Former Tustin Hospital Executive Agrees to Plead Guilty to Paying Kickbacks in ‘Skid Row’ Health Care Fraud Plot

February 13, 2010 - LOS ANGELES—The former chief financial officer of Tustin Hospital and Medical Center agreed in court papers filed today to plead guilty to paying illegal kickbacks for patients who were recruited from the “Skid Row” area of Los Angeles.

In a plea agreement filed today in United States District Court, Vincent Rubio 49, of Los Angeles, admitted paying illegal kickbacks to “marketers” who recruited homeless persons from Los Angeles’ Skid Row and had them transported to Tustin Hospital.

In addition to the healthcare fraud charge, Rubio admitted that he failed to report the payments he received from one of the marketers on his federal tax returns.

Rubio specifically admitted to participating in a scheme to pay Estill Mitts, who operated a center on Skid Row that recruited homeless people to receive unnecessary health services, and others to refer homeless Medicare and Medi-Cal beneficiaries to Tustin Hospital for in-patient hospital stays. As part of the scheme, Tustin Hosptial entered into sham “consulting” contracts intended to conceal the illegal kickbacks. Tustin billed Medicare and Medi-Cal for in-patient services provided to the recruited homeless beneficiaries, including those for whom in-patient hospitalization was not medically necessary.

Tustin is a subsidiary of Pacific Health Corporation, which also owns Los Angeles Metropolitan Medical Center, Anaheim General Hospital and Bellflower Medical Center.

Rubio is the fifth person to be charged in relation to an ongoing investigation into health care fraud related to Skid Row residents. Mitts, 65, of Los Angeles, pleaded guilty in September 2008 to conspiracy to commit health care fraud, money laundering and tax evasion, and he is scheduled to be sentenced on June 21. Rudra Sabaratnam, 65, one of the owners of City of Angels Hospital in Los Angeles pleaded guilty in December 2008 to paying illegal kickbacks for patient referrals, and he is scheduled to be sentenced on April 5. Dante Nicholson, 52, senior vice president of City of Angels, pleaded guilty in March 2009 to paying illegal kickbacks for patient referrals, and he is scheduled to be sentenced on June 14. Robert Bourseau, co-owner of City of Angels, pleaded guilty in June 2009 to paying illegal kickbacks, and he is scheduled to be sentenced on February 22. United States District Judge George H. King is presiding over all of the Skid Row cases.

The three charges to which Rubio has agreed to plead guilty carry a statutory maximum penalty of 11 years in federal prison. Rubio is expected to make his initial appearance in United States District Court on March 1.

The ongoing investigation into healthcare fraud related to the recruitment of Skid Row denizens is being conducted by the U.S. Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; IRS-Criminal Investigation; the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse; and the Health and Law Enforcement Team (HALT), a multi-agency task force which is operated by the Los Angeles County Health Department.

Anyone with information that could assist the ongoing investigation is encouraged to contact investigators with the Department of Health and Human Services by calling 1-800-HHS-TIPS, or e-mailing HHSTips@oig.hhs.gov.