Corporate Compliance

California hospitals pay homeless for participation in Medicare fraud scheme

Compliance Monitor, August 13, 2008

Federal agents arrested Rudra Sabaratnam, CEO of Los Angeles’s City of Angels hospital,  and Estill Mitts, the operator of a Skid Row health assessment center, for an alleged Medicare and Medi-Cal fraud scheme.
According to the Department of Justice (DOJ) release, Mitts recruited homeless people with a promise of payment and then referred them to hospitals in the area, including City of Angels. The hospitals would use the homeless people’s names to bill Medicare and Medi-Cal for procedures that were not medically necessary.
Both men are charged with conspiring to receive and pay kickbacks for patient referrals and to commit healthcare fraud. Sabaratnam was indicted on eight counts of paying kickbacks for patient referrals. Mitts was charged with four counts of receiving kickbacks for patient referrals.
Sabaratnam faces a maximum penalty of 50 years in federal prison if convicted on all charges. Mitts, who is also charged with six counts of money laundering and two counts of tax evasion, faces a maximum possible sentence of 140 years in prison.
The DOJ said it has also filed civil lawsuits against three other LA area hospitals that were involved in similar schemes.
To read the DOJ release click here


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