The Los Angeles city attorney and federal officials have filed charges against three hospitals, their executives and several others, charging that they recruited homeless individuals to receive unnecessary hospital treatment and then billed government programs for millions of dollars.
Los Angeles City Attorney Rocky Delgadillo, the city's chief prosecutor, announced the charges late Wednesday and named three southern California hospitals in the complaint.
Hospitals and individuals named in the compliant include the Pacific Health Corp.; the Los Angeles Metropolitan Medical Center and its CEO, John Fenton and admitting physician Frederick Rundall; Tustin Hospital and Medical Center and CEO Daniel Davis, CFO Vincent Rubio and admitting physicians Kenneth Thaler and Al-Reza Tajik; and City of Angels Medical Center and its owner/operators, Robert Borseau and Rudra Sabaratnam.
Also named in the complaint is Estill Mitts, the director of Metropolitan Healthcare, a hospital support company. The complaint charges that Mitts and his company helped to coordinate the scheme and "received tens of thousands of dollars per month from the hospitals." The APT Ambulance Co. also was named in the suit for its role in transporting homeless recruits, Delgadillo's office said.
The charges contend that "in an effort to fill unused beds at hospitals, runners employed by Mitts would approach homeless individuals ... to determine their eligibility for Medicare or Medi-Cal benefits. Eligible individuals were promised modest amounts of money, up to $30, in exchange for visiting the Seventh Street Assessment Center in downtown Los Angeles."
"At the facility, an admitting form was generated for the homeless recruit that would include the fabricated diagnosis by untrained staff," Delgadillo's office continued. "These forms were sent to the defendant hospitals under the name of the admitting physician, who had not examined or, in most cases, even seen their patient beforehand. Recruits were often admitted to hospitals solely based on the faxed admission form for various ailments, both actual and fictional."
The scheme was uncovered in October 2006 by officers from the Los Angeles Police Department, who originally believed they had identified an incident of dumping a homeless patient by one of the hospitals.
The civil law enforcement action seeks to prevent the hospitals from engaging in the illegal activities and have them sign a court order requiring defendants to fully comply with all state and federal healthcare laws and repay all gains from the scheme. The suit seeks civil penalties of $2,500 for each violation of the Unfair Competition Law and an additional $2,500 penalty for each violation that victimized any senior citizen or disabled person.
The action was filed in coordination with an investigation being conducted by the U.S. Attorney's office, the Department of Health and Human Services, the Federal Bureau of Investigation and the Internal Revenue Service.