The Aldersons' lives are divided into before and after Jim's unexpected 1990 firing as chief financial officer at North Valley Hospital in Whitefish.

Just days before the firing, Alderson had had a conversation with Clyde Eder, the vice president of Quorum, the management team the hospital had just hired. Eder explained to Alderson that Quorum prepared two sets of cost reports: one to submit to the government and one for in-house use only, with different expenses recorded than those reported to Uncle Sam. But Alderson refused to take up that practice himself. It violated accounting codes of ethics.

Alderson had received good performance reviews for years so it didn't occur to him then that Eder would fire him for refusing to create a second set of books.

"I was absolutely devastated," Alderson said, adding Eder didn't offer a reason when he fired him five days later, other than to say the arrangement just wasn't working out.

Unable to find other work in his field in the resort town, Alderson took a job with a hospital in Dillon. Meanwhile, daughter Jennifer attended college in Missoula, and Connie and son Justin, then a teenager, stayed in Whitefish until the following spring break so that Justin could continue at his school.

The time was particularly difficult for Connie, who was forced to leave her job for one with more flexible hours. She also eventually resigned her term on the school board. With her husband living more than 300 miles away, Connie also had to endure questions and rumors about her husband's job switch.

"There was a huge stigma in the community about my firing," Alderson said. "When a CPA leaves a position like that, people assume he must have done something wrong, whether it was embezzlement or whatever."

The Rosetta Stone

In Dillon, Alderson became convinced he had done nothing wrong at North Valley. He filed a wrongful discharge action in May 1991.

As part of the suit, Alderson's attorney took Eder's deposition, and Eder confirmed that Quorum's practice was to create two cost reports.

Alderson wanted more information, so he requested to see examples of the cost reports used by Quorum's hospitals.

Quorum argued that the request was too burdensome, because in order to comply it would have to produce records going back 15 years and covering 180 hospitals.

At that point, Alderson knew that at least one other major healthcare corporation, HCA, must be involved, because Quorum had been formed as a spin-off of HCA in 1989.

Quorum eventually provided the front pages of the file reports and the cost reports submitted to the government for one year from nine hospitals in Eder's region.

Based on their agreement, Alderson was expecting to receive 18 pages of documents. Instead, he received 27. He was amazed: In addition to the cost report submitted to the government, Quorum had also included the front page of what was called the reserve analysis," which was used internally to reconcile the items claimed. Alderson hadn't known that such a document even existed.

"That was the Rosetta Stone of the case, the reserve analysis," Alderson said"By sending that, (Quorum) established a precedent that they had that for every single hospital. At that point, I knew (the fraud) was nationwide."

Return to regular view	Text-only              Email this article	Published: 11/27/2007