Stuart Levine, a former health insurance executive and past vice chairman of Illinois' hospital certificate-of-need agency, was accused of extortion, fraud and accepting kickbacks in an indictment announced by the U.S. attorney in Chicago last week.
The previous week, a federal grand jury delivered the sealed, 28-count indictment charging Levine, 59, a lawyer and millionaire businessman who previously headed the Illinois Health Facilities Planning Board. The indictment alleges he masterminded a $9.5 million scheme to rig the hospital CON approval process for kickbacks and defraud a local medical school on whose board he served.
Levine is a major Illinois Republican campaign contributor and an original shareholder and former counsel for HMO America, which later merged to form UnitedHealth Group in 1993. He was appointed to the CON board in 1996. Also charged in the fraud and kickback scheme were financial executive Nicholas Hurtgen, 42, former senior managing director of the Chicago office of New York investment banking firm Bear Stearns & Co.; and construction company official and architect Jacob Kiferbaum, 52, whose company built medical school buildings and planned to build hospitals. While all three defendants face the extortion, mail and wire fraud charges, Levine and Kiferbaum face added charges of misapplication of funds and Levine is also charged with money-laundering.
Levine and Hurtgen were arrested and arraigned last week, pleading not guilty in U.S. District Court in Chicago. Kiferbaum, who is cooperating with federal prosecutors, entered a not guilty plea but is expected to plead guilty to lesser charges.
Levine allegedly accepted kickbacks to steer construction and financing contracts to Hurtgen and Kiferbaum, including pocketing $1.5 million to approve the first nonreplacement Illinois hospital construction project in 25 years. The indictment charged that Levine solicited the money from defendant Kiferbaum in exchange for persuading the CON board to approve Janesville, Wis. -- based Mercy Health System's proposal to build a $49 million hospital in Crystal Lake.
At an April 2004 meeting the board was preparing to reject the Mercy proposal for a second time when Levine whispered in the ear of board member Imad Almanaseer, who changed his vote, resulting in board approval for the project. Almanaseer, chairman of pathology for Advocate Lutheran General Hospital in Park Ridge, Ill., refused comment. "I really can't talk about it," said Almanaseer, whose term expired July 1, 2004.
In addition to the alleged hospital CON kickback allegations, prosecutors charged that Levine and Kiferbaum defrauded what is now known as the Rosalind Franklin University of Medicine and Science, and its charitable trust, the Northshore Supporting Organization. Levine and Kiferbaum sat on the medical school's board and Levine was a foundation trustee. The indictment alleges they inflated costs on four construction projects from 2001 to 2004 to cover million-dollar kickbacks from Kiferbaum to Levine.
Levine and an alleged co-conspirator not identified in the indictment exploited their board positions at the medical school and a supporting foundation to obtain $6 million in loans to their companies that they illegally arranged to have forgiven, according to the indictment. No other current or former CON board members or Mercy Health System officials have been named or charged in the investigation, which U.S. Attorney Patrick Fitzgerald said was continuing. Federal officials said they expected more indictments.
Mercy President and CEO Javon Bea said the system acted properly in pursuing its CON. "Mercy believed and expected that its third-party contractors would act honorably and lawfully as well," Bea said in a news release, pointing out that the system has cooperated in the investigation. Bea said the system reacted "with shock and dismay" when it learned of the recent indictments.
The indictment detailed how Levine, who resigned from the CON board last year in the wake of a whistle-blower suit filed against him and the other two defendants, allegedly persuaded the nine-member board to approve the Mercy CON proposal and reject another that refused to contract with Kiferbaum's and Hurtgen's companies. Hurtgen and Levine declined to comment after their hearing and Kiferbaum could not be reached.