Chicago to Revoke Sacred Heart Hospital’s License

The Illinois Department of Public Health plans to revoke the license of Sacred Heart Hospital, a day after the West Side facility abruptly shut down amid a suspension of Medicare payments.

Late Tuesday afternoon, the Sacred Heart was preparing to seek protection from creditors by filing a Chapter 11 petition in U.S. Bankruptcy Court in Chicago, according to Robert Wild, an attorney in the Chicago office of law firm Krieg DeVault LLP, which represents the hospital.

Federal authorities allege the hospital performed unnecessary tracheotomies on patients to boost revenue, but the state is taking action because Sacred Heart didn’t provide the required 90 days’ notice before telling the agency it planned to shut down.

“The Department learned Sacred Heart Hospital planned to close yesterday just a few hours before it shut its doors,” Illinois Department of Public Health Director Dr. LaMar Hasbrouck said in a news release. “We are now beginning disciplinary action against the facility to ensure that if the facility does reopen in the future, it will do so legally and responsibly.”

The hospital closed yesterday, weeks after the federal Centers for Medicare & Medicaid Services, which administers the Medicare program, suspended payments. That decision followed the mid-April arrest of CEO and owner Edward Novak, CFO Roy Payawal and five doctors in connection with an undercover FBI investigation.

Eight inpatients at the hospital were either discharged home or to another health care facility, and signs were put on the hospital’s external doors saying it was closed and directing patients where they can access medical records.

Authorities accuse Mr. Novak of orchestrating a kickback scheme in which the hospital paid thousands per month to physicians in exchange for admitting their Medicare patients.

Mr. Novak today ripped the government’s criminal case against him and criticized CMS for stopping payments, even though he and others alleged to have acted illegally have had no hand in running the hospital since their arrests in April.

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