Additional reporting was provided by Susan Orenstein and Jesse Drucker.
For decades, Lenox Hill Hospital has appeared as quietly affluent as the Upper East Side patients it cared for-Manhattan banking families with names like Uris, Hess and Wurtzburger-and as genteel as the East 77th Street block it occupies. As the city’s other major teaching hospitals have scrambled for paying patients and fought with merger partners in their efforts to stay solvent, Lenox Hill has not only remained independent, but its ledger sheets have tipped decisively into the black while the hospital seems to have escaped the financial fray of the managed-care revolution. Last year, its revenues rose by $10 million.
Lenox Hill has benefited from the success of its doctors. Now some of those doctors are the focus of three Federal probes, The Observer has learned. Agents from the F.B.I., the Internal Revenue Service and the Department of Health and Human Services are studying allegations of fraudulent billing and improper patient referrals at two doctors’ practices that send patients to Lenox Hill: Madison Medical Associates, and Advanced Heart Physicians & Surgeons Network. Also under investigation is Advanced Health Corporation, a publicly traded company that manages the billing and administration of those doctors’ practices. Federal agents first interviewed the hospital staff in 1997.
Terence O’Brien, Lenox Hill’s chief operating officer, said that the U.S. Attorney’s office requested certain charts and records from the hospital as recently as February, but added that he had been assured that the hospital “was in no way involved” in the investigations. He added that Lenox Hill Hospital had no inappropriate relationships with Madison Medical, Advanced Heart or Advanced Health. “At this point in time, I believe that we continue to act in a prudent way,” he said.
Michael Sommer, a lawyer for Advanced Health, said, “The company is unaware of any governmental investigation into either its formation or operation.”
A spokesman for Madison Medical, Alan Metrick, said, “We’ve heard nothing from the I.R.S., the H.H.S., the F.B.I. or any Government agency regarding an investigation. As far as we know, there is no investigation under way.”
An F.B.I. spokesman declined to comment for this article, as did spokesmen at Health and Human Services and the I.R.S. The Observer conducted an independent, three-month investigation into the relationships among Madison Medical, Advanced Heart and the hospital, interviewing more than a dozen hospital staff members, physicians in the city with knowledge of how patients were referred to the private practices, law enforcement sources and people with access to pertinent billing records. In the interviews, one figure emerged again and again: a 44-year-old Lenox Hill internist named Angelo J. Acquista. According to a law enforcement source with ties to the F.B.I., Dr. Acquista is a focus of the agency’s inquiry, and an assistant U.S. attorney in Manhattan was recently assigned to the case.
The Observer first spoke with David Warmflash, an attorney for Dr. Acquista and physicians in Advanced Heart, on March 13. Dr. Acquista’s current attorney, Kevin Walsh, a partner at Whitman, Breed, Abbott & Morgan who also represents doctors in Advanced Heart, said that he could not adequately respond to The Observer ‘s request for comment before the paper’s deadline. He did say, however, “My client is unaware of any such investigation.” Mr. Walsh said he hadn’t had the opportunity to speak with his clients in Advanced Heart.
Dr. Acquista has been instrumental in building a complex and lucrative network of doctors’ practices in Queens, Brooklyn and Long Island that refers patients to Lenox Hill Hospital. He is the assistant to the chief of critical care and pulmonary medicine at Lenox Hill, but is widely perceived to be the most powerful doctor at the hospital.
He is also a founding member of Madison Medical and has a financial stake in Advanced Health. His multiple roles-as a doctor in private practice, a teaching physician and a businessman-have given him both clout and capital. According to his detractors, they have also created conflicts between his private-practice interests and his hospital obligations. (Mr. Walsh said that he had not had the chance to discuss this with his client.)
The alleged conflicts have also apparently set Lenox Hill in an uproar. Increasingly, the institution is divided into two hostile and paranoid camps: physicians who benefit financially from Madison Medical, Advanced Heart or Advanced Health, and those who don’t.
Four doctors, all of whom have been critical of Dr. Acquista, told The Observer their safety had been threatened by him. One of those doctors, Marc Spero, a Lenox Hill internist and pulmonologist, said he believes that “the vast majority of doctors at Lenox Hill Hospital are outstanding physicians, and many may be unaware of the turmoil.” Hugh Barber, the hospital’s 79-year-old director emeritus of obstetrics and gynecology, said that in 1996 he received a phone call informing him that a plot at a cemetery in Queens had been purchased in his name. Not long after the call came, he said he received a visit from Kenneth McCabe, a Federal investigator who specializes in organized crime. (Mr. McCabe declined to comment for this story.)
One physician wrote a letter to his attorney documenting a threat, and the events leading up to it, to be released should harm come to him. He wrote: “I am committing this to writing because the persons involved may be ruthless enough to try to silence me, implausible though this may seem.” In another case, a doctor changed his license plates and tripled his fire insurance. In response to these allegations, Dr. Acquista’s attorney Mr. Walsh said he had no knowledge of any such threats.
Further schisms over money and turf at the hospital resulted in at least two lawsuits-one between individual doctors, another between a group practice of radiologists and the chairman of the radiology department. On one occasion, security guards had to put on surgical masks and shoe covers and post themselves at an open-heart surgery procedure that was being performed by two doctors, one of whom had reportedly threatened to physically harm the other, doctors familiar with the situation said. (Mr. O’Brien denied that this happened.)
“Lenox Hill Hospital had the most wonderful spirit for taking care of patients, and it’s gone now,” said Dr. Barber. “It seems to me that the purpose of the hospital is to make a profit. This motive has spread feelings of rivalry, disgust and hate. Today, you cannot make a profit unless you cut services or commit fraud. We are talking about the sale of human flesh.”
In a lengthy interview, Mr. O’Brien said, “Our basic philosophy is that patients come first in everything we do.” He said that competitiveness and financial resentment, because of changes wrought by managed care, had fueled the complaints of wrongdoing, and that it was disgruntled doctors who may have first contacted Federal investigators. “There’s no question in my mind that there’s a financial issue here,” he said.
Mr. O’Brien singled out two physicians as troublemakers: Dr. Barber and Dr. David Follett, who is involved in the radiology suit. “Dr. Barber is almost 80 years old. He was director of obstetrics for 40-some years, and he’s not anymore,” said Mr. O’Brien. “I think he might be, if nothing else, motivated by the disenfranchisement of his role and the frustration it brings.”
Mr. O’Brien said that Dr. Follett may feel competitive pressure from Madison Medical, which plans on starting a radiology practice.
Dr. Follett responded in a faxed statement, “Mr. O’Brien’s comments regarding myself are absurd and ludicrous, and represent an interpretation of events that is false.”
Last September, the hospital hired the law firm of Latham & Watkins to “assist the institution in developing a compliance program [that would make sure the hospital is following governing rules and regulations] and responding to requests for information and documents from various agencies,” said a Lenox Hill spokesman. In January of this year, its trustees asked Latham & Watkins to conduct an internal review of “certain physician relations.”
A ‘Hail of Punches’
One doctor said that after he criticized Dr. Acquista for performing medical procedures which he deemed unnecessary, Dr. Acquista assaulted him with a “hail of punches” on hospital premises. The doctor reported in a letter to his attorney, which The Observer obtained, that immediately after the attack, Dr. Acquista said, “‘Do you know who my family is? Do you know who my family is? If this happens once more, one more word out of you, you will be very sorry, very sorry.'” Mr. Walsh said that he couldn’t comment on this “because I haven’t had the opportunity to discuss it with Dr. Acquista.”
Dr. Acquista’s brother, Dominick Acquista, is listed in F.B.I. files as an associate of the Gambino organized crime family. Dr. Acquista does not appear to share any business ventures with his brother, but at least one of Dr. Acquista’s business associates has faced allegations of mob connections. Madison Medical, of which Dr. Acquista was a founder, used Vardo Construction Company for a piece of the construction of the Madison Medical offices. Vardo is owned by Lorenzo Devardo, who in 1987 was charged, along with more than 10 others, with conspiring to smuggle more than $60 million worth of cocaine and heroin into the United States, using pizza parlors as a front in the famous “pizza connection” Mafia case. Then-U.S. Attorney Rudolph Giuliani dropped conspiracy and racketeering charges against Mr. Devardo after he pleaded guilty to two gun-possession felonies. Last year, the city abruptly dropped construction contracts with Mr. Devardo’s company after the Daily News exposed his conviction and jail sentence for gun possession.
The Observer obtained a work permit application in which Mr. Devardo is listed as a contractor for 110 East 59th Street, eighth floor, which is Madison Medical. But a lawyer for the company, James Moriarty, said the firm did only minor demolition on the project. Mr. Moriarty added that Mr. Devardo “does not have anything to do with organized crime. He has no association, period.”
Apparently, Dr. Acquista’s and Mr. Devardo’s relationship goes beyond the Madison Medical job. According to property records, Dr. Acquista has been involved in at least four real estate transactions with Mr. Devardo or his wife, Antonella Devardo. Dr. Acquista, who owns properties in Queens, is attempting to secure political support to develop luxury apartments on the site of a sculpture park in Astoria. Dr. Acquista’s architect on the project is Miele Associates; Jean Miele, brother of Joel Miele, who is head of the city’s Department of Environmental Protection, is one of the partners of the firm. Last October, The Village Voice reported that it had identified business associates or clients of Miele Associates with ties to organized crime. A partner at Miele Associates called the Voice story “unbelievable.”
Trouble on Park Avenue
While such contacts may not be surprising in the construction world, they seem absurd in the context of a Park Avenue hospital. One physician said that on an occasion when he’d had a professional dispute with someone, Dr. Acquista said to him, in earnest, “If he gives you a hard time, I’ll get my brother to break his legs.”
Mr. Walsh responded that he hadn’t had the chance to discuss that story with Dr. Acquista.
On March 17, Lenox Hill released this statement: “The hospital had no knowledge or information concerning Dr. Acquista’s alleged association with individuals reputed to be affiliated with members of organized crime.”
Doctors at Lenox Hill have expressed shock at such physical threats and familial references. Given this, they have been surprised at Dr. Acquista’s steady ascent: from the hospital’s assistant to the chief of critical care, to a position on the quality-assurance committee, which monitors the caliber of care at Lenox Hill, and finally to a top partnership at Madison Medical with the hospital’s chief of medicine, Michael Bruno. In the spring of 1996, a group of doctors scheduled a meeting with James S. Marcus, chairman of the board of trustees, to discuss their concerns about Dr. Acquista. They claim that the meeting was canceled on short notice.
Subsequently, Dr. Barber wrote a letter to Mr. Marcus dated May 3, 1996, referring to “issues and problems.” The letter elaborated: “These include activities negatively affecting the quality of patient care, potential and possible conflicts of interest of staff.… The staff who have spoken to me feel strongly that unless dealt with appropriately by the board, these problems will ultimately threaten the hospital’s survival.”
Mr. O’Brien, however, told The Observer that the hospital administration has taken a number of actions to address concerns, and that physicians have been unwilling to meet with hospital administration or be more specific in their allegations. “We’ve had meetings that no one showed up to,” he said.
Not only has Lenox Hill’s board of trustees hired an attorney to explore the allegations, it has formed a special committee that is charged with conducting a full review of possible conflicts of interest.
“Whenever there was a question raised, there was an investigation to the degree it could be investigated,” Mr. O’Brien said. “We reviewed all this thoroughly. We also discussed thoroughly within the institution any comment, any questions that anybody had about what was going on, even to the extent of writing charts on the blackboard about how some of these institutions were linked together.” Mr. O’Brien added: “We continue to function in a way that you would expect the hospital to function in.… We feel confident that we’ve done absolutely nothing wrong.”