The former chief executive of New York's Hospital for Special Surgery was arrested for allegedly pilfering $1.4 million in kickbacks for more than a decade, the U.S. Department of Justice announced yesterday. Along with one count of racketeering, ex-CEO John Reynolds also was charged with lying to law enforcement.
The DOJ claims from 1996 through 2007, Reynolds took money from at least two hospital vendors, a subordinate hospital employee and U.K.-based healthcare organization in exchange for business contracts, an annual bonus and a clinical partnership, respectively.
During that time, then-CEO Reynolds also made false statements to the Hospital for Special Surgery board of directors about outside consulting and conflicts of interest, the DOJ noted.
"Kickbacks have no place in the healthcare industry. They can influence medical decision making, cause overutilization of services and lead to increased costs in the Medicare program on which millions of elderly and disabled Americans rely," HHS-OIG Special Agent-in-Charge Thomas O'Donnell said in a statement.
Reynolds' lawyer said the kickback allegations are "without basis in fact or law," according to the Associated Press.
Meanwhile, the hospital said it was shocked by the charges against its former CEO but told Bloomberg it cooperated with the government's investigation.