Hospital and physicians indicted in kickback case
The owner and three other executives of the now-closed Sacred Heart Hospital in Chicago and four physicians affiliated with the facility were indicted recently on federal charges alleging that they collectively paid and received hundreds of thousands of dollars in illegal kickbacks in exchange for the referral of hospital patients who were insured by Medicare and Medicaid.
Sacred Heart allegedly paid physicians bribes and kickbacks to induce patient referrals and increase the patient census, which, in turn, increased hospital revenue. Sacred Heart Hospital was a 119-bed acute care facility that closed in 2013. It filed for bankruptcy after Medicare payments were suspended in the aftermath of criminal charges that were first filed in April 2013. The recent indictment charges only conduct involved in the alleged kickback conspiracy while a broader investigation that was outlined in the earlier criminal complaint continues.
The eight defendants were charged in a 17-count indictment that was returned by a federal grand jury and announced by Zachary T. Fardon, JD, U.S. attorney for the Northern District of Illinois.
One of the defendants is Noemi Velgara, 64, of Chicago, who was Sacred Heart’s vice president of geriatric services and was responsible for overseeing the Golden L.I.G.H.T. medical clinics, including managing employees responsible for marketing, and recruiting and transporting patients. All eight defendants will be ordered to appear for arraignment in U.S. District Court.
Four defendants were each charged with one count of conspiracy to violate the federal healthcare anti-kickback statute by offering and paying kickbacks and bribes, directly and indirectly, from Sacred Heart to physicians to induce them to refer patients to the hospital for services that would be reimbursed by Medicare and Medicaid.
Two of the physicians were each charged with eight substantive counts of paying kickbacks for patients, while four were charged with two counts each of accepting kickbacks for patient referrals. The indictment also seeks forfeiture of illegal proceeds from the physicians, including the unspecified total amount of Medicare and Medicaid reimbursements made on claims submitted on behalf of hospital patients whose referral involved kickbacks, and the total amount of kickbacks paid to the four physicians.
According to the indictment, Sacred Heart’s owner, executives, and administrators conspired between 2004 and April 2013 to pay physicians bribes concealed as consulting, employment, and personal services compensation, rent, and instructional stipends in return for referrals of Medicare and Medicaid patients. Although styled as payments for legitimate services, the payments actually contained disguised bribes paid to and for the benefit of physicians in exchange for patient referrals, according to the indictment.
The indictment alleges that the arrangement caused Sacred Heart to pay a physician hundreds of thousands of dollars in bribes disguised as rent and more than $150,000 in bribes to one physician, disguised as payments for purportedly teaching podiatric surgery residents. Some of the defendants allegedly agreed to have Sacred Heart offer to pay bribes to the hospital’s transportation staff to recruit and refer patients to the hospital, and those three defendants also caused Sacred Heart to pay individuals employed as "marketers" to recruit patients.
Each count in the eight-defendant indictment carries a maximum penalty of five years in prison and a $250,000 fine. Restitution is mandatory.