State’s largest health care fraud brings contrasting sentences

The largest health care bribery and fraud case in California’s history resulted in 15 months of imprisonment for a former hospital owner who purportedly allowed the scheme to continue. What began as a hospital purchase allegedly enabled the continuance of a complex surgery referral and kickback system worth millions in payouts, as reported by the Press-Telegram.

When the hospital’s purchase took place in 2005, the previous owner assured the buyer that at least 75 spinal procedures would occur each month. A network of physicians, chiropractors and other marketers making referrals to the hospital for back surgeries accounted for a reliable stream of patients.

Patient referrals involved kickbacks and illicit payments

According to the U.S. Department of Justice, more than 20 defendants carried out the kickback scheme. The arrangement rewarded surgery referrals through fraudulent agreements and contracts. Authorities believe that the hospital performed about 1,400 spinal procedures as a result of the kickback-induced referrals.

Although the new hospital owner eventually caught on to the referral and kickback system, he did not take action to stop it. The years-long scheme finally came to a halt after the hospital’s previous owner repurchased it.

A health care fraud conviction could lead to lengthy incarceration

Allegations of health care fraud may result in penalties that include several years of incarceration if a jury decides to convict. The originator of the arrangement pleaded guilty to charges related to kickbacks and conspiracy. He began serving a sentence of five years of incarceration.

As reported by the Orange County Register, the scheme’s former mastermind faces further years of imprisonment. An additional charge stems from defying a court order to turn over to the government the funds he raised from the proceeds of his classic car auction. A conviction could add up to 50 years in federal prison.

Investigations involving the unlawful acceptance or offering of funds can evolve into complex affairs with multiple defendants. The degree of involvement, however, may determine the severity of the charge. The former hospital owner, in contrast to the scheme’s originator, received his 15-month sentence after pleading guilty to concealment of a felony.