Former Chicago hospital CEO sentenced to 4 1/2 years in prison

Edward Novak, the former owner and CEO of now-shuttered Sacred Heart Hospital in Chicago, has been sentenced to 4 1/2 years in prison for his involvement in a massive kickback scheme, according to a Chicago Tribune report.

In March, a federal jury deliberated for three days before convicting Mr. Novak as well as Roy Payawal, the hospital's former CFO, and Clarence Naglevoort, the hospital's former COO, of conspiring to pay hundreds of thousands of dollars in kickbacks to physicians for referrals to Sacred Heart.

In April 2013, federal authorities arrested Mr. Novak and Mr. Payawal and four physicians for their alleged participation in the scheme. After the arrests, CMS suspended its reimbursements to Sacred Heart, and the hospital closed in July 2013.

In October 2013, Anthony Puorro, who was Mr. Novak's former second-in-command at the hospital, and Noemi Velgara, the hospital's former vice president of geriatric services, were indicted in the case. However, they both cooperated with the federal investigation, including wearing recorders to tape conversations. In December 2014, Mr. Puorro and Ms. Velgara entered into a plea deal with prosecutors.

Mr. Puorro admitted the hospital had a deal with an ambulance company, which involved patients being transported to Sacred Heart even though other hospitals were closer. He also admitted he kept records of the patients each physician was referring to the hospital in exchange for kickbacks.

During Mr. Novak's trial, his attorneys attempted to blame Mr. Puorro and Ms. Velgara for the misconduct that had occurred at the hospital. However, the jury did not accept that theory.

In addition to his prison term, Mr. Novak was also fined $770,000 and ordered to pay an additional $10.4 million in forfeiture.

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