigative hearings into Medicare fraud by doctors, hospitals, and other health-care providers. Medicare fraud was becoming an enormous issue, one that generated the creation of special FBI task forces and other investigations, and Sasser wanted to know the extent of the problem.
Little did Sasser know that the very biggest offender was none other than Tennessee's own Hospital Corp. of America. HCA didn't figure into Sasser's 1993 fraud hearings, simply because he -- and the FBI -- didn't know about the vast thievery being committed by HCA. For years, HCA and its predecessors, including a smaller hospital firm also founded by the Frists, had rigged Medicare billing systems to charge the federal government far more than was justified for treating ordinary ailments, a practice known as “upcoding.”
The charges began to surface late in '93, when the U.S. General Accounting Office began to uncover a pattern of Medicare fraud involving HCA. Throughout the decade, charges snowballed against the firm. Eventually HCA would emerge as arguably America's most egregious corporate criminal, accused of having bilked U.S. taxpayers and the Medicare system out of billions of dollars. In a desperate effort to restore its good name, HCA would agree to three settlements between 2000 and 2003, paying civil and criminal fines amounting to $1.47 billion. Although several HCA officials were indicted, the settlement allowed HCA to escape further government action against it. Even the enormous fines paid by HCA may suggest a sweetheart deal between HCA and the Bush administration's Department of Justice, because under Medicare rules HCA was liable for treble damages for the fraud it engineered -- which would have cost the company many billions -- and could have been barred from doing business with Medicare. It wasn't.
The public knew nothing of the HCA scandal in 1993. The Frist family, on the other hand, as HCA's founders and major stockholders, must have known that Sasser's investigation could, at any moment, explode their company. The Frist family suddenly decided to run one of their own, Bill, against Sasser. According to Tennessee Democratic sources, Frist was a political unknown, but there were suspicions that the Frists were pushing Bill's Senate race in order to get rid of their nemesis, Sasser, before he could uncover HCA's criminal fraud. The Frists spent millions of dollars to back Bill's '94 Senate bid -- and, in a stunning year in which the GOP seized control of both chambers of Congress, Sasser was defeated.
Did the Frists run Bill for Senate in order to protect HCA from Sasser, and to get a powerful defender in place in case the FBI uncovered HCA's wrongdoings? It's certainly a fit subject for an investigation.
Today Frist is scrambling somewhat clownishly to pretend that he sold his HCA stock not to cash in but to avoid the appearance of a conflict of interest. Of course, as countless others have pointed out, Frist never seemed to mind that conflict in the decade since he first appeared in the Senate. Several years ago, I interviewed him for a story in Mother Jones. At the time, when Frist was sponsoring a piece of legislation that would have allowed his family's company to cash in big on Medicare, I wrote:
Frist is an outspoken advocate for giving Medicare recipients more "options" -- options that could direct billions of Medicare dollars to Columbia/HCA. In January, Frist, along with Sen. Jay Rockefeller (D-W. Va.), introduced a bill that would for the first time allow hospitals and doctors to join together as private entities that could contract with Medicare. That would enable these so-called provider-sponsored organizations (PSOs) to compete directly with HMOs for Medicare patients. Not surprisingly, Columbia/HCA stands to make a tidy profit from the new business.
Frist also opposes a White House plan that would save Medicare $6 billion by reducing payments to HMOs and, if approved, PSOs as well. According to various recent studies, the government is overpaying HMOs for Medicare patients by at least 5 to 7 percent. But even though he acknowledges that HMOs are being overpaid, Frist argues, "That might be a good thing. It will attract more managed care companies into the market and drive prices down."
Back then, when I asked Frist to comment for the story about the potential conflict of interest on behalf of his father's company, he said: "Everybody knows my background, where I come from, and the hats that I wear. … Sure it could become an issue. Some may want to make it an issue."
Well, it's become an issue.
Robert Dreyfuss is a Prospect senior correspondent. He covers national security for Rolling Stone and writes frequently for The Nation and Mother Jones. His book, Devil's Game: How the United States Helped Unleash Fundamentalist Islam, will be published this fall by Henry Holt/Metropolitan.
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