FBI Arrests Hospital Executives for Medicare Fraud

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The New York Sun

LOS ANGELES — A hospital top executive was arrested today as federal agents raided three medical centers while investigating an alleged scheme to recruit homeless people as phony patients and bill government programs for millions of dollars in unnecessary health services, authorities said.

A lawsuit filed today by the city said the hospitals used homeless people as “human pawns.”

More charges are expected, a federal prosecutor said.

The hospitals at Los Angeles and Orange counties submitted phony Medicare and Medi-Cal bills for hundreds, perhaps thousands, of homeless patients — including drug addicts and the mentally ill — recruited from downtown’s Skid Row, authorities alleged.

The investigation was sparked in 2006 by a Los Angeles police investigation of reports that hospitals were dumping homeless patients on the streets.

Search warrants were served at City of Angels Medical Center, Los Angeles Metropolitan Medical Center, and Tustin Hospital and Medical Center, the FBI said.

FBI agents arrested Rudra Sabaratnam, the CEO of City of Angels hospital, and Estill Mitts, operator of a Skid Row health assessment center, an FBI spokeswoman, Laura Eimiller, said.

A 21-count indictment unsealed today charged both men with conspiring to receive and take kickbacks for patient referrals and to commit health care fraud. Mr. Sabaratnam also was charged with paying kickbacks and Mr. Mitts was charged with money laundering and tax evasion.

If convicted, Mr. Sabaratnam could face 50 years in federal prison, and Mitts could face 140 years, authorities said.

A U.S. attorney, Thomas O’Brien, said he expects additional charges in the case.

“This is one of several major medical fraud investigations that are ongoing,” he said. “There’s too much money being illegally stripped from public health care programs and the potential impact to those with a legitimate need is too great to let such fraud escape federal prosecution.”

There were no residential phone listings at Los Angeles for Mr. Sabaratnam or Mr. Mitts.

Representatives of the hospitals did not immediately respond to calls seeking comment.

The city attorney’s office said it filed a lawsuit against the corporate owners of the hospitals — along with Mr. Sabaratnam, several doctors, and others — in connection with the alleged scheme.

“This is a rather large operation. They were receiving kickbacks up to $20,000 a month from some of these hospitals and they were delivering between 30 and 50 patients a month,” a spokesman for the city attorney’s office, Frank Mateljan, said.

Mr. Mitts ran the 7th Street Assessment Center, which screens people for health needs and takes them to hospitals if necessary.

The lawsuit said the “patients” were picked up by recruiters who sent them to the 7th Street center, where they were given a phony diagnosis and forms were filled out justifying their eligibility for government medical programs.

Medi-Cal and Medicare would be billed for the ambulance and hospital stay, Mr. Mateljan said.

After their hospital stays, the homeless patients would be returned to Skid Row shelters, but “they would go back multiple times,” he said.

In one case, the suit said, a mentally ill woman said she had been admitted to all three hospitals in the past four years, including at least six times to Los Angeles Metropolitan. The woman, identified only as “Recruit X,” was diagnosed at the assessment center with conditions such as “shortness of breath” or “chest pains” that she never had, and was given little treatment, none of which was necessary, the complaint contended.

She frequently used the money she received for participating in the scheme to buy crack cocaine, the suit said.

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Associated Press writer Robert Jablon contributed to this story in Los Angeles.


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