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FBI Arrests Hospital Owner, Doctors For Kickback Scheme

By Samantha Abernethy in News on Apr 16, 2013 10:20PM

Image via Google Street View

Federal officers raided the Sacred Heart Hospital Tuesday afternoon, arresting the hospital owner, financial officer and four doctors for their alleged role in a healthcare scam that included ordering unnecessary surgeries on elderly patients to cash Medicare checks.

According to the FBI, the owner of Sacred Heart Hospital, the chief financial officer and four doctors engaged in Medicare and Medicaid fraud schemes "involving emergency room evaluation, testing, and observation services that were not medically necessary, as well as medically unnecessary sedation, intubation, and tracheotomy procedures performed on patients."

“These charges and the affidavit’s other allegations outline a kickback conspiracy to bribe doctors to refer patients to Sacred Heart where they would be treated in in an environment in which the quality of care and appropriate medical analysis were less important than maximizing the numbers of patients funneled into the hospital,” said Gary S. Shapiro, U.S. Attorney for the Northern District of Illinois, in a release.

Those arrested include: Owner/CEO Edward J. Novak, 58; CFO Roy Payawal, 64; Dr. Venkateswara "V.R." Kuchipudi, 66; Dr. Percy Conrad May Jr., 75; Dr. Subir Maitra, 73; and Dr. Shanin Moshiri, 57.

Investigators also seized about $2 million in Medicare reimbursement payments, and the FBI said more than $225,000 in cash kickbacks may have been involved, too.

According to the Tribune, about 40 patients were in the 119-bed hospital when federal officers made the arrests. According to the Sun-Times, a whistleblower filed a lawsuit against Novak in 2009 with similar allegations. That suit was dropped, but prosecutors kept a closer eye on the proceedings at Sacred Heart.

Hospital owner Novak is also involved in several other medical entities including Superior Home Health LLC, the Golden L.I.G.H.T. clinics, the Chen Medical center, the Garfield Kidney Center LLC, and last but not least, the Bentley Insurance Group, a medical malpractice insurance company.