Union-backed Investors File SEC Complaint Against HCA Healthcare

HCA denies the allegations and calls the new complaint 'a rehash of claims this group purported in 2020.'

A union-backed investment group has filed a complaint with federal regulators against HCA Healthcare, claiming that the nation's largest for-profit hospital chain failed to disclose "elevated risk" to shareholders stemming from allegations of Medicare fraud.

The complaint was filed Thursday with the Securities and Exchange Commission by the Strategic Organizing Center Investment Group (formerly known as the Change to Win Federation), formed in 2006 by a coalition of labor unions that includes the Service Employees International Union, which represents workers at a number HCA facilities.

SOC said it filed the complaint six months after a report written by the SEIU revealed that HCA may be unnecessarily admitting patients from hospital ERs, putting shareholders at grave risk.

"Since at least 2014, HCA has consistently explained its corporate strategy to investors by noting that higher hospital admissions reliably translate into high company earnings, and that emergency departments are one of the key mechanisms through which hospitals can increase their admission rates," the complaint reads. "For over a decade, Medicare regulators at HHS have identified high levels of emergency department admissions as a potential indicator of improper practices." 

In its February report, the SEIU said that "HCA has potentially been engaging in widespread Medicare fraud through the systematic over-admittance of patients from Emergency Departments at HCA hospitals—a practice that may have continued throughout the pandemic."

"Data from the report reveals that HCA may have collected nearly $2 billion in excess Medicare payments since 2008 through these potential ED over-admissions—information that HCA failed to disclose to shareholders," the SOC says.

The complaint asks the SEC to investigate HCA's "failure to disclose to shareholders potential liability of these alleged practices and for the agency to hold the nation's largest for-profit healthcare corporation accountable for alleged wrongdoing."

SOC says there is precedent for the federal action, noting that in 2007 the SEC leveled civil fraud charges against Tenet Healthcare for "failing to disclose to investors that the company's earnings between 1999 and 2002 were 'driven by exploiting a loophole in the Medicare reimbursement system,' a scheme that cost investors billions in lost share value when brought to light."

HCA responds

HCA issued this statement when contacted by HealthLeaders.

"SOC Investment Group is a union-backed organization that formerly called themselves CtW Investment Group, and this appears to be a rehash of claims this group purported in 2020."

"We took their concerns seriously and we analyzed the data and our procedures, and our publicly filed-response can be found here. We remain confident in our processes and robust audit systems. In addition to our internal reviews, independent third-party audits provide additional confidence in our compliance with regulatory requirements. Our hospitals are staffed by physicians, clinicians and nurses who work tirelessly to ensure our patients receive medically necessary care in the appropriate clinical setting."

"This year, HCA Healthcare was named one of Ethisphere's World’s Most Ethical Companies for the 12th time and we are confident that our operational processes and procedures are working well and that we are meeting the healthcare needs of our patients and communities."