A longtime physician and the marketing head at a now-defunct South Side hospital were charged Wednesday with recruiting hundreds of homeless people, drug addicts and others to be admitted and undergo unnecessary medical tests in a fraud scheme that bilked Medicare, Medicaid and private insurers of more than $7.5 million.
Federal authorities said the phony patients were enticed with offers of cigarettes and cash and were coached on what symptoms to feign to justify their admissions into Doctors Hospital of Hyde Park, owned by eye-care physician James Desnick.
Among those hospitalized in the scheme were five undercover agents, including three retired FBI agents called back into service to pose as patients, authorities and sources said. They were all healthy and their admissions were medically unnecessary, the charges alleged.
The two charged were Robert Krasnow Sr., who as vice president and director of marketing was responsible for obtaining patients for Doctors Hospital in the early- to mid-1990s, and Dr. Monty McClellan, the attending physician for a year on a medical-surgical unit at the hospital.
Both also formerly worked for Desnick Eye Center.
Krasnow, 48, formerly of Long Grove and now of Gainesville, Fla., was charged with one count of racketeering and two counts of filing false tax returns. McClellan, 60, a physician for more than three decades who formerly lived in Wadsworth but now resides in Prospect, Ky., was charged with one count of mail fraud.
The charges alleged that a second doctor, whose name was not disclosed, also was linked to fraud schemes at Doctors Hospital. This doctor was involved in operating both Doctors Hospital and Desnick Eye Center and held a financial interest in each, the charges alleged.
In a telephone interview Wednesday evening, Desnick confirmed he is the only shareholder of Doctors Hospital. He also is listed as the hospital’s owner in filings in U.S. Bankruptcy Court.
But Desnick denied any involvement in criminal wrongdoing.
“I don’t know what they are referring to,” he said. “I can’t comment on something I don’t know about. I have heard none of this.”
The charges come less than a month after Desnick paid $14 million to federal and state authorities to avoid civil litigation over separate allegations that he defrauded Medicare and Medicaid programs while running Doctors Hospital.
That settlement didn’t preclude Desnick from possibly being criminally charged, Randall Samborn, a spokesman for U.S. Atty. Scott Lassar, told reporters Wednesday.
Desnick abruptly closed the 84-year-old community hospital in April. It has been mired in bankruptcy proceedings in the face of $60 million in debt and other problems.
McClellan was charged with improperly admitting hundreds of patients to Doctors Hospital as well as engaging in a kickback scheme at Desnick Eye Center with Krasnow and the undisclosed doctor involving the order of hundreds of unnecessary allergy tests.
Many of the homeless and drug addicts agreed to become hospital patients because they wanted “food and shelter or detoxification treatment” in addition to the offers of cash and cigarettes, the charges alleged.
Daniel C. Murray, McClellan’s lawyer, said his client has been cooperating with federal authorities for several years, but he declined further comment.
Attorney Jeffrey Steinback, who represents Krasnow, said his client “got caught up in something that wasn’t of his own making. He is going to respond to this accordingly.”
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After a conviction on felony bankruptcy charges in federal court in Peoria, McClellan’s medical license was suspended in 1990 for two years by the Illinois Department of Professional Regulation, said its spokesman, Tony Sanders.