Los Angeles Hospital Executive Pleads Guilty To Paying Kickbacks In Skid Row Healthcare Fraud Case

On January 3, 2009, we posted an article about an indictment in the United States District Court in Los Angeles relating to alleged patient recruiting on skid row in Los Angeles and the payment of referral fees by the hospitals for these patients. See http://greenandassociates.blogspot.com/2009/01/california-hospital-executive-arrested.html

There has been a recent development in this case.

On June 16, 2009, Robert Bourseau, the former co-owner and board chairman of City of Angels Medical Center pleaded guilty to paying illegal kickbacks for patient referrals. The charges to which Bourseau has pleaded guilty carry a statutory maximum penalty of 10 years in federal prison. However, any sentence would be imposed by the court (United States District Judge George H. King) after consideration of the plea agreement, the U.S. Sentencing Guidelines, and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Mr. Bourseau has agreed to pay over $4.1 million in restitution to Medicare and Medi-Cal. Sentencing is scheduled on September 14, 2009 before Judge King.

Mr. Bourseau and Dante Nicholson, a former senior vice-president at City of Angels, were indicted in January by a federal grand jury in Los Angeles. Also named in the indictment was Intercare Health Systems, Inc., the company through which Bourseau and Dr. Rudra Sabaratnam, operated City of Angels. The 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.

In pleading guilty, Mr. Bourseau admitted to participating in a scheme to pay Estill Mitts 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. He also admitted that City of Angels entered into sham contracts intended to conceal the illegal kickbacks paid to Mitts, and 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.

This was the second indictment related to this investigation. Three other individuals have already plead guilty. In December 2008, Dr. Sabaratnam pleaded guilty to paying illegal kickbacks for patient referrals. In September 2008, Mr. Mitts, who operated a center that recruited homeless people to receive alleged unnecessary health services, pleaded guilty to conspiracy to commit health care fraud, money laundering, and tax evasion. In March 2009, Mr. Nicholson pleaded guilty to paying kickbacks for patient referrals. Messrs. Sabaratnum, Mitts, and Nicholson are all scheduled to be sentenced by Judge King.

Follow-Up/Post-Script:

• Dr. Sabaratnum was sentenced on September 2, 2010 to 24 months on Counts 3 and 6 of the Indictment for payment of kickbacks for patient referrals in violation of 42 USC Section 13207b(b)(2)(A) to be served concurrently. Restitution will be jointly and severally liable among the defendants. Dr. Sabaratnum could have decided to surrender his medical license when he entered custody but he decided to contest the Accusation filed by the Medical Board. He represented himself at a hearing which was held at Taft Correction Institute where a decision was issued revoking his medical license. 
• Defendant Intercare Health Care Systems dba City of Angels Medical Center plead guilty to Counts 6 and 7 with restitution to be addressed in the company's bankruptcy case since the U.S. Government filed a claim of $10 million and this is restitution that is jointly and severally liable among the defendants.
• Mr. Bourseau was sentenced on February 22, 2010 to 37 months on Counts 3 and 6 of the Indictment for payment of kickbacks for patient referrals in violation of 42 USC Section 13207b(b)(2)(A) to be served concurrently.
• Mr. Nicholson was sentenced on July 12, 2012 to 12 months and 1 day (there is a benefit to having the extra day added). This was on Counts 6 and 7 of the Indictment for payment of kickbacks for patient referrals in violation of 42 USC Section 13207b(b)(2)(A) to be served concurrently.
• On March 18, 2013, Richard Massey was sentenced. However, the terms of his plea and sentence are completely sealed. It is doubtful that he received any time in custody. His case was initially filed on March 18, 2008 -- 5 years to the day before he was sentenced. 
• Mr. Mitts still has not been sentenced and is scheduled for sentencing on July 29, 2013.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates, Attorneys at Law, Los Angeles, California. They focus their practice on the representation of licensed professionals and businesses in civil, business, administrative and criminal proceedings, with a specialty in Medicare fraud, Medi-Cal fraud, kickback cases and health care fraud.