Hospital allegations date to ’04

State and county inspectors found serious irregularities in the admission and treatment policies of a Los Angeles hospital four years before authorities raided it and charged its chief executive with providing unnecessary medical services to patients recruited on skid row, according to a confidential county report reviewed by The Times.

After inspections in early 2004, state health officials ordered City of Angels Medical Center to correct an array of problems, including accepting patients with “questionable medical criteria for admission.”

But there is no evidence that the state ever followed up to ensure changes were made. Two years passed before allegations of patient dumping on skid row sparked a federal and city investigation into the admission practices of City of Angels and two other local hospitals.

The original inspections came in February and March 2004, when employees from the Los Angeles County Department of Mental Health and the state Department of Health Services visited the hospital “to investigate complaints regarding inappropriate admissions and discharge placements,” according to the county report.

After those inspections, an advocate from the Department of Mental Health concluded that “patients are admitted to the medical unit with flimsy medical diagnosis, and often have psychiatric needs that are not addressed.” The same report noted that “discharge planning is shoddy and incomplete.”

In a Statement of Deficiencies and Plan of Correction dated March 8, 2004, the state laid out five problems at the medical center, including that patients were being admitted directly to a medical-surgical unit on the fifth floor, rather than through the emergency room or urgent care unit.

Such admissions avoid usual pre-admission screening and evaluation of whether hospitalization is medically appropriate.

In April 2004, the hospital proposed solutions to each of the deficiencies and agreed to implement them.

State officials would not say whether they followed up with the hospital, and public files obtained by The Times show no further action on the admissions issues.

But a lawyer for City of Angels said the deficiencies were corrected to the state’s satisfaction.

“Over four years ago, DHS made certain allegations about the hospital’s admissions policies. The City of Angels immediately responded to the few isolated deficiencies, to the full satisfaction of DHS. Two subsequent DHS inspections within the year found no further such problems,” said Richard M. Steingard, the hospital’s attorney.

The public files on City of Angels do show subsequent inspections, but they were prompted by new complaints that were unrelated to the hospital’s admissions policies.

A state official said that when the health department reviews a hospital in response to a complaint, investigators look only at the complaint that prompted the investigation. Most subsequent complaints at the hospital were not substantiated during inspections, records show.

California Department of Public Health spokeswoman Suanne Buggy said in a prepared statement that the department “is currently undertaking an investigation at City of Angels. As such, we are not commenting further at this time.”

The county, said Ellen Satkin, program director of the Patients’ Rights Office at the Department of Mental Health, was “unable to do much” because the problems were in City of Angels’ medical-surgical unit and not in its psychiatric unit, where the department has authority.

Dr. Rudra Sabaratnam, an owner and chief executive of City of Angels Medical Center, and Estill Mitts, an alleged patient recruiter who operated a storefront facility called the Assessment Center in the heart of skid row, were arrested last week on federal charges of healthcare fraud and receiving illegal kickbacks.

In addition, the Los Angeles city attorney sued the two men, along with City of Angels, Los Angeles Metropolitan Medical Center, Tustin Hospital and Medical Center in Orange County, their operators and several others, alleging that the hospitals used unfair business practices to fill empty beds in a bid to boost their finances.

Legal documents filed as part of the civil suit describe a pattern in which patients allegedly were recruited at Mitts’ skid row storefront and offered cash to be admitted to a hospital.

The center, the city alleges, typically arranged for the patients to be transported to the hospital by ambulance.

The skid row recruits, the documents allege, “did not see their treating physician (if at all) until well after admission and typically shortly before discharge. They were, however, treated for various medical conditions, some real and some not.”

Satkin said the 2004 inspections were prompted by calls the Department of Mental Health received about inappropriate admissions and discharge of patients on the fifth floor of the hospital.

“When you hear about homeless people coming in and the allegations that they are being exploited for financial gain, it’s very distressing,” Satkin said last week. That’s what the county and state inspectors “were concerned about: the exploitation of homeless and possibly mentally ill folks.”

Several of the patients whose cases are cited in the county’s 2004 report were homeless, and several were seen by Dr. Frederick Rundall, one of the individuals named in the city’s fraudulent business practice suit.

Rundall, the county report states, relied heavily on physician assistants to see his patients, sometimes not seeing them himself “at all during an admission.”

Rundall referred a call for comment to his lawyer. “Dr. Rundall runs a completely clean shop,” said the attorney, Donald Etra. “He provides valuable medical care to an often untreated universe of patients.”

A 10-page report filed by the state from that same visit found that patients were being admitted who apparently didn’t need hospitalization.

“It was revealed that patients were being discharged the following day after review . . . because of inadequate criteria for admission to the hospital,” the report states.

City of Angels’ plan of correction, written by hospital executives and signed by then-chief executive James V. Fenton, promised that the hospital would ensure that each patient admitted to the facility had “a complete history and physical examination within the designated time frame (24 hours) by the attending physician and/or his/her designee.”

The hospital’s correction plan disputed some of the state’s conclusions, stating that less than 10% of patients admitted to the hospital’s medical-surgical unit directly without pre-screening failed to meet adequate medical criteria for admission.

But Fenton promised in the correction plan that patients found to have medical and psychiatric issues -- known as dual diagnoses -- would not be accepted for admission directly to the treatment ward but would first be evaluated in the hospital’s urgent care center.

Last year, Fenton left City of Angels and joined the management staff of Los Angeles Metropolitan Medical Center.

He and that hospital are named in the city attorney’s lawsuit.

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cara.dimassa@latimes.com