[NY Times article below]
Five years before FBI agents swarmed into Redding Medical Center to investigate charges of unnecessary heart surgeries, executives at the hospital were warned by local doctors that too many operations and tests were being carried out by its star heart specialists.
A team of 40 federal agents raided the hospital and offices of cardiologist Dr. Chae Hyun Moon and heart surgeon Dr. Fidel Realyvasquez Jr. on Wednesday, seeking medical records of hundreds of Medicare patients suspected of having unnecessary open-heart surgeries and complex and expensive diagnostic probes.
Neither of the doctors has been charged with a crime, and they continue to practice at Redding Medical Center, where they built a reputation for aggressive treatment of heart problems.
But an FBI affidavit filed in federal court in Sacramento contains allegations from competing cardiologists that as many as half of the heart surgeries and tests performed by the pair were "unnecessary by commonly held medical standards," and that an estimated 25 percent were performed on patients who had no serious heart problems.
John Reese, a lawyer representing Moon, said Friday, "It is too early to comment," but he promised to assemble a rebuttal to the allegations by Monday or Tuesday.
"We are still looking at everything, and we will have definitive information by the first of the week, so that the public will get to know the true facts of the case," Reese said.
Attorneys for Realyvasquez did not return phone calls Friday.
A spokeswoman with the California Medical Board, the state agency that disciplines doctors, also said Moon and Realyvasquez were under investigation. The federal affidavit lists two complaints against Moon and one against Realyvasquez filed with the board.
STOCK PLUMMETS
Once word of the federal probe got out, jittery investors dumped stock of Tenet Healthcare, the firm that owns the medical center. It is the second- largest hospital chain in the nation, with 115 medical centers in 17 states. On Thursday, the stock plunged 26 percent; on Friday it fell another 8 percent,
closing at $26.50. The company lost a stunning $6 billion in market value over the two days.
The investigation began last June, when the Rev. John Corapi -- a nationally known Redding priest who travels the country giving inspirational talks -- told the FBI he had been told to undergo surgery by Moon that he later found out he didn't need.
"I was just one of the lucky ones," Corapi, 55, said in an interview from Wyoming, where he is addressing a religious convention all weekend. "They didn't saw my chest open, but I came within minutes of it. I'm lucky to be alive."
FBI spokesman Nick Rossi said Friday that agents will spend the weekend combing through computer records at the hospital and that no charges have been filed.
"We need to consult other cardiologists and go through all the material before that decision can be made," he said.
The material gathered so far is considerable.
"Many of the surgery patients were falsely told by Moon that they suffered from a serious heart malady and that they would soon die without surgical intervention," FBI agent Michael Skeen wrote in a 70-page affidavit accompanying search warrants.
In addition to the doctors, also under investigation is Redding Medical Center, where Moon is reported to have performed most of more than 35,000 cardiac catheterizations.
The affidavit describes testimony from a Redding physician who said he met with the chief executive of the hospital in 1997 and warned that "too many heart procedures" were being done there, and the doctor proposed a medical review of the situation. He said it was never carried out.
That doctor said he was subsequently "forced" out of a medical group affiliated with Redding Medical Center, partly because of the allegations he was raising.
MORE WARNINGS Similar concerns were raised by a pair of local cardiologists on several occasions, according to the affidavit. One said he warned Steve Schmidt, who was chief executive of the hospital at the time, of a "serious problem" with unnecessary heart procedures as far back as 1998; another warned current hospital chief Hal Chilton during the summer of 2001. He quoted Chilton as responding, "We have heard that, but we're not sure how to handle it."
On Friday, the medical center referred all calls to Tenet corporate headquarters, where officials said the allegations are being looked into.
Meanwhile, Medicare investigators were drawn to the unusually high number of procedures billed by Moon -- four to five times the rate of his peers. After auditing 20 patients' bills from 2000, the Medicare office said Moon had overcharged $12,689 -- which was reimbursed by the doctor.
In April, Moon gave an interview to the Redding Record Searchlight newspaper in which he complained about "bean counters" from Medicare who had conducted yearly audits and complained about the volume of procedures at the hospital, which contributed to the loss of HMO coverage in the north state.
Despite persistent whistle-blowing by local doctors, it was ultimately a pair of Redding patients who apparently drew the attention of federal investigators.
CHILLING PORTRAIT The affidavit that stemmed from a three-month investigation paints a chilling portrait of doctors allegedly ordering up needless dangerous surgeries and tests to frightened patients.
Corapi said he went to four other cardiologists and two cardiac surgeons for second opinions after seeing Moon. After being told by all of them that he didn't need the surgery that Moon recommended, Corapi was so outraged he went to the FBI at the end of June, and that started the investigation.
Corapi said his encounter with Moon began when he went in for a physical checkup.
"It went from a $250 stress test, which I had requested, to a heart angiogram for $40,000," said Corapi. "And then, while I'm still on the table, Moon leans ominously over me and says, 'Sorry there's nothing I can do for you -- you need a triple bypass operation.'
"I thought I was in rough shape."
Because of a scheduling conflict, Corapi did not have the surgery right away -- as recommended -- and that gave him time to seek a second opinion.
A second patient was a Redding personal injury lawyer who went to the clinic because he thought his heart was skipping beats under stress. After his arteries were probed, according to the affidavit, "Moon leaned over him and gravely stated, 'I am sorry to see you under these circumstances . . . This is really bad."' He was told he needed a quadruple bypass and was otherwise "going to have a heart attack."
According to the lawyer, Moon described to him a flap of tissue the doctor called "the widow maker" on the right side of his coronary artery. He also used a term that appears repeatedly in patient interviews: "spiral dissections" of coronary arteries.
But the attorney eventually sought second opinions as well, and was told by the second cardiologist, "Your arteries are better than normal." There was no "spiral dissection," a rare unraveling of arteries usually caused by an injury to the blood vessel during catheterization.
UNNECESSARY DEATHS? The affidavit also alludes to patients who may have had unnecessary surgery and later died. One whistle-blowing doctor interviewed in the affidavit describes an elderly woman patient of his in 1995, whom he described as "a hypochondriac, to some degree." He thought she had no problem, but referred her to Moon for further tests. She was diagnosed with a serious heart-valve problem and operated on at Redding Medical Center. A year later, after the first valve failed, she died during an attempt to implant a new one.
According to Medicare records, during a 3 1/2-year period that ended in July of this year, 167 patients treated by Realyvasquez and Moon died.
Dr. Tony Chou, a cardiologist at UCSF, said doctors in Northern California were aware of Moon and Realyvasquez, who had a reputation in the field as "cowboys," or doctors who were highly aggressive in offering invasive procedures. "These guys were way out there," he said.
Chou also cautioned that cardiology is subject to interpretation. "It is not a science, it's an art," he said. "I think there should be variation in how people practice medicine, just as there is variation in how people play the piano."
Dugan Barr, the priest's Redding attorney, said Moon's recommendation for surgery "shut down (Corapi's) life for a while."
"He canceled all his appearances and thought he was in real health trouble, " Barr said. "If he'd really been in the trouble he was told he was in, though,
he'd be dead today."
Corapi and Barr said they plan to file a lawsuit in the coming week alleging fraud, battery, malpractice and intentional infliction of emotional distress. They don't intend to include any other plaintiffs.
However, prominent Redding-area attorney Robert Simpson said he is assembling a lawsuit against Moon and Realyvasquez that so far includes at least 30 plaintiffs -- all of whom were contacted in the past two days, since the allegations hit the local news.
"They say that because of these doctors, they feel much worse, their lives have been ruined and some have had to retire from jobs," Simpson said. "Nobody was looking over the shoulders of these two doctors -- where were the people who were supposed to be watching this?"
DAMAGE CONTROL Tenet summoned its top guns for a three-hour conference call Friday to convince Wall Street analysts that the problem was confined to the Redding hospital and that the company would act decisively to resolve it.
Jeff Barbakow, Tenet chairman and CEO, refuted what he called "many erroneous rumors," including one that the Santa Barbara headquarters had been raided by the FBI, that he had stormed out of an investor meeting on Thursday and that the stock plunge would hurt the company's bank loans.
All completely untrue, Barbakow said.
"We have no reason to believe this is anything other than an isolated instance involving these two physicians practicing at one hospital," he said.
He apologized, however, for taking too long to alert investors to the probe.
Tenet executives said they were cooperating fully with investigators as well as launching their own internal probe. The company said it will hire independent cardiologists to review all the medical records of patients cared for by the two physicians.
The two doctors will continue to practice at the Redding facility because state laws "hamper our ability to summarily stop any physicians from practicing," said Christi Sulzbach, the company's general counsel. However, all medical procedures scheduled by the two doctors will be evaluated.
For Barbakow, 58, this week's revelations are an unpleasant dose of deja vu.
He took the helm a decade ago when the company, then called National Medical Enterprises, was reeling from lawsuits by insurance companies alleging fraudulent psychiatric claims. Federal agents did raid company headquarters at that time. Those suits were settled in 1993.
Tenet officials sidestepped the issue of affidavits in the current case, alleging that hospital officials heard allegations against the two physicians years ago.
"That will be part of a separate internal investigation that we'll conduct, " Sulzbach said.
Tenet Healthcare, reeling from concerns about special Medicare reimbursements paid to its hospitals and a raid by federal agents of one of its facilities in California, outlined steps yesterday that it said it was taking to try to reassure investors.
In a conference call that lasted more than two hours yesterday afternoon, Tenet's management promised to review dozens of cases by two doctors who are being investigated on accusations that they performed unnecessary surgeries. They also vowed to make more information available about the Medicare reimbursements in question.
"I need to demonstrate to all of you that you can trust this company and that you can trust me," said Jeffrey C. Barbakow, Tenet's chairman and chief executive, who recalled the years the company spent rebuilding its credibility after a troubled history.
Shares of Tenet have plummeted the last week as the company has struggled to answer investor questions about why so many of its cases qualify for special treatment under Medicare and news circulated about the raid of the Redding Medical Center in California.
The federal authorities think two Redding doctors performed numerous unnecessary procedures, including artery bypass surgery and heart valve replacement surgery. Tenet's shares, which traded as high as $52.50 in early October, closed at $26.50 yesterday.
The stock, which was hurt earlier in the week when reimbursement questions arose, has fallen significantly the last two days.
"I think they are trying very, very hard to answer as many questions as possible," said Sheryl Skolnick, a managing director of Fulcrum Global Partners, a research firm, who recommended selling shares of the stock because of news of the raid.
An affidavit filed by the F.B.I. paints a disturbing portrait of two enormously popular physicians who played a critical role in the hospital's success. Despite repeated warnings over the years, hospital officials chose to ignore concerns raised by other doctors and a patient, according to the people interviewed by the federal authorities.
Federal authorities say there is reason to believe that Dr. Chae Hyun Moon, Redding's director of cardiology, and Dr. Fidel Realyvasquez Jr., Redding's chairman of cardiac surgery, performed unnecessary surgery on patients since 1995. As many as a quarter to a half of the procedures may have been unnecessary, the affidavit contends.
Tenet said it had no reason to believe the accusations against the doctors and hospital officials were true and emphasized that none of its other hospitals are involved in similar investigations. Tenet is also not currently the target of the federal investigation.
The company said it was cooperating with federal authorities and conducting its own investigation into the actions of its doctors and hospital executives.
The doctors, who have not been charged with any crimes, referred questions to their lawyers. Dr. Moon's lawyer had no comment, and Dr. Realyvasquez's lawyer said on Thursday that he thought his client would be able to convince federal authorities that he did only what was best for patients.
The doctors will continue to have admitting privileges, according to Tenet, which described them yesterday as "experienced physicians who are highly credentialed and highly respected within the community."
But company executives emphasized that the two doctors will be subject to review by independent cardiologists brought in to review the cases now under investigation. The company said it might expand that review if warranted.
The independent cardiologists will also determine whether any procedures the two doctors continue to perform are necessary.
If any cases performed are deemed to have been unnecessary, the company will refund the money paid to it by Medicare, officials said. The company also has significant malpractice coverage in case of related claims, although it said it was aware of just five malpractice suits filed against the doctors.
While none of the accusations at Redding have been proved, analysts raised concerns about the importance of cardiology to companies like Tenet and whether the company or hospital officials encouraged the doctors to perform too many procedures.
In recent years, cardiology has become one of the most lucrative fields for hospitals, and Redding is one of Tenet's most successful hospitals. Dr. Moon and Dr. Realyvasquez are among the state's top producers, according to the F.B.I. affidavit, and Redding expects to perform more than 1,000 open-heart surgeries this year.
"Very few places nowadays are doing that kind of volume," said Dr. Larry Kaiser, the chairman of surgery at the University of Pennsylvania School of Medicine and Health System in Philadelphia, who said he was surprised at the kind of volume a small hospital like Redding, in Northern California away from a major urban center, would be able to generate.
Redding began positioning itself as a leading heart center in 1987, according to a cardiologist quoted in the affidavit, and spent millions of dollars on advertising. Dr. Moon spoke of being in a "club" of cardiologists that performed 10,000 heart catheterizations, according to this cardiologist.
Another doctor quoted in the affidavit "does not believe that the administrators were unaware of this situation but rather chose to look the other way" because the two doctors produced tremendous revenue for the hospital.
While one of the cardiologists interviewed by the federal authorities said that the doctors were given bonuses based on how much revenue they generated for the hospital, Tenet officials strongly denied the accusation.
In response to concerns that hospital officials knew about the accusations, Tenet emphasized that the doctors were responsible for making medical decisions. The company, which said it only learned of these concerns when it was informed of the F.B.I. raid, said it was investigating the hospital's handling of the accusations.
But it is unclear exactly where the hospital or Tenet's responsibilities lie. "A lot of hospitals do not police at that level," said Dr. Mark Hlatky, a cardiologist who teaches health policy at Stanford, noting that most hospitals only pay attention to signs of quality problems like a rise in deaths or related illnesses.
Responding to the questions of investors, Tenet's management also promised to make events, like the raid, public much more quickly. Analysts had criticized the company for waiting a day to discuss the news. "Clearly, we should have acted more quickly, and, for that, you have my sincere apology," Mr. Barbakow said.
He promised investors that the company would also provide more detailed information about its Medicare reimbursements, a subject that the company insisted was not tied to the raid by federal agents.
"We are deeply concerned about these allegations," he said.
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