Healthcare News & Insights

Hospital chain nailed in billing scam involving the homeless

Treating the homeless for free sounds like an honorable thing to do. But what if a hospital was paying people to find the homeless, giving them unnecessary treatments and then billing the government for them? Sounds like major fraud. But no one would do that, right?


Recently, Pacific Health Corporation (PHC) — a  Los Angeles hospital chain — pleaded guilty and agreed to pay the federal government and the state of California $16.5 million for allegedly engaging in an illegal kickback scheme.

This settlement ends a federal and state investigation of three PHC-affiliated hospitals for taking part in a scheme in which the hospitals paid recruiters to deliver homeless Medicare or Medic-Cal beneficiaries by ambulance to the facilities for treatments that were often medically unnecessary, according to the Department of Justice. They were charged with violating the Anti-Kickback statute, as well as the False Claims Act.

The three hospitals involved were: Los Angeles Metropolitan Medical Center (LA Metro), Newport Specialty Hospital (formerly known as Tustin Hospital and Medical Center) and Anaheim General Hospital.

Los Angeles Doctors Hospital, Inc., (LADH) a subsidiary of PHC, is also involved. The facility has agreed to plead guilty to a federal conspiracy charge arising out of the illegal kickback scheme.

In the agreement, LADH and PCH admitted to paying more than $2.3 million to the recruiters who would find people to act as patients. As a result, Medicare and Medi-Cal paid nearly $16 million in fraudulent payments to the PHC hospitals.

In addition, the three hospitals as well as a fourth  — Bellflower Medical Center — and their related entities have entered into a corporate integrity agreement to deter future misc0nduct.

“The integrity of government health care programs is threatened when hospitals pay kickbacks to induce unnecessary or unwanted medical care,” said Stuart Delery, the acting assistant attorney general in charge of the Justice Department’s Civil Division. “Kickbacks subvert medical decision making and cause government programs to pay much more for services than would otherwise be warranted.”

Subscribe Today

Get the latest and greatest healthcare news and insights delivered to your inbox.