In a sweeping attack on the illegal practice of paying kickbacks for patient referrals, the U.S. attorney in Chicago last week announced a 58-count criminal indictment of a hospital management company, a hospital vice president and three physicians.
The government alleged that Bainbridge Management of suburban Chicago (formerly named Braddock Management), which manages 140-bed Edgewater Medical Center and 213-bed Grant Hospital, both in Chicago; former Edgewater Senior Vice President Roger Ehmen; and former Edgewater Medical Director Ravi Barnabas, M.D., paid or caused to be paid kickbacks for patient referrals to Sheshiqiri Rao Vavilikolanu, M.D.; Kumar Kaliana, M.D.; and still-unnamed patient recruiters.
Bainbridge, Edgewater and the physicians allegedly billed Medicare, Medicaid and private insurers for more than $1 million in false claims for unnecessary hospitalizations, tests and services. Patients allegedly were recruited from homeless shelters and the streets and told they would be provided with food, money and a place to sleep.
Vavilikolanu, 43, an internist and anesthesiologist, had exclusive contracts with Edgewater to provide anesthesia and detoxification services. He allegedly received $290,000 in kickbacks, $150,000 of which went to Kaliana for referrals. Vavilikolanu faces one count of racketeering and racketeering conspiracy, whereas Kaliana, 62, faces one count of mail fraud and healthcare fraud. Bainbridge, Ehmen, 55, and Barnabas, 47, are each charged with 28 counts of healthcare fraud, 20 counts of paying kickbacks for patient referrals, six counts of mail fraud and three counts of wire fraud.
Ehmen and Barnabas also face one count each of racketeering and racketeering conspiracy. No trial date has been set, but First Assistant U.S. Attorney Gary Shapiro said Vavilikolanu has agreed to cooperate and is expected to plead guilty.
"There is deterrent value in these kinds of prosecutions," Shapiro said. "The medical community follows very closely these kinds of cases. We hope they've gotten the word."
Defendants face a maximum of five years imprisonment for each count of mail fraud, wire fraud, healthcare fraud and Medicare kickback violations and $250,000 in fines per count, except for Medicare kickbacks, which are punishable by $25,000 per count. Racketeering and racketeering conspiracy are punishable by up to 20 years in prison and a $250,000 fine.
If convicted, the defendants face exclusion from Medicare and Medicaid and the physicians could lose their medical licenses.
Bainbridge no longer manages Edgewater, and the defendants are no longer employed by the hospital.
Edgewater lawyer William Ziegelmueller said the hospital "is disappointed to hear of the return of criminal charges in connection with alleged actions of its prior management company."
Vincent Connelly, a lawyer representing Bainbridge, said the company is cooperating with the government, but it was disappointed with the indictment and disputes the allegations.