In addition to City of Angels, agents earlier Wednesday swarmed Los Angeles Metropolitan Medical Center and Tustin Hospital and Medical Center in Orange County. Pacific Health Corp., which owns both hospitals, said in a statement that it had cooperated with authorities and believed it would be cleared of any illegal conduct.
Officials said the investigation was continuing and additional defendants were expected to be charged. The total amount of the fraud was still being tallied, but prosecutors said Mitts' operation could have cost the government $11 million in improper payments and that City of Angels collected $5 million in federal healthcare reimbursements. City of Angels did not respond to requests for comment.
Delgadillo sued the three hospitals, their operators and several others. The hospitals used unfair business practices to fill empty beds in a bid to boost their finances, the suit claims.
The privately owned medical centers allegedly worked with patient recruiting operations on skid row that plucked homeless people from the streets and delivered them, with fake medical diagnoses, to the hospitals.
According to court filings, "runners" or "stringers" on skid row looked for homeless recruits. Prospects were offered small sums of money, typically $20 or $30, to be paid upon completion of a hospital stay of one to three days. The street recruiter typically received $40 for each homeless recruit with Medicare eligibility and $20 for each recruit with Medi-Cal benefits, according to the city attorney's lawsuit.
Some solicitations were direct, but others were coded, according to the city attorney's lawsuit. One alleged street pitch referred to the color scheme of the Medi-Cal eligibility card: "Red, white and blue, just make it do what it do, for me and you."
A person familiar with the workings of the alleged scheme told The Times last year that employees at the Assessment Center would recruit people on skid row to reach out to potential patients, who may or may not have needed medical treatment. The source, who spoke on the condition that he not be named, said some patients were reimbursed for their time with money, food or a pack of cigarettes -- what was called an "incentive."
In other instances, the source said, patients walked into the center on their own.
Recruiters "were looking for someone who was sick or immobile," the source said. "Someone who was in need of money, who was down and out, sleeping on the street, with nowhere to go."
