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Press Release

Oak Brook Doctor Sentenced to Two Years in Prison in Connection with Kickback Scheme at Sacred Heart Hospital

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

CHICAGO — A federal judge sentenced an Oak Brook doctor to two years in prison for illegally receiving benefits in exchange for referring elderly patients to Sacred Heart Hospital on Chicago’s West Side.

DR. VENKATESWARA R. “V.R.” KUCHIPUDI was convicted in March 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.

U.S. District Judge Matthew F. Kennelly imposed the sentence Friday in federal court in Chicago.

“Medical professionals of every kind must know that patient need should be the only factor influencing decisions concerning patient care,” Assistant U.S. Attorney Joel M. Hammerman argued in the government’s sentencing memorandum.  “Patients are not commodities to be bartered or monetized.”

Dr. Kuchipudi, 69, was one of ten defendants convicted in the 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, 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.

The investigation was carried out by the Medicare Fraud Strike Force, which is part of the Health Care Fraud Prevention & Enforcement Action Team, 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.

Evidence at Dr. Kuchipudi’s five-week 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 a physician, 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.

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

Updated August 15, 2016

Health Care Fraud