Meanwhile, a civil lawsuit was filed by Los Angeles City Attorney Rocky Delgadillo, who has crusaded against Los Angeles-area hospitals he believes routinely dumped indigent patients on Skid Row and insurance companies he says canceled policies when members got sick. His office, he said, discovered the opposite of what was assumed to be patient dumping when police videotaped an ambulance drop five people near a homeless shelter in October 2006.
The lawsuit names City of Angels and Sabaratnam, as well as his co-owner and Chief Financial Officer Robert Bourseau; Pacific Health Corp. and subsidiary hospitals 213-bed Los Angeles Metropolitan Medical Center and 22-bed Tustin (Calif.) Hospital and Medical Center; Los Angeles Metropolitan CEO John Fenton; former Tustin CEO Daniel Davis; former Tustin CFO Vincent Rubio; three admitting physicians; and APT Ambulance.
An attorney representing City of Angels issued a statement saying the hospital is cooperating with the investigation. Lawyer Joseph Epps, a partner in Epps & Yong who is contributing to Pacific Healths defense in the civil lawsuit, said the company has cooperated with the city attorneys office since fall 2006 and turned over records that should refute any violation of state or federal law. We will defend that action vigorously, Epps said, emphasizing that neither Pacific Health nor either of the Pacific Health Hospitals named in the lawsuit have been targeted by federal prosecutors.
Epps said Metropolitan terminated a contract for community outreach with Mitts company, Metropolitan Healthcare, in November 2006 after allegations of patient dumping raised concerns, though he categorically denies the scenario advanced by Delgadillo.
As a result of a previous finding against them in a False Claims Act lawsuit brought by the government, City of Angels Sabaratnam and Bourseau were excluded from participating in Medicare and MedicaidSabaratnam for 10 years and Bourseau for 15 yearsas of February, when the 9th U.S. Circuit Court of Appeals, San Francisco, affirmed the result. They were ordered to pay $15.7 million for padding Medicare cost reports with legal fees associated with bankruptcy proceedings and other costs unrelated to patient services for 64-bed Bayview Hospital and Mental Health System, Chula Vista, Calif., a psychiatric hospital they controlled through a corporate organization owned together, similar to the ownership structure of City of Angels as described in Delgadillos lawsuit. Court records indicate the government has moved to garnishee their income to collect on the judgment.
Patric Hooper, a partner in the Los Angeles law firm of Hooper, Lundy & Bookman, represented Sabaratnam and Bourseau in that case and said he may become involved in the current matter. I know him to be an honest guy and devoted to patient care, Hooper said, referring to Sabaratnam, a psychiatrist. It would surprise me if these kinds of allegations are accurate.
Typically when someone is excluded by the CMS, billing privileges are revoked for services theyre involved in, and its not clear whether the action against Sabaratnam and Bourseau had reached City of Angels. Were still looking at it, CMS spokesman Peter Ashkenaz said.
Bourseau and Sabaratnam bought the bankrupt and shuttered Ross-Loos Medical Center for $14.2 million in 1998 and reopened it as City of Angels Medical Center in 1999. In a Modern Healthcare article that year, they described a business strategy of providing low-cost care to the low-income Latino community around the hospital, relying on self-pay patients for as much as a quarter of its revenue. We want to make it as easy to get a cash quote for a procedure as it would be calling a car dealer to get a quote on replacing a carburetor, Sabaratnam was quoted as saying in the article.
City of Angels made a profit of $4.5 million in 2006, the most recent year available from the state. Of $192 million in patient revenue, the hospital collected $74 million from Medicare and $87.9 million from Medi-Cal. Self-pay was about 1%.
According to Delgadillos complaint, runners paid by Mitts would approach homeless people and ask whether they were eligible for Medicare or Medi-Cal, sometimes using code phrases referring to the color scheme on Medicare cards, such as, Red, white and blue, just make it do what it do, for me and you. Mitts, through consulting contracts, received thousands of dollars a month from each hospital for sending dozens of patients their way. One woman told investigators she was hospitalized at Metropolitan at least six timesusually for nonexistent chest pains and shortness of breathin exchange for $20, which she would use to buy crack cocaine after the hospital returned her to Skid Row.