Las Vegas hospital co-founded by casino skim mobster loses appeal of big Medicare overbilling claim

casino skim

Hospital co-founder

A premier Las Vegas hospital co-founded by a mobster who helped run the infamous casino skim to avoid federal taxes has essentially lost its initial appeal of audit findings it overbilled Medicare by nearly $20 million in just a two-year period.

“The appeal decision is unfavorable,” an independent review contractor for the U.S. Centers for Medicare and Medicaid Services wrote bluntly on the first page of the 83-page decision on the plea by Sunrise Hospital and Medical Center. Plus this stinger near the end: Sunrise “either knew or could reasonably be expected to know that the item or service would not be covered.” The decision lowered the total overpayment that Sunrise is on the hook for from $23.6 million in the original audit to $19.7 million. But it further said Sunrise couldn’t hit up the patients for any of the disallowed overbilled amount.

Even at $19.7 million, the overbilling amounted to 8% of the $245 million amount Sunrise billed the feds for Medicare in the audit period, 2017 to 2018. This is serious coin.

But it’s a fraction of the estimated 75% rake-off at the height of the casino skim starting in the 1940s, by which organized crime with hidden interests grabbed casino house winnings before counting profits, committing massive tax evasion. One of the leading figures in that endeavor was Morris Barney “Moe” Dalitz (1899-1989), an organized crime character who moved from the Midwest to Las Vegas in the 1940s. He eventually got control of several long-gone hotbeds of the skim, including Wilbur Clarke’s Desert Inn and the Stardust Resort and Casino. (The Stardust became a model for the mob-skimming casino in the 1998 movie Casino, starring Robert De Niro and Sharon Stone.) Dalitz’s life is the subject of a 2009 biography by Michael Newton whose title says it all: Mr. Mob: The Life and Crimes of Moe Dalitz.

In 1958, Dalitz was one of three co-founders of Sunrise Hospital, just a mile east of the Las Vegas Strip on East Desert Inn Rd. Neither his name nor his key role in starting the hospital comes up in a search of the facility’s extensive website. Originally a nonprofit, Sunrise is now owned by HCA Healthcare, the giant for-profit national health care provider with a long history of overbilling problems.

Yesterday, I emailed a copy of the appeal decision to Sunrise’s grandly named Office of Strategic Communications along with a request for comment, also asking if the money has been repaid or, as well could be the case given the time lag, further appeals brought. I’ll update this post if I hear back. As I understand it, further actions could include a hearing before an administrative law judge of the Office of Medicare Hearings and Appeals, an appeal to the Medicare Appeals Council, and then a lawsuit in U.S. District Court. Medicare is the Federal Government’s giant health insurance program for older Americans and some younger folks with disabilities.

It was the Las Vegas Review-Journal last April that broke news of the initial audit findings by the Office of Inspector General in the U.S. Department of Health and Human Services. An outraged Sunrise CEO Todd P. Sklamberg issued a statement saying, among other things, “We think it unfortunate that the … audit process did not take into account the overwhelmingly positive outcomes and the feedback of our patients and their families, all of whom benefited from our … services.”

I also wrote about the case at the time. As a student of history, I focused, of course, on the Dalitz angle, which I find culturally fascinating. It wasn’t until the late 1980s that Mob influence over the Las Vegas Strip petered out as billionaires and public corporations assumed greater control.

The original audit report was dated March 2021. Sunrise filed its appeal on May 18, 2021. The appeal decision by the independent reviewer, Noridian Healthcare Solutions, was dated July 28, 2021. I obtained a copy as the result of a U.S. Freedom of Information Act request I filed in August with the Centers for Medicare and Medicaid Services. Patient names were redacted, but, it seems, nothing else, in the copy I received this week at the New To Las Vegas world headquarters.

The audit of Sunrise pulled at random 100 cases with perceived higher risk for overbilling. Federal auditors found problems with about half that sample, then extrapolated that to all such cases to come up with the claimed massive overbilling.

As I read the appeal decision, as well as the audit, Sunrise’s m.o. was mulifaceted but straightforward. (1) Bill Medicare for many hospital stays that lasted less than two nights, the normal minimum for federal reimbursement. (2) Use incorrect billing codes. (3) Keep inadequate records.

That Review-Journal story didn’t mention Dalitz but quoted Sunrise CEO Sklamberg as saying, “If finalized, OIG’s report will harm Sunrise’s reputation.” Indeed.

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Las Vegas hospital co-founded by casino skim mobster loses appeal of big Medicare overbilling claim — 4 Comments

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