HCA Holdings 2012 Annual Report Download - page 59

Item 3. Legal Proceedings
We operate in a highly regulated and litigious industry. As a result, various lawsuits, claims and legal and
regulatory proceedings have been and can be expected to be instituted or asserted against us. The resolution of
any such lawsuits, claims or legal and regulatory proceedings could materially and adversely affect our results of
operations and financial position in a given period.
Government Investigations, Claims and Litigation
Health care companies are subject to numerous investigations by various governmental agencies. Further,
under the federal False Claims Act (“FCA”), private parties have the right to bring qui tam, or “whistleblower,”
suits against companies that submit false claims for payments to, or improperly retain overpayments from, the
government. Some states have adopted similar state whistleblower and false claims provisions. Certain of our
individual facilities have received, and from time to time, other facilities may receive, government inquiries
from, and may be subject to investigation by, federal and state agencies. Depending on whether the underlying
conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a
material, adverse effect on our financial position, results of operations and liquidity.
As initially disclosed in 2010, the DOJ has contacted the Company in connection with its nationwide review
of whether, in certain cases, hospital charges to the federal government relating to implantable cardio-
defibrillators (“ICDs”) met the CMS criteria. In connection with this nationwide review, the DOJ has indicated
that it will be reviewing certain ICD billing and medical records at 95 HCA hospitals; the review covers the
period from October 2003 to the present. In August 2012, HCA, along with non-HCA hospitals across the
country subject to the DOJ’s review, received from the DOJ a proposed framework for resolving the DOJ’s
review of ICDs. The Company is cooperating in the review. The review could potentially give rise to claims
against the Company under the federal FCA or other statutes, regulations or laws. At this time, we cannot predict
what effect, if any, this review or any resulting claims could have on the Company.
In July 2012, the Civil Division of the U.S. Attorney’s Office in Miami requested information on reviews
assessing the medical necessity of interventional cardiology services provided at any Company facility (other
than peer reviews). The Company is cooperating with the government’s request and is currently producing
medical records associated with particular reviews at eight hospitals, located primarily in Florida. At this time,
we cannot predict what effect, if any, the request or any resulting claims, including any potential claims under the
federal FCA, other statutes, regulations or laws, could have on the Company.
New Hampshire Hospital Litigation
In 2006, the Foundation for Seacoast Health (the “Foundation”) filed suit against HCA in state court in
New Hampshire. The Foundation alleged that both the 2006 recapitalization transaction and a prior 1999 intra-
corporate transaction violated a 1983 agreement that placed certain restrictions on transfers of the Portsmouth
Regional Hospital. In May 2007, the trial court ruled against the Foundation on all its claims. On appeal, the
New Hampshire Supreme Court affirmed the ruling on the 2006 recapitalization, but remanded to the trial court
the claims based on the 1999 intra-corporate transaction. The trial court ruled in December 2009 that the 1999
intra-corporate transaction breached the transfer restriction provisions of the 1983 agreement. In September of
2011, the trial court issued its remedies phase decision and held that the only remedy to which the Foundation
was entitled was rescission of the intra-corporate transfer that breached the transfer restriction (the Company has
complied with the Court’s order, and it is not expected that such compliance will have any material effect on our
operations or financial position). The Court awarded the Foundation, under the terms of the Asset Purchase
Agreement, a “fraction” of its attorney fees. The Foundation appealed the remedy phase ruling, and the Company
cross-appealed the liability determination. On October 31, 2011, the New Hampshire Supreme Court, on its own,
raised the question whether the appeal needed to await the trial court’s further ruling on attorney fees. On
November 21, 2011, after the parties briefed the issue, the New Hampshire Supreme Court dismissed the appeal
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