Orange County Business Journal

Hospital Chain Paying $16.5 Million to Settle Fraud Case

Vita Reed Friday, August 24, 2012

Newport Specialty Hospital in Tustin and Anaheim General Hospital are among a group of hospitals that will pay a $16.5 million fine to settle allegations that they were treating homeless people to defraud the government.

Los Angeles Doctor’s Hospital Inc., a subsidiary of Tustin-based Pacific Health Corp., pleaded guilty to conspiracy to defraud Medicare and Medi-Cal by paying “marketers” to recruit homeless people who acted as patients from 2004 to 2007, according to a press release from the U.S. Attorney for the Central District of California’s office.

The office said the patients were treated for health conditions even if they didn’t need treatment.

Although Pacific was criminally charged Thursday, those charges will be dismissed in 2018 if the company follows through with its deal, the U.S. attorney’s statement said.

Pacific said in a release that its new management team wanted to “fairly resolve these legacy issues with the government.”

Pacific said that it wanted to focus on providing care to the communities its hospitals serve and “we believe that ultimately our hospitals will be stronger as a result of this agreement.”