August 26, 2012

The FBI has announced that Los Angeles Doctor’s Hospital Inc., which is a subsidiary of Pacific Health Corporation, has agreed to plead guilty to conspiring to defraud Medicare and Medi-Cal by paying illegal kickbacks to marketers who were paid to recruit homeless people and bring them to the hospital for inpatient treatment, whether or not the medical treatment was necessary, for which medical bills were improperly submitted to Medicare and Medi-Cal. Some of the homeless people reportedly received small payments for agreeing to be brought to the hospital.

Pacific Health Corporation also agreed to enter into a deferred prosecution agreement in which it will be criminally charged in the kickback scheme but the criminal charges will be dismissed in six years if it abides by all of the terms of the agreement.

Pacific Health Corporation, its parent company, Health Investment Corporation, and three subsidiary hospitals (Los Angeles Metropolitan Medical Center, Newport Specialty Hospital (formerly known as Tustin Hospital and Medical Center), and Anaheim General Hospital) also entered into a civil settlement agreement in which they agreed to pay $16.5 million to resolve claims that they participated in an illegal kickback scheme and that they submitted false claims to Medicare and Medi-Cal. They admitted that they (including Los Angeles Doctor’s Hospital Inc.) paid more than $2.3 million in kickbacks to the marketers from 2003 to 2008 and that as a result of the scheme, Medicare and Medi-Cal paid nearly $16 million in improper payments to the hospitals.


One can only imagine the reaction of hospitals throughout the United States that comply with the laws regarding their provision of medical services to the communities that they serve when they hear about some hospitals billing the federal or state government for unnecessary services or services that were never provided — money paid to those dishonest hospitals that could have been spent to reimburse law-abiding hospitals for care that they legitimately provided to homeless individuals and others who did not have health insurance coverage. While hospitals throughout the United States struggle to keep their doors open as their reimbursements from Medicare and Medicaid dwindle, some hospitals cross over the line and engage in illegal or improper activities in an effort to increase their own bottom lines and the profits of their corporate owners.

Who ultimately suffers when Medicare or Medicaid pay submitted medical bills that are fraudulent or are otherwise improper? The answer is aggravating yet simple: we, the taxpayers, who face our own financial struggles to make ends meet. We, the taxpayers, who are further burdened by our tax dollars going to unscrupulous health care providers who line their own pockets with their ill-gotten gains that should have been applied toward valid, legitimate, and necessary medical care provided to those who cannot afford or who are otherwise unable to pay for their needed medical care.

We wonder whether paying a civil settlement in the amount of $16.5 million for an alleged illegal scheme that netted $16 million is enough of a disincentive to prevent similar behavior by those paying the settlement and whether it provides a sufficient punishment to prevent other hospitals and health care providers from engaging in similar wrongful activities.

One must wonder how many illegal or improper payments are received by health care providers throughout the United States that are not discovered during governmental investigations that result in less-than-honest health care providers deciding to assume the small risk of getting caught while engaging in illegal or improper activities in light of the large monetary benefits that may be gained.

If you may be the victim of medical negligence that occurred in a hospital, you should promptly contact a local medical malpractice attorney to learn about you legal rights.

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