Three months into my undercover role, I was summoned to appear before the federal grand jury looking into practices at Columbia/HCA. I dreaded the thought that on March 19, 1997, I would have to testify in front of a group of strangers in what seemed like a very intimidating setting.
Before that took place, though, I worked on a consulting assignment preparing Gulf Coast Hospital's cost report in the accounting offices of Southwest Florida Regional Medical Center. While I was there, Jim McGonnell, Southwest Florida's assistant controller, told me he was uncomfortable with the recent practices of Richard Pearson, the reimbursement manager at Columbia/HCA's Fort Myers division. McGonnell was worried that his hospital might not be in compliance, but he said that it did not seem to concern upper management. McGonnell also said he was concerned about the legality of some ideas Pearson had implemented to increase Medicare reimbursement.
“Accounting for some of his ideas has been a nightmare for us,” he complained. “Specifically, what ideas are you concerned about?” I asked.
“Intercompany transactions relating to marketing expenses,” McGonnell said, describing an accounting term that captured the cost of division marketing expenses and allocated them to the various hospitals. McGonnell wasn't sure how the company was reporting the expenses on hospital cost reports, but he said it didn't feel right to him. I was suspicious that Pearson was disguising non-reimbursable marketing expenses (promo-