CHICAGO — Four doctors and two senior executives were arrested Tuesday when federal agents raided a West Side hospital over what authorities called a “far-reaching” Medicare and Medicaid kickback scheme.
The FBI and U.S. Department of Health and Human Services were on hand Tuesday morning to execute search warrants at Sacred Heart Hospital, 3240 W. Franklin Blvd., according to the U.S. Attorney's Office in Chicago.
“We were searching for evidence of what we believe to be a far-reaching scheme… to fraud Medicare and Medicaid by paying kickbacks to physicians for referrals to Sacred Heart Hospital,” Gary S. Shapiro, U. S. Attorney for the Northern District of Illinois, said at a news conference Tuesday.
“Once admitted,” Shapiro said, “there are medically unnecessary procedures and examinations being conducted — including unnecessary treatment in the emergency room… and most disturbingly, unnecessary intubations and tracheotomies.”
Since 2011, several hospital employees have conspired to pay and receive illegal kickbacks, including more than $225,000 in cash, the U.S. Attorney’s Office claimed.
Sacred Heart concealed the alleged kickbacks “with a variety of rouses,” Shapiro said. These include paying physicians to teach non-existent students and writing rent checks for fictitious spaces.
Two senior executives were arrested Tuesday: hospital owner and CEO Edward Novak, 58, of Park Ridge; and executive vice president and CFO Roy Payawal, 64, of Burr Ridge.
Four doctors were also taken into custody: Venkateswara Kuchipudi, 66, of Oak Brook; Percy Conrad May Jr., 75, of Chicago; Subir Maitra, 73, of Chicago; and Shanin Moshiri, 57, of Chicago.
All six appeared in federal court Tuesday afternoon for an initial arraignment. If convicted of Medicare and Medicaid fraud, each man could face up to 5 years in prison or $250,000 in fines.
“It is apparent that these individuals were experienced and organized in their efforts to take advantage of a system based on trust,” said Lamont Pugh III, a special agent with the U.S. Department of Health and Human Services Office of Inspector General.
“Healthcare fraud is not a victimless crime,” Pugh said. “It puts a strain on our healthcare system and is costly to the taxpayers. … We will not allow patients to be used as pawns for profit.”
Shapiro said most of the patients referred through the alleged Sacred Heart scheme were elderly, lower income and residents of nursing homes.
About $2 million worth of Medicare reimbursement payments were seized Tuesday from various bank accounts.
Federal agents and prosecutors are continuing to investigate Sacred Heart Hospital, Shapiro said.