Former Chief Operating Officer of Sacred Heart Hospital Sentenced to 21 Months in Prison for Conspiring in Kickback Scheme
CHICAGO—The former chief operating officer of Sacred Heart Hospital was sentenced Friday to 21 months in prison for arranging payoffs to doctors in exchange for referring patients to the now-shuttered facility on Chicago’s West Side.
CLARENCE NAGELVOORT, 60, of Chicago, conspired with other hospital executives to pay kickbacks and bribes to doctors to induce the referrals. The payoffs were disguised in a number of ways, including compensation for consulting work, instructional services and lease agreements, and through the provision of free professional staff.
A jury convicted Nagelvoort in March of one count of conspiracy to violate the federal healthcare anti-kickback statute, and 11 counts of paying kickbacks for patient referrals. In addition to the prison term, U.S. District Judge Matthew F. Kennelly ordered Nagelvoort jointly liable for an $8.48 million forfeiture with his co-conspirators, EDWARD NOVAK and ROY PAYAWAL.
Novak, of Park Ridge, was the hospital’s former owner and chief executive officer. He was sentenced Wednesday to 54 months in prison. Payawal, of Burr Ridge, served as the hospital’s chief financial officer. Judge Kennelly sentenced Payawal on Thursday to 12 months and one day in prison. Other convicted executives, including the chief operating officer who succeeded Nagelvoort and the Vice President of Geriatrics, are awaiting sentencing.
The hospital executives are among nine defendants convicted in a multi-year investigation of Sacred Heart, a 119-bed acute care facility at 3240 West Franklin Boulevard in Chicago. From 2001 through April 2013, the executives conspired to pay kickbacks and bribes to physicians to induce them to refer patients to the hospital for services that would be reimbursed by Medicare and Medicaid. Evidence at trial revealed that hospital administrators tried to conceal the kickbacks by creating sham professional and lease agreements with doctors. The hospital closed in 2013 in the aftermath of the criminal indictments.
The Sacred Heart investigation was carried out by the Medicare Fraud Strike Force, which is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the U.S. Justice Department and the U.S. Department of Health and Human Services to prevent fraud and to enforce anti-fraud laws around the country. Dozens of defendants have been charged in numerous fraud cases since the strike force began operating in Chicago in 2011.
“It is illegal for hospitals and other health care providers to pay for patient referrals,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois. “We will continue to pursue these cases through our investigative partnerships with federal, state and local authorities.”
Mr. Fardon announced today’s sentence along with Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General; and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
In addition to Nagelvoort, Novak and Payawal, the prior convictions include:
Dr. PERCY CONRAD MAY JR., of Chicago, a physician who practiced at Sacred Heart. His sentencing is scheduled before Judge Kennelly on Sept. 24, 2015, at 1:30 p.m.
Dr. SUBIR MAITRA, of Chicago, a physician who practiced at Sacred Heart. He was sentenced by Judge Kennelly in 2014 to six months in prison.
Dr. JAGDISH SHAH, of Oak Brook, a physician who practiced at Sacred Heart. His sentencing will be set at a future date to be determined by Judge Kennelly.
ANTHONY J. PUORRO, formerly of Chicago, who was Sacred Heart’s chief operating officer after Nagelvoort. His sentencing will be set at a future date to be determined by Judge Kennelly.
NOEMI VELGARA, of Chicago, who was Sacred Heart’s vice president of geriatric services. Her sentencing will be set at a future date to be determined by Judge Kennelly.
Dr. SHANIN MOSHIRI, also known as “Shawni Moshiri,” of Chicago, a physician who practiced at Sacred Heart. Dr. Moshiri is scheduled to be sentenced by Judge Kennelly on Oct. 21, 2015, at 1:30 p.m.
The government is being represented by Assistant United States Attorneys Joel Hammerman, Ryan Hedges, Kelly Greening, Diane MacArthur, and Brian Wallach.