Feds Arrests Doctors, Hospital Executives Over Kickbacks, Unnecessary Surgeries

A number of health care practitioners and administrators were just arrested by federal authorities for their involvement in a widespread Medicare and Medicaid scam.

A hospital owner, a senior executive, and four doctors were accused of being involved in a broad scheme that involved patients undergoing unnecessary tracheotomies as well as kickbacks, and other unethical practices meant to make money for the hospital at the expense of patients, said MassDevice.

According to a statement just issued by the FBI, among other fraud, the administrators allegedly paid kickbacks to the accused physicians with payments that were falsified as so-called “ghost contracts, false rental payments, and teaching fees for nonexistent medical students, said MassDevice.

“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 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,” Illinois Northern District attorney Gary Shapiro said in prepared remarks,” MassDevice wrote.

Sacred Heart owner and CEO Edward Novak, 58; executive vice president and CFO Roy Payawal, 64; and doctors Venkateswara Kuchipudi, 66; Percy Conrad May, Jr., 75; Subir Maitra, 73; and Shanin Moshiri, 57 were arrested and charged by the FBI, said MassDevice.

In another situation involving questionable ethical practices and potential kick-back violations seen in the healthcare community, we recently wrote that Physician-Owned Distributorships (PODS), which have been established in least 20 states, were the focus of a government watchdog group alert over fraud risks associated with these entities.

We have long noted that the financial relationships between the drug and medical device industries and the health care industry have led to enormous controversy. Critics maintain that such relationships create conflicts of interest and could unduly influence everything from research findings to prescribing practices, with patients no longer the primary focus in health care decisions.

PODs used in spine and orthopedic surgery have long been criticized for creating financial incentives for doctor investors to use the devices that provide them with the best financial return. An arrangement is created that can lead to violations on an anti-kickback statute and other federal fraud and abuse laws with PODs acting as outfits that offer profits to surgeons for the medical devices they use on their patients.

The Office of Inspector General issued a warning about fraud risks associated with these so-called PODs, which involve physicians purchasing ownership interests in a medical device distributor and sharing in PODs profits made via sales to hospitals. In its report, the Office of Inspector General said its longstanding guidance “makes clear that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the anti-kickback statute,” according to a prior Reuters report.

“The anti-kickback statute is violated if even one purpose of the remuneration is to induce such referrals” by healthcare professionals involved in such PODs, the report said. The language in the report “can’t get any more damning,” Dr. Josh Jennings, a Cowen & Co analyst, told Reuters.

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