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November 20, 2014

Former hospital COO admits to role in 'horror movie' scheme

Daily Briefing

The former COO of the Hollywood Pavilion psychiatric hospital in Florida this week pleaded guilty to partaking in a $67 million scheme to defraud Medicare.

Fraud scheme sends CEO and others to prison

In June 2013, Hollywood Pavilion CEO Karen Kallen-Zury, chief clinical officer Daisy Miller, and hospital administrator Christian Coloma were found guilty of submitting false Medicare claims for $67 million and tricking the federal health program into paying out almost $40 million in fraudulent claims.

Prosecutors argued that the hospital executives used "dirty" recruiters—many of whom were convicted felons—and paid them more than $1 million to refer patients who did not need care. Executives also falsified records to make it appear that physicians had delivered care and services when they actually hadn't, according to an FBI investigation.

Prosecutor Robert Zink said in court documents that Kallen-Zury personally made more than $10 million from the fraud scheme.

In September 2013, Kallen-Zury was sentenced to 25 years in prison, Miller was sentenced to 15 years in prison, and Coloma was sentenced to 12 years. In addition, Kallen-Zury was ordered to pay $40 million for her involvement in the scheme, which prosecutors have described as a "brothel of fraud."

CEO of Hollywood Pavilion gets 25 years in prison for 'horror movie' fraud scheme

Details of the COO's involvement

In May, former COO Christopher Gabel was indicted for his role in the scheme. On Tuesday, he pleaded guilty for conspiracy to commit health care fraud and conspiracy to defraud taxpayers with kickbacks.

Specifically, Gabel admitted to overseeing patients who were admitted to the hospital, which then resulted in claims to and reimbursement from Medicare, even if the patients' treatment was not deemed medically necessary. Gabel also admitted to paying kickbacks and bribes to patient brokers.

Gabel is currently free on bond, but he faces up to 15 years in prison when he is sentenced.

Meanwhile, Hollywood Pavilion is facing a foreclosure lawsuit (Bandell, "Morning Edition," South Florida Business Journal, 11/19; AP/CBS Miami, 11/19; McMahon, South Florida Sun-Sentinel, 11/18).

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