Saturday, January 31, 2009

Hospital Executives Indicted - What Can You Learn From This?

On January 30, 2009, the U.S. Attorney's Office (USAO) reported that Robert Bourseau (a former co-owner and executive at City of Angels Medical Center), and Dante Nicholson (a former City of Angels vice-president) were indicted yesterday by a federal grand in Los Angeles. Also named in the indictment was Intercare Health Systems, the company through which Bourseau and his partner, Rudra Sabaratnam, operated City of Angels.

Los Angeles City Attorney Rocky Delgadillo's office has also sued City of Angeles Medical Center and other hospitals in a civil lawsuit, saying they used homeless people as "human pawns."

In a separate criminal case, Rudra Sabaratnam (the former CEO of City of Angeles) pleaded guilty in December 2008 to paying illegal kickbacks as part of a scheme to defraud Medicare and Medi-Cal by recruiting homeless persons from the Skid Row area of downtown Los Angeles. In pleading guilty in her case, Sabaratnam admitted to paying Estill Mitts (his co-defendant who has also plead guilty) and others to refer homeless Medicare and Medi-Cal beneficiaries whom they recruited, primarily from Skid Row, to City of Angels for in-patient hospital stays. As part of the scheme, Sabaratnam admitted they entered into sham contracts intended to conceal the illegal kickbacks.

Throughout the alleged scheme, Mitts operated a facility called the Assessment Center, also known as 7th Street Christian Day Center, located at 431 East Seventh Street, Los Angeles, California, in Skid Row. Mitts' facility apparently had marketing contracts or arrangements with City of Angles. According to Sabaratnam's plea agreement, the total amount of illegal kickbacks that Sabaratnam paid and caused to be paid to Mitts and others was approximately $493,382. In the plea agreement, the City of Angels billed Medicare and Medi-Cal for in-patient services to the recruited homeless beneficiaries, including those for whom in-patient hospitalization was not medically necessary.

The new 12-count indictment alleges that Intercare, Bourseau, Nicholson and others conspired to recruit homeless people to receive unnecessary health services for the purpose of committing health care fraud. The USAO reports that this is part of an ongoing probe into an alleged fraud scheme using thousands of homeless people from skid row as patients.

The investigating agencies in this indictment were: the U.S. Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; IRS-Criminal Investigation Division; the California Department of Justice Bureau of Medi-Cal Fraud and Elder Abuse; and the Health and Law Enforcement Team (HALT), a multi-agency task force which is operated by the Los Angeles County Health Department.

Please remember that an indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent unless proven guilty in court.

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Although we do not know all the facts, what are a few things that this indictment can remind all health care providers who engage in marketing or are thinking about marketing?

1. Have all marketing agreements and arrangements reviewed by experienced health care counsel and obtain legal opinions that they do not violate Stark, the anti-kickback statute, or any controlling federal or state statutes or rules. If you obtain a legal opinion, you can rely upon advice of counsel defense, among other things.

2. Look beyond the actual written agreements. Understand these marketing arrangements at every level and look at how they operate in the "real world." Have an attorney, compliance officer or another source who knows the workings of the business understand the marketing and patient flows work. This indictment appears to be based upon a marketing program involving hospitals and low-income patients.

3. Understand that if there are violations of Stark and the anti-kickback statute -- even if not criminal violations -- they automatically can be treated as false claims. In fact, Medicare applications specifically state this above the signature line so that providers cannot claim ignorance of the rules. In other words, it is IMPORTANT for all health care providers to be cautious and compliant with the rules. Don't simply let the marketing department or person in charge assume all responsibility for compliance.

4. Be cognizant of the fact that if you are hiring marketers (outside or inside) they may be tempted to take shortcuts or violate the rules when they have difficulty getting results. They will not tell you when they are violating the rules but you may have trouble later persuading the government that you were not aware of their actions. Conduct internal compliance investigations on a regular basis to determine, among other things, how the patients are coming to your facility, the reputation of referring providers, whether the patients are given anything of value from anyone, who is determining medical necessity, and what the marketers are doing to generate more patients.

5. Medical necessity finding by a referring provider may not save another who relies upon it. The days when a DME, hospital, radiologist or other can blindly rely on another health care provider's finding of medical necessity are gone. It is important to do your own periodic reviews of medical necessity as part of a compliance plan.

Posted by Tracy Green, Esq.  Any questions should be directed to Tracy Green, a very experienced Los Angeles health care fraud lawyer, Medi-Cal fraud lawyer and Los Angeles kick-back attorney. You can email her at or call her at 213-233-2261.  Green and Associates is located in Los Angeles, California.

The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing health care providers  in health care fraud and other types of fraud, referral and overbilling allegations in California and throughout the country. The health care professionals represented include individual physicians, corporate providers and group practices.Their website is:


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