Three California Hospitals Used Homeless to Bilk Medicaid Programs: Suit

Three privately-owned Southern California hospitals and their top executives are facing a civil lawsuit for an elaborate scheme to defraud federal and state Medicaid programs.
 
The Los Angeles Metropolitan Medical Center, Tustin Hospital and Medical Center, and the City of Angels Medical Center are accused of recruiting homeless people to fill unused beds at the hospitals so they could bill the state and federal programs, according to Los Angeles City Attorney Rocky Delgadillo’s office.  And at least one hospital executive faces criminal charges because some of the homeless recruits received tests or treatments that were potentially harmful, according to a Los Angeles Times report. More arrests are expected.

Authorities say the scheme cost taxpayers millions as thousands of homeless people were churned through the hospitals for unjustified medical procedures.

Dr. Rudra Sabaratnam, an owner and chief executive of City of Angels Medical Center, and Estill Mitts, an alleged patient recruiter who operated the hospital’s Assessment Center, were arrested on federal charges, the Times reported.  In addition to the civil complaint filed by Delgadillo’s office, they face a 21-count grand jury indictment for healthcare fraud and receiving illegal kickbacks.  Mitts, who authorities say coordinated the scheme, also is charged with money laundering and income tax evasion.

The city attorney’s civil lawsuit names Pacific Health Corp., owner and operator of the Los Angeles Metropolitan Medical Center, its chief executive John Fenton and admitting physician Frederick Rundall; Tustin Hospital’s chief executive Daniel Davis, chief financial officer Vincent Rubio, and admitting physicians Kenneth Thaler and Al-Reza Tajik; and City of Angels Medical Center co-owner and operator Robert Borseau.

APT Ambulance Company also was named in the civil complaint for transporting the homeless recruits.  The civil suit by Delgadillo’s office seeks fines of $2,500 for each violation of the Unfair Competition Law and $2,500 for each violation that victimized a senior citizen or disabled person, in addition to repayment of ill-gotten gains.

Delgadillo’s office said in a press release that the homeless recruits from downtown Los Angeles’ Skid Row were approached by ambulance runners to determine their eligibility for Medicare and Med-Cal benefits. Eligible recruits were promised up to $30 in exchange for visiting the Seventh Street Assessment Center in downtown Los Angeles where an admitting form with a fabricated diagnosis was waiting for them. The forms were sent to one of the hospitals under the name of the admitting physician, who had not examined — or in most cases seen — the patient beforehand.

The recruits often were admitted to hospitals solely based on the faxed admission forms for actual and fictional ailments, but no illness that required hospitalization, Delgadillo’s office said. Additionally, the admitting physician often did not see their “patients” until shortly before their discharge.

"The defendants are accused of preying on the homeless and exploiting their desperate conditions for personal gain," Salvador Hernandez, assistant director in charge of the FBI’s Los Angeles office, told the LA Times.

According to Delgadillo’s office, the scheme was discovered in October 2006 when Los Angeles police officers thought they were witnessing patient dumping by hospitals.  An investigation later determined the homeless individuals were recruits.

“We are sending the message that those who would seek to defraud our health care system and those who would callously exploit mentally-impaired and drug addicted homeless men and women to turn a profit will be prosecuted to the fullest extent of the law,” Delgadillo said in a press release. “These criminals thought they could get away with this scheme because – they figured – no one cares about the homeless on Skid Row. They were dead wrong.”