A federal jury found the former owner of a now-shuttered Chicago hospital and two former top administrators guilty on Thursday of taking part in a scheme to pay hundreds of thousands of dollars in bribes to doctors in exchange for referring patients on Medicare and Medicaid to the struggling facility.
Edward J. Novak, the onetime owner of Sacred Heart Hospital, and executives Roy Payawal and Clarence Nagelvoort were convicted after jurors deliberated over parts of three days. Novak, 60, was convicted of 27 of 28 counts against him, including Medicare fraud and conspiracy. Payawal and Nagelvoort were convicted of conspiracy and a number of fraud counts.
During the six-week trial, prosecutors contended that the three were involved in the scheme in which they disguised the kickbacks as teaching agreements, lease contracts and staffing perks.
Defense attorneys argued that people who worked for the three were responsible for the scheme, including at least one who wore a wire for the FBI after being confronted by agents about possible misconduct. And they said there was nothing unusual about a hospital trying to attract more patients.
“We're disappointed and we do intend to appeal,” Novak's attorney, Daniel Collins, said Thursday afternoon. An attorney for Payawal, Clarke Robert, also expressed disappointment and said Payawal will also likely appeal though he hadn't yet decided. Attempts to reach attorneys for Nagelvoort were not immediately successful Thursday afternoon.
Prosecutors have contended that the three bribed the doctors to send patients to what they have said was a substandard and even filthy hospital.
The most explosive allegations that surfaced in 2013 when federal authorities raided the 119-bed hospital never made it in front of the jury. At the time of the raid there were allegations that patients were given unnecessary tracheotomies or overly sedated—but those allegations were not included when the officials were indicted six months later.
In a pretrial ruling, U.S. District Judge Matthew Kennelly had also blocked prosecutors from talking about what they've contended were instances of patient mistreatment.
Before Thursday's conviction, four others—including Anthony Puorro, the hospital's former chief operating officer, and Noemi Velgara, a former hospital vice president—had pleaded guilty to their roles in the scheme. Another four doctors associated with the hospital are scheduled to go to trial later this year, according to the U.S. Attorney's office in Chicago.
After the administrators' arrests, the Chicago hospital struggled to stay open failed to find a buyer. The hospital auctioned off its equipment and sold the building in 2013.