Health Care Fraud Exposed: LA Hospital CEO Arrested

The arrest of the CEO of City of Angels hospital, Rudra Sabaratnam, and Estill Mitts, operator of a Skid Row health assessment center, by the FBI has brought to light a scam involving kickbacks for patient referrals that have resulted in fleecing public health programs of thousands of dollars.

A 21-count indictment unsealed Wednesday charged Sabaratnam with paying kickbacks and Mitts with money laundering and tax evasion. The investigation was sparked off in 2006 by a Los Angeles police enquiry into reports that homeless patients were being dumped on the streets by hospitals.

Search warrants were served at City of Angels Medical Center, Los Angeles Metropolitan Medical Center, and Tustin Hospital and Medical Center, informed the FBI. The health fraud emerged as a result of the investigations.

The city attorney's office filed a lawsuit saying ‘patients’ were picked up by recruiters who sent them to the 7th Street center, under Mitts, where they were given false diagnoses and referred for government medical programs. Medi-Cal and Medicare would then be billed for the ambulance and hospital stay.

Thereafter, the homeless patients would be returned to their Skid Row shelters, but ‘they would go back multiple times,’ said Frank Mateljan, a spokesman for the city attorney’s office.

The lawsuit cited the case of ‘Recruit X’, who said she ‘received very little medical treatment, and none of the treatment that she received was necessary.’ She even suffered a serious drop in blood pressure at least once after being given a nitroglycerin patch for a falsely stated cardiopulmonary condition, the suit said.

Skid Row workers ‘were receiving kickbacks up to $20,000 a month from some of these hospitals and they were delivering between 30 and 50 patients a month,’ claimed the lawsuit.

The corporate owners of the three hospitals — along with Sabaratnam, several doctors, and others – have been sued in connection with the alleged scheme. Los Angeles Metropolitan and the Tustin Hospital are owned by Pacific Health Corp. and City of Angels is owned by Los Angeles-based Intercare Health Systems.

"This is one of several major medical fraud investigations that are ongoing. There’s too much money being illegally stripped from public health care programs and the potential impact to those with a legitimate need is too great to let such fraud escape federal prosecution," said Mateljan.

U.S. Attorney Thomas O'Brien said he expects additional charges to be slapped on the offenders.

Sabaratnam could face 50 years in federal prison if convicted, and Mitts might be sentenced for 140 years, authorities said. Sabaratnam's lawyer Dominic Cantalupo and Mitts' lawyer John Vandevelde have not yet made their stance known.