The Pacific Health Corporation and its affiliates have agreed to pay $16.5 million to settle allegations of an illegal kickback scheme in Los Angeles, the Justice Department announced.
The civil settlement resolves a U.S. and state investigation of three PHC-affiliated hospitals for engaging in a scheme in which the hospitals paid recruiters to deliver homeless Medicare or Medi-Cal beneficiaries from the “Skid Row” area in Los Angeles to the hospitals for treatment that often was medically unnecessary.
The hospitals, Los Angeles Metropolitan Medical Center (LA Metro); Newport Specialty Hospital, formerly known as Tustin Hospital and Medical Center; and Anaheim General Hospital, then allegedly billed Medicare and Medi-Cal for these services, violating rules that permit payment only for necessary treatment.
The governments contended that these services were induced by illegal remuneration in violation of the Anti-Kickback statute (AKS), and the resulting billings to Medicare and Medi-Cal violated the False Claims Act.
Los Angeles Doctors Hospital Inc., a subsidiary of PHC, has agreed to plead guilty to a federal conspiracy charge arising out of the illegal kickback scheme. In addition, the three hospitals, a fourth related hospital (Bellflower Medical Center), and their related entities have entered into a corporate integrity agreement with the Inspector General for the U.S. Department of Health and Human Services intended to deter future misconduct.
This settlement arises out of the same investigation which in 2010 resulted in consent judgments against Intercare Health Systems Inc., formerly doing business as City of Angels Medical Center, and its former owners Robert Bourseau and Rudra Sabaratnam, for a similar illegal kickback scheme in Los Angeles. Several individuals have pleaded guilty in connection with the scheme, including Mr. Bourseau and Dr. Sabaratnam, who were sentenced to three years and one month, and two years in prison, respectively, for their part in the scheme.
“The integrity of government health care programs is threatened when hospitals pay kickbacks to induce unnecessary or unwanted medical care,” said Stuart Delery, the Acting Assistant Attorney General in charge of the Justice Department’s Civil Division. “Kickbacks subvert medical decision making and cause government programs to pay much more for services than would otherwise be warranted.”
The investigation was handled by the U.S. Attorney’s Office for the Central District of California, the Office of Inspector General of the U.S. Department of Health and Human Services, the FBI, the IRS-Criminal Investigation, the Justice Department’s Civil Division, the Attorney General’s Office of the State of California, the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse and the Health and Law Enforcement Team (HALT), a multi-agency task force operated by the Los Angeles County Health Department.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between federal, state, and local law enforcement agencies is critical in protecting taxpayer dollars and ensuring that those who abuse the system are held accountable for their actions.”
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