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Orange County Doctor Sentenced to Year in Prison in $11 Million Medicare Scam Involving Patients Recruited from L.A.’s Skid Row

U.S. Attorney’s Office December 18, 2012
  • Central District of California (213) 894-2434

LOS ANGELES—A physician who admitted homeless patients to the Tustin Hospital and Medical Center after they had been driven from Skid Row in downtown Los Angeles as part of a Medicare fraud scheme has been sentenced to one year in federal prison.

Dr. Kenneth Thaler, 61, of Westminster, was sentenced yesterday afternoon by Chief United States District Judge George H. King. Thaler, who admitted approximately 60 patients per month—including some who did not require hospitalization—also was ordered to pay approximately $11 million in restitution to the Medicare program. Thaler admitted patients who had been recruited by marketers who were being paid kickbacks by Tustin Hospital. These patients had been driven from Skid Row, past various hospitals, to be admitted to the facility in Tustin.

When he pleaded guilty in 2010, Thaler admitted that he was aware that the hospital was paying illegal kickbacks to recruiters such as Estill Mitts to refer homeless Medicare and Medi-Cal beneficiaries for in-patient hospital stays. After Thaler admitted these patients, he and the hospital billed Medicare and Medi-Cal for in-patient services, even if it was not medically necessary for the patient to be hospitalized. In fact, Thaler conceded that many of the recruited patients had been coached to recite false symptoms and that Thaler sometimes falsified medical records to justify their admission.

Prosecutors said Thaler faced a much longer prison sentence, but he cooperated with federal and local authorities in their investigations of the Skid Row scheme. Thaler has resigned his license to practice medicine.

Mitts, 68, of Los Angeles, who operated a center that recruited homeless people to receive unnecessary health services, pleaded guilty in September 2008 to conspiracy to commit health care fraud, money laundering, and tax evasion. He is scheduled to be sentenced on January 14.

Previously in the investigation, Tustin Hospital’s former chief financial officer pleaded guilty to paying illegal kickback to Mitts and others for patient referrals (see: http://www.justice.gov/usao/cac/Pressroom/pr2010/029.html). Vincent Rubio is scheduled to be sentenced by Judge King on January 28.

These cases are part of an ongoing investigation being conducted by the U.S. Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; IRS-Criminal Investigation Division; the California Department of Justice, 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.