By On the occasion of our 20th anniversary
By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
After graduating four years later, Fitzgibbons went to Georgetown University in Washington, D.C., for medical school. In 1976, he returned to California and began a three-year residency at OC Medical Center, which was renamed UC Irvine Medical Center later that year, and then completed a fellowship in infectious diseases. Fitzgibbons began working at Western Medical Center in 1982; there, he treated some of the earliest AIDS cases. During the next two decades, Fitzgibbons built his practice and dedicated himself to improving the quality of care at that hospital.
By 2002, he was Western Medical’s chief of staff. “That year, the hospital made more money than it ever had,” he recalls. “The problem is, no money was being put back in for capital improvements.” The hospital had started to look run-down. Once-sophisticated pieces of medical equipment were now either outdated or starting to show their age; carpets weren’t being replaced; and the hospital’s stocks of sheets, pillows, blankets weren’t being maintained.
The hospital’s owner, Tenet Healthcare Corp., which had purchased Western Medical in 1995, didn’t seem too interested in improving patient care. In 2002, the Justice Department began investigating the company for Medicare fraud and overcharging patients for medication. The charges hardly came as a surprise: As early as 1994, Tenet had pleaded guilty to federal conspiracy charges for giving kickbacks and bribes to doctors. In return for payments, doctors were told to direct psychiatric patients to mental hospitals, where they were held against their will until their insurance benefits expired. Tenet ultimately paid more than half a billion dollars in fines and settlements relating to that scandal.
Starting in 2002, imploding under heavy pressure from government regulators and criminal investigators, Tenet tried to get rid of Western Medical and three other hospitals—another Western Medical Center in Anaheim, Chapman Medical Center in Orange and Coastal Communities Hospital in Santa Ana. At Santa Ana’s Western Medical, Fitzgibbons urged his fellow doctors to do everything they could to protect the interests of their patients by trying to purchase the hospital themselves. “We felt Tenet was evil, a criminal organization,” he explains. “So if the sale was going to a company they selected, we’d have to step up because if we didn’t, things would just go from bad to worse.”
Along with 64 other doctors, Fitzgibbons contributed $5,000 to hire a business representative to represent them in talks with Tenet. But Tenet was determined to sell all four OC hospitals in one package, and the doctors were in no position to buy them all. One of the hospital’s physicians, Dr. Anil Shah, managed to cobble together several other doctors into an investment group that had enough cash to win a 20 percent stake in the sale by teaming up with a newly formed company in Costa Mesa, Integrated Healthcare Holdings Inc. (IHHI), Tenet’s favored buyer.
Also in on the deal was a Mumbai-raised surgeon named Dr. Kali P. Chaudhuri, a fact that terrified Fitzgibbons and most of his fellow doctors. Chaudhuri had a reputation as a ruthless businessman. In 2000, he had purchased dozens of Southern California medical clinics and set them up under a company with his own initials, KPC. Fourteen months later, with KPC hemorrhaging red ink, Chaudhuri closed the clinics, stranding 250,000 patients, some without doctors or medical records. Lawsuits followed, along with still-unresolved claims of unpaid bills, financial mismanagement and fraud (see John Underwood’s “Not a Dunn Deal,” Dec. 23, 2004).
“The doctors and the medical staff went ballistic over Chaudhuri,” Fitzgibbons recalls. “We wanted to put a stop to this. We went to the Orange County Board of Supervisors and the Santa Ana City Council.” Local officials failed to respond to their complaints, so Fitzgibbons and other doctors contacted then-state Senator Joe Dunn (D-Garden Grove), who probed Chaudhuri’s background and chaired a series of hearings over the pending sale in Anaheim.
“The physicians who came to me from Western Medical Center were very concerned that an organization run by Dr. Chaudhuri would run the risk of jeopardizing the population it serves, most of which is low-income,” Dunn says. “My staff started to probe [Chaudhuri] more in-depth. The more we dug, the more concern we had about whether the purchase was for a long-term investment or a short-term one, where you get what you can and shut [the hospitals] down.”
As a result of Dunn’s intervention, Chaudhuri was prohibited from being a majority shareholder in the company or from having any role in the day-to-day operations of the four hospitals. IHHI agreed not to retaliate against any of the doctors, such as Fitzgibbons, who testified in the hearings, if the doctors signed paperwork saying they supported the sale, which was completed in March 2005. But at a meeting of doctors viewed as friendly to the company, IHHI officials announced they were considering filing a lawsuit against Fitzgibbons.
Despite learning of that threat, Fitzgibbons continued to sound the alarm about IHHI. On May 19, 2005, he sent an e-mail to several colleagues criticizing a $50 million loan IHHI had negotiated with a Las Vegas-based company called Medical Capital Partners, the terms of which would force IHHI to pay what seemed to Fitzgibbons to be ridiculously high interest rates, almost guaranteeing that IHHI would go bankrupt. After discovering the e-mail, IHHI sued Fitzgibbons for slander and interfering in company business. To defend himself against the lawsuit, he raised $100,000 from fellow doctors at the hospital.