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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