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					USDOJ: US A orney's Office ‐ CENTRAL DISTRICT OF CALIFORNIA ‐ 112a                                           h p://www.jus

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                                                                                                                                  Giving Back to the Community
                                                                                                                                  through a variety of venues &
              Pacific Health Corporation And Three Of Its Southland Hospitals Agree                                               initatives.
              To Pay $16.5 Million In Cases Stemming From Illegal Kickback Scheme
              FOR IMMEDIATE RELEASE                                                                       August 23, 2012

              Marketers Were Paid to Recruit Homeless from L.A.’s ‘Skid Row’ To Undergo Often
              Unnecessary Treatments that Were Billed to Medicare and Medi-Cal

              LOS ANGELES – A Los Angeles-based hospital chain has agreed to pay $16.5 million to resolve allegations
              that several of its subsidiary hospitals participated in an illegal kickback scheme in which so-called
              marketers were paid to recruit homeless persons from locations such as downtown Los Angeles’ “Skid
              Row” and bring them to Southland hospitals regardless of medical necessity, which allowed the hospitals to         Making sure that victims of federal
                                                                                                                                 crimes are treated with compassion,
              improperly submit bills to Medicare and Medi-Cal.                                                                  fairness and respect.

              A global resolution of civil and criminal investigations conducted by the United States and the State of
              California was announced today when federal prosecutors filed a criminal case against Los Angeles
              Doctor’s Hospital, Inc. (LADH), which has agreed to plead guilty to conspiring to defraud Medicare and
              Medi-Cal through the payment of illegal kickbacks to the marketers.

              “To root out and deter those who seek to exploit publicly funded health care programs, we need to pursue
              all available remedies – civil, criminal, and administrative,” said United States Attorney André Birotte Jr.
              “The guilty plea, civil settlement agreement, and corporate compliance agreement that we are announcing
              today – the result of efforts of civil and criminal attorneys in my office and officials at the Department of
                                                                                                                                  Individuals who believe that they may
              Health and Human Services – reflect this approach and should remind unscrupulous health care providers              have been victims of lending
              of our determination to bring to justice those who exploit federal and state public health programs for their       discrimination by Countrywide and
              personal gain.”                                                                                                     have questions about the settlement
                                                                                                                                  may email the Department of Justice
                                                                                                                                  at .
              LADH is a subsidiary of Pacific Health Corporation (PHC), which has entered into a deferred prosecution
              agreement with the United States Justice Department. PHC is also being criminally charged today, but if
              the company abides by the deferred prosecution agreement, the charges will be dismissed in six years.

              PHC; its parent company, Health Investment Corporation (HIC); and three subsidiary hospitals have also
              entered into a civil settlement agreement with the United States in which the companies agreed to pay
              $16.5 million to resolve allegations that they participated in the illegal kickback scheme and submitted
              false claims to Medicare and Medi-Cal. The three PHC hospitals whose conduct was the subject of the state
              and federal investigations and which are parties to the civil settlement are: Los Angeles Metropolitan
              Medical Center, Newport Specialty Hospital (formerly known as Tustin Hospital and Medical Center) and
              Anaheim General Hospital. The first payment related to this settlement was received yesterday.

              In the plea agreement and deferred prosecution agreement filed this afternoon in United States District
              Court, LADH and PCH admitted that from 2003 to 2008, they, along with the three PCH hospitals, paid
              more than $2.3 million in kickbacks to marketers to recruit patients who were admitted to the hospitals for
              in-patient care, whether they needed it or not. As a result of this illegal conduct, Medicare and Medi-Cal
              made nearly $16 million in improper payments to the PHC hospitals.

              Among the marketers paid by the PHC hospitals was Estill Mitts, who previously pleaded guilty in federal
              court to conspiring to recruit homeless people to receive unnecessary health services. According to Mitts’
              plea agreement, from 2004 until October 2007, Mitts operated a facility on East Seventh Street in
              downtown Los Angeles commonly called the Assessment Center. Mitts hired so-called “stringers” to recruit
              homeless people to participate as patients in the scheme with promises of small payments. Mitts is
              scheduled to be sentenced by United States District Judge H. King on October 15.

              In connection with the criminal plea agreement, the deferred prosecution agreement, and the civil
              settlement announced today, HIC, PHC, the three hospitals referenced above, and another PHC hospital –
              Bellflower Medical Center in Bellflower – have entered into a corporate integrity agreement with the Office
              of the Inspector General of the U.S. Department of Health and Human Services that imposes strict
              oversight on the four PHC hospitals.

              “Hospitals colluding with marketers to fatten profits through illegal referrals for costly and sometimes
              needless medical services are pocketing millions of taxpayer dollars,” said Glenn R. Ferry, Special Agent in
              Charge for the Los Angeles Region of the Office of Inspector General of the U.S. Department of Health and
              Human Services. “Our agents are monitoring such schemes, and those entering into similar sham

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USDOJ: US A orney's Office ‐ CENTRAL DISTRICT OF CALIFORNIA ‐ 112a                                                    h p://www.jus

              contracts should expect investigation and prosecution.”

              Previously in this investigation, Intercare Health Systems Inc. (formerly doing business as City of Angels
              Medical Center), and former owners Robert Bourseau and Dr. Rudra Sabaratnam, were the subjects of
              consent judgments in relation to a similar kickback scheme (see:
              /2010/January/10-civ-082.html). Several individuals pleaded guilty in connection with the scheme –
              including Bourseau and Sabaratnam, who were sentenced to federal prison for their roles in the scheme.

              The criminal plea, the deferred prosecution agreement, and the civil settlement announced today are the
              results of ongoing criminal and civil investigations being conducted by the Office of Inspector General of
              the U.S. Department of Health and Human Services; the Federal Bureau of Investigation; IRS-Criminal
              Investigation; the Justice Department’s Civil Division; the California Attorney General’s Office; the
              California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse; and the Health and Law
              Enforcement Team (HALT), a multi-agency task force operated by the Los Angeles County Health

              Anyone with information that could assist the ongoing investigation is encouraged to contact investigators
              with the U.S. Department of Health and Human Services by calling 1-800-HHS-TIPS or emailing

              Release No. 12-112a

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