Medi-Cal and Medicare fraud

Law enforcement personnel from multiple local and federal agencies enter the City of Angels Medical Center in Los Angeles in 2008 as search warrants were served on it and two other hospitals. (Al Seib / Los Angeles Times / August 6, 2008)

A Los Angeles man who recruited homeless medical patients on skid row as part of a scheme to defraud federal programs of millions of dollars was sentenced Monday to 18 months in federal prison.

Estill Mitts, 68, of Los Angeles was sentenced by U.S. District Judge George H. King five years after Mitts pleaded guilty to his role in the scheme. Prosecutors said he recruited homeless people in downtown Los Angeles and sent them to hospitals, which drained their Medi-Cal and Medicare benefits before sending them back to the streets. Mitts must also pay $9.8 million in restitution in connection with the massive fraud scheme exposed when some of the hospitals got caught dumping patients.

Mitts’ conduct was “fueled by greed to enrich himself” and “breeds contempt for, leads to a lack of confidence in and threatens the stability of” the Medicare program, the judge told Mitts as he handed down the sentence.

Mitts pleaded guilty in 2008 to conspiracy to commit healthcare fraud, money laundering and tax evasion. But federal prosecutors delayed sentencing as he aided them in a probe that eventually led to the conviction of 11 defendants, including a couple of hospital owners and CEOs in the massive fraud scheme.

The skid row “capping” scheme was revealed in the fall of 2006 after the Los Angeles Times reported that L.A. police were discovering patients being "dumped" or discharged on skid row out of ambulances. In some cases, they were still wearing medical gowns. Further investigation by the city attorney revealed Mitt's capping operations.

The patients told investigators they were recruited by the Assessment Center on 7th Street operated by Mitts, who earned more than $1million in kickbacks from three hospitals between 2004 and October 2007. Mitts also admitted failing to pay taxes on the earnings during that period.

The scheme referred patients to City of Angels Hospital, Los Angeles Metropolitan Medical Center and Tustin Hospital and Medical Center. The defendant and others working for him would recruit homeless people for treatment they did not require.

Mitts will join hospital executives as a federal inmate. Robert Bourseau, one of the owners of City of Angels, received a 37-month prison sentence. Dante Nicholson, the facility's marketing director, was sentenced to a year. And ex-chief executive Dr. Rudra Sabaratnam also received two years in prison and was ordered to pay $4.1 million in restitution.

[For the record, 4:48 p.m., Aug. 26: A previous version of this post said Mitts was sentenced to five years after pleading guilty. He pleaded guilty five years ago, and has been sentenced to 18 months.]

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richard.winton@latimes.com