March 20--The onetime owner and two former top executives of the now-shuttered Sacred Heart Hospital in Chicago were convicted Thursday on charges they paid hundreds of thousands of dollars in kickbacks so doctors would refer patients on Medicare to the struggling hospital.
Seated at the defense table in a gray suit and a burgundy tie, Edward J. Novak, a pharmacist who had owned the West Side hospital since the 1980s, showed no reaction to the verdicts. As the jury filed out, he stood but kept his eyes down as he calmly scrolled through his smartphone.
The federal jury deliberated over parts of three days before convicting Novak, 60, on all but one of the 28 counts against him, including conspiracy and paying direct kickbacks to physicians. The jury found Clarence Nagelvoort, 59, the former chief operating officer, guilty on 11 of 12 counts, while Roy Payawal, 66, the former chief financial officer, was convicted on 17 of 27 counts. Each count carries a maximum penalty of five years in prison.
Prosecutors alleged that the hospital was so desperate for revenue that it enticed physicians to refer patients by kicking back money to them -- much of it disguised as teaching contracts, lease agreements and staffing perks.
Speaking in the courthouse lobby after the verdicts, U.S. Attorney Zachary Fardon said elderly patients were bused from nursing homes as far as 25 miles away from Sacred Heart, sometimes in the middle of the night, to "receive care from an emergency room that was undermanned and under-resourced."
"Physicians need to make care decisions based on their patients' needs and not based on their own profit or personal financial interests," Fardon said. "The message of this jury is that a kickback is a kickback ... and it doesn't matter if you dress it up as a rental payment or a lease payment or a consulting payment. If you are paying for patient referrals, you are committing a federal crime."
Prosecutors said the massive Medicare fraud scheme operated over a 10-year span before federal agents raided the hospital in 2013.
Neither Novak nor his attorney, Sergio Acosta, would comment as they left the Dirksen U.S Courthouse. Novak, whose personal wealth has been estimated in court records at $30 million, will remain free on a $10 million cash bond pending sentencing in July.
During the trial, attorneys for Novak and his co-defendants argued that underlings who wore undercover wires for the FBI were to blame for the misconduct, and that they agreed to cooperate against their bosses to save their own skins. They also said there was nothing unorthodox about a hospital trying to drum up business.
In six weeks of testimony, jurors heard numerous undercover recordings and testimony from dozens of witnesses. Among them was William Noorlag, who ran the podiatric residency program for more than a decade. He testified that Novak had set up teaching contracts to disguise kickbacks to physicians after he had grown concerned about a dip in the number of podiatric patients in the early 2000s.
Noorlag said Novak stressed the need to make the contracts appear legitimate, quoting him as saying in 2001, "Bill, you better make sure the evaluations and paperwork are done because if I go down for this, you're going down with me."
Jurors also heard a key recording that captured Chicago podiatrist Dr. Shanin Moshiri meeting at the hospital with Anthony Puorro, who at the time was Novak's second in command, to collect what prosecutors alleged was Moshiri's monthly $2,000 kickback for referring Medicare patients to Sacred Heart.
Moshiri told Puorro in that March 2013 conversation that Novak never seemed to be satisfied with the number of patients the hospital was taking on through the illegal referrals.
"He wants the Taj Mahal, all or nothing," Moshiri said. "He should be very happy I bring my patients here. ... I'm the most active podiatrist at the hospital."
Federal authorities raided the hospital in 2013 amid bombshell allegations that doctors were performing medically unnecessary tracheotomies and giving heavy sedation to patients in a process called "snowing."
At least five deaths at the hospital had been under scrutiny at one time, authorities said. But when the indictment came six months later, none of the ghoulish allegations involving patient deaths or over-sedation was leveled against any of the defendants.
Four defendants have pleaded guilty in the case, including doctors Subir Maitra, 75, and Jagdish Shah, 70, and former executives Puorro, 57, and Noemi Velgara, 65, who both cooperated with the investigation.
Four doctors who were charged in the scheme have denied wrongdoing and are awaiting trial.
jmeisner@tribpub.com
