'King of Nursing Homes' Gets 2 Years for Taking Kickbacks

August 16, 2016

A physician known as "the king of nursing homes" was sentenced August 12 to 2 years in prison for receiving kickbacks from a scandal-ridden hospital in Chicago, Illinois, in exchange for admitting hundreds of Medicare and Medicaid patients.

Federal prosecutors said that 69-year-old Venkateswara Kuchipudi, MD, had "monetized an extremely vulnerable patient population by directing them to a hospital he consistently criticized as substandard for the sole reason that he benefitted financially."

In March, a jury found Dr Kuchipudi guilty of one count of conspiracy to defraud the government and nine counts of soliciting kickbacks, which took the form of free labor: namely, physician assistants (PAs) and nurse practitioners (NPs). Dr Kuchipudi was the fifth physician convicted of receiving kickbacks — which also included bogus rent payments and teaching fees — from the now-defunct Sacred Heart Hospital, which appeared to be operating a residency program in fraud. Three of its executives, including CEO and owner Edward Novak, also were convicted on fraud charges, and they are serving lengthy prison sentences.

Sacred Heart employed PAs and NPs who almost exclusively treated patients that Dr Kuchipudi admitted from more than 30 nursing homes, prosecutors said. He billed Medicare and Medicaid for the services of these clinicians, but illegally so, because they were on the hospital payroll. He also illegally billed for work they performed in his office and his nursing homes. And Sacred Heart let him bill for patient care rendered by its emergency physicians as well. The estimated value of all the illegal claims came to roughly $770,000. In another benefit, Sacred Heart spent at least $412,500 to employ staff who worked for Dr Kuchipudi, according to prosecutors.

"Thank You for the Admissions"

The Department of Justice had sought a prison sentence of 6 to 8 years for Dr Kuchipudi. His attorneys, in turn, argued for probation coupled with community service. In a sentencing memorandum to US District Judge Matthew Kennelly in Chicago, they said that Dr Kuchipudi's crime, occurring in the twilight of an illustrious career, arose from good intentions.

The offense at its core "involved a primary care physician attempting to treat and oversee…more patients than otherwise would have been possible in the context of a shortage of a primary care physicians," his attorneys said. And although he illegally benefited from the work of NPs and PAs employed by Sacred Heart, patients benefited, too. "The presence of PAs/NPs at [the hospital] enhanced the level of care. They were a good thing."

Dr Kuchipudi's selfless devotion to his patients over the years also justified a light sentence, his attorneys argued, citing testimonial letters from dozens of colleagues, friends, family members, and patients.

"Dr Kuchipudi is so hard working and the most caring and compassionate medical doctor I have ever seen," wrote one patient, one of three generations of her family in his practice. She recalled how he used to tear up her parents' medical bills when they couldn't afford to pay them.

"I can tell you for sure he didn't become a doctor for the money or else he wouldn't have anything to do with our family," she said.

In their sentencing memorandum to the court, federal prosecutors contended that Dr Kuchipudi was not the "hard-working, committed physician" depicted by his attorneys. Citing evidence presented at trial, they said he rounded on hospitalized patients in a cursory manner and often did not know who they were or why they had been admitted. Prosecutors also described him as someone driven by "callous greed," going so far as to pressure Sacred Heart to pick up his meal tabs at the famous Gibsons Bar and Steakhouse in downtown Chicago. A hospital executive obliged, promising him $200 in gift certificates every month, according to the government's sentencing memorandum.

"Thank you for the admissions," the executive was quoted as saying.

An attorney for Dr Kuchipudi did not respond to a request for an interview.

Follow Robert Lowes on Twitter @LowesRobert

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