6 arrested in Sacred Heart Hospital fraud investigation

Sacred Heart Hospital
April 16, 2013 3:35:04 PM PDT
Doctors and executives at a West Side hospital are charged in what federal authorities are calling a kickback scheme.

The owner of Sacred Heart Hospital, a hospital executive and four doctors are accused of billing Medicaid and Medicare for unnecessary medical treatment.

Federal agents on Tuesday were looking beyond the case already filed for evidence of unnecessary medical procedures -- paid for by the Medicare and Medicaid programs -- that include intubations and tracheotomies.

"Which as you know are procedures which involved inserting a tube into the patient's windpipe or actually surgically cutting a hole in the patient's throat," said U.S. Attorney Gary Shapiro.

The FBI used inside informers to make its healthcare fraud case against Sacred Heart's owner Edward Novak and chief financial officer Roy Payawal.

Four doctors were also charged with receiving kickbacks for referring patients to the 119-bed community hospital in the 3200-block of West Franklin that serves a mostly low-income neighborhood.

"I am not surprised to hear about what happened this morning," said neighborhood resident Cordelia Brooks. "It's just been a long time coming."

State as well as federal Health and Human Services officials were called to supervise care for about 40 Sacred Heart patients as the investigation continues.

The complaint alleges one doctor was secretly recorded bragging about the money he made performing penile implants before Medicaid reduced the rate of reimbursement.

"These schemes further erode the taxpayers confidence that vital government health care dollars are being used wisely," said Health and Human Services Inspector General Lamont Pugh.

Depending on what the feds find in hospital records, it is possible that more doctors could be charged. It is also likely that this case moving forward will spawn civil lawsuits.

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