Ex-Owner of City of Angels MC to Pay $10M Consent Judgment for Medicare, Medi-Cal Fraud Scheme

Intercare Health Systems, Inc., the ex-owner of City of Angels Medical Center, will pay the federal government a $10 million consent judgment in a Medicare and Medi-Cal fraud and kickback scheme involving homeless patients at the Los Angeles hospital, the Justice Department announced today.

The consent judgment resolves a civil lawsuit filed against Intercare by the federal government and California in the U.S. District Court for the Central District of California. Also named in the suit were the former owners of Intercare, Robert Bourseau and Rudra Sabaratnam, who entered $10 million consent judgments in January.

Federal prosecutors alleged that City of Angels paid recruiters employed at homeless shelters in the skid row area of Los Angeles to deliver their homeless clients by ambulance to the hospital for medical treatment regardless of whether they needed or asked for the treatment. City of Angels billed Medicare and Medi-Cal for medical services allegedly provided for the homeless patients, many of which were not necessary, a violation of the False Claims Act. Payments that City of Angels made to its recruiters were a violation of the federal anti-kickback statute.

"Performing unnecessary medical services on homeless people who are struggling to survive is particularly egregious and will not be tolerated," said Tony West, assistant attorney general of the Civil Division of the Department of Justice. "Companies, institutions, and individuals will be held accountable for fraudulent conduct that takes money from taxpayers and undermines the integrity of the healthcare system."

The Department of Justice has used the False Claims Act to recover more than $2.7 billion since January 2009 in cases involving fraud against federal healthcare programs.