copyright 2009, The Washington Post WASHINGTON -- The Securities and Exchange Commission has opened a probe into whether the largest hospital company in the world, Hospital Corporation of America, violated securities law by manipulating its books and records, according to documents and people familiar with the investigation. The investigation has been focusing, at least in part, on HCA's London subsidiary and whether the company fabricated tens of thousands of payments for phantom nursing shifts, according to the documents and people familiar with the matter. The SEC has been coordinating with investigators at Her Majesty's Revenue & Customs in London, according to the documents. HCA runs more than 160 facilities across the United States and in London and treats millions of people a year. In 2006, HCA, then a public company, was bought by a consortium including its management, the family of former Senate majority leader Bill Frist, R-Tenn., and three major financial firms for about $33 billion in the largest leveraged buyout ever at the time. In a statement, HCA confirmed Tuesday that it has been contacted by the SEC as part of an ongoing probe, saying it 'received a voluntary request for related information from the United States Securities and Exchange Commission. We have provided requested information and look forward to working with them to conclude this inquiry.' The company said the allegations under investigation are unfounded. An SEC spokesman declined to comment about the probe. The agency opens many investigations each year, and most don't lead to formal action. The prospect of action in the HCA investigation could not be determined from documents and interviews. The investigation is the latest brush with regulators for HCA, though there is no evidence that the current probe is related to previous issues. Earlier, an investigation dating to the mid-1990s exposed a massive health-care fraud at HCA, resulting in the largest penalty ever imposed on a company in a health-care case. In 2003, HCA agreed to pay a total of $1.7 billion to the U.S. government to settle charges that it defrauded government insurance programs. The company's top managers were replaced. More recently, the SEC investigated whether Frist, whose family helped found the company in 1968, sold shares with insider knowledge before HCA announced that it was going to miss profit estimates in July 2005. After two years of review, the SEC closed the case without any taking any action or making any public statement. Frist said at the time that he had acted properly and had sold the stock to avoid any appearance of conflict of interest. The latest probe grows out of a dispute in British employment court. A former HCA finance employee, Jill May-Bheemul, has alleged that up to 120,000 nursing shifts might have been improperly booked and paid for. 'We are aware that a former employee in our London payroll department is seeking money in a civil employment lawsuit, and she has made assertions about the accuracy of our nurse scheduling systems and the related compensation paid in our six UK hospitals,' HCA said in a statement. 'Her allegations have no merit, and we are vigorously defending the employment litigation.' The company says similar allegations have been raised with local authorities in London, which have declined to investigate. In Britain, agencies including the National Health Service and the Serious Fraud Office have examined the matter and decided not to pursue it, according to documents. Dozens of times since January, SEC investigators have e-mailed and spoken with May-Bheemul's representative, her husband, Paul Bheemul, to ask questions about what she found, according to documents. The SEC has been studying files it has obtained from May-Bheemul to determine whether HCA paid for fake nursing shifts in its British payroll system. These files include a spreadsheet created by May-Bheemul that Paul Bheemul told investigators shows that the number of nursing shifts logged under her name increased by thousands from January 2005 through mid-2007. As an indication of the amount of money involved, May-Bheemul estimates that the value of the shifts billed in the month of April 2007 exceeded that of the shifts actually worked by 1.9 million British pounds, then worth about $3.8 million, according to the documents. May-Bheemul joined HCA in London in August 2004 as a payroll administrator, eventually rising to finance coordinator. In July 2007, May-Bheemul noticed that HCA received an invoice from a nursing agency for staff supplied in May 2007, according to the complaint she filed in the British court. But the invoice lacked the usual reference number and she was unsure who booked the shifts, according to the complaint. When she approached her superiors, they discovered that a request for additional staff had been processed using her computer log-in. Upon further research, May-Bheemul found that her log-in and password had been used 120,000 times in HCA's nurse staffing system, called Matchnet, to book these shifts since 2005, according to May-Bheemul. None of those requests had been made by her, she said in the complaint. HCA acknowledged that her log-in and password had been used inappropriately but disputed the number of times it was used, according to its response. HCA 'confirmed that the Payroll Dept, where your wife was originally employed before she moved to the Bank Office, were still using her Matchnet log-in. This accounted for the significant entries she identified,' said an Oct. 9, 2007, letter from Jasy Loyal, director of legal and human resources at HCA London, to Paul Bheemul. 'These were made by the Payroll Dept. I have been advised that Payroll were waiting for their log-ins from Matchnet, however, it is unacceptable to use another member of staff's log-in. There has been no evidence to date of fraud or indeed fraudulent/incorrect payments.' May-Bheemul left HCA in January 2008 and filed the complaint in employment court, saying she wasn't treated fairly and didn't receive appropriate health benefits for treating the anxiety caused by her discovery of alleged wrongdoing. Before she left the company, she downloaded account data and spreadsheets from HCA's system. May-Bheemul's husband sent this information to the Serious Fraud Office in London and contacted other authorities, including the SEC. In January of this year, Gerald Hodgkins, an assistant director of the SEC's division of enforcement, contacted Paul Bheemul by e-mail. After an initial conversation with Bheemul, Hodgkins started coordinating with an investigator at Her Majesty's Revenue and Customs. On Feb. 11, Hodgkins prepared a draft letter to send to an employment tribunal hearing the case. In the letter, he asks for all copies of files in May-Bheemul's possession, according to a copy of the letter. '(T)he Enforcement Division of the United States Securities and Exchange Commission has an interest in determining whether HCA Inc. and/or its overseas affiliates (`HCA') violated any U.S. securities laws,' Hodgkins wrote in a confidential Feb. 11 letter prepared for a British court. As the SEC investigation has proceeded, the employment dispute between HCA and May-Bheemul over whether she was treated fairly has continued in British court. In August, a judge refused to throw out May-Bheemul's complaint despite HCA's request for dismissal. 