Columbia-Presbyterian Knew of Surgery Scam Before Current Fiasco

On Dec. 18, the plastic surgery division of Columbia-Presbyterian Medical Center received an official smack from the New York State Department of Health. The agency released a 30-page, 33-count finding of violations against Columbia-Presbyterian regarding allegations that plastic surgery residents there performed clandestine cosmetic surgeries for cash.

The report was uncommonly harsh, criticizing the hospital for many things, including inadequate medical care and an absence of senior-staff supervision of the residents. The press duly noted the report’s release, and Columbia-Presbyterian sent out this curiously limited, even self-congratulatory statement: “The Department of Health has released its report relating to an unauthorized cosmetic surgical procedure performed by an unsupervised resident in plastic surgery.… We are reassured that our internal review was consistent with the thorough investigation performed by the New York State Department of Health and that the actions we have already taken demonstrate our outrage with this particular event.”

Between the Health Department’s report and the hospital’s professed outrage at one resident in particular, Dr. James Brady, lies the story of how Columbia-Presbyterian officials ignored warning signals, passed up numerous opportunities to halt the clandestine practice and essentially hung two residents out to dry-after failing to supervise them.

George Arzt, a former New York Post reporter-turned-media consultant retained by the institution, took the heat for the thinness of the hospital’s statement. “That may have been my fault. We put out a short statement knowing that we were going to give further statements later,” he said.

But the statement perpetuated the hospital’s posture of focusing on the renegade Dr. Brady, rather than on a plastic surgery division run amok and the hospital’s failure to correct it. In August, The Observer first reported that Dr. Brady, a fifth-year chief resident in plastic surgery, was fired after performing a botched, after-hours liposuction for $700 cash in the office of senior surgeon Dr. Ted Chaglassian. Even after The Observer identified two residents performing clandestine surgeries on four patients and the strong possibility that senior staff knew this was happening, the hospital continued to stick to its lone-resident version of events.

Furthermore, the hospital depicted itself as the Health Department’s partner in rooting out the “outlaw” Dr. Brady, a description Dr. John Driscoll, president of Columbia-Presbyterian’s medical board, used in a television interview on Dec. 18 with New York 1. He also said to a WWOR-TV reporter, “On some perverse level, it was reassuring that nothing further was uncovered by this report that we hadn’t already known or suspected.”

The problem is that, according to that report, hospital officials had known of questionable practices in the plastic surgery department since the early 80’s. The Health Department cited not just one event, but a long and ignoble tradition of residents hustling plastic surgery patients at Columbia-Presbyterian. “For at least 15 years,” the report reads, “senior residents in the division of plastic surgery were soliciting money from cosmetic surgery patients in violation of hospital policy. The solicitation was started by a former chief of the division and was done with the knowledge of many attending staff members.”

The report further outlines how Dr. Brady and his co-chief resident, Dr. Jeffrey Yager, performed between three dozen and 100 unauthorized surgeries in the offices of senior physicians, who, according to the report, had many opportunities to stop the practice.

Even after the hospital had submitted the results of its internal investigation to the Health Department last fall, Dr. Driscoll told ABC’s 20/20 in an Oct. 17 TV broadcast, “Nobody in the hospital here knew that Dr. Brady was performing procedures unsupervised.” Yet seven months earlier, according to the Health Department report, Dr. M. Kamel Abouzahr, an attending plastic surgeon at Columbia-Presbyterian, wrote to Dr. Brady, and sent a copy of the letter to the resident’s supervisor, Dr. David Chiu, complaining that Dr. Brady was treating patients admitted under Dr. Abouzahr’s name without notifying him. A department physician reviewed two of the cases Dr. Abouzahr referred to, but “no action was taken by the hospital to identify the extent of the problem or to assure that the problem was corrected and did not recur,” the report states.

Dr. Driscoll told The Observer , in an interview that included several other Columbia-Presbyterian officials: “Dr. Chiu does not recall ever receiving the copy.” In other words, the letter appears to have fallen into an abyss already crowded with cover-your-trail memos regarding failures in the plastic surgery division.

Not that Dr. Brady and Dr. Yager don’t deserve to be punished. The Health Department’s Office of Professional Medical Conduct has voted to strip them of their medical licenses, The Observer has learned; the Drug Enforcement Agency is now investigating the diversion of controlled substances-Valium in the case of the liposuction patient; and the Internal Revenue Service may investigate whether the cash the residents collected was reported.

But what about Columbia-Presbyterian, which was supposed to be training and supervising these young residents and teaching them to be ethical doctors? As a senior administrator of a plastic surgery residency program at another Manhattan hospital said, “Not only was it a failure of [Dr. Brady and Dr. Yager], but of all the attending physicians on staff. The entire faculty of the department is responsible for the education of residents. They were notified time and time again. Nobody picked up on it.”

So far, the financial penalties assessed the hospital are minor (the Health Department slapped it with a fine of $66,000-the maximum $2,000 per infraction). But the failure of the teaching program was viewed as severe enough that in early December, the Accreditation Council for Graduate Medical Education disbanded the hospital’s plastic surgery training program without the opportunity for appeal. It is the first time that the committee has resorted to what is called “withdrawal of accreditation for catastrophic reasons,” said a spokesman, Dr. Doris Stoll.

That means that Columbia-Presbyterian’s four current plastic surgery residents, who presumably have been following the rules of their residency, plus the two incoming residents, are now refugees. Their training interrupted, they are scrambling to find places in other programs. That may prove difficult. While “they have great backgrounds,” the senior administrator at the other Manhattan hospital said, “the question is not, How smart are they, but how ethical?” So in addition to giving Dr. Brady and Dr. Yager carte blanche to ruin their medical futures, Columbia-Presbyterian has screwed up the careers of six other residents who saw their program disappear overnight.

Seeds of Trouble

Ultimately, it was the pursuit of money that led to the disintegration of the plastic surgery division. The seeds of trouble, according to the report, were planted in 1983 by the former chair of the plastic surgery division, Dr. Norman Hugo. After a patient impressed with the performance of a resident made a donation to the hospital, Dr. Hugo apparently saw a potential revenue stream, and he pursued it. He permitted residents who performed cosmetic surgery in the hospital’s main operating room to solicit donations from private-pay patients for an educational fund, according to the report. The money was given by check, paid into a fund maintained by the hospital’s accounting department and used to cover the cost of ball games, dinners and conferences for residents.

Hospital administrators apparently had full knowledge of the fund. Not only did Columbia-Presbyterian begin to assess a 10 percent fee for administering it and processing the checks, but in the late 1980’s, according to what Dr. Hugo told investigators, the hospital’s medical director approached him with allegations that Medicaid patients were being hit up for donations. Dr. Hugo denied this, and the hospital, in a pattern it would establish, backed off.

In the early 90’s, the residents, chafing under the 10 percent fee, began to solicit cash instead of checks. Patients paid, and the cash was kept in an envelope in the center desk drawer of the chief residents’ office. The off-the-books surgical procedures migrated from the hospital’s plastic surgery clinic-where discounted surgeries were supposed to be performed by residents and supervised by attending physicians-to Dr. Hugo’s private office in Columbia-Presbyterian’s Atchley Pavilion.

In 1994, Dr. Chiu replaced Dr. Hugo, and the report states that the new department chair knew of both the fund and the procedures: “Dr. Chiu indicated that he knew of the existence of the plastic surgery residents’ fund, but he thought it was funded by patrons and other charitable sources. Dr. Chiu acknowledged that he knew residents were performing surgery in attending physicians’ offices and assumed that proper supervision was being provided.”

In 1994, chief resident Dr. Jeffrey Ascherman, now a plastic surgeon at Columbia-Presbyterian, sent a letter to the hospital’s admitting office suggesting that the cash practice be stopped. The letter was apparently ignored. A year later, a patient complained about being charged on different scales for surgical procedures. Hospital officials again investigated the residents’ fund. Dr. Chiu supposedly ordered the residents to discontinue the fund, according to a June 19, 1995, letter that a surgery department administrator sent to Dr. Robert Lewy. As medical director, he is responsible for care throughout the hospital. Yet Dr. Chiu issued no written directives, and Dr. Lewy did not follow up.

Dr. Yager and Dr. Brady continued the practice with greater intensity and refinement. They printed business cards using the official hospital logo and diverted clinic patients to Dr. Chaglassian’s office, performing dozens of cosmetic procedures after-hours for cash. They also managed to receive academic credit for the clandestine procedures, submitting a list of them to Dr. Chiu as demonstration that they had performed the number of surgeries required to complete their residencies and receive board certification.

The hospital’s legal counsel, Marcia Morris, attempted to draw a sharp line between this scheme and early troubles in the division. “What had been going on before was an ineffective effort to stop a program instituted by Dr. Hugo, in which residents were encouraged to ask for donations that were voluntary. But procedures were supervised, and medical records were kept.” By contrast, she said, “Dr. Brady and Dr. Yager went underground. The attending staff should have known that these two young men were rather busy.”

In fact, the scheme was underground from the day that cash began to be kept in an envelope in the chief resident’s desk drawer. And according to an internal hospital memo, dated June 17, obtained by The Observer , at least one member of the attending staff, Dr. Chaglassian, did know that Dr. Brady planned to perform an extracurricular surgery in his office.

To Health Department investigators, Dr. Chaglassian admitted knowing that Dr. Brady and Dr. Yager were soliciting fees from patients for a residents’ fund.

The Buck Stops Where?

Dr. Chiu was demoted last August. In a recent interview, Ms. Morris said, “The failure [of supervision] lies squarely with [the] plastic surgery [division].” But if Dr. Chiu failed as a plastic surgery chair, he may have served a larger function for the hospital. According to a source familiar with the workings of the department, Dr. Chiu brought in big money to Columbia-Presbyterian through his friendship with Gordon Wu, a Hong Kong industrialist. The source said the Wu family backed Dr. Chiu for division chairman. In 1995, the year after Dr. Chiu got that job, Mr. Wu pledged more than $500,000 to the hospital. His brother Clyde Wu, a cardiologist at Wayne State University in Indiana who trained at Columbia-Presbyterian, said, “My brother has been very supportive of Dr. Chiu.” He declined to comment further.

Ms. Morris said that punishment of supervising physicians “is likely” to be meted out in January 1998. One member of the plastic surgery division speculated that the crisis could affect not only the standing of Dr. Chaglassian, Dr. Chiu and Dr. Hugo, but also could embroil Dr. Eric Rose, the chairman of the surgery department, who oversees plastic surgery.

Then again, if history repeats itself at Columbia-Presbyterian, their jobs are probably secure. “You’ve got Chaglassian responsible to Chiu, responsible to Rose, responsible to Lewy, responsible to Bill Speck [who is chief executive of Presbyterian Hospital],” the source said. “No one has said, ‘The buck stops here.'”