Article - August 7, 2008 - Wall Street Journal

Two Charged in Medical-Care Billing Scam

By Amy Kaufman

LOS ANGELES -- A top hospital official and the operator of a homeless facility face federal criminal fraud charges for their alleged involvement in an elaborate plan to recruit homeless individuals for unnecessary health-care treatment and then bill the government for it.

Federal Bureau of Investigation agents on Wednesday arrested Rudra Sabaratnam, chief executive of City of Angels hospital, and Estill Mitts, operator of a homeless assessment center in Los Angeles's downtown "Skid Row," for conspiring to persuade homeless people to act as patients in an attempt to fill beds, according to the U.S. attorney's office here.

"Individuals who saw a great deal of money were trying to line their pockets illegally with millions of dollars that were intended to go to the elderly and the sick," said U.S. Attorney Thomas P. O'Brien. Mr. O'Brien said the investigation was ongoing and he expects other defendants to be indicted in the near future.

Lawyers for Messrs. Sabaratnam and Mitts couldn't be reached for comment.

At the same time, the Los Angeles city attorney has filed civil charges against three Southern California hospitals where search warrants were served Wednesday as well as against their chief executive officers and other alleged co-schemers, including an ambulance company.

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