Chicago Hospital Execs, Docs Face Kickback Charges
The two top executives of Sacred Heart Hospital in Chicago and four physicians affiliated with the facility were charged by federal authorities last week to pay and receive kickbacks for referrals of Medicare and Medicaid patients.
Agents with the FBI and the Office of the Inspector General also seized about $2 million in Medicare payments from various bank accounts attached to the 119-bed hospital, which is located on the Windy City's West Side.
Those arrested by the FBI include Edward J. Novak, 58, Sacred Heart's owner and CEO, Roy M. Payawal, 64, the hospital's CFO, and four physicians: V.R. Kuchipudi, 66, M.D., Percy Conrad May, M.D., 75, Subir Maitra, 73, and Shanin Moshiri, 57.
A fifth physician, Kenneth Nave, 50, was arrested in Florida later in the week and charged with dispensing illegal prescriptions. His license to prescribe narcotics had been suspended after he had allegedly encountered issues with drug and alcohol abuse. Nave eventually was reinstated as a physician, but his prescription license – which is governed by federal officials – was never renewed, according to officials.
According to the complaint filed in federal court, Novak and Payawal allegedly tried to conceal the scheme by masking payments as fictitious rental payments, paying the salaries of physicians' employees, providing physicians ghost contracts for duties without any real responsibilities, and purporting to pay physicians to supervise and teach non-existent medical students. A minimum of $228,000 changed hands for referrals, according to officials.
An unnamed pulmonologist may have also been induced to perform unnecessary tracheotomies on patients due to the high rates of Medicare reimbursement, and stretching their hospital stays to 28 days – the maximize length of stay Medicare will reimburse for. Maitra was also alleged to have been performing penile implants at the hospital on a nearly daily basis until Medicare rules for reimbursement changed.
“These charges and the affidavit’s other allegations outline a kickback conspiracy to bribe doctors to refer patients to Sacred Heart where they would be treated in in an environment in which the quality of care and appropriate medical analysis were less important than maximizing the numbers of patients funneled into the hospital,” said Gary S. Shapiro, the U.S.Attorney for the Northern District of Illinois.
Federal officials say that a physician and two executives with the hospital cooperated with investigators as far back as late 2011.
Prosecutors also said that Sacred Heart officials are also being investigated for potentially encouraging unnecessary admissions of patients through its emergency room, although no charges have yet been filed.
The case was spearheaded by the Medicare Fraud Strike Force, which expanded operations to Chicago in February 2011. It is part of a joint initiative announced in May 2009 between the Justice Department and the U.S. Department of Health and Human Services to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
