NYT: Hospitals pay homeless

By SOLOMON MOORE
Published: August 9, 2008
LOS ANGELES — An investigation into what the authorities say was a scheme that used homeless people to bilk tens of millions of dollars from federal and state health insurance programs began four years ago with a tip from a rescue mission employee.
The employee, Scott Johnson, who works for the Union Rescue Mission in the heart of Skid Row, said he had noticed vans and cars loading up homeless people.
“Sometimes they were so full of people that they put people in the trunks of cars,” Mr. Johnson said Thursday as he passed out bottles of water to the homeless. “I wondered what was going on, so I called the state authorities.”
Mr. Johnson said security cameras on the mission building captured what he initially thought were ambulances illegally discarding patients.
His tip in 2004, and those recordings, prompted state and local officials to investigate.
In October 2006, Los Angeles police officers videotaped an ambulance “dumping” five homeless patients. They later determined that the patients had been recruited as “human pawns in a scheme by hospitals, doctors, ambulance companies and others to defraud” health insurance programs, according to the city attorney’s complaint.
And on Wednesday, federal agents raided three private for-profit hospitals — Los Angeles Metropolitan Medical Center, City of Angels Medical Center, and Tustin Hospital and Medical Center in Orange County — in connection with an alleged fraud scheme involving federal Medicaid and state Medi-Cal health insurance programs. Agents arrested Dr. Rudra Sabaratnam, owner and chief executive of City of Angels Medical Center, and Estill Mitts, who is accused of recruiting patients from his Skid Row storefront church, the 7th Street Christian Day Center. Mr. Mitts posted $25,000 bond and is confined to his home. Dr. Sabaratnam posted $700,000 bail Thursday night.
In a 21-count grand jury indictment, the men are charged with conspiring to take and receive kickbacks for referrals and to commit health care fraud. Mr. Mitts is also charged with money laundering and tax evasion.
read more
Skid Row residents said the ambulances arrived each morning heralded by hospital patient recruiters who offered food, cigarettes and sometimes cash, to the homeless people who call these grimy downtown sidewalks home. Patients were paid as much as $30, court papers say.
Residents said recruiters, also known as runners, would call out like street salesmen for anyone who had a multicolored Medi-Cal eligibility card: “Red, white and blue! Let it do what it do!”
A little later, the vans would leave Skid Row bound for one of the three hospitals. Some of the homeless people would receive medical treatments, court papers said, whether they needed them or not.
Investigators said recruits often received no medical care at all, or in some cases received faulty health care, as in the case of one person, identified as Recruit X, who court papers said was “given a nitroglycerin patch for her non-existent cardiopulmonary condition.” The treatment caused a dangerous drop in blood pressure that made her ill, investigators said.
She was recruited repeatedly, court papers said, and for her cooperation was paid money that she used to buy crack cocaine.
After the trips to the hospitals, vans dropped off their recruits at the same Skid Row street corners, court papers said.
Those accused of being involved in the alleged scam billed Medicaid and Medi-Cal for thousands of fake treatments, according to lawsuits filed by the Los Angeles city attorney, Rocky Delgadillo, and Thomas P. O’Brien, the United States attorney for the Central District of California. According to the lawsuits, Los Angeles Metropolitan, City of Angels and Tustin hospitals paid Mr. Mitts $1,600 to $20,000 a month and paid salaries to patient recruiters he managed.
Mr. O’Brien said the private hospitals were trying to keep beds occupied at the expense of taxpayers.
Although Medicare scams are relatively common, Mr. O’Brien said they usually implicated small clinics or doctors’ offices. The scale and duration of this enterprise is unusual, investigators said.
“These allegations involve individuals in a complex arrangement involving shell companies, kickbacks, bogus contracts with the people committing fraud and hospitals covering up kickbacks,” Mr. O’Brien said.
Los Angeles Metropolitan and Tustin Hospital issued a joint statement on Wednesday saying they were cooperating with the investigation. City of Angels could not be reached for comment.
On Skid Row few people were surprised by the arrests, and nearly everyone was familiar with the recruitment of patients.
Johnny Reed Jr., a wheelchair-bound musician who belts out songs a cappella on the sidewalk calling himself The King of Gospel, said he was recruited once.
“They gave me a little money,” Mr. Reed said. “And I went with them to the hospital. They treated me for my arthritis.”
Anthony Pitts, 50, who lives in a government-subsidized apartment building in Skid Row, said he heard the recruiters each morning. Mr. Pitts, a military veteran, said that he did not need Medicaid but that plenty of his friends were on the system and had been picked up by recruiters.
“They come down every morning with four or five people, they fill up their van and take them to the hospital,” Mr. Pitts said. “When they come back they give them money — sometimes as much as $150 or $200.”
Also implicated in county and federal court papers were John Fenton, chief executive of Los Angeles Doctors Hospital Corporation, a subsidiary of Pacific Health Corporation that owns Los Angeles Metropolitan and Tustin hospitals; Daniel Davis, chief executive of Tustin; and Robert Borseau, an owner of Intercare Health Systems, which owns City of Angels. More arrests are expected, said Mr. Delgadillo, the city attorney.