Western Medical Center's Owners Sued Their Doctors to Muzzle Them, But One Wouldn't Shut Up
The owners of Western Medical Center sued their own doctors to muzzle them. But one doctor wouldn’t shut up,and now the feds are investigating the company’s shady financial deals
For someone who had supposedly just pointed a gun at a passing motorist in a fit of rage, the middle-aged man with the horn-rimmed glasses and the white medical robe seemed remarkably relaxed. On June 28, 2006, the man was sitting alone at a table in the doctors’ dining room of Santa Ana’s Western Medical Center and was wholly absorbed in the plate of food before him. It wasn’t until two uniformed officers of the Santa Ana Police Department were standing in front of him that the suspect looked up.
“Are you Michael Fitzgibbons?” one of the cops asked.
Fitzgibbons, a veteran infectious-diseases specialist at Orange County’s oldest hospital, nodded his head. “Do you mind if we search you?” the cop asked. “Do you have any weapons on you?”
A look of bemused irritation flashed across Fitzgibbons’ face as he stood up and spread out his arms. “No,” he said. “What’s this all about?”
“We have a report of your car being involved in a road-rage incident,” the officer answered. The cop searched Fitzgibbons without finding any weapons, then asked if he could search his car. “Sure, go ahead,” Fitzgibbons said. He accompanied the cops to the parking structure, led them to his brown Toyota Camry and handed over his keys.
As the cops searched the car, it occurred to Fitzgibbons that he ought to call an attorney. For the past few years, Fitzgibbons had been a vocal critic of the corporation that had recently purchased the hospital. He’d spoken out against the company in a public hearing. He’d been such a nuisance that the company had sued him for slander and interfering with company business. On June 14, an Orange County Superior Court judge had tossed out the company’s lawsuit, ordering the plaintiff to pay Fitzgibbons’ six-figure legal bills.
Just as Fitzgibbons finished dialing his lawyer, one of the police officers pulled something out from under a front seat.
“We’ve got a loaded gun,” he yelled.
The other cop handcuffed Fitzgibbons, whose cell phone continued to ring. “I’m trying to call my lawyer,” Fitzgibbons protested, but the cop snapped the phone shut and placed him in the back seat of his patrol car. His partner continued to search the Camry. A few seconds later, he retrieved a pair of black gloves from beneath the driver’s seat.
By this time, a large crowd of onlookers had gathered. “I knew this was a frame-up,” Fitzgibbons recalls. “I didn’t own a gun or a pair of black gloves, and they weren’t in the car when I parked it. I just knew somebody had set me up.”
Fitzgibbons had already been through hell thanks to his refusal to stop complaining about the plummeting conditions at Western Medical Center. Now, just when it seemed like he’d been vindicated, the cops were arresting him for possessing a loaded weapon, carrying a concealed weapon and brandishing a firearm. He knew he was innocent but also knew that the arrest itself could destroy his career. What he didn’t know was that the real nightmare was just beginning.
The scandal that followed Fitzgibbons’ arrest would ultimately produce not only numerous lawsuits, but also high-profile resignations, allegations of widespread fraud, a U.S. Securities and Exchange Commission probe, and even an FBI investigation. Documents that the Weekly has obtained, including sworn testimony by key players, strongly support Fitzgibbons’ belief that he was set up on bogus charges in an attempt to destroy his livelihood and reputation.
What happened to Fitzgibbons—frame jobs, financial ruin and even, Fitzgibbons claims, life-threatening sabotage—is so harrowing that almost none of his colleagues at Western Medical will talk about it on the record. Off the record, they complain about years having gone by without the hospital receiving much-needed medical equipment and other upgrades. Meanwhile, they marvel at how much time and money was spent on punishing Fitzgibbons.
“What happened to Mike was an object lesson for all of us,” says one doctor who still works at the hospital. “A lot of us really support Mike, but we realized that what happened to him isn’t something that would do any of us any good.”
* * *
With his sympathetic smile and almost anachronistic earnestness, Fitzgibbons seems like the kind of friendly neighborhood doctor you’d find in a late 1950s Norman Rockwell advertisement. In fact, it was during that time, as a young child in Berkeley, that he realized he wanted to be a doctor. “My mom was a nurse,” Fitzgibbons, now 59, recalls. “I remember that doctors had very soft hands, and they always seemed so friendly and helpful.”
In high school in the early 1960s, he volunteered as an orderly at Brookside Hospital in nearby San Pablo. In 1968, after a freshman year at Contra Costa College, Fitzgibbons transferred to UC Berkeley, where he majored in bacteriology and immunology. He arrived just in time for some of the biggest anti-Vietnam War demonstrations in the United States. “I was a protester,” he says. “I still have a tear-gas canister from that time.”
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.
Although he had his supporters, many doctors began to turn against him, worried he’d endanger their careers. “They were completely cowed,” Fitzgibbons says. The number of patients he treated began to dwindle. The hospital hired another doctor to replace him as director of infection control, a job that had paid Fitzgibbons a sorely needed $1,000 per month. “People wouldn’t talk to me who had known me for years,” he says. “Business got slow. I was pretty sure I would go bankrupt.”
Meanwhile, a series of bizarre coincidences began to occur. At the end of November 2005, a water heater burst, leaked and flooded Fitzgibbons’ office. “It was a pinhole that suddenly developed in the pipe,” he recalls. “Not only was I being sued for all my money, but also my office was a total mess.” On several other occasions, Fitzgibbons says, he would be in his office and notice something out of place—a file drawer left slightly open when he could swear it had been shut, furniture that seemed to have been moved ever so slightly. “I felt like I knew something was going on, but I couldn’t identify it, like I knew someone was messing with me.”
* * *That feeling became a certainty just two weeks after an Orange County Superior Court judge threw out IHHI’s lawsuit against Fitzgibbons, at the exact moment when Fitzgibbons watched a Santa Ana police officer fish from his car a loaded handgun and a pair of black gloves—neither of which he’d ever seen before. After the gun and gloves were placed into evidence bags, police brought Fitzgibbons to the station, booked and strip-searched him, then led him to a cell, where he remained until 8 p.m. that evening, when his wife drove him home. If the arrest was meant to damage Fitzgibbons’ standing at Western Medical, it worked. A few weeks later, on July 13, the hospital’s new chief of staff sent Fitzgibbons a letter demanding he appear before a “well-being committee” to address the incident.
Determined to clear his name, Fitzgibbons loudly proclaimed his innocence. “It’s a fairly complex crime,” he told the Weekly at the time (see “Can I Get a Witness?” July 27, 2006). “It involves some planning and forethought. And obviously, it’s a crime that someone paid for.”
By the time that story ran, the county district attorney’s office had declined to prosecute Fitzgibbons; he was able to produce cell-phone records showing he had been talking on the phone with a fellow doctor at the exact time when the road-rage incident had supposedly occurred. Plus, both of the 911 calls that alerted police to the alleged road-rage incident were made by callers who refused to identify themselves and were calling from disposable—therefore untraceable—cell phones.
Yet Fitzgibbons says there was even more damning evidence that the whole thing was a set-up, although it hasn’t been made public until now. On July 5, a few weeks after his arrest—Fitzgibbons had been in Texas at a family reunion—his wife drove him to an impound lot to retrieve his car. As he opened the driver’s-side door, he glanced through the window and noticed a bag of yellow pills on the passenger seat. Each pill had been stamped with Playboy magazine’s famous bunny logo.
“There were probably 100 or so pills in this sandwich-size Ziploc bag,” Fitzgibbons says. “I took a photograph of it because I had my camera with me.” (Fitzgibbons provided that photo to the Weekly.) Fitzgibbons summoned the lot attendant and told him there was a bag of what looked like Ecstasy pills in his car. The man refused to even look in the vehicle. “I don’t see anything, and if you ask me to testify, I’ll say I never saw anything,” Fitzgibbons recalls him saying. Instead of handing the pills over to police, after discussing it with his attorney, Fitzgibbons decided to dispose of the bag and its contents.
Unfortunately, even bigger trouble was brewing. A few weeks later, at about 7 p.m. on the evening of July 16, he received a frantic telephone call at his Irvine home from his 23-year-old daughter. Her car had just flipped over on the 22 freeway near Valley View Road. “She was in tears and said the car had suddenly gone out of control and crashed into the center divider,” he says. “She said the wheel had jerked to the left and she flipped.”
His daughter had two friends in the car, Japanese exchange students, who hadn’t been wearing their seat belts until, fortuitously, she told them it was against the law to not buckle up. All three escaped without a scratch. Fitzgibbons and his 22-year-old daughter jumped in his wife’s Astrovan and headed to the scene of the crash, but as he pulled out of the driveway, his daughter told him the front right tire had just gone flat. So he got in a second vehicle, picked up his older daughter and her friends, and took them to an urgent-care clinic.
Although the California Highway Patrol ruled the crash to be an accident, Fitzgibbons was suspicious enough about what had happened to hire a forensic investigator to examine the car. It didn’t take long for the investigator to discover a 2-inch horizontal slash on the tire’s tread. His assessment: Someone intentionally slashed the tire, which catastrophically failed, thus causing the crash. (The investigator confirmed that assessment in an interview with the Weekly at the time; Fitzgibbons provided the Weekly with a photograph of the damaged tire.) Fitzgibbons’ wife had already taken her Astrovan in to have the other punctured tire replaced, so there was no way to check if it had been slashed as well.
Convinced that both cars had been vandalized, Fitzgibbons met with detectives at the Irvine Police Department. They declined to investigate. Meanwhile, gossip circulated at Western Medical that Fitzgibbons was paranoid and that he’d staged the gun incident. One source shared those same suspicions with the Weekly at the time.
As more doctors abandoned Fitzgibbons, he felt increasingly isolated and vulnerable in his costly crusade against IHHI. “It was emotionally very trying,” he says. “I was disgusted that these people had been able to come into this hospital and hijack an institution that had done a tremendous amount of good for the community and just use it for their own purposes. I was saddened because the authorities had turned their back on the hospital, and the hospital had turned its back on me.”
* * *
In May 2007, Fitzgibbons sued IHHI for aiding and abetting criminal activity by spreading false rumors about him in the wake of the gun episode. It was just one of seemingly countless lawsuits that were now flying back and forth among IHHI and various doctors and business partners involved with the company. Many of IHHI’s lawsuits targeted people critical of the company, especially those who spoke out against CEO Bruce Mogel.
Before joining IHHI, Mogel had lost his job in 2003 at Alta Healthcare System, which owned seven LA-area hospitals, when the company discovered that he had forged several checks and given both himself and his business partner Larry Anderson, who became IHHI’s vice president, a handsome raise and bonus, according to a Sept. 4, 2003, investigative report by Alta uncovered as part of Dr. Shah’s lawsuit. In January 2006, Anderson wrote a letter to IHHI’s board of directors claiming that Mogel had also taken kickbacks from hospital vendors. He begged without success to not have to report to Mogel any longer.
Despite Anderson’s warnings, IHHI continued to file lawsuits against anyone who disparaged Mogel. The company also sued Shah, who had become critical of Mogel and had refused to sign off on what he considered to be IHHI’s highly questionable line of credit with Medical Capital Partners—the same deal that Fitzgibbons had questioned. Shah now says he felt particularly disturbed by Mogel’s cozy relationship with Medical Capital’s CEO, Joey Lampariello. “I wouldn’t sign the loan document because it was for 24 percent—a usurious rate,” Shah says. “I had investors all over the country and raised $11.5 million, but Joey wouldn’t take my money.”
IHHI’s litigiousness finally backfired when the company sued for defamation Fred Siembeda, a loan broker who had allegedly made negative comments about Mogel. Siembeda responded by suing IHHI. Among other things, his lawyers deposed Anderson, who proved only too happy to divulge everything he knew about Mogel. In August 2008, Marc Miles, a lawyer with Callahan & Blaine, the Santa Ana-based law firm representing Shah against IHHI, also deposed Anderson, who provided even more details about Mogel, details that seemed to have everything to do with Fitzgibbons and his strange arrest on gun charges. According to Anderson, on June 10, 2006, less than three weeks before the arrest, Mogel called Anderson into his office. For weeks, Mogel had been fuming about both Shah and Fitzgibbons, Anderson said, boasting that he was going to “humble” the two doctors.
“He was in an odd mood, I would say, and he started talking about Dr. Shah,” Anderson stated under oath. “He said, ‘You know, there are people who could kidnap Shah’s wife . . . who could kidnap Shah’s daughter . . . who could take Shah into a bathroom, strip him down naked and hold a knife to his penis. They won’t cut it off; they won’t hurt him at all, but they will make him crap his pants.’” Mogel also boasted that he could arrange for someone to put “kiddie porn” on Shah’s computer.
Then Anderson claimed Mogel turned to his computer and pulled up an amateurish-looking website for a company called Form Labs, which advertised web-design services for a fee of $25,000 without even naming any current clients. “This is Mikey’s company,” Anderson says Mogel told him. Mogel then explained that “Mikey” was a guy he had met on an airplane who could “lift 2,100 pounds in a triple lift” and who had on his “payroll” a person with a “senior-level position” in the Santa Ana Police Department. “He told me that if I ever get into trouble in the jurisdiction of Santa Ana, don’t call a lawyer, call him first because he can have Mikey get me out of any trouble that I get into,” Anderson stated in his sworn deposition.
Despite the fact that IHHI already had a contract with another firm to develop the company’s website, Anderson stated that Mogel instructed him to draw up a $10,000 check to Form Labs. Mogel insisted that Anderson hand-deliver to him the check so Mogel could send it to Form Labs immediately. Anderson says his suspicion that the payment might have something to do with humbling Fitzgibbons was confirmed when, on another occasion—Anderson could not recall the exact date—Mogel made a strange boast about Fitzgibbons being arrested. “People don’t know how powerful I am,” he claims Mogel told him.
Callahan & Blaine’s Miles also deposed Mogel and his lending partner, Lampariello of Medical Capital. It was Medical Capital’s high-interest-rate, $50 million loan to IHHI that had led Fitzgibbons to send the May 2005 e-mail, which, in turn, led to him being sued for slander by IHHI. Miles uncovered e-mails showing that Mogel and Lampariello had taken an unusual interest in providing a $5 million loan to an Internet-porn company called E Mark Advertising Inc., whose vice president is also listed on corporate paperwork for Form Labs. The company is headquartered in a small house in East Los Angeles, despite documents asserting it was housed in a state-of-the-art facility with hand-scanner security (see “New Complications In the IHHI Saga,” July 29).
Shortly after Miles began asking questions about E Mark, IHHI settled its lawsuit with Shah for $2.7 million and Mogel abruptly resigned, although, thanks to his December 2008 severance package, he’s still earning $40,000 per month.
On June 6 of this year, the SEC sued Medical Capital for defrauding investors—the alleged fraud supposedly included using their cash to, among other things, purchase a multimillion-dollar party yacht in Newport Beach—and froze the company’s assets.
According to Miles, the FBI is also investigating Mogel and Lampariello. “A special agent from the FBI came into our office to interview us with respect to issues concerning IHHI, Bruce Mogel and Medical Capital,” he says. “The FBI is concerned with whether the payment to Form Labs constitutes Medicare fraud.”
As the Weekly previously reported, e-mails sent to Form Labs were responded to by someone calling him- or herself “administrator” who refused to answer any questions about IHHI or Mogel. “By the direction of our attorneys, it is advised that we minimize contact by withholding names and telephone conversations until the matter is investigated further or resolved,” the person wrote.
Both Mogel and Anderson have refused repeated requests for an interview, citing pending litigation and confidentiality clauses. However, in a statement he released to the Weekly last year, Mogel proclaimed his innocence. “I want everyone to know the allegations in this lawsuit are outrageous and untrue,” he said. “The truth will come out.”
Meanwhile, thanks to IHHI’s legal and financial troubles, it has been years since any significant upgrades have occurred at its hospitals. “A lot of problems we were complaining about four years ago are still there,” says one doctor who asked not to be identified. “Nobody asked these people to come and run the hospital. They have dug themselves into a multimillion-dollar hole and have shown a willingness to sue anyone who criticizes them. They don’t have to win in court; all they need to do is force you to lose $100,000 a year defending yourself, and they’ve won.”
Despite having won a multimillion-dollar judgement against IHHI, Shah says he still awaits justice. “I could write a 500-page book about IHHI and how bad they were to Fitzgibbons and me,” he says. “We exposed Bruce Mogel and Joey Lampariello, but the government hasn’t really done anything.” Shah remains amazed at the details of Anderson’s sworn statement about Mogel’s bizarre tirade. “There are guys at the company who supported Mogel when Fitzgibbons was set up, and Bruce threatened to kidnap me and my daughter. The doctors are afraid to talk about this. And meanwhile, this company spent $8 million in its lawsuit against me, a physician who helped create this company, instead of spending it on new equipment or maintaining the hospital.”
Fitzgibbons still works at Western Medical, although he has lost about half of his practice and feels his reputation has been permanently damaged. His lawsuit against the hospital and IHHI has yet to reach a courtroom. Despite Mogel’s resignation and the ongoing SEC and FBI investigations into IHHI and Medical Capital, Fitzgibbons says he still fears for his life. “I can’t believe nobody has been arrested in this case,” he says. “Whoever planted a gun and drugs in my car and almost killed my daughter is still out there. Isn’t there some kind of punishment for this kind of illegal activity?”
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