More questions surface about closed West Side hospital [Chicago Tribune]

Aug. 30--As Naaman Durham lay unconscious in Sacred Heart Hospital in the final weeks of his life, his sister stood vigil, deeply troubled by the many questions she had.

Why had her brother been transferred from his nursing home on the Far South Side to Sacred Heart some 10 miles away on the West Side, past hospitals that were closer to where he lived? Why had a tracheotomy tube been inserted into his windpipe? And what other treatment had he received?

Mayola Nash never got any answers from hospital employees and only began to grasp the horrifying possibilities of her brother's care at Sacred Heart when federal investigators called her in April.

Durham's death is one of at least five under investigation by federal officials several months after Sacred Heart's longtime owner, another hospital executive and four doctors were arrested on charges of running an elaborate kickback and fraud scheme to boost the number of patients -- and, as a result, its Medicare and Medicaid billings. Sacred Heart has since been forced to close, but the criminal complaint paints a portrait of a hospital that regularly shuttled patients from nursing homes and performed medically unnecessary, sometimes risky procedures.

"It's all about the money," Nash said earlier this week. "You took an oath to do all you can, to save a person, and they took advantage for monetary reasons. Naaman is dead now. ... It didn't have to happen."

Interviews with former hospital employees as well as patients and their families, plus a review of hundreds of pages of court records, state hospital inspection reports and other documents, suggest that the drive for profit often overwhelmed Sacred Heart's mission to provide quality care to the poor and elderly. Doctors and nurses said they tried their best but often were stymied by administrators concerned more about costs than treatment. Some administrators said questioning the hospital's top executives was strongly discouraged and could lead to being fired.

At the center of the alleged scheme was Edward Novak, a licensed pharmacist who fulfilled his dream of running a hospital when he bought Sacred Heart and became its president. Known for displays of generosity, Novak took cash out of his pocket to give those who came to the hospital's front door in need of money or food, former employees said, and he kept a driver on staff so the man had a job and patients without transportation could be driven to and from the hospital. The hospital provided health care "with a personal touch," Novak was quoted as saying on Sacred Heart's website.

But Novak, who built a small health care empire -- including a home health care business and medical malpractice insurance company in addition to Sacred Heart -- brooked no dissent, according to former employees. When a moneymaking surgery was canceled, he became exasperated with underlings, according to the charges. During a conversation secretly recorded by an employee cooperating with federal prosecutors, Novak allegedly called tracheotomies the "biggest moneymaker" for the hospital, saying earnings could reach $160,000 if a patient remained hospitalized for precisely 27 days.

After a federal judge set bail at $4 million following Novak's arrest in April, his wife, Linda, hurried to a nearby bank and returned to court that same afternoon with a cashier's check. Later, Novak paid an additional $6 million to ease home monitoring restrictions.

On Thursday, prosecutors alleged that Novak has $30 million in assets "at his disposal," calling him "a man of just incredible wealth."

In seeking to lower Novak's bail to $1 million, his lawyer on Thursday ripped the government's evidence, saying it relied heavily on one high-ranking hospital administrator. Attorney Sergio Acosta said he can prove through witnesses and documents that the alleged kickbacks were legitimate business arrangements. He said the government's most sensational allegation about the medically unnecessary tracheotomies wasn't true either and that undercover recordings back that up.

In the meantime, prosecutors who have already received two extensions face a Sept. 27 deadline to bring an indictment that could broaden the allegations and add more defendants.

A fixture since '30s

Despite its name, Sacred Heart had no religious affiliation. In fact, its official name, West Side Community Hospital, referred to its location in the impoverished Garfield Park neighborhood. The 119-bed blond brick hospital long filled a void by providing much-needed medical care for low-income and elderly residents in the area.

The hospital had been a fixture since it opened in the early 1930s on West Franklin Boulevard near North Kedzie Avenue. Then known as Franklin Boulevard Community Hospital, it played a crucial role in the 1958 fire at Our Lady of the Angels school that killed 92 children and three nuns, treating close to two dozen survivors, according to news accounts from the time.

By 1988, the not-for-profit hospital faced a financial crunch. A change in the surrounding neighborhood left it with a poorer clientele and a shrinking patient population, and chronically late Medicaid reimbursements from the state added to the woes, said Patrick DeMoon, a former top administrator. Hospital administrators even spoke publicly of filing for bankruptcy protection.

Novak, who at the time owned and operated drugstores, put together an investor group that bought the hospital. Among the investors was Alfredo Sy, a doctor at the hospital who sat on its board of directors and recently recalled being sold on Novak's "vision to bring health care to this community."

"He was very convincing," he said.

Novak renamed the hospital Sacred Heart, a nod to his Roman Catholic grandmother. He also converted the hospital to a for-profit enterprise, a difficult proposition with 95 percent of Sacred Heart's patients qualifying for Medicare or Medicaid, according to health care consultants. Former supervisors said they, too, wondered how the hospital was able to make money given the patients it served.

In 2009, an administrator at Novak's Superior Home Health business filed a federal whistle-blower lawsuit alleging that Novak caused Sacred Heart doctors to refer any Medicare and Medicaid patients to Superior so that it could make claims for government reimbursement. But Superior, according to the lawsuit, frequently delayed care to its patients and, at times, denied care altogether -- yet still billed the government. After the federal government didn't join in the whistle-blower lawsuit, the administrator dropped the litigation.

Then in March, a month before the arrests of Novak and the others, state inspectors responded to a complaint about the hospital's use of tracheotomies, homing in on the issue federal prosecutors later identified: whether the procedures were medically necessary and leading to patient deaths.

'Snowing'

The doctors called it "snowing" -- intentionally over-sedating patients until only the whites of their eyes were visible, authorities alleged. According to the criminal complaint, some elderly and disabled patients would then be placed on ventilators long enough that tracheotomies need to be performed. A hole would be cut in a patient's throat and a breathing tube inserted.

Authorities said the motive was profit -- each tracheotomy produced government reimbursements of $160,000 -- and singled out two doctors, identifying them only as Physicians D and E, for performing the tracheotomies. Neither has been charged with any wrongdoing.

According to the complaint, patients in five of the 28 tracheotomies performed by Physician E died within two weeks, a mortality rate three times the national average.

Attorney Anthony Onesto, who confirmed his client, Dr. Vittorio Guerriero, was Physician E, denied any wrongdoing, saying Guerriero was trusted by hospital staff for his surgical skills.

"I am hoping that the government realizes once they get the whole picture, this is a man who should not be charged with anything," Onesto said.

The criminal complaint identified Physician D as Sacred Heart's chair of the critical care committee. Dr. Venkata Buddharaju was chair of that committee at the time, according to his attorney, Thomas Breen.

"While it would appear that Dr. Buddharaju is Physician D in the complaint based on job title and his chairmanship of the critical care committee, the rest of the ... allegations do not conform to the medical care or decisions made by Dr. Buddharaju," Breen said in a statement.

The probe of Sacred Heart came after a doctor referred to by authorities as Physician A, a chairman of emergency room operations at Sacred Heart, was allegedly implicated in an unrelated health care fraud scheme. He began working undercover for investigators in fall 2011.

Secret recordings

Additional hospital insiders were eventually caught on secret recordings offering or taking kickbacks, authorities said. In a key development in January, a member of the hospital's senior executive staff began cooperating, secretly recording high-level meetings and conversations with Novak and the doctors who were also charged in the scheme, according to the charges.

The heart of the scheme alleged by authorities involved tens of thousands of dollars in kickbacks doled out regularly by the hospital to doctors who referred patients in order to fill beds. Sacred Heart also had an arrangement with an ambulance company to transport patients there even if numerous other hospitals were closer, according to the charges.

Many of the patients were admitted to the emergency room even though they didn't need that level of care, all to pad the cost to Medicare and Medicaid further, authorities alleged. For those cases, the hospital always marked Room 200 A -- an overflow room -- as the patient's destination, a code to make the paperwork appear appropriate, according to the complaint.

Authorities said Roy Payawal, who was the hospital's chief financial officer, oversaw the scheme with Novak. Three doctors -- Percy May Jr., Subir Maitra and Shanin Moshiri -- received monthly kickbacks from 2010 to early 2013 for regularly referring their patients to Sacred Heart for treatment, according to the complaint. The kickbacks for the three combined totaled more than $225,000, authorities said.

"They were paying for patients," Assistant U.S. Attorney Joel Hammerman told a judge Thursday as Novak briskly shook his head from side to side.

A fourth doctor, Venkateswara Kuchipudi, was known as the "king of nursing homes" because he sent so many of his nursing home patients to Sacred Heart, according to the charges. At one point, Kuchipudi is alleged to have boasted that he was responsible for more than half the patients then in the hospital.

In return, Sacred Heart paid salaries of two of Kuchipudi's employees and even rewarded him with gift cards to Gibsons steakhouse, the charges alleged.

Authorities alleged the hospital also concealed the kickbacks by disguising them as payments for rent or for supervising medical students.

In one secretly recorded conversation with another administrator, Novak urged that documents concealing the scheme be in order, authorities said.

<p>"Just keep us kosher," the complaint quoted Novak as saying. "You know, that's all just to cover our asses."

Kuchipudi's attorneys denied any wrongdoing and portrayed their client in a recent court filing as a doctor who had attained the "American Dream."

"Not once during his 35-year decorated career as a caregiver was he ever accused of an impropriety with respect to his medical practice, his billing or for that matter -- anything," the lawyers wrote.

Attorney Robert Fisher said May, who has been practicing medicine for five decades, had had a valid rental agreement with the hospital.

"He has an impeccable record for providing for low-income patients," Fisher said.

Moshiri's attorney declined comment. Attorneys for Payawal and Maitra could not be reached.

Families seek answers

Sacred Heart closed its doors in July after the government cut off financial reimbursements to the hospital. The state has moved to revoke its license.

Several families of patients who died at the hospital are considering lawsuits and awaiting the outcome of the federal investigation to finally get answers.

Sarah Thomas, whose father, Tommy Miller, died after a tracheotomy at Sacred Heart, has lingering questions much like Mayola Nash. She doesn't know why he was moved from his nursing home at 80th Street and Western Avenue all the way to Sacred Heart.

"They didn't tell me nothing," she said as she recently stood on her front stoop, a box containing her father's ashes cradled in her arms. "I don't even know how he got there."

Nash was recently told by an attorney that a lawsuit against Sacred Heart could be complicated by the hospital's filing for bankruptcy.

"It shouldn't have happened," she said of her brother's death. "Sometimes when I talk about it I want to cry so I have to stop. It's all over now, and I'm trying to come to terms with it. But I do think of him and have my depressed moments. What did happen? There's always a question there."

asweeney@tribune.com

smmills@tribune.com

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