doctor_officeThree former hospital executives have been convicted of defrauding federal healthcare programs through an alleged kickback scheme to pay doctors to refer patients to the hospital.

An Illinois federal jury returned guilty verdicts on March 19, 2015 against the former owner and CEO of Chicago’s Sacred Heart Hospital on 26 counts alleging payment of kickbacks for referrals of Medicare and Medicaid patients, as well as a related conspiracy charge. The hospital’s former COO and former CFO were also found guilty of conspiracy and violations of the Anti-Kickback Statute.

Of the physicians implicated in the charges, four doctors are scheduled to stand trial later this year. Two other physicians have already pled guilty.

According to the prosecution, Sacred Heart concealed hundreds of thousands of dollars in illegal payments to physicians by entering into fake leases for office space and doling out paid positions – such as director roles – without real duties. The hospital also allegedly entered into phony contracts to teach medical residents and lent out physicians assistants and nurse practitioners to physicians free of charge.

Notably, the prosecution also invoked the quality of care provided for these patients, many of whom were elderly. The 2013 FBI raid that precipitated the prosecution had related to both kickback allegations and claims that patients were receiving medically unnecessary tests and procedures, including tracheotomies and intubation.

Attorneys for the defendants sought to characterize the payments as either legitimate or as directed by the replacement COO and a former vice president at the hospital, both of whom had pled guilty in the case and cooperated with the government.

At the sentencing scheduled for July, the convicted executives face a maximum penalty of five years in prison and a $250,000 fine for each charge on which they were convicted. The case is U.S. v. Edward Novak et al., case number 1:13-cr-00312, in the U.S. District Court for the Northern District of Illinois.

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