This blog has devoted significant space to the house of horrors formally known as Sacred Heart Hospital in Chicago. Although the criminal case dealt mostly with Medicare fraud, shocking testimony revealed deplorable conditions within the facility. Some defendants took responsibility and quickly pleaded guilty in the hopes of being spared a lengthy prison sentence. Others exercised their right to a trial… and lost. And then there is Dr. Venkateswara Kuchipudi.
Convicted by a jury on March 4th after a month long trial, Kuchipudi now wants the court to reverse the jury’s verdict. He believes the jury got it wrong.
Motions to overturn jury verdicts are rarely granted. Our Constitution envisions a jury being the ultimate finder of fact. Although a defendant can easily choose to waive their right to a jury, judges don’t lightly overturn jury verdicts.
Federal Anti Kickback Statute
Jurors convicted Kuchipudi of a single count of conspiracy and ten counts of violating the federal Anti Kickback Statute. Congress prohibits the exchange of anything of value in an effort to induce (or reward) the referral of federally funded health care program business. Federally funded care includes Medicare, Medicaid and Tricare. A violation of the anti kickback statute is considered a felony punishable by up to 5 years in prison.
A violation of the anti-kickback statute is also a violation of the federal False Claims Act, the latter being a whistleblower statute that pays awards to people who report illegal kickback and other Medicare fraud schemes. More on that later.
Congress elected to make the anti-kickback law a serious crime. We and Congress believe that important healthcare decisions should be based on medical need and what is in the best interest of the patient. Kickbacks and bribes radically alter that dynamic. Suddenly doctors are being induced to do what is in their financial interest, not what is in their patient’s best interest.
The anti-kickback statute can be applied both to the payer of the bribe and the recipient. It is just as wrong to pay a bribe as it is to accept it.
Prosecutors claim that Kuchipudi would send all his nursing home patients to Sacred Heart Hospital, even if other or better hospitals were closer. Because he had such a large number of elderly nursing home residents, he was dubbed the “nursing home king.” In return for the patient referrals, he would receive free labor from hospital staff. While that might seem to make good business sense, it was a horrible idea for patients. Vermin, flies in the operating room, poor staff… ask any former Sacred Heart patient and it seems they all have a horror story. One physician we spoke with confirmed that conditions were really as bad as prosecutors and media reports claim.
So why does Kuchipudi think he should be set free? He says that jurors misunderstood the law. He believes that he is protected by an exception in the anti kickback statute that exempts any sums that employers pay employees.
Today, few hospitals are stupid enough to pay cash kickbacks. Instead they often disguise kickbacks as below market office space leases, phony medical directorships and phony research grants. The law doesn’t just forbid the payment of cash bribes, however. It prohibits the exchange of anything of value. Giving Kuchipudi free labor certainly has value.
Ultimately, it was up to the jury to decide and clearly they sided with the government and not Kuchipudi.
Presently Kuchipudi is scheduled to be sentenced on July 7th. That is, unless he is successful in convincing the court to ignore the will of 12 jurors. Several physicians and hospital administrators have already received prison sentences ranging from 3 months to four and a half years.
Hospitals and other health care providers have become quite sophisticated in hiding kickbacks. The easiest way to tell is to ask the question from the perspective of the patient. “Is the arrangement in the best interest of the patient?” If the answer is “no”, the arrangement probably violates the anti-kickback statute.
Anti Kickback Statute and Whistleblower Awards
As noted above, violations of the anti kickback statute are also violations of the False Claims Act. Under the latter, whistleblowers with inside information about illegal kickback or referral schemes can collect an award of between 15% and 30% of whatever the government collects. To receive an award, one generally must have inside information about the scheme, the scheme must related to Medicare or Medicaid and one must also be the first to file. There are some variations but the above rules apply in most situations.
Collecting an award means filing a lawsuit in federal court.
If you believe you qualify for an award, call us. Our whistleblower lawyers have collected over $100 million in award monies for our clients. We have also defended whistleblowers who face illegal retaliation for reporting misconduct or kickbacks.
Need more information? Contact attorney Brian Mahany at or by phone at (direct). You can also download our 11 step guide to whistleblowing. All inquiries are protected by the attorney – client privilege.
MahanyLaw – America’s Whistleblower Lawyers
** Want to learn more? Our blog has over two thousand posts and is text searchable. To learn more about the horrific Sacred Heart Hospital case, just use the words “Sacred Heart” in the search box. Want to more about the anti kickback statute? Visit our anti kickback Medicare fraud information page.