Rick Scott Would Run Florida Like One Of His Fraudulent Businesses

October 21, 2010 12:38 pm ET

During the October 20th Florida gubernatorial debate, Rick Scott made it clear that he wants to run Florida like a business.  He wants to make drastic cuts, set firm benchmarks, create an outcome-based environment for work, and even base teacher salary on student performance.  However, during Scott's tenure as head of Columbia/HCA, these practices proved inefficient and destructive.  His aggressive cost-cutting tactics meant community hospitals were closed and Medicare reports were "knowingly" falsified to bring in more in Medicare reimbursements.  Furthermore, when the government investigated problems with the company, Scott was combative and disrespectful to the individuals tasked with protecting Americans from the ruthless business practices Scott utilized in his company.

In His Rush To Expand Columbia/HCA, Scott Disregarded The Needs Of The Surrounding Communities

Richard L. Scott Had A Reputation For Dismissing The Needs Of The Community. NurseWeek.com reported: "'Rick Scott created a public relations nightmare for himself. He created an image, which may or may not be fair, of a grand buccaneer,' said Paul Torrens, MD, MPH, professor of health services management at the UCLA School of Public Health. 'His arrogance and disdain for concern for communities, which had been a part of health care, are appalling.'" [NurseWeek.com, 9/10/97]

"Scott Has No Qualms About Closing Hospitals If They Compete With Facilities His Company Owns." In an article discussing the Columbia/HCA merger and the possible effects upon Texas medical facilities, the Austin Business Journal reported: "The president of that new corporation would be Richard Scott, a former attorney who lives in Fort Worth. Media reports from across the nation have noted Scott has no qualms about closing hospitals if they compete with facilities his company owns or if the facilities are not performing up to par." [Austin Business Journal, 10/18/93, via Lexis]

  • Columbia/HCA Eliminated 1,000 Hospital Beds In Dade County, Florida. According to the Omaha World Herald, "Columbia/HCA has bought eight general hospitals in Dade County since December 1988. It closed two hospitals and transferred some general medical services out of a third to eliminate 1,000 acute-care hospital beds." [Omaha World Herald, 3/19/95, via Lexis]

Columbia/HCA Said Shareholders Would Benefit From Hospital Closings. The New York Times reported: "The $5 billion merger that Columbia/HCA and Healthtrust Inc. announced Tuesday night would involve a swap of stock valued at $3.6 billion and an assumption of Healthtrust's $1.8 billion in debt...Columbia/HCA said that the deal would be profitable for its shareholders from the outset and that further profits would come from increasing efficiency and taking competitors' market share, not from raising occupancy levels by closing hospitals in areas where both chains operate." [New York Times, 10/6/94]

Scott "Became Respected And Reviled" For His Cost-Cutting Activity As Head Of Columbia/HCA. The Rocky Mountain News reported that during his time heading the Columbia/HCA Hospital system, Richard L. Scott "became respected and reviled as one of the hospital industry's most aggressive cost-cutters. In many instances, he would buy two neighboring hospitals and then shut one." [Rocky Mountain News, 11/20/03, via Lexis]

Scott Has No Respect For Government Agencies Set Up To Protect Americans

Columbia "Hospitals Were Knowingly Inflating The Numbers Reported To The Government." The New York Times reported: "In particular, these people said, investigators are examining accusations of significant differences between the cost reports submitted by certain Columbia hospitals to the Government and separate reports -- known as reserve cost reports -- that were kept at hospitals. Investigators were said to believe that these second reports, along with work sheets prepared by analysts working with the company, provided evidence that at least some hospitals were knowingly inflating the numbers reported to the Government in the cost report to improperly raise total compensation." [New York Times, 7/17/97, emphasis added]

Evidence Collected In HCA Investigation Included Documents "Stamped With Warnings That They Should Not Be Disclosed To Medicare Auditors." According to the New York Times: "The investigation of HCA's cost reporting began in 1993, when James Alderson, a former chief financial officer of one of its former hospitals, filed a whistle-blower suit contending that the expense documents were rife with fraud. The government began a civil investigation and obtained critical evidence: second sets of cost reports and worksheets maintained at HCA hospitals that contained significantly lower expenses than in reports submitted to the government. Some of those documents were stamped with warnings that they should not be disclosed to Medicare auditors." [New York Times, 12/18/02]

FBI "Uncovered A 'Systemic Corporate Scheme' To Defraud Medicare" On The Part Of Columbia/HCA Under Scott And Vandewater. According to the St. Petersburg Times: "Neither Scott nor Vandewater has been charged with wrongdoing, though a government affidavit said the FBI has uncovered a 'systemic corporate scheme' to defraud Medicare and Medicaid. In signing the severance agreement, each man said he 'had acted in good faith and in what he reasonably believed to be the best interest of the company, and that he had no reasonable cause to believe that any of his conduct was unlawful.' Dr. Thomas Frist, who replaced Scott, has since reversed most of his predecessor's policies and put a halt to Columbia's rapid expansion." [St. Petersburg Times, 11/14/97, via Lexis]

Scott Has A Proven History Of Disrespect Towards Government Regulations And Investigations

Scott Offered The FTC His "Candid Appraisal" Of The Investigation. During his testimony before the Federal Trade Commission, Richard L. Scott said: "You have investigated Columbia up, down, and sideways.  You and the Justice Department have together required us to supply literally over two thousand boxes of documents, and pay for the time and expense of countless lawyers and economists, in order to justify our competitive activities.  You have forced us to divest ten hospitals and one surgery center and undo one joint venture.  You have used a great part of your staff resources investigating us and the healthcare industry.  Thus, we are particularly pleased that you have invited us to testify in your present hearings.  In the spirit in which I know these hearings have been convened, I want to give you a candid appraisal of how we see your work, and how we believe it could be improved upon." [Testimony of Richard L. Scott before the Federal Trade Commission, 11/7/95, emphasis added]

  • Richard L. Scott "Handled Previous Federal Investigations With A Disdain That Is Remarkable." According to the New York Times: "Indeed, Mr. Scott had handled previous Federal investigations with a disdain that is remarkable for the head of a public company. When Federal investigators in Tampa, Fla., asked for him to be interviewed regarding certain accusations during an investigation in 1995, Mr. Scott not only did not agree to the interview, neither he nor the company even replied to the repeated requests. Beginning last March, articles about Columbia's business practices began to appear in the New York Times...But again, when directors questioned Mr. Scott about the issues being raised in the articles, Mr. Scott dismissed them, people familiar with the discussions said." [New York Times, 7/26/97]

Under Scott's Management, Columbia/HCA Was "Combative With The Government, Competitors, Its Employees And The Press." According to the New York Times: "People close to Mr. Scott characterized his downfall in terms suitable for a Greek tragedy, portraying him as a brilliant and incisive businessman who was undone by his fatal flaws. Those flaws, they said, included an arrogance and aggressiveness that permeated the company. Indeed, in interviews yesterday, Dr. Frist, who has agreed to work without pay, went to great lengths to emphasize that the Columbia of old was dead, and what was emerging was a gentler company that intended to be less combative with the Government, competitors, its employees and the press." [New York Times, 7/26/97]

Scott Wants To Tie Teacher Salaries To Student Performance... Did He Earn His Golden Parachute When He Was Ousted From Columbia/HCA?

Scott thinks teacher salaries should be commensurate with student performance, but as a businessman Scott profited heavily from a company whose performance was rather dismal. Before being ousted by the company's board, Scott ran a hospital chain that pleaded guilty to and paid a $1.7 billion fine for defrauding Medicare — yet Scott still departed the company with a multi-million dollar severance package.

Scott Received Nearly $10 Million In Severance And A 5 Year Contract With Columbia/HCA Following Resignation.  Modern Healthcare reported that Richard L. Scott's "$9.9 million severance included a five-year consulting contract with HCA." [Modern Healthcare, 7/11/05, via Lexis]

  • Scott's 5 Year Consulting Contract Paid $950,000 Every Year. According to the New York Times: "The Columbia/HCA Healthcare Corporation said yesterday that it had agreed to pay its former chairman and chief executive nearly $10 million when he was forced out in July in the wake of an unfolding criminal investigation of the company. The agreement with the executive, Richard L. Scott, provided for a one-time payment of $5.13 million, as well as a five-year annual consulting fee of $950,000, for a total of $9.88 million, according to a copy of a severance agreement included in the company's quarterly filing with the Securities and Exchange Commission." [New York Times, 11/14/97]

Scott's Severance Package Included $300 Million In Stocks.  According to the Florida Times-Union, Richard L. Scott left Columbia/HCA "with a $10 million severance package and 10 million shares of stock valued at more than $300 million." [Florida Times-Union, 6/21/06, via Lexis]