On April 16, 2013, the United States Department of Justice (DOJ) and U.S. Attorney’s Office in the Northern District of Illinois announced the arrest in Chicago of the owner and senior executive of Sacred Heart Hospital (Sacred Heart), along with four physicians affiliated with the facility, for allegedly conspiring to pay and receive illegal kickbacks in exchange for referrals of Medicare and Medicaid patients.

The alleged kickback schemes involved payments to the indicted physicians in return for their patient referrals. Kickbacks were characterized as fictitious rental payments, payments for the salaries of the physicians’ employees, payments pursuant to ghost contracts for duties without real responsibilities, alternative billing arrangements, and payments to supervise and teach non-existent medical students.

Agents from the Federal Bureau of Investigation and the U.S. Department of Health & Human Services Office of Inspector General also executed a search warrant in connection with an ongoing investigation of other alleged fraudulent schemes involving billing for medically unnecessary emergency department evaluations, testing, and observation services, and intubation and tracheotomy procedures. The government seized approximately $2 million in Medicare payments from hospital bank accounts.

The Affidavit in support of the criminal complaint and search warrant reflects that a physician formerly affiliated with Sacred Heart began cooperating with law enforcement in October 2011, and two administrators began assisting in the investigation in February 2012 and in January 2013. It further reflects that these individuals made consensual recordings of meetings and telephone conversations with hospital executives, administrators, physicians and employees.

On April 18, 2013, the DOJ announced the arrest of a fifth physician affiliated with Sacred Heart for allegedly prescribing controlled substances without a valid license or DEA registration. According to the press release, the physician wrote prescriptions using another physician’s DEA registration.

A copy of the April 16 and April 18 press release, and the Affidavit in support of the criminal complaint and search warrant can be found here, here and here, respectively.