Allegations of Illegal Kickbacks and Medicare Fraud at Sacred Heart Hospital

Federal authorities raided Sacred Heart Hospital this week, arresting four doctors and two executives at the West Side hospital in what is being called a “far-reaching” Medicare and Medicaid kickback scheme. Almost $2 million in Medicare reimbursement payments were immediately seized from various bank accounts that are related to the incident.

According to the allegations, hospital officials paid illegal kickbacks to physicians that totaled more than $225,000 in cash and other forms of payment for Medicare and Medicaid patient referrals to Sacred Heart. The hospital executives and physicians were allegedly caught on tape arranging the kickback payments.

Though no additional charges have been filed, the affidavit also includes information that the hospital unnecessarily admitted patients to the emergency room and performed medically unnecessary tests.

Investigators are also looking into claims that Sacred Heart performed unnecessary tracheostomies to collect substantial insurance reimbursements.

“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 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,” acting U.S. Attorney Gary Shapiro said in the statement.

The Sacred Heart Hospital is located in Chicago, Illinois and is considered an acute care facility. Hospitals of this type provide patients with short-term treatments for severe injuries or illnesses, emergency medical conditions and surgical recovery. Acute care is usually provided by a medical team made up of both medical and surgical specialists and may involve a visit to the hospital emergency room, ambulatory surgical center, urgent care or short-term stay facility.

At the time of the arrests, Sacred Heart had around 40 patients currently admitted for care. Officials from the Illinois Department of Public Health were on sight in order to monitor “the hospital’s ability to care for patients.”

“The safe care of Sacred Heart patients and the hospital’s ability to provide nursing and physician staffing is our utmost priority,” said Public Health Director Dr. LaMar Hasbrouck. “Per our normal duties, the Department will be conducting a full inspection of the facility to determine any violations of state or federal regulations.”

The arrests included hospital CEO Edward Novak, Executive Vice President and Chief Financial Officer Roy Payawal, Dr. Venkateswara Kuchipudi, Dr. Percy Conrad May Jr., Dr. Shanin Moshiri and Dr. Subir Maitra.

Details of the Illegal Kickbacks

According to the allegations, the doctors who were arrested pocketed thousands of dollars in illegal kickbacks. They were paid in exchange for the referral of Medicare and Medicaid patients to Sacred Heart. In all, the doctors were each paid the following:

  • Dr. Conrad May: $74,000
  • Dr. Shanin Mishiri: $86,000
  • Dr. Subir Mairtra: $68,000

Novak and Payawal apparently covered up the kickbacks by making them look like payments for legitimate services.

Dr. Kuchipudi received his illegal kickback payments by disguising the salaries of a physician’s assistant and one nurse, and by paying another uncharged physician to treat his patients at Sacred Heart. The U.S. Attorney’s Office called Dr. Kuchipudi “one of the most prolific patient referral sources” they had ever seen and went on to say that he was known around the hospital as “king of nursing homes.” 

Additional Charges and Allegations

Sacred Heart is also accused of admitting nursing home patients to their hospital in order to get the extra money out of Medicare. Doctors allegedly transferred each and every patient to the hospital via ambulance, despite their location. From there, the patients were admitted through the Sacred Heart ER, even though it was medically unnecessary. During 2011, 1,064 patients were admitted through the hospital’s emergency room.

Investigators are also looking into allegations that a Sacred Heart pulmonologist performed medically unnecessary tracheostomies (intubations) that ended up being a major source of Medicare reimbursement. In fact, Novak was allegedly caught on tape stating that tracheotomies were the hospital’s “biggest money maker,” as they could make $160,000 off of the procedure, so long as the patient was in the hospital for 27 days.

Payawal was also allegedly caught saying that the bulk of the hospital’s revenue comes from Medicare or Medicaid and that some of that money ended up going to ventures controlled by Novak.

“Today’s arrests demonstrate our commitment to enforcing the laws intended to prevent abuses of the Medicare and Medicaid programs and to preserve the ability of those programs to provide appropriate medical services to the elderly and the needy,” said Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

By | 2019-03-07T16:06:12+00:00 April 18th, 2013|Healthcare Fraud|