California Health Officials Accused of Fraud

(Los Angeles, CA) Presumably heartless and greedy, health officials for three Southern California hospitals have been accused of a conspiracy to defraud taxpayer-funded health care programs of millions of dollars by recruiting homeless patients for unnecessary medical services.

The facilities involved include the City of Angels Medical Center, Los Angeles Metropolitan Medical Center and the Tustin Hospital and Medical Center in Orange County.

Those involved in the alleged conspiracy "ranged from street-level operatives to the chief executive of a hospital," U.S. Atty. Thomas P. O'Brien said.

After raids on three hospitals in Los Angeles and Orange counties Wednesday, one hospital chief executive faces criminal charges and executives at two other facilities were accused of fraudulent business practices in a related civil lawsuit filed by Los Angeles City Atty. Rocky Delgadillo.

Some of the homeless patients involved received tests or treatments that were potentially harmful, authorities said.

The "depravity" of the alleged scheme startled authorities, said Salvador Hernandez, assistant director in charge of the FBI's Los Angeles office.

"The defendants are accused of preying on the homeless and exploiting their desperate conditions for personal gain," he said.

Arrested for fraud and illegal kickbacks were the owner of the City of Angels Medical Center, Dr. Rudra Sabaratnam, and an alleged patient recruiter, Estill Mitts. Additional defendants are expected to be charged.

In addition, Los Angeles City Atty. Rocky Delgadillo has filed a civil lawsuit against health executives claiming fraudulent business practices.

The privately owned medical centers allegedly worked with patient recruiting operations on skid row that plucked homeless people from the streets and delivered them, with fake medical diagnoses, to the hospitals.

According to court filings, "runners" or "stringers" on skid row looked for homeless recruits. Prospects were offered small sums of money, typically $20 or $30, to be paid upon completion of a hospital stay of one to three days. The street recruiter typically received $40 for each homeless recruit with Medicare eligibility and $20 for each recruit with Medi-Cal benefits, according to the city attorney's lawsuit.

The facilities involved in the alleged conspiracy were guaranteed a set number of skid row indigents per month for reported "callous" exploitation. Agents of the FBI, the Department of Health and Human Services and the IRS are investigating.