Ex-Hospital Owners Pay $10M to Settle Homeless Fraud Scheme

Two former hospital executives in Los Angeles have agreed to pay the State of California and the federal government $10 million to settle civil claims that they recruited and treated homeless people for unnecessary medical procedures and then billed the government, according to the Department of Justice.

Robert Bourseau and Rudra Sabaratnam, MD, the former owners of City of Angels Medical Center, have already pleaded guilty to separate criminal Anti-Kickback Statute charges stemming from the case, in which City of Angels reportedly paid "recruiters" employed at homeless shelters in the skid row area to deliver their homeless clients by ambulance to the hospital for unneeded medical treatment.

City of Angels billed Medicare and Medi-Cal for treatment allegedly rendered to the homeless patients, much of which was not medically necessary, said the Department of Justice. The two men are awaiting sentencing.

One other former senior executive of City of Angels and two of the medical center's recruiters have also pleaded guilty to similar charges in connection with the alleged scheme.

"Performing unnecessary medical procedures just to take money from taxpayers' pockets is bad enough, but to prey on homeless people struggling to survive day to day is particularly reprehensible," said Tony West, DOJ's assistant attorney general for the civil division, in a media release. "We won't tolerate illegal conduct and we will continue to hold companies, institutions and individuals accountable for health care fraud."

DOJ said it has used the False Claims Act to recover approximately $2.2 billion since January 2009 in cases involving fraud against federal healthcare programs. DOJ's total recoveries in False Claims Act cases since January 2009 have topped $3 billion, according to the department.