Federal authorities arrested a hospital owner, a senior executive and 4 physicians, accusing them of involvement in an extensive Medicare and Medicaid bilking scheme that involved unnecessary tracheotomies, illegal kickbacks and other questionable activities designed to make money for the hospital at the patients’ expense.
The hospital administrators allegedly paid out kickbacks to the accused physicians, disguising them as "ghost contracts," fake rental payments and teaching fees for non-existent medical students among other deceits, the FBI claimed in a statement issued this week.
"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 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," Illinois Northern District attorney Gary Shapiro said in prepared remarks. "
The FBI arrested and charged Sacred Heart owner and CEO Edward Novak, 58; executive vice president and CFO Roy Payawal, 64; and Drs. Venkateswara Kuchipudi, 66; Percy Conrad May, Jr., 75; Subir Maitra, 73; and Shanin Moshiri, 57.
The 6 defendants were caught on tape, according to the FBI, detailing their efforts to glean reimbursements from Medicare and Medicaid programs with apparent disregard for the medical necessity of the procedures. A handful of anonymous Sacred Heart physicians and administrators recorded their colleagues in participating with the government’s investigation that goes at least as far back as October 2011. Many of the doctors and administrators who cooperated with the FBI’s investigation had previously participated in the kickbacks scheme as well, according to court documents.
Dr. Maitra in particular was highlighted in the FBI’s report for statements involving potentially unnecessary penile implants. Maitra is allegedly on record telling one of the anonymous insiders that he used to make Novak "so much money" by performing penile implant surgeries almost daily, but that he slowed down when Medicare cut its reimbursement rate for the procedure.
Perhaps one of the most troubling accusations involves an as-yet unnamed pulmonologist, whose name was masked as "Physician D" because he/she has not yet been formally charged. Physician D is accused of performing many unnecessary intubations and heavily sedating his patients for a prolonged period of time and ultimately ordering emergency tracheotomies that might have otherwise been unnecessary.
An anonymous inside administrator, dubbed "Administrator A," recorded hospital owner Novak explaining that tracheotomies are the hospital’s "biggest money maker," worth $160,000 if the patient stays in the hospital for at least 27 days.
In total the group is accused of conspiring to pay and receive more than $225,000 in cash, as well as other forms of payment in exchange for Medicare and Medicaid referrals. The authorities have already seized some $2 million in Medicare reimbursement payments from various bank accounts, the FBI said.