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Press Release

Oak Brook Doctor Convicted in Kickback Scheme at Sacred Heart Hospital

For Immediate Release
U.S. Attorney's Office, Northern District of Illinois

CHICAGO — A federal jury today convicted an Oak Brook doctor of illegally receiving benefits in exchange for referring elderly patients to Sacred Heart Hospital on Chicago’s West Side.

After a five-week trial, DR. VENKATESWARA R. “V.R.” KUCHIPUDI was convicted on one count of conspiracy to defraud the United States, and nine counts of illegally soliciting or receiving benefits in return for referrals of patients covered under a federal health care program.  Each count carries a maximum sentence of five years in prison and a $250,000 fine.

U.S. District Judge Matthew F. Kennelly scheduled a sentencing hearing for June 2, 2016, at 1:30 p.m.

Dr. Kuchipudi, 69, is the tenth defendant convicted in a multi-year investigation of the now-shuttered hospital at 3240 W. Franklin Blvd. in Chicago.  From 2001 through April 2013, Sacred Heart executives conspired to pay kickbacks and bribes to physicians to induce them to refer patients for services that would be reimbursed by Medicare and Medicaid.  The scheme earned Sacred Heart millions of dollars in reimbursements from Medicare and Medicaid.

The prior convictions include EDWARD NOVAK, the hospital’s owner and chief executive officer; ROY PAYAWAL, the chief financial officer; CLARENCE NAGELVOORT and ANTHONY J. PUORRO, both of whom were chief operating officers; and four other physicians.  Sacred Heart closed in 2013 in the aftermath of a federal law enforcement search of the hospital and the arrests of principal executives and Dr. Kuchipudi.

Evidence at Dr. Kuchipudi’s trial revealed that he was one of Sacred Heart’s most prolific sources of patient referrals.  In exchange for his referrals, Sacred Heart provided Dr. Kuchipudi with free labor in the form of physician assistants and nurse practitioners.  The free labor was provided not only inside Sacred Heart but also in Chicago-area nursing homes where many of Dr. Kuchipudi’s patients resided.  Sacred Heart allowed Dr. Kuchipudi to bill Medicare and Medicaid for the services of the physician assistants and nurse practitioners as if he employed them himself.

Evidence at trial further revealed that Dr. Kuchipudi and Sacred Heart arranged for his patients to be transported long distances to Sacred Heart for treatment, even when the nursing homes in which they resided were closer to hospitals where Dr. Kuchipudi had privileges and which had more comprehensive facilities. 

The conviction was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The investigation was carried out by the Medicare Fraud Strike Force, which is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the U.S. Justice Department and the U.S. Department of Health and Human Services to prevent fraud and to enforce anti-fraud laws around the country.  Dozens of defendants have been charged in numerous fraud cases since the strike force began operating in Chicago in 2011.

The government is represented by Assistant U.S. Attorneys Joel Hammerman, Diane MacArthur, Kelly Greening and Brian Wallach.

Updated March 4, 2016

Health Care Fraud