Patients as Commodities

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When you think of the term ”commodity,” things like oil, natural gas, grain, or livestock come to mind. An article in The Chicago Tribune tells about a doctor known as the ”king of nursing homes,” who essentially traded patient referrals as commodities. His part in an illegal scam perpetrated by other physicians and hospital executives netted the fraudster hundreds of thousands of dollars in Medicaid and Medicare reimbursements.

The article states that this fraudster is one of five doctors involved in the scam, in addition to the CEO, COO and CFO of a struggling Chicago hospital no longer in business. In an attempt to fill empty beds, hospital executives paid kickbacks and bribes to the doctors to persuade them to refer Medicare and Medicaid patients to the struggling health care facility. (Many elderly patients, who were mentally disabled or poor, were transported to the failing hospital instead of health care facilities that were closer in proximity.) The hospital received $35 million from the government benefit programs by paying hundreds of thousands of dollars in kickbacks to physicians who referred qualified beneficiaries.

Additional research shows that in exchange for the patient referrals, the hospital provided the doctor with free labor inside of the hospital and also at Chicago-area nursing homes where many of his elderly patients resided. In exchange for patient referrals, he was authorized to use hospital-provided labor including physicians, physician assistants and nurse practitioners. The doctor could then bill Medicare and Medicaid for the services provided by these workers as if he employed them. (That’s a great way to increase your profit margins – have someone else pay for your staff.)

The 69-year-old doctor was convicted on one count of conspiracy to defraud the U.S. and nine counts of illegally soliciting or receiving benefits in return for patient referrals covered under a federal health care program. He was sentenced to two years in prison and ordered to pay more than $786,000 in forfeited funds and fines.

The physician is one of 10 defendants involved in the scam. The hospital’s owner and CEO received a sentence of four-and-a-half years in prison and must pay back $10.4 million; the COO is serving 21 months in prison; and, the CFO was sentenced to one year and a day in prison. One defendant is awaiting sentencing and another one was not found guilty.

This doctor may have started out his career with the desire to care for his patients; but, somewhere along the way, he let greed take over. (Instead of putting his patients ahead of himself, he put his desires in front of some of the country’s most underprivileged citizens.) Congratulations to the Medicare Strike Force for stopping these criminals and reminding anyone thinking about committing a similar crime – Medicare and Medicaid patients are not a commodity to be used for selfish gains.

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Doctor sentenced to 2 years in Sacred Heart bribery scheme,” published by The Chicago Tribune on August 12, 2016.

In the years before Sacred Heart Hospital abruptly closed, a series of elderly nursing home patients were taken to the struggling West Side medical facility, where they were whisked directly into a room to be examined and tested.

The reasons for admission were murky. The trips to Sacred Heart, situated in the Garfield Park area, often made little geographic sense. Many of the patients were mentally disabled and poor.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.