JUNE 2000 VOLUME 21 NUMBER 6


NAMES IN THE NEWS

 

Columbia/HCA's Fraud
Columbia/HCA Healthcare Corporation agreed in May to pay $745 million to settle fraud allegations brought by the U.S. Department of Justice.

In addition, the company has reached an understanding with the Office of Inspector General of the Department of Health and Human Services on the principal terms of a corporate integrity agreement.

The corporate integrity agreement is intended to assure the government of the company's overall Medicare compliance, and covers diagnostic coding issues, laboratory billing and the two civil issues still to be resolved -- physician relations and cost reports.

If the company follows through on the corporate integrity agreement to the government's satisfaction, it will waive its right to exclude any of the company's operations from participation in the Medicare program.

But the federal government's criminal investigation of the company remains open and active. In a statement, the company said that if the company and the government do not agree to a settlement of the criminal cases by September 30, or if the government refuses to extend the criminal settlement discussions, then the company will withdraw from the civil settlement.

The Justice Department confirmed that it had reached a tentative agreement with the company on certain civil issues.

Promise of Sweet Music  
The five largest distributors of recorded music, who sell approximately 85 percent of all compact discs (CDs) purchased in the United States, agreed in a May to a settlement with the Federal Trade Commission to end allegedly illegal advertising policies that affected prices for CDs.

The proposed agreements with Universal Music and Video Distribution, Sony Corp. of America, Time-Warner Inc., EMI Music Distribution and Bertelsmann Music Group (BMG) would settle FTC charges that all five companies illegally modified their existing cooperative advertising programs to induce retailers to charge consumers higher prices for CDs, allowing the distributors to raise their own prices.

The FTC's orders would require all the companies to discontinue their "Minimum Advertised Price" (MAP) programs in their entirety for seven years.

"The FTC estimates that U.S. consumers may have paid as much as $480 million more than they should have for CDs and other music because of these policies over the last three years," said FTC Chairman Robert Pitofsky. "These settlements will eliminate these policies and should help restore much-needed competition to the retail music market, consisting of $15 billion in annual sales. Today's news should be sweet music to the ears of all CD purchasers."

According to the FTC's complaints, the companies required retailers to advertise CDs at or above the MAP set by the distribution company in exchange for substantial cooperative advertising payments. The restrictions applied to all advertising, including even banners within the retailers' own stores and advertising funded entirely by the retailer. Under the policies, large music retailers would lose millions of dollars a year if they failed to follow the MAP restrictions. 

Sentencing Enviro Crime
In the longest sentence ever imposed for an environmental crime, a federal judge has ordered an Idaho man to serve 17 years in prison for crimes that left a 20-year-old employee with permanent brain damage from cyanide poisoning. Allan Elias was also ordered to pay $6 million in restitution to the victim and his family.

In May 1999, a jury in Pocatello, Idaho found that Elias ordered employees of Evergreen Resources, a fertilizer manufacturing company he owned, to enter and clean out a 25,000-gallon storage tank containing cyanide without taking required precautions to protect his employees.

Occupational Safety and Health Administration inspectors repeatedly had warned Elias about the dangers of cyanide and explained the precautions he must take before sending his employees into the tank, such as giving workers protective gear. 

Scott Dominguez, an Evergreen Resources employee, was overcome by hydrogen cyanide gas while cleaning the tank and sustained permanent brain damage as a result of cyanide poisoning. 

Over a period of two days in August 1996, Elias directed his employees -- wearing only jeans and T-shirts -- to enter a 11-foot-high, 36-foot-long storage tank and clean out cyanide waste from a mining operation he owned.  Elias did not first test the material inside the tank for its toxicity, nor did he determine the amount of toxic gases present.

After the first day of working inside the tank, several employees met with Elias and told him that working in the tank was giving them sore throats, which is an early symptom of exposure to hydrogen cyanide gas. The employees asked Elias to test the air in the tank for toxic gases and bring them protective gear -- which is required by OSHA and which was available to the defendant free of charge in this case. Elias did not provide the protective gear, and he ordered the employees to go back into the tank, falsely assuring them that he would get them the equipment.

Later that morning, Dominguez collapsed inside the tank. And he could not be rescued for nearly an hour because Elias also had not given employees the required rescue equipment.

-- Russell Mokhiber