The United States Attorney's Office

FORMER HOSPITAL C.E.O. PLEADS GUILTY TO PAYING KICKBACKS IN ‘SKID ROW’ HEALTHCARE FRAUD SCHEME

The former Chief Executive Officer (“CEO”) of City of Angels Medical Center pleaded guilty to paying illegal kickbacks for patient referrals in United States District Court in Los Angeles today.  Rudra Sabaratnam, 64, a physician from Brentwood, admitted to paying illegal kickbacks as part of a scheme to defraud Medicare and Medi-Cal by recruiting homeless persons from the Skid Row area of downtown Los Angeles.

Sabaratnam and co-defendant Estill Mitts, 64, of Los Angeles, are named in a 21-count indictment that accuses both men of conspiring to recruit homeless people to receive unnecessary health services.  Mitts pleaded guilty in September to conspiracy to commit health care fraud, money laundering, and tax evasion.

In pleading guilty, Sabaratnam admitted to paying Mitts and others to refer homeless Medicare and Medi-Cal beneficiaries whom they recruited, primarily from Skid Row, to City of Angels for in-patient hospital stays.  As part of the scheme, Sabaratnam entered into sham contracts intended to conceal the illegal kickbacks.  Throughout the scheme, Mitts operated a facility called the Assessment Center, also known as 7th Street Christian Day Center, located at 431 East Seventh Street, Los Angeles, California, in Skid Row.  The total amount of illegal kickbacks that Sabaratnam paid and caused to be paid to Mitts and others was approximately $493,382.  City of Angels billed Medicare and Medi-Cal for in-patient services to the recruited homeless beneficiaries, including those for whom in-patient hospitalization was not medically necessary.

“This was a sophisticated scheme to defraud healthcare programs that are financed by taxpayers,” said United States Attorney Thomas P. O’Brien.  “These defendants stripped public healthcare programs of money that should have been used for those patients with legitimate needs and are well deserving of prosecution by the United States.”

The charges to which Sabaratnam has pleaded guilty carry a statutory maximum penalty of 10 years in federal prison.  Sabaratnam has agreed to pay over $4.1 million in restitution to Medicare and Medi-Cal.  United States District Judge George H. King ordered Sabaratnam to appear for sentencing on June 8, 2009.

The case against Sabaratnam and Mitts is part of an ongoing investigation being conducted by the U.S. Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; IRS-Criminal Investigation Division; the California Department of Justice Bureau of Medi-Cal Fraud and Elder Abuse; and the Health and Law Enforcement Team (HALT), a multi-agency task force which is operated by the Los Angeles County Health Department.

Anyone with information that could assist the ongoing investigation is encouraged to contact investigators with the Department of Health and Human Services by calling 1-800-HHS-TIPS, or emailing HHSTips@oig.hhs.gov.

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Release No. 08-153
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