After Fines, Legal Costs, Three Southern California Hospitals to Close

Pacific Health Corp. had just announced it would close Anaheim General Hospital last week

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    NEWSLETTERS

    A health care corporation is closing four Southern California emergency rooms in part because of heavy legal costs related to federal prosecutors' allegations that the hospitals recruited homeless people and wrongly charged Medicare and Medi-Cal for care. Gordon Tokumatsu reports from Hawthorne for the NBC4 News at 5 p.m. on April 3, 2013. (Published Wednesday, Apr 3, 2013)

    A health care corporation is closing four Southern California emergency rooms in part because of heavy legal costs related to federal prosecutors' allegations that the hospitals recruited homeless people and wrongly charged Medicare and Medi-Cal for care.

    Pacific Health Corp. had just last week announced it would close Anaheim General Hospital after receiving a $7 million fine from the state last month for failing to properly pay employees.

    On Tuesday, the company announced the closure of Bellflower Medical Center, Newport Specialty Hospital and Los Angeles Metropolitan Medical Center's West Adams and Hawthorne campuses.

    The hospitals' emergency departments were slated to close Wednesday, while existing patients will continue to receive care until they are transferred to other facilities, according to the company.

    "Pacific Health Corp. has taken the difficult decision to suspend services at all three of its remaining hospitals as we work to resolve the legacy issues facing our company,'' according to a statement. "These issues include the settlement we reached with the Department of Justice last year, as well as other legal matters from our past, which have made it impossible for us to continue operating in this especially challenging economic climate for all health-care providers.''

    Employees were told of the closure on Tuesday.

    In August, Pacific Health Corporation agreed to pay $16.5 million for allegedly engaging in an illegal kickback scheme to recruit homeless people from Los Angeles' Skid Row to become patients at the hospital, where some received unnecessary treatment.

    As part of the settlement, PHC's Los Angeles Doctors Hospital pleaded guilty to conspiracy for the illegal kickback scheme.

    The alleged kickbacks were discovered in the same investigation that landed two hospital owners behind bars for running a similar scheme at City of Angels Medical Center. Several people pleaded guilty in that scheme. Co-owners Dr. Rudra Sabaratnam and Robert Bourseau were sentenced to two years and a little over three years in prison, respectively.

    Bellflower Medical Center has 142 beds, while Newport Specialty has 177 beds. The two Los Angeles Metropolitan Medical Center campuses have 212 beds.

    Last year, Pacific Health Corp. agreed to pay $16.5 million in fines and restitution to the federal government to settle allegations that homeless people were recruited to undergo unneeded tests or procedures, for which Medicare and MediCal were billed.

    Then, last month, the corporation was fined more than $7 million by the state for failing to pay wages and issuing checks that bounced. The state began investigating the company after receiving an anonymous tip that Bellflower Medical Center issued checks to employees that bounced in September.

    The Department of Industrial Relations also said the company was holding pay checks past payday and offered incentives to workers to wait to pick up checks after payday.

    It was unclear how many people would lose their jobs due to the closures.

    "We would like to extend a sincere thank you to all of our staff for their hard work and dedication to the many patients we have served over the years,'' the company said.

    City News Service contributed to this story.

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