Within months of becoming medical director of a private radiation cancer treatment center in Baltimore, Dr. Syed Rahman began to question procedures performed by technicians, believing they were unnecessary.
His concern led to his firing -- and to a $340,000 wrongful termination judgment against the two Pennsylvania companies that operated the clinic.
It also led to a multimillion-dollar medical fraud case by the federal government against Dr. Douglas Colkitt, a State College, Pa., physician and entrepreneur who sits atop a complex health care enterprise that runs about three dozen cancer centers in nine states, including Maryland.
The government's suit, scheduled for a May trial in U.S. District Court in Baltimore, accuses Colkitt-controlled companies of billing Medicare and a medical program for families of military personnel out of more than $12 million between 1992 and 1997 through a variety of fraudulent billing schemes.
Add to that the triple damages allowed under the federal False Claims Act and other penalties, and the total the government is seeking in the civil action tops $50 million. That makes it among the more substantial cases being pursued by federal authorities as part of an intensified, coordinated fight against health care fraud required by Congress three years ago.
The government's suit charges that Colkitt's companies' submitted "thousands" of false claims to Medicare over a five-year period. It alleges that the companies billed for services not ordered or provided by physicians, billed for duplicate services and misrepresented services to get higher reimbursements. It says the companies "routinely" billed for multiple treatment plans for "numerous" patients when physicians had prepared one plan.
Colkitt, through his Baltimore lawyer, Paul Mark Sandler, vigorously denies any wrongdoing and claims the future of his companies is being imperiled by the government prosecution.
Medicare approved billing
In court papers, Sandler calls the government's complaint a "quintessential 'shotgun' pleading" made up of a "jumbled mass of vague claims."
Sandler says in court papers that Colkitt's companies' bills were reviewed regularly by insurance companies that administered the federal medical programs and found nothing wrong. "The government cannot seriously contend that the defendants were fraudulently billing for services when the Medicare carriers employed by the government were auditing and approving the very same billing practices," he said.
Four years after Rahman filed suit and 10 months after the government intervened, the bitterly contested case is on its third judge and its eighth volume of court filings.
And it is getting more contentious.
In late May, prosecutors from the U.S. attorney's office in Baltimore and the U.S. Department of Justice in Washington claimed that several of Colkitt's companies -- including EquiMed Inc., the holding company that controls all the others -- merged, reorganized or transferred assets to avoid having to pay the government if they lose in court.
Between December and February, the assets of 17 cancer centers were transferred to 11 newly created corporations owned by former EquiMed employees and relatives of Colkitt, prosecutors said.
Last month, Colkitt's attorneys asked the court to dissolve a temporary restraining order forbidding his companies from selling assets without government approval. They based their argument on a recent U.S. Supreme Court ruling that federal judges can't freeze assets of a company that is in debt to assure it can pay a judgment in a pending court case.
Also last month, U.S. District Judge Alexander Harvey II granted a request by Colkitt to allow Colkitt's companies' administrative appeals of findings of overpayments to go forward while the court case proceeds. But he declined to lift suspensions dating to October of $2.2 million in Medicare payments to Colkitt companies.
For Colkitt's companies, more than money is at stake in the case. Forty percent of the companies' revenues come from Medicare payments, according to court records; three of its seven Maryland centers have been closed because of financial problems caused by the suspension of Medicare payments.
"The very existence of the defendants is being jeopardized by the actions taken against them by the United States of America," Sandler said in court papers. He declined to discuss the case beyond the court filings, saying he would reserve comments for the courtroom.
Government cracking down
The Rahman case is one of 107 civil health care fraud actions filed by the government last year, or 20 percent more than were filed in 1997, according to the annual report on the Health Care Fraud and Abuse Control Program of the Department of Justice and Department of Health and Human Services. The government also filed 322 health care fraud criminal cases last year. In all, the government won or negotiated more than $480 million in judgments, settlements and fines last year, the report said.
At the end of last year, according to the report, federal prosecutors also had under investigation 3,471 civil health care fraud "matters" referred to them by federal and state investigative agencies or from individual whistle-blowers.
The whistle-blowers, known officially as "relators," file suit on behalf of the government. Government attorneys then decide whether to intervene in the suit, and the whistle-blowers may share in any monetary recoveries based on what are known as the qui tam amendments to the federal False Claims Act.
"We don't intervene in all qui tams," said Stephen M. Schenning, first assistant U.S. attorney in Baltimore. "We look at the case and if it's significant enough we will intervene."
Dr. Syed Rahman was just such a "relator."
Formerly a senior fellow at the Sloan Kettering Memorial Cancer Institute, Rahman, 59, was chief of radiation oncology at Grant Hospital in Columbus, Ohio, in 1992 when he was recruited by two of Colkitt's companies to head a new cancer treatment clinic. He was lured in part by the promise of becoming a partner in the operation.
Christopher B. Mead, Rahman's Washington lawyer, declined to make his client available for an interview while the lawsuit is pending.
Court records show that Rahman became concerned about some medical work and billing after becoming the clinic's director.
Rahman later discovered that treatments were being billed at higher levels than they should have been, resulting in overcharges to insurers, court records said.
Rahman repeatedly requested patient billing records in late 1993 and early 1994, records said. He was fired and ordered to clean out his desk by July 1, 1994.
In 1995, Rahman filed a wrongful termination suit against the two companies, resulting in a $340,000 jury award in 1996.
Also in 1995, Rahman filed suit against Colkitt's empire as a "relator." That case was sealed until last August, when the federal government joined the action and the files were opened.
Rahman -- who has returned to Ohio, where he fills in at various clinics for doctors who are on vacation -- is asking for 25 percent of any money collected by the government.
The cancer center he once ran, across from Union Memorial Hospital in North Baltimore, has closed for financial reasons, as have Colkitt centers in Greenbelt and Olney.
Still operating are company centers in Belcamp, Mechanicsville, Randallstown and one across from Maryland General Hospital in downtown Baltimore.
The medical director of the center at Maryland General, Dr. Bernard R. Rogers, said his center provides treatments to an average of 25 patients a day, many of whom are indigent.
Rogers said he is not involved in patient billing but acknowledged the litigation is a concern.
"I hope for the sake of the patients and all of us who work here that this matter is resolved," he said. "This particular center provides an important service to the city of Baltimore."
Colkitt's companies want to sell the assets of centers in Belcamp, Mechanicsville, Randallstown and at Union Memorial for $3.9 million to allow them to remain in business, according to court papers.
But the government is opposing the sale, arguing that the proposed purchasers are former Colkitt associates and that the payment is in the form of promissory notes of dubious value.
"The transaction currently proposed by defendants is a sham, arranged for the purpose of defrauding the United States," prosecutors said in court papers.
Sun researchers Sandy Levy and Jean Packard contributed to this article.