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Estill Mitts, 68, who lives near the Miracle Mile district of Los Angeles, recruited homeless people from the “Skid Row” section of Los Angeles as part of a widespread scheme to defraud Medicare and Medi-Cal by providing unnecessary health services. He was sentenced this week to 18 months in federal prison and ordered Mitts to pay more than $9.8 million in restitution. In sentencing Mitts the federal judge stated that Mitts’ conduct was “fueled by greed to enrich himself,” and “breeds contempt for, leads to a lack of confidence in, and threatens the stability of” the Medicare program.

The Skid Row “capping” — or illegal referral — scheme was discovered in the fall of 2006 after local authorities observed some patients discharged from a local hospital being “dumped” on Skid Row. The patients subsequently reported that they had been paid to go to the hospital.

Mitts “was a ring-leader in a significant, long-term, serious crime that used the homeless as fodder for exploiting the Medicare and Medi-Cal programs,” prosecutors wrote in a sentencing memo filed with the court. Mitts admitted that he received more than $1 million in kickbacks from three hospitals that took in the illegally referred patients from Skid Row.

From 2004 until October 2007, Mitts operated the Assessment Center, a facility on East Seventh Street in downtown Los Angeles that was also known as 7th Street Christian Day Center. “Mitts employed individuals he called ‘stringers’ to recruit homeless people with promises of small payments,” according to the sentencing memorandum. “The Assessment Center was not a medical clinic, but a site that defendant used for the purpose of recruiting homeless Medicare and Medi-Cal beneficiaries for referral to three hospitals — City of Angels Hospital, Los Angeles Metropolitan Medical Center, and Tustin Hospital and Medical Center. Defendant and others working for him would recruit homeless beneficiaries for in-patient hospital admissions whether or not such hospitalizations were medically necessary.”

In relation to the tax evasion count, Mitts admits in the plea agreement that he failed to report more than $479,000 in income in 2005 and more than $620,000 in income in 2006. By failing to report this income, the Internal Revenue Service suffered losses of $349,857.

Mitts pleaded guilty in 2008 to conspiracy to commit health care fraud, money laundering and tax evasion. Mitts’ sentencing was delayed a number of times as he provided assistance to the government’s investigation that has led to 11 defendants being charged and convicted.

Mitts is the latest in a series of defendant to be sentenced in relation to the Skid Row investigation. For example, Robert Bourseau, one of the owners of City of Angels, was sentenced to 37 months in prison, and Dante Nicholson, the director of marketing at City of Angels, who also cooperated with the government in its investigation, was sentenced to one year in prison. Late last year, a doctor who admitted homeless patients to the Tustin Hospital and Medical Center after they had been driven from Skid Row was sentenced to one year in federal prison.