U.S. Markets closed

Pacific Health Corporation closes 3 hospitals

TUSTIN, Calif. (AP) -- Pacific Health Corp. officials said they will close the doors of their three remaining hospitals this week, in part because of legal costs associated with federal prosecutors' allegations that the hospitals recruited homeless people to wrongly charge Medicare and Medi-Cal for care.

Emergency rooms will close Wednesday at Bellflower Medical Center, Los Angeles Metropolitan Medical Center and the Hawthorne campus and Newport Specialty Hospital, according to spokesman Gary Hopkins. The rest of the hospitals' services will cease as soon as all patients can be transferred.

Employees were told about the closure Tuesday, Hopkins said.

Department of Justice officials announced in August that Pacific Health agreed to pay a $16.5 million for allegedly engaging in an illegal kickback scheme in which homeless people were recruited from Los Angeles' Skid Row to become patients and bilk the system.

As part of the settlement, PHC's Los Angeles Doctors Hospital pleaded guilty to conspiracy.

The alleged kickbacks were discovered in the same investigation that landed two hospital owners behind bars for running a similar scheme at City of Angels Medical Center. Several people pleaded guilty in that scheme. Co-owners Dr. Rudra Sabaratnam and Robert Bourseau were sentenced to two years and a little over three years in prison, respectively.

The Pacific Health hospitals could reopen as long as their licenses remain active, but there are no current plans to re-open, Hopkins said.

According to a public database of state hospital licenses, the licenses for all the hospitals expired in recent months but are listed as "active."

Hopkins did not comment on the allegations that homeless people from Skid Row were recruited as patients.