Former hospital CEO faces up to 25 years in prison for kickbacks scheme

Schemes with vendors, employees, and overseas totaled $1.4 million

Former Hospital for Special Surgery CEO John Reynolds was arrested Wednesday and charged for his alleged involvement in a decade-long kickback scheme worth $1.4 million.

According to a Federal District Court indictment, Reynolds—who served as the New York City hospital's CEO from 1997 to 2006 and as its CFO from 1986 to 1997—allegedly extorted or received:

  • $420,000 from two hospital vendors in return for securing hospital business;
  • $298,500 from a subordinate hospital employee for negotiating the employee's annual bonus; and
  • $670,000 from a British-based health care organization for approving a clinical partnership with the organization.

The indictment further accuses Reynolds of deceiving the hospital by annually filing forms that stated that he was not involved in outside consulting work that may pose a conflict of interest. 

Reynolds was charged with one count of racketeering, which has a 20-year maximum sentence, and one count of making false statements, which has a five-year maximum sentence (Karas, Crain's New York Business, 9/26; Weiser, New York Times, 9/26; Van Voris, Bloomberg, 9/26).

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