Hospital Gave Illegal Loans to Doctors, Report Says : Inquiry: Simi Valley Adventist made payments in exchange for referrals in the mid-1980s, a grand jury finds. It is now too late to prosecute.

Simi Valley Adventist Hospital violated state law in the mid-1980s by giving hundreds of thousands of dollars in non-repayable loans to doctors in exchange for referring patients to the hospital, the Ventura County grand jury reported Thursday.

“Hospitals should want doctors to take their patients where they can get the best care,” the grand jury said in its report. They should not want doctors to “take their patients where doctors get the best deal.”

In return for steering patients to the hospital, doctors received low-priced office space and equipment and large loans, some of which they did not have to repay, the report says.

The grand jury said that even though the doctors and the hospital violated the law in the mid-1980s, county prosecutors concluded that no charges could be filed because too much time has passed since the alleged crimes.

The panel said it found no evidence that the hospital or the doctors now associated with it have broken the law within the last three years.

Tim Patten, a hospital vice president, said the entire administration at the 215-bed facility is new, having been recruited within the last 1 1/2 years.

The grand jury findings have “nothing to do with the quality of care at the hospital, but with the marketing practices of a past administration,” Patten said.

The hospital’s closest competitors are Los Robles Regional Medical Center in Thousand Oaks, Westlake Community Hospital in Westlake Village and Northridge Hospital Medical Center, he said.

Three Simi Valley doctors named in the jury report still practice at Simi Valley Adventist, and the hospital’s Board of Directors will have to decide whether to broach the issue with them, Patten said.

“But I wouldn’t anticipate anything happening,” he said.

One of the doctors, Vahe Azizian, testified before the grand jury. Drs. George Dichter and Geoffrey Graham invoked their constitutional right against self-incrimination and refused to testify, the report says.

None of the three physicians could be reached for comment Thursday.

Documents show that the Simi Valley hospital agreed in 1985 to forgive at least part of its $25,000 loan to Azizian if he would attempt to bring all of his pregnant patients to the hospital for delivery and also admit the vast majority of his other patients who needed hospitalization, the grand jury reported.

Azizian, who also has an office in Thousand Oaks, testified that the arrangement had no effect on his decisions about where to place patients, the report says.

Documents show that Dichter and Graham were loaned “several hundred thousand dollars” by the hospital, the report says. They would not have to repay the loan if, “among other things, they made their best efforts to admit their patients to Simi Valley Adventist Hospital for five years,” the report says.

Darwin Remboldt, the hospital’s administrator in the mid-1980s, testified that the practice of giving doctors financial benefits partly for referring patients had been hospital policy.

Remboldt, who answered questions only after being granted immunity from prosecution, said that lending physicians money in return for referrals was necessary for the hospital to keep up with Simi Valley’s rapid growth, the report says.

Patten said the hospital still makes loans up to $100,000 to help needed specialists set up a practice in Simi Valley, but not as part of an agreement to bring patients to the hospital. Most loans are paid back but occasionally physicians are allowed to work off some of the debt, he said.

The grand jury report says it is a violation of state law for physicians to be compensated for referring patients to a facility.

But Patten said the law is ambiguous. “It’s like trying to hit a moving target,” he said. “There needs to be more clarity in what the regulations are.”

The grand jurors also recommended changes in existing law.

They urged lawmakers to amend patient-referral laws so charges can be filed within a period of time after a crime is discovered. Now charges must be filed against a hospital within one year of the commission of a crime and against a doctor within three years, the grand jury said.

The grand jury also recommended that state law be changed so doctors would have to inform patients if they have financial arrangements with hospitals.