Doctor known as 'king of nursing homes' convicted in kickback scheme

The Sacred Heart Hospital building at 3240 W. Franklin Blvd. in Chicago remains vacant on July 27, 2015. (Zbigniew Bzdak, Chicago Tribune)

A federal jury on Friday convicted a doctor known as the "king of nursing homes" for routinely referring elderly patients to a financially struggling hospital on Chicago's West Side as part of a kickback scheme.

Dr. Venkateswara Kuchipudi became the fifth physician and 10th defendant overall to be convicted for taking part in the massive Medicare and Medicaid fraud scheme at the now-shuttered Sacred Heart Hospital for 12 years. Doctors referred patients to the hospital in exchange for hundreds of thousands of dollars in kickbacks disguised as office rent, teaching fees and other bogus payments, prosecutors charged.

U.S. District Judge Matthew Kennelly, who presided over the five-week trial, set sentencing for June 2 for Kuchipudi, 69, of Oak Brook.

Jurors deliberated a day and a half before finding Kuchipudi guilty 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, said Joseph Fitzpatrick, a spokesman for the U.S. attorney's office in Chicago.

The scheme kept patients coming to the hospital despite its location in a high-crime neighborhood as well as its limited emergency services, skeleton staff on nights and weekends, and lack of access at those hours to routine procedures such as X-rays or lab work, prosecutors said.

Federal agents raided the hospital in April 2013 amid bombshell allegations that doctors were performing medically unnecessary and sometimes risky procedures such as tracheotomies as well as giving heavy sedation to patients in a process called "snowing." At least five deaths at the hospital had been under scrutiny at one time, authorities said. But the indictment ultimately made no allegations of patient deaths or oversedation.

Prosecutors instead focused on kickbacks they alleged were paid out on nearly every level to fill empty beds.

Sacred Heart administrators referred to Kuchipudi as the "king of nursing homes" for his alleged prowess in bringing elderly patients to the hospital. He routinely had patients taken to Sacred Heart from as far as 25 miles away, often bypassing hospitals that offered better care, prosecutors alleged.

Prosecutors alleged Kuchipudi knew many of his patients had dementia or other mental health problems, but had no real reason to be admitted to the hospital. But his order for direct admission meant they were able to bypass the evaluation of emergency room doctors and be admitted at least overnight, allowing him to bill Medicare at a higher rate, they said.

Prosecutors alleged Kuchipudi had been aware of problems at the hospital for years. For example, in fall 2009, shortly after Kuchipudi obtained privileges at Sacred Heart, the hospital had a fly infestation, prosecutors said.

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Doctor known as 'king of nursing homes' convicted in kickback scheme