Chicago's Sacred Heart Hospital raided by feds in kickback scheme, four arrested

April 16, 2013

Staff and wire reports

WBEZ/Shannon Heffernan
Officials speak at a press conference April 16 after six arrests were made at Sacred Heart Hospital Tuesday morning. The U.S. States attorney’s office alleges hospital officials paid kickbacks to physicians in return for referrals of Medicare and Medicaid patients.

Federal authorities raided Sacred Heart Hospital on Chicago’s West Side Tuesday morning.  

The hospital’s owner and chief financial officer were arrested, along with four doctors.

The U.S. States attorney’s office alleges hospital officials paid kickbacks to physicians in return for referrals of Medicare and Medicaid patients. Prosecutors say about $2 million in Medicare reimbursement payments were seized Tuesday from various bank accounts.

An FBI spokeswoman in Chicago, Joan Hyde, confirmed warrants were served during a raid Tuesday morning at the hospital.

Hospital Chief Nursing Officer Jim Bailey says the hospital continues to provide ongoing care. He says the hospital has no additional information on the investigation.

Though not charged, the affidavit also suggests the hospital unnecessarily admitted patients to the emergency room and performed unneeded tests to increase billing.  

The investigation is also probing claims that the hospital performed unnecessary tracheostomies to collect substantial insurance reimbursements.

“Today’s arrests demonstrate our commitment to enforcing the laws intended to prevent abuses of the Medicare and Medicaid programs and to preserve the ability of those programs to provide appropriate medical services to the elderly and the needy,” said Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

Arrests included:

  • Edward J Novak, 58, of Park Ridge, Sacred Heart’s owner and chief executive officer
  • Roy M Payawal, 64, of Burr Ridge, executive vice president and chief financial officer
  • Doctors Venkateswara R. Kuchipudi, of Oak Brook; Percy Conrad May Jr., 75, of Chicago; Subir Maitra, 73, of Chicago and Shanin Moshiri, 57, of Chicago.

All six defendants are scheduled to have their initial court appearance April 16.

The Illinois Department of Public Health says its now assessing patient care at the Chicago hospital.

The department said in a news release Tuesday afternoon that it's at Sacred Heart Hospital to assess the facility's ability to care for patients and will conduct a full inspection of the facility to see if there are any state or federal violations.

Hospital officials said they are cooperating with federal authorities.

If you or a loved one has received unnecessary treatment at Sacred Heart, or any hospital, you can report it at www.stopmedicarefraud.gov

Shannon Heffernan is a WBEZ reporter. Follow her @shannon_h