June 15 (Bloomberg) -- A surgeon at Chicago’s Sacred Heart Hospital cut a hole in Earl Nattee’s throat on Jan. 3, the day before he died. It’s not clear why.
The medical file contained no explanation of the need for the procedure, called a tracheotomy, according to a state and federal inspection report that quotes Sacred Heart’s chief nursing officer as saying it happened “out of the blue.” Tracheotomies are typically used to open an air passage directly to the windpipe for patients who can’t breathe otherwise.
Now, amid a federal investigation into allegations of unneeded tracheotomies at the hospital, Nattee’s daughter, Antoinette Hayes, wonders whether her father was a pawn in what an FBI agent called a scheme to defraud Medicare and Medicaid.
“My daddy said, ‘They’re killing me,’” Hayes recalled, in reference to the care he received at the hospital.
Based in part on surreptitious tape recordings, an FBI affidavit lays out allegations that a Sacred Heart pulmonologist kept patients too sedated to breathe on their own, then ordered unneeded tracheotomies for them -- enabling the for-profit hospital to reap revenue of as much as $160,000 per case.
The Sacred Heart case is unusual because of the troubling nature of some of the allegations, said Ryan Stumphauzer, a former federal health care fraud prosecutor in Miami who reviewed the affidavit. “A typical indictment might allege phantom billing or improper coding,” he said. “This complaint alleges the hospital and doctors were performing unnecessary invasive surgery to justify false billing.”
It’s also unusual to have recordings from cooperating witnesses, he said, “but it is always very difficult to challenge a physician’s judgment.”
The government has already charged Sacred Heart owner Edward Novak, his chief financial officer and five physicians with Medicare fraud, in a criminal complaint alleging that they gave or received kickbacks in return for patient referrals.
A physician and two Sacred Heart administrators worked with federal investigators, secretly taping conversations with other hospital staff members, according to the complaint. The 90-page FBI affidavit includes a quote attributed to Novak saying tracheotomies were the hospital’s “biggest money maker.” The hospital’s pulmonologist, or respiratory specialist, is quoted as saying during an April conversation that Novak asked him “to provide two more tracheotomy cases for the hospital soon,” before inspectors -- who had visited the hospital in March -- returned.
Sergio Acosta, an attorney representing Novak, said his client declined to comment. Robert Clarke, attorney for Sacred Heart CFO Roy Payawal, also declined to comment.
A Sacred Heart surgeon performed tracheotomies on 28 Medicare patients between early 2010 and January, according to the affidavit, which doesn’t identify the surgeon by name. Five patients died within two weeks -- a death rate three times the statewide rate in Illinois.
The affidavit quotes a nursing supervisor as saying the hospital’s pulmonologist directed an ICU nurse to “snow the patient” in one case -- a phrase that means to sedate the patient so heavily that only the whites of the eyes were visible, according to the complaint.
The affidavit identified the pulmonologist only as “Physician D” and said he chairs Sacred Heart’s Critical Care Committee. That position is held by Venkata Buddharaju, according to his attorney, Thomas Breen. Buddharaju, who hasn’t been charged with any violations, declined to be interviewed for this story, citing the ongoing investigation, Breen said in an e-mailed statement.
“While it would appear that Dr. Buddharaju is Physician D in the complaint based on his job title and his chairmanship of the Critical Care Committee, the rest of the description and allegations do not conform to the medical care or decisions made by Dr. Buddharaju,” said Breen, a former state prosecutor.
His client “does not use the word ‘snow,’ and it is preposterous to suggest that he does,” Breen said. “The other allegations in the complaint are equally untrue.”
The affidavit contains an allegation that tracheotomy patients were lucrative for doctors as well as the hospital: The physician could bill $160 each time he visited a tracheotomy patient at the hospital, versus $32 for seeing a ventilator patient in a nursing home.
The state Medicaid program paid Buddharaju more than any other physician at Sacred Heart for such patient visits in the six months that ended Dec. 30, according to state records. A Sacred Heart surgeon, Vittorio Guerriero, received seven of the nine Medicaid payments made for tracheotomies at the hospital during that period, records show. In both cases, the billing rate was about double that of previous years.
Anthony Onesto, a lawyer for Guerriero, declined to comment, saying he hadn’t received his client’s permission to discuss the case. Guerriero hasn’t been charged in the case.
State and federal regulators were also scrutinizing Sacred Heart’s tracheotomies. In a “statement of deficiencies” dated March 12, they cited the hospital’s failure to document a reason for performing the procedure on an individual identified as “patient No. 3.” While their report doesn’t identify the patient by name, his gender, age and date of death match up with those of Earl Nattee, who died at 76 on Jan. 4 after a tracheotomy the day before.
The cause of death was listed as pneumonia and renal failure. Buddharaju’s name is on the death certificate. Nattee ran a mini-mart in Chicago for many years, Hayes said.
The same inspection report details the case of Patient No. 8, who was admitted in November, 2012, and given a tracheotomy on Nov. 17. By the end of that month, he had an infection that was recorded as being acquired in the hospital, the report says. He died Dec. 1 of what the report describes as end-stage liver disease.
That description aligns with the case of Naaman Durham, 48, a former exterminator who was receiving federal disability benefits and had a drinking problem, according to his sister, Mayola Nash of Chicago. Durham was sent to Sacred Heart from a local nursing home after he had a seizure, Nash said.
“After they signed him in, he just went downhill,” she said.
Since Novak’s arrest, the hospital has continued to operate, though he has stepped aside from his post as chief executive officer for the time being. His tenure as CEO goes back 25 years to when he took over the financially troubled Franklin Boulevard Community Hospital, turned it into a for-profit venture and renamed it Sacred Heart, said Patrick DeMoon, who was an assistant administrator at Franklin Boulevard.
A licensed pharmacist turned health care entrepreneur, Novak’s other ventures include a home health agency, a kidney dialysis center, an adult day care center and a malpractice insurance company.
$10 Million Bail
Sacred Heart, which is located on Chicago’s west side, in a neighborhood with half the median household income and twice the poverty rate of the city overall, has been filling less than half its 119 beds in recent years, according to reports it files with the Medicare program. Almost all its customers are Medicare or Medicaid recipients, according to state and federal reports.
Still, Novak reported a jump in profit to $9.4 million for the year ended June 30, 2012 -- up from $1.3 million the previous year. After his arrest in April, he posted $10 million in cash to make bail, according to Randall Samborn, a spokesman for the U.S. attorney’s office for the Northern District of Illinois.
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