by | last updated on January 15, 2016

The Medicare Strike Force is at it again. This time in Chicago.

On March 19, the former owner and CEO, the COO, and the CFO of the now-closed Sacred Heart Hospital, a 119-bed acute care facility, in Chicago were convicted after a nearly two-month trial of collectively paying hundreds of thousands of dollars as part of an illegal kickback scheme that for the referral of patients who were insured by Medicare and Medicaid.

The federal jury found that Edward J. Novak, 60, Sacred Heart’s owner and CEO, Roy M. Payawal, CFO and Exec. V.P., and Clarence Nagelvoort, were part of an illegal kickback scheme that paid doctors concealed bribes and kickbacks for patient referrals to increase the number of patients in order to increase hospital earnings. Four others who were also charged entered guilty pleas and gave up their right to have a jury decide their guilt or innocence.

Once Medicare payments were suspended after criminal charges were filed in April 2013, the hospital closed it doors later and filed for bankruptcy.

The indictment charged that the conspiracy went as far back to 2001 and lasted through April 2013. All defendants were convicted of one count of conspiring to violate the federal healthcare anti-kickback statute, 42 USC § 1320a – 7b(b), by offering and paying kickbacks and bribes, directly and indirectly, to doctors in order to induce them to refer patients to the hospital for services that Medicare and Medicaid would reimburse.

According to the verdict, Novak was convicted of 26 counts of paying kickbacks for patient referrals, Payawal was convicted of 17 counts of paying kickbacks for patient referrals, and Nagelvoort was convicted of 11 substantive counts of paying kickbacks for patient referrals.

The jury acquitted Payawal of ten kickback counts and Nagelvoort of one kickback count. The jury did not reached a verdict on one substantive kickback count for defendant Novak. The acquittals are unlikely to have much, if any, benefit as far as the sentencing guidelines sentencing computation. The Court must impose a reasonable sentence under federal statutes and after taking into consideration the advisory United States Sentencing Guidelines.

Until they are sentenced in July, the defendants are free on bond. Each conviction carries a maximum penalty of five years in prison. A $250,000 fine and restitution is mandatory.

The Law Offices of Robert David Malove are a full-service health care / Medicare fraud criminal defense law firm. If you or someone you know is facing Medicare fraud charges, for a confidential consultation, contact Robert Malove.