Rigging the sales

Hospitals Probed Over Bid-Rigging

Federal prosecutors are investigating allegations that bid rigging and fraud at Mount Sinai Medical Center and New York-Presbyterian Hospital resulted in the hospitals awarding contracts worth tens of millions of dollars to outside contractors.

Purchasing officials at the hospitals, two of the city's largest and most prestigious, are alleged to have gotten more than a million dollars in payments from companies that were then given lucrative contracts to perform work such as re-insulating pipes and removing asbestos, according to documents filed in the Southern District of New York.

Nine contractors are involved in the case. So far, eight people and three companies supplying the hospitals have pleaded guilty to charges including bid-rigging, mail fraud and tax fraud. Three more people have been indicted on similar charges.

The Federal Bureau of Investigation and Internal Revenue Service have been investigating and the Justice Department's Antitrust Division is prosecuting the allegations in the case.

A Mount Sinai spokesman said the hospital notified the Justice Department "about the possibility of impropriety immediately after it was identified in an internal audit" and is cooperating with the investigation. The spokesman said the hospital dismissed the employee under investigation and instituted tougher contracting systems.

Mount Sinai has a policy of awarding sizable contracts through competitive bidding, according to the indictment. To appear to satisfy the policy, prosecutors say, Mr. Perciavalle had the Long Island City company submit higher bids on the letterhead of other companies.