CA hospitals raided on fraud charges

Anne Zieger — Thu, 07 Aug 2008 10:39:31 -0400

Three hospitals in the Los Angeles area are facing lurid charges that they recruited homeless people on the city's skid row and subjected them to unnecessary tests and procedures in an effort to generate extra income. The hospitals are accused of bilking both Medicare and Medi-Cal, the state's Medicaid program. In addition to facing state and federal charges, the three facilities have also been sued by Los Angeles City Attorney Rocky Delgadillo, whose suit accuses the hospitals of fraudulent business practices.

The alleged scheme appears to have involved the CEO of City of Angels Medical Center, and executives with two suburban facilities, Los Angeles Metropolitan Medical Center and Tustin Hospital and Medical Center. While federal, state and local investigators are still tallying the dollars generated by these schemes, at present it appears that City of Angels alone collected $5 million in federal healthcare reimbursements.

To recruit sham patients, the hospitals used "runners" who canvassed the streets of the city's skid row section. Homeless people were offered $20 to $30 when they finished a needless hospital stay of one to three days. The runner would get $40 for each homeless recruit eligible for Medicare and $20 for each recruit with Medi-Cal benefits, according to Delgadillo's lawsuit. One hospital, meanwhile, worked with a sham "Assessment Center" that reached out to potential patients and attempted to bring them in to City of Angels, offering money, food or even a pack of cigarettes.

To learn more about the scandal:
- read this Los Angeles Times piece

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L.A. sues Blue Shield of CA over cancellations

Anne Zieger — Thu, 17 Jul 2008 11:26:28 -0400

Engaging in yet another battle with the state's health plans, Los Angeles City Attorney Rocky Delgadillo has filed a lawsuit contending that Blue Shield of California illegally canceled the policies of hundreds of beneficiaries. This move follows a number of similar actions by state and local officials, including a similar suit Delgadillo filed earlier this year against Anthem Blue Cross and million-dollar fines against various health plans by the state Department of Managed Health Care. Regulators contend that the practice of rescinding policies for such innocent mistakes, known as rescission, is illegal under state law. Health plans, meanwhile, maintain that they're merely rooting out fraud.

In the current suit, Delgadillo argues that the plan has illegally canceled coverage of more than 850 policyholders. It asserts that the plan uses confusing applications to trick individual applicants into making innocent mistakes, then uses the mistakes to cancel policies when medical bills get high. Delgadillo is seeking fines and penalties totaling of more than $1 billion.

To learn more about the suit:
- read this Los Angeles Times piece

Related Articles:
WellPoint pays hospitals $11.8M to settle bills from rescissions
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