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by Internet Medical Society

John Reynolds, former CEO of the Hospital for Special Surgery in Manhattan, in a 2005 handout photo.

 

The former chief of the Hospital for Special Surgery in Manhattan has been indicted in an alleged $1.4 million kickback scheme at the high-end health facility.

John R. Reynolds, 63, who lived in New City during his tenure as hospital chief, is charged with racketeering and making false statements to the federal government during the investigation.

He was arrested at his Bourne, Mass., home on Cape Cod. It’s unclear who his lawyer is.

Federal prosecutors say the scheme lasted for a decade and involved $1.4 million in payments he is accused of extorting or soliciting from hospital vendors, a hospital employee and a United Kingdom-based health-care organization.

Reynolds was CEO from 1997 until October 2006 and was chief financial officer for about 11 years prior to that.

The indictment alleges that between 1996 and 2002, Reynolds solicited and received kickbacks totaling about $420,000 from at least two hospital vendors in return for using his position to secure contracts for them.

It also says Reynolds extorted and received kickbacks totaling about $298,500 from a subordinate hospital employee after negotiating an annual bonus for the employee between 2000 and 2005.

Reynolds also is accused of soliciting and receiving kickbacks totaling $670,000 from a health-care organization in the UK in exchange for using his position to approve a clinical partnership between the hospital and that company.

And prosecutors say he misled investigators. In 2008, he made false statements to a U.S. Department of Health and Human Services Office of Inspector General agent who was investigating the case, it is alleged.

At the time period being investigated, the Upper East Side hospital, which is the oldest orthopedic hospital in the country, employed more than 3,000 full-time physicians and staff.

If convicted of racketeering, Reynolds could face up to 20 years in prison.

“By allegedly exploiting his position at the helm of a world renowned hospital for his own personal gain, John Reynolds tarnished the hospital’s reputation and did a disservice to its employees. This office has zero tolerance for corruption, and we will aggressively prosecute anyone who engages in such conduct,” U.S. Attorney Preet Bharara in Manhattan said.

It’s not the first time an allegation has been made that Reynolds was involved in kickbacks. He was named in a $10 million lawsuit brought by Healthwave Inc. in 2009 that alleged he took kickbacks from a Long Island supplier in return for steering roughly $150,000 a year in contracts its way, Crain’s New York reported.

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