FOR IMMEDIATE RELEASE
CIV
WEDNESDAY, AUGUST 26, 1998
(202) 616-2765
TDD (202) 514-1888

COMPLAINT FILED AGAINST PHYSICIAN, COMPANIES IN FALSE CLAIMS CASE

WASHINGTON, D.C. - A physician who operated cancer clinics in nine states has been sued for allegedly submitting thousands of false claims to two government health care programs between 1992 and 1997, the Department of Justice announced today. More than 80 businesses involved in the physician's cancer care operations were also sued.

Assistant Attorney General Frank W. Hunger and United States Attorney for Maryland Lynne Battaglia said the Complaint, filed in U.S. District Court in Baltimore, stems from an investigation into allegations of improper billing practices to Medicare and CHAMPUS.

The civil complaint alleges that EquiMed, Inc.; National Medical Financial Services Corporation; EquiMed's President and Chief Executive Officer, Douglas Colkitt, M.D.; and more than 80 businesses owned or controlled by Colkitt presented false statements and claims for payment to Medicare and CHAMPUS; conspired to submit false claims; and received reimbursements to which they were not entitled.

The complaint also alleges that Colkitt used business entities that he controlled to implement the scheme to submit false claims.

In addition, Jerome Derdel, M.D., a director and officer of EquiMed, and Joanne Russell, a shareholder and employee of EquiMed, were named as defendants in the complaint.

The complaint alleges that the Colkitt companies, which are involved in various aspects of Colkitt's cancer care operations, routinely submitted claims to Medicare and CHAMPUS, both government health care programs, for services not rendered or not ordered by the physician; upcoded procedures to gain improper high reimbursement; and double billed Medicare for certain procedures. As a result of the fraudulent submissions, Colkitt and his companies allegedly obtained millions of dollars to which they were not entitled.

The complaint alleges that the false claims resulted from multiple billing schemes created or approved by executive management of the Colkitt companies, located in State College, Penn., and then implemented in all of the cancer centers.

"This case demonstrates the Department's continuing dedication to combat health care fraud and to seek recovery from those who violate the False Claims Act," said Hunger.

Battaglia said, "Government health care programs are especially vulnerable to billing schemes that cause devastating losses and undermine the integrity of all government programs."

The complaint was filed in a qui tam false claims action pending in the U.S. District Court in Baltimore. The false claims action was originally filed by Syed Rahman, M.D., a physician who formerly worked at a Baltimore, Md., cancer center operated by one of the Colkitt companies. The United States intervened in the case on August 17.

The Civil Division and the U.S. Attorney's Office conducted the investigation. They were assisted by the Office of the Inspector General of the Department of Health and Human Services and the Defense Criminal Investigative Service.

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