Under city law, female prisoners about to give birth are supposed to be taken to a medical facility outside the jail. But at the clinic, administered by St. Barnabas Hospital, a physician assistant–less highly trained than an M.D.–decided Ms. Green could wait for hospitalization and sent her back to her cell. Yet common obstetrical logic is that a woman who'd had 10 children, as Ms. Green had had, would be a likely candidate for rapid labor. Sure enough, she was. With the help of other inmates, she quickly gave birth, in her cell, to a baby in distress who was then rushed to Elmhurst Hospital Center.

The irony of this story is rich: A woman incarcerated by the city for having allegedly killed a child gives birth in a city prison cell, in conditions that endanger the child.

While Rikers staff members have told The Observer that what happened to Ms. Green is an indication of problems at the jail, any claim by her would probably be far down on the list of troubles for St. Barnabas. On Aug. 24, almost eight months after the hospital assumed control of health care for Rikers, the city convened an extraordinary quality-assurance meeting. Packing a conference room at the headquarters of the Health and Hospitals Corporation, the city agency that was placed in charge of prison care in 1996, were high-level city doctors and administrators, and representatives from St. Barnabas, including its president, Dr. Ronald Gade. The medical charts of a handful of inmates were examined during the meeting. Ongoing assessment of medical care at Rikers, through which 133,000 inmates pass a year, is common. But this meeting was unusual because of the seniority of the administrators in attendance and what prompted it: steady complaints from doctors that medical standards at the jail have plummeted dangerously under St. Barnabas' watch.

In August, the Manhattan District Attorney began a preliminary investigation into whether medical supplies are being diverted from the detention center, The Observer has learned. According to a senior law-enforcement source, investigators from the racketeering division have contacted at least one person at H.H.C., seeking information about supply orders and inventories.

Physicians have claimed, and internal memos seem to support, severe shortages of basic but necessary medical staples–gauze, paper towels, latex gloves, Foley catheters, specimen bags. Yet St. Barnabas has ordered roughly the same levels of supplies as its predecessor. If the District Attorney determines that the shortages do indeed exist, the question then would be, where are the supplies going? Sources have alleged to investigators that they are being diverted from Rikers to other St. Barnabas-run facilities.

Officials at St. Barnabas declined to be interviewed for this article, but did respond in a letter to written questions. "We are aware of no investigation by the office of the Manhattan District Attorney," the response read. "No one at the hospital has been contacted by anyone in law enforcement … and we state categorically for the record that there is no basis whatsoever for any such investigation."

H.H.C. released a two-paragraph statement which read, in part: "[H.H.C.'s] Office of Correctional Health Services and its affiliate, St. Barnabas Hospital, are committed to providing high-quality care to inmates at Rikers Island. This includes a quality assessment/improvement program with continuous monitoring of the care that we deliver. Furthermore, ample pharmaceuticals and medical/surgical supplies are provided for the clinics we operate and the patients we serve."

All together, eight Federal, state and city agencies and watchdog groups are looking at St. Barnabas' medical practices and management, some at Rikers Island and others at another facility it administers, Lincoln Medical and Mental Health Center in the South Bronx. On July 21, the Federal Health Care Financing Administration issued a 12-page report on deficiencies at Lincoln hospital that it found were "of such serious nature" that they limited the hospital's ability to provide adequate care and meet the conditions for receiving Medicaid and Medicare revenue. The agency cited, among other things, inadequate triaging of emergency-room patients and waits for critically injured patients of up to six hours for consultations with specialists like neurosurgeons.

Yet H.H.C., in its statement, said that Lincoln has always met Health Care Financing Administration standards, continues to do so, and has not been excluded from the two Federal programs, which in 1997 reimbursed the hospital $271 million. St. Barnabas responded that the hospital, along with H.H.C., had disagreed with various of the Federal agency's findings. "In the time since that report, a secondary survey has found that every standard of care is being met–or exceeded–at Lincoln."

However, a Health Care Financing Administration spokesman said that the hospital was still being monitored by the state because of deficiencies. "These statements appear to be dismissive and cause me to be concerned about whether the facility takes these findings seriously," she said.

St. Barnabas' Rocky Road

Even as St. Barnabas faces these charges and findings, Dr. Gade appears to be contemplating expanding his reach. The Observer has learned that on Aug. 6 and 7, St. Barnabas representatives attended a mandatory preproposal conference in Philadelphia for any potential bidders interested in providing health care for inmates in that city's correctional system. On Sept. 4, bids are due for that contract, which may be worth more than $17 million per year. St. Barnabas declined to comment on those plans.

New York's award to St. Barnabas of the Rikers contract–the most lucrative prison-care deal in the country–has been fraught with controversy from the beginning. On Sept. 5, 1997, six medical groups submitted bids to H.H.C. The lowest bidder, St. Barnabas, won the contract with a managed-care-style plan to computerize patient records, improve care and cover inmates' hospital costs. The Bronx hospital estimated that it could do this for a base amount of roughly $301 million over three years; the highest bid, in comparison, came in at $373 million. (Last December, Saint Vincents Hospital and Medical Center–which previously had shared the prison contract with Montefiore Medical Center–filed a lawsuit against St. Barnabas and H.H.C., alleging that there were irregularities in the bidding process. The suit is still pending.)

Six months prior to the awarding of the Rikers contract, Dr. Gade had emerged from another competitive city bid with a three-year, $94 million deal to provide health care at Lincoln. Again, St. Barnabas, the lowest of five bidders, had proposed to cut costs through a vigorous triage of 40 percent of hospital staff and a streamlining of residency training programs. With the 1998 prison contract, the city used H.M.O. logic. It gave St. Barnabas a lump sum to pay for hospital visits. If there is money left at year's end, St. Barnabas gets to keep it. The city, under its previous Rikers Island medical contract, picked up the costs of inmates' hospitalization. A March 1998 New York Times story reported that in February, hospital visits by inmates were roughly half what they were in February 1997 when Montefiore administered the contract. St. Barnabas wrote The Observer that its "model of care has produced a record of innovation, cost-effectiveness and markedly improved public safety by reducing the number of off-site trips by prisoners." Donna Bell, a senior obstetrician at the clinic Ms. Green visited, said, "Under Montefiore, there were a lot of unnecessary procedures" being performed on inmates. "Under St. Barnabas, I have not had any problems with patient care." When asked about the case of Ms. Green, she replied, "No comment."

Yet the spate of inquiries raise several questions. Does the contract, under a managed-care model approved by the city, provide a dangerous incentive to withhold care? And can the complicated lives behind bars at Rikers–often tainted by H.I.V., drug habits, sexual abuse and multiple diseases–bend to a pared-down, managed-care model?

Staffing and Supplies

A review by The Observer of 20 patient records, more than 100 internal memos, and interviews with five inmates, seven current and nine former staff members, reveals chronic supply shortages, severe understaffing and significant delays in treatment.

Shortly after St. Barnabas took over the contract on Jan. 1, 1998, Rikers staff members said, they began to experience a lack of basic supplies. "You're examining an AIDS patient and you don't have gloves," said a physician who recently left the correctional facility. "If you don't have paper towels and you're seeing 15 to 20 patients, what do you do? Many times, I brought my own."

In February, alarm bells over missing supplies began to ring at H.H.C.'s Correctional Health Services division, which oversees the contract. Then executive director of the division, Greg Kaladjian, investigated allegations that supplies were being diverted. Mr. Kaladjian, now a private consultant, met secretly with a senior Rikers administrator at a Holiday Inn near La Guardia Airport, where the possibility of diversion of supplies to other St. Barnabas facilities was first discussed. "There was no documented evidence," said Mr. Kaladjian, "just rumors and innuendo. I would send out my people on unannounced visits and the [warehouses] and closets were filled to the gills. We looked at the ordering patterns, too, and we could never establish why [the shortages] were happening."

The supply shortages are well documented in interoffice memos obtained by The Observer . On March 12, Rikers medical program director Richard Daines wrote to senior managers about supplies, "New purchases (wheelchairs, shower chairs, nebulizers, exam tables, sphygs, opthalmoscopes)–managers feel like they are not getting definitive answers and are not updated on the status of their requests."

The day before, a group of clinic managers at the prison had typed up a more candid account. Their note begins: "This page was not sent to [H.H.C. central office], just some specifics we discussed.… Supplies: Paper towels! Basics like these are not being provided. There are no medication forms! Items such as shower chairs, wheelchair tires, batteries have been ordered but we are getting no response or feedback–consider offering us a time frame during which time we will receive items." At the end of a list of problems, from a backlog of dental consults to a shortage of lab coats, the note says, "Concern with the quality and compromise of patient care."

Rikers clinicians, who declined to be identified, said that severe supply shortages forced them to improvise. A source at the Anna M. Kross Center, where inmates are first evaluated, said that on one occasion, "We didn't have specimen bags, so we were putting specimens in test tubes into trash bags. Sometimes … we have to use unsterile gauze for dressing changes."

For a three-week period earlier this summer at North Infirmary Command, Rikers' medical clinic, inmates were apparently forced to reuse disposable Foley catheters to drain urine from their bladders when the stock of new ones ran out, according to a nurse, several inmates and an inmate's attorney. St. Barnabas said that it had never heard of such a claim. In one documented case, a family purchased a box of catheters for an incarcerated relative.

"There is no factual basis for any statement that 'there have been extreme shortages' of supplies on Rikers Island," St. Barnabas' letter read. "Since taking over the contract, St. Barnabas has enhanced and improved the flow of supplies to the correctional facilities." St. Barnabas further stated that as required by the city, the hospital maintains a "perpetual inventory, and is in full compliance with the contract."

A System Under Stress

Hillel Bodek, a veteran social worker in the city's court and prison systems who on July 5 was profiled in The New York Times as an expediter in a sluggish bureaucracy, said, "There hasn't been a crisis of this proportion in providing health care to the city's prisoners in all the 20 years that I've been doing this. I very often get calls by judges when lawyers finally complain to them about [inmates'] health care. I've had more calls in the last six months than in the two years before."

It would appear that supply shortages and understaffing may be affecting patient care. Joseph Kennedy, 21, a paraplegic inmate, was treated at Rikers for bed sores above his buttocks which turned into decubitus ulcers. His wounds became so infected that in January, at Bellevue Hospital Center, his leg was amputated and its skin used to cover his wounds.

Mr. Kennedy was returned to Rikers, where his wounds reopened. The next four months were a battle for needed supplies and treatment in the face of escalating infection, according to his medical records.

The largest ulcer was documented as four inches long, two inches wide and an inch-and-a-half deep. On March 12, a clinician wrote of the wound, "extremely foul odor noted (like a dead animal) … additional symptoms (tendons) now are exposed."

It was also noted that the patient's catheter was leaking urine because the only available connector for the tubing was too large. Mr. Kennedy was using tape around the connector in an effort to stem the leak.

In April, notations show that a plastic surgery consultation at Bellevue was needed, but not scheduled, despite calls up the bureaucratic chain. A dry flotation cushion to ease pressure on his wounds was ordered, but did not arrive. Mr. Kennedy's infection progressed. A June 20 notation reads: "[Patient] very anxious to go to hospital for flap and very concerned about his condition." Two days later, it was noted that a hospital appointment was still unscheduled.

By June 24, Mr. Kennedy began to vomit up a "yellowish material" and had a 103-degree fever. Sepsis had set in, and he was transferred to Bellevue, where he underwent emergency treatment of the wounds. Mr. Kennedy is now back at Rikers.

In some patient cases, doctors seemed to chart the inmate's deterioration defensively, noting their recommendations for emergency care in bold lettering and with exclamation points. On Jan. 22, a clinician wrote in capital letters in the chart of one inmate, "Needs urgent evaluation at Bellevue or Elmhurst hand clinic for reevaluation of gangrene of remaining fingers."

The patient's chart reveals that over the course of seven weeks, he requested painkillers of increasing strength as dry gangrene crept up his right hand. Necrotic tissue was noted on Jan. 8. On Jan. 27, he refused treatment at the Elmhurst Hospital clinic.

On Feb. 27, his condition deemed urgent by Rikers doctors, the inmate was sent to Bellevue, where he underwent a bypass graft for a clotted artery in his right arm and had several fingers amputated. On March 11, his chart notes that he told a Rikers clinician, "'You are not doing anything for me–why should I come to [the prison clinic]?' [Patient] wheeled himself back to bed."

Staff members said that cases like those are born of a system that is stretched to the breaking point. They claim there are too few staff members, many of them inexperienced, and that patients are leaving clinics without treatment because of excessive waiting times. According to staffing plans obtained by The Observer , under St. Barnabas, four-fifths of the medical staff are physician assistants.

St. Barnabas said of its staffing that it had essentially continued Montefiore's patterns and was meeting its obligations under the contract. It added, "[T]o the extent that any changes in that pattern have occurred, they have resulted–in the findings of our H.H.C. monitors under these contracts–in improvements in care."

An administrative assistant in charge of scheduling who recently resigned from Rikers described a depleted staff pool. Montefiore, she said, maintained a per diem staff pool of approximately 200 it could draw on to fill shifts; she said that St. Barnabas' per diem pool is one-quarter that size, and that on any given shift, there was at least one unfilled position in each clinic. "The staff is just overwhelmed and stressed," she said. "There are no buffers."

He was never taken for the evaluation that was scheduled for him at Bellevue Medical Center, which has a prison ward and is where most of the city's sickest inmates are treated. Instead, he was repeatedly given a Motrin-like pain reliever for what his medical records described as "musculoskeletal pain," and was sent back to his cell.

After his collapse on May 31, at about 10:30 A.M., he was taken again, cold and sweating, to the facility's clinic. It was not until 2:30 P.M. that an ambulance took a gravely ill Mr. Pacheco to Bellevue Medical Center. Less than 12 hours later, at 1:02 A.M., following emergency heart surgery, he was pronounced dead. A few days short of completing his six-month jail term, Mr. Pacheco had died from a massive build-up of blood around the heart, a condition known as pericardial tapanade. A source at Rikers said the X-ray impression had clearly warned of this condition, which is treatable with prompt medical attention.

Last January, at the same time that Mr. Pacheco began his detention, a new health-care provider, St. Barnabas Medical Center, a small, profitable Bronx hospital with no prior prison-care experience, assumed care of the city's inmates–more than 133,000 annually–most of whom reside on Rikers Island, but some of whom are housed in borough facilities like the Tombs. Since then, said several clinicians, two detainees, Mr. Pacheco and Benjamin Campbell, 51, have died from conditions that required urgent hospitalization. Through interviews and medical records, The Observer has identified nine more detainees who were held in correctional facility clinics, or their cells, for time periods of up to two months after presenting serious symptoms to clinic staff.

Now, two investigations are under way. The New York State Commission of Corrections, an agency that regulates correctional facilities throughout the state, is specifically investigating Mr. Pacheco's death. A spokesman there declined to comment further, citing the ongoing investigation. The Prisoner's Rights Project of the New York City Legal Aid Society, a watchdog group, is also investigating. "We have had a number of complaints from prisoners with serious medical conditions stating that their hospitalization was excessively delayed," said project director John Boston. "We have been investigating these complaints, and we believe that some of them are quite correct."

These probes, and the death of Mr. Pacheco, are a troubling reminder of a time when public health concerns in jails went unaddressed and inmates were left to languish. Federal laws such as the Federal Civil Rights Act entitle prisoners to medical care that meets the standard of the community.

The Observer consulted an emergency medicine expert who reviewed seven patients' cases. Dr. John E. Prescott, chairman of the department of emergency medicine for the Robert C. Byrd Health Sciences Center of West Virginia University, said that Mr. Pacheco's condition warranted immediate hospital evaluation. "If a patient is having persistent pain and had a chest X-ray that is highly suggestive of a dissection [a rupture], the course of action is very clear."

Dr. Harry Schuman, who began as St. Barnabas' program director for correctional health services on May 4 after serving as medical director for the Illinois State Department of Corrections, said of any investigation, "I welcome it. I don't know of a correctional system that is not under scrutiny. Part of working in correctional health is working in a fishbowl."

St. Barnabas' three-year, $342 million contract–the country's most lucrative prison-care deal and the result of a competitive and now legally contested bidding process–departs from the previous detention center contracts held by St. Vincent's and Montefiore medical centers in one key respect. Whereas the city previously picked up the tab for prisoners' emergency hospital visits, St. Barnabas must now pay the costs. While the new arrangement is standard health maintenance organization-operating procedure aimed at reducing unnecessary hospital visits, it may have created an incentive to delay hospitalization of inmates.

"There are many prisoners coming from Rikers Island in the last six months who are sicker than any I've seen in the last 15 years," said Lewis Goldfrank, emergency medicine director of Bellevue Hospital, who has long treated the city's poor. "We've seen individuals with infections that appear to have the manifestations of days, if not weeks, of neglect. It appears that patients with complex disorders who need urgent care are being delayed in their access to it, and this delay has resulted in increased morbidity and mortality."

Dr. Schuman said that he could not respond to questions about specific cases but said he strongly disagreed. "[Previously] there was a disincentive to keep anyone on [Rikers Island]. Once a physician could get a patient to the hospital, he washed his hands of it.… We're asking people to use their training," he said, and "not … to simply refer people to the hospital."

A reliable source told The Observer that the Health and Hospitals Corporation, the city agency that oversees public hospitals and was placed in charge of prison care in 1996, is reviewing 30 cases of prisoners who, since Jan. 1, may have been medically mistreated. Dr. Audrey Compton, the agency's medical director for correctional health services, said, "There is no investigation. There is simply an ongoing quality-assurance process."

Reducing the Fat in the Prison System

Under St. Barnabas' management, the number of prisoners being sent to Bellevue for emergency care has dropped significantly. According to Bellevue's Daily Restraint Update Reports, a census of prisoners sent for medical attention, in December 1997 the hospital's medical ward averaged 21 prisoners a day and the psychiatric ward averaged 20. In January 1998, those numbers were 12 and 16, respectively, representing a drop of 43 percent in the medical ward and 32 percent overall. In a March 9 profile of St. Barnabas president Ronald Gade, The New York Times also cited the remarkable decline. In February 1997, 345 Rikers prisoners were admitted to a hospital; a year later, half that number were hospitalized. In the article, Dr. Gade observed that the drop was an impressive trimming of fat; prisoners were no longer sent to the hospital for minor problems.

However, on one surprise visit to Rikers several months into the St. Barnabas contract, doctors employed by Health and Hospitals Corporation determined that some prisoners with major problems were also not being sent to the hospital. During their visit, according to Rikers medical staff, the H.H.C. doctors intervened and sent five inmates to the hospital for emergency care. (Dr. Compton challenged this interpretation of the visit and said that her agency works collaboratively with the St. Barnabas doctors.)

The Observer obtained the medical records of five detainees, interviewed four inmates and spoke with family members of two others, in cases that raised concerns about delayed hospitalization. Richard Franz, 45, a Rikers detainee, became crippled when bone cancer ate through his vertebrae. Though an X-ray revealed a spinal compression fracture, and Rikers medical staff knew of earlier treatment for cancer, Mr. Frantz was not sent to the hospital for more than two months after the onset of symptoms. He is now terminally ill.

For Yukon Shoulars, 21, who has sickle-cell anemia, a sonogram taken at Rikers revealed that he had severe gallstones. Yet he was kept in the clinic there for three weeks, unable to eat or drink or move his bowels, according to concerned medical staff and family members, and was only sent to the hospital when he began to vomit blood. A 60-year-old detainee who complained of an infected hand for a week, did not receive treatment until gangrene reached the middle of his palm. Several fingers were finally amputated at Bellevue, where he was admitted on Feb. 27, 1998, and kept for almost a month.

Shipping inmates to the hospital does come with a security risk. In 1994, an inmate sent to King's County Hospital for a minor problem stole a police officer's gun, which resulted in a shootout in the emergency room.

St. Barnabas has created a new system for screening emergency hospitalizations of inmates. Now, doctors within the detention system must get approval from a medical gatekeeper, termed an "Urgicare" physician. There is one such physician on site at Rikers in any given shift to oversee the medical care of more than 15,000 inmates, who tend to be far sicker than the general population. Urgicare policies state that prior to transporting patients to the hospital, medical staff should contact an Urgicare physician who can recommend hospitalization, see the patient or recommend continued treatment in the correctional facility. While the Urgicare doctor has the power to veto the medical staff's decision, the policy says that this process should not unduly delay the needed hospitalization.

Dr. Schuman described the Urgicare physician, who is board-certified in emergency medicine, as one additional resource, particularly when doctors at the clinics are unsure whether a detainee needs hospitalization.

Medical staff in the clinics talked about overworked Urgicare physicians who do not return emergency pages and are difficult to locate among the 10 different jail buildings that comprise Rikers Island.

One clinician in the detention system who requested anonymity said, "You have to go through this charade. You have a qualified physician on the spot with his hands on the patient. Then you have to call another Urgicare physician who hasn't seen the patient and say, 'Please let me send this guy to the hospital.' It's insane."

Now, the overseeing physicians are there to advise a transfer to the hospital transfer, see the patient or recommend continued treatment in the correctional facility.

The Urgicare policy states that senior medical personnel are "fully authorized" to call Emergency Medical Services and that "we will support the documented good judgment of the facility medical staff." The memo goes on to state that while all E.M.S. runs will be reviewed, "[i]nterventions will be educational and professional, not punitive."

However, three clinicians in the detention system told The Observer that sending out patients to the hospital can result in negative evaluations or a reduction in work hours. "They ream you the next day," said the clinician, who added that the staff's judgment is often retrospectively challenged on patients they send to the hospital. He said that he and a physician agreed to do an overtime shift at Rikers. But after he sent out two seriously ill detainees, he said, "They never asked me back."

"The word is clear," said one of the employees, who described a Faustian conflict between the unspoken cost-cutting imperative and the needs of the patients.

This conflict played out in the case of 21-year-old Yukon Shoulars, who is currently in the North Infirmary Command. He was arrested in April for a parole violation and was taken to the Tombs, where he soon began to complain of pains in his right side and stomach. After a week, he was sent to Rikers Island, where a sonogram indicated gallstones. "The doctor said I had to have an operation," Mr. Shoulars told The Observer in a telephone interview. Yet in his three weeks at the infirmary, he was maintained on Demerol, which dulled the pain and made him sleep. "Everything I ate I would throw back up," he said, his weight plunging during this period.

Mr. Shoulars said that he asked at least twice a day to be sent to the hospital, only to be told that he was either faking, or that the pain medication would help him pass the gallstones in a bowel movement, which he was unable to have. "Still, I might have been waiting had I not lost so much blood," Mr. Shoulars said.

Dr. Prescott said people with sickle-cell anemia are at a high risk for serious complication. "After two or three days with belly pain, he needs to be evaluated medically and probably hospitalized."

On May 1, a month after he first complained of pain, he began to vomit up blood. "The [physician assistant] said, 'Hey, we've got to get this guy out of here,'" Mr. Shoulars recalled. He was sent immediately to Bellevue, where surgeons removed his gallbladder and left him with a bag that drains bile from his liver. "Before [St. Barnabas] came in," said the clinician, "we erred on the side of caution. We didn't second-guess it."

Under Montefiore's old policy, any doctor in the detention system who believed an inmate was in dire condition simply made the decision to hospitalize him or her. But the costs of that system, which often required overtime payment for corrections officers, were astronomical. With Montefiore's contract due to expire, it seemed likely that some form of managed care, which has been sweeping the nation's prisons, would take hold at Rikers. However, when St. Barnabas was awarded the contract over St. Vincent's, which has more than 10 years of prison experience. There was talk that the bidding process had been rigged. Last December, St. Vincent's filed a lawsuit against H.H.C. in State Supreme Court in Manhattan, alleging that political considerations had outweighed merit and experience in the process of selecting vendors. The suit is still pending.

John Boston at the Prisoner's Rights Project noted that when his attorneys requested eight medical records, his investigation was slowed by an H.H.C. requirement imposed on May 24 that all requests for medical records be notarized. He suggested that obstruction may be the cause and said, "We've been getting medical records from H.H.C. with non-notarized releases for 20 years."

While H.H.C. initially denied that there was a notarization policy, Dr. Compton, when presented with the letter written by H.H.C. legal counsel to the legal aid society (and copied to Dr. Compton) insisting on notarization, said, "We're going to ask the person who wrote it to retract it, and I don't know why it was imposed at that time."

Staff Cuts and Chaos

While law-abiding citizens feel that they are held prisoner by H.M.O.'s and given limited access to doctors, the inmate's dilemma under these same circumstances is even more acute. "[Prisoners] can't call up a doctor if they feel sick," said Dr. Ronald Shansky, medical director for the Illinois Department of Corrections, who provided an affidavit for St. Vincent's in its lawsuit. "A doctor has to arrange for access to the service, so there is much less ability to control one's own destiny."

This feeling of helplessness may be what led a sick Rikers inmate, Gerald Stallings, to send a typed "Letter of Urgency" headlined "Please Help Us" to the Daily News in February. No article resulted. The letter chronicled filthy, chaotic and understaffed conditions in the North Infirmary Command Center, and identified two prisoners with H.I.V. and high temperatures who, in Mr. Stallings' view, needed immediate care and were being neglected.

One excerpt from the log they maintained, dated Feb. 2, 1998, at 8 A.M., says, "No doctors on site in Unit Dorm 4." They go on to list sick-call patients in Dorm 4, the AIDS unit, among them "Benny Campbell." Campbell was the inmate who died at Bellevue from a blood infection known as septicemia. He was admitted on April 6 and died on April 10, two months after his appearance in Mr. Sprague's log. The Observer obtained Campbell's medical records, and a doctor's note in them reads, "Patient states weakness for one month presents himself to infirmary at Rikers." The records also say "treated for pneumonia for two weeks," and the treatment listed is "PCP, got Bactrum."

"PCP can be a life-threatening pneumonia for patients with AIDS. The standard of care is to place him in the hospital with IV antibiotics, in isolation," said Dr. Prescott.

According to public health experts, incarceration should be viewed as an opportunity to provide much needed care to a captive audience who, if untreated, will likely return to their neighborhoods and spread diseases.

However, one clinician described a medical environment at the Tombs as so dispirited and understaffed that prisoners are actually refusing care.

"Doctors from one shift to the next don't know what the guy's in there for. There's no formal baton-pass of information from shift to shift. There are no rounds. There was an H.I.V. patient who was laying on a stretcher for two days with 104-degree temperature. You shake your head in utter awe over this," he said, adding, "Third world medicine does a better job."

Recently, this kind of treatment of a mentally ill 18-year-old inmate, currently in critical condition in the Bellevue intensive care unit, led to outrage among the Rikers staff. The boy was too sick to be interviewed, but, according to his Rikers medical records, he suffered a life-threatening reaction to Haldol, an antipsychotic medication. Despite a potentially fatal diagnosis of neuroleptic malignant syndrome–a reaction to psychotropic medication–he was observed in the Rikers clinic for five days before being sent to Bellevue on June 10. Dr. Prescott, who expressed shock at this delay, said that this syndrome left untreated, can quickly cause respiratory and renal failure and neurological disintegration. "There are some diagnoses where when you think about them, you need to act, and this is one of them."

Isidro Pacheco was no saint. But he is recalled at the Tombs as a kind man who once gave a fresh set of clothes to a disheveled new inmate. When news of his death reached the corrections officers, two of them sent a condolence card to his girlfriend Dina Vaccaro. The day before his death when she came to visit, she was apparently turned away. "They told me he was too sick," she said. She has retained a Manhattan attorney, Paul Layton, who said he plans to file a lawsuit against the city of New York, the Department of Corrections, H.H.C. and St. Barnabas for wrongful death, conscious pain and suffering, and violation of civil rights. "Mr. Pacheco was given Tylenol instead of coronary care," said Mr. Layton.

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."

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.'"

What Dr. James Brady and Dr. Jeffrey Yager did was this: They diverted patients from the Columbia-Presbyterian plastic surgery clinic into a clandestine side practice. They printed official-looking business cards, with the hospital's logo, that read "Jeffrey S. Yager, M.D., James A. Brady, M.D., Post-Doctoral Residency Fellows, Plastic and Reconstructive Surgery" and listed an office phone number that in fact rang at Dr. Yager's East Side home. According to a patient who received the card, the number led to a voice-mail message that told callers they had reached the "offices of Drs. Yager and Brady."

They performed procedures at discounted rates, after hours, on weekends in a senior physician's private office.

The Observer has identified four patients who received unauthorized surgeries, two of whom were given the business cards. The two who agreed to be interviewed said they underwent the procedures on a weekend in the office of a supervising plastic surgeon, Dr. Ted Chaglassian, located in the Atchley Pavilion on the hospital's grounds. Dr. Chaglassian was not present during those surgeries. (He did not return calls.)

The unauthorized practice lasted for nearly a year and appears to have begun soon after the two doctors became co-chief residents of the program in July 1996. Telephone records obtained by The Observer show that little more than a month after he became co-chief resident, Dr. Yager set up another home phone line-the number that was listed on the residents' business card.

All of this was against hospital regulations: The two were still in training, were not board-certified in plastic surgery and were not entitled to operate on patients without supervision, let alone be in private practice. Under several state laws, the residents may have been practicing outside the terms of their residencies, conducting a negligent practice and committing fraudulent medical practice by possibly deceiving patients. What really rankled one senior Columbia-Presbyterian surgeon familiar with the residents' actions, however, was that their business "was stealing assets from the hospital. The patients belonged to Columbia-Presbyterian, and they were being diverted from the clinic."

In dozens of interviews conducted by The Observer since it broke the story of how Dr. Brady performed an unauthorized liposuction on a Staten Island hairdresser, a picture emerges of a side business that the residents maintained with the acknowledgment, and maybe even the help, of employees at the hospital. One of the residents' patients, a Columbia University employee, said that at the hospital's legitimate plastic surgery clinic, both a desk clerk and a nurse told her that cosmetic procedures were also performed off site, and that fees were set by the residents-a highly irregular setup, according to current staff and former residents. The Columbia employee said she wound up in Dr. Chaglassian's office on a Sunday, writing a $100 check made out to cash, at Dr. Brady's request, for a procedure akin to a collagen injection.

System Breakdown Or Willful Ignorance?

Were hospital employees involved in steering patients away from the clinic and into the off-hours body shop? In a three-hour interview with The Observer , the Columbia University employee, who requested anonymity, said, "My full belief is that [the clinic staff] knew procedures were done in Atchley, and if that was irregular, they must have known. I don't know if they knew the residents were being paid in cash, but they knew that the procedures weren't being performed during clinic hours."

When another patient was unable to pay the $14,000 fee that the senior Columbia-Presbyterian surgeon would normally charge, the surgeon referred the patient to the hospital's clinic. According to the senior surgeon, when the patient got to the clinic, she was told that cosmetic procedures were performed in "Dr. Yager's office." This struck the patient as strange; she called the senior surgeon to complain. It was only later, when news of the Staten Island hairdresser broke, that the senior surgeon realized something inappropriate was happening.

"Apparently," he said, "all the other residents on the other services knew this was going on. Residents have made that claim to me." He also said that the department's senior attending physicians, who are ultimately responsible for residents' actions, have claimed ignorance of the scheme. He found this hard to believe. "There was definitely a trail," he said, and Columbia-Presbyterian's senior physicians chose not to follow it.

Although the residents maintained no medical records for their covert procedures, a prominent plastic surgeon who practices at another Manhattan hospital told The Observer , "It is hard to imagine they did not have the knowledge or approval of the division. Surgery requires a whole armament of preparation, staffing and ordering of medical supplies, that for a resident to do alone is almost impossible."

Why did the basic mechanisms of oversight, which are fundamental to a teaching hospital, fail so spectacularly at Columbia-Presbyterian? Dr. Brady was only investigated by the hospital when his Staten Island patient, who contracted a liposuction-related infection that the resident could not remedy after several desperate house calls, went to see Dr. Lloyd Gayle, a physician at New York Hospital-Cornell Medical Center. Dr. Gayle quickly reported the circumstances of her surgery to his supervisor, who in turn called Columbia-Presbyterian.

Last June, one week before Dr. Brady was to graduate, Columbia-Presbyterian fired him, claiming that he was a renegade resident who had performed an isolated procedure. The chief of the plastic surgery division, Dr. David Chiu, was demoted. Dr. Yager, whose involvement is only now coming to light, graduated and opened his private practice, the Plastic Surgery Center, directly across the street from Presbyterian Hospital. Dr. Brady had intended to go into practice with Dr. Yager-the two are even listed as partners in the Manhattan White Pages.

Either there was a stunning procedural breakdown at Columbia-Presbyterian-that lasted for almost a year-or the two residents' supervisors gave their tacit consent until it was impossible to continue doing so. "This brings up the worst nightmares any director [of a residency program] ever has: that residents begin practicing outside of the department," said the prominent plastic surgeon.

The State Health Department is actively investigating the residents' conduct and the hospital's failure to properly supervise them. A department spokesman would only say, "The department is aware of the allegations about the surreptitious surgery, and our investigation remains open. At this time I cannot comment about the scope of our investigation or provide any details." Furthermore, the plastic surgery program's accreditation hangs in the balance. The Accreditation Counsel for Graduate Education's residency review committee, which accredits training programs, is scheduled to re-evaluate the program's status on Oct. 23. An administrator there said the committee was considering the recent allegations in its review.

Through his lawyer, Dr. Brady has declined to be interviewed by The Observer , as have officials at Columbia-Presbyterian, and Dr. Yager did not return phone calls.

A Climate of Lax Supervision

Former and current hospital staff have described a climate of lax supervision, and a habit of unsupervised cosmetic procedures within the plastic surgery division, which trains only four residents at a time. "At Columbia, residents really run the show," said Dr. Alexandra Pinz, a former anesthesiology resident who added that Presbyterian Hospital was designed, specifically, as a training ground for medical residents at Columbia University's College of Physicians & Surgeons.

A desk clerk in the admitting department said that one past chief resident routinely operated, without supervision, on hospital staff, only requiring payment to his supervisor in the admitting department to cover the cost of supplies and office time. "It wasn't something done as a secret. I don't think it was something hidden," she said. From the way Dr. Brady and Dr. Yager handled the Columbia University employee, it seems they had little fear of getting caught.

In mid-February, the patient went to the plastic surgery clinic in the Vanderbilt building, which is known as VC-5, expecting to receive a high-quality, low-cost cosmetic surgery procedure on her eyelids that would be performed by a resident and supervised by a senior physician.

Instead, she said, Dr. Yager took her into an examining room. He then said, "Let me get my colleague," she recalled, and Dr. Brady came into the room. Dr. Brady examined her eyelids and proposed a brow lift, an intensive procedure in which the forehead is raised. The woman recalls Dr. Yager reassuring her, "We work with a couple of good anesthesiologists." ( The Observer was unable to learn whether any anesthesiology residents or attending physicians assisted the duo.) The residents urged her to schedule her procedure soon, saying they were booked through March and were graduating in June.

Dr. Brady also offered another procedure: decreasing wrinkles around the mouth by injecting body fat into them. Dr. Brady and Dr. Yager gave her their business card and told her to call if she wanted an appointment.

It is rare for medical trainees to have a business card and, if they do, the office number is almost always the department's general number, or that of the chairman.

Past residents and other senior fellows of the Columbia program said they were never given business cards. And even though the employee had never been presented with anything like it in prior experiences at Columbia-Presbyterian clinics, the card itself seemed authoritative to her.

Like many university employees, she received much of her health care through the clinic system. In an earlier, by-the-book experience at the dermatology clinic, she was quoted a fee over the phone; when she went in for the procedure, the desk clerk gave her an invoice, which she took to the medical center cashier. She then wrote out a check to Columbia-Presbyterian, obtained a receipt and presented it at the clinic as proof of payment before being treated by a supervised resident. The deposited check had a Columbia-Presbyterian stamp on the back.

None of this happened when she saw Dr. Brady and Dr. Yager in mid-February. Two days after her consultation, the Columbia employee called the residents' "office" number and left a voice-mail message for an appointment. Dr. Brady called back and offered her a range of weekday times, saying, "We also work evenings or weekends," the woman recalled. She made an appointment to see him on a Friday at 10:30 A.M., and he told her to meet him in Room 607 of the Atchley Pavilion-Dr. Chaglassian's office. The morning of her appointment, he canceled, telling her that he was in the middle of a major operation. In fact, he was caught in a conflict between the demands of his hospital duties and the demands of his private practice.

He then proposed to meet her in the late afternoon after the clinic let out, or in the evening after rounds. They agreed to meet at 4 P.M., but again he called to cancel, leaving an apologetic and revealing message on her answering machine, which the woman saved and played for The Observer . On the tape, Dr. Brady said, "This doesn't often happen because usually me or Dr. Yager is free. But he's away." She paged him, and they settled on a time: noon on Sunday in Dr. Chaglassian's office.

The Atchley Pavilion is locked on Sundays, so Dr. Brady met her outside and escorted her to Dr. Chaglassian's office, which was empty. There were no medical records of the procedure. The employee recalls that as Dr. Brady performed the procedure, he described a thriving practice with Dr. Yager. He said that the residents had performed numerous procedures, even back-to-back surgeries. The employee said that Dr. Brady mused that their practice of off-hours cosmetic surgery might die down after he and Dr. Yager graduated.

When Dr. Brady finished the procedure, the patient took out a checkbook and asked him who she should make out the check to. "He paused, and said, 'Make it out to cash,'" she recalled. The $100 check, which The Observer obtained a copy of, was cashed eight days later and was processed by Chase Manhattan Bank. (Though Dr. Brady told an attorney that he turned over his earnings from the procedures to an educational fund for residents, there is no evidence on the check that it was processed through any official hospital account.)

A Scheme Unraveling

The residents' scheme was apparently operational within three months of setting up their office number. In November 1996, the Staten Island hairdresser first learned about the residents' work from an acquaintance who works as a Carnival Airlines flight attendant. According to the hairdresser, the flight attendant told her that she'd received an eyelid procedure from the residents, and recommended them: "She gave me a telephone number and said, 'Either Dr. Brady or Dr. Yager will get back to you.'" The flight attendant said that she had paid them with a check made out to cash, and that the duo had worked on her colleagues at Carnival Airlines, the hairdresser recalled.

In May, Dr. Brady gave the hairdresser local anesthesia and Valium, a controlled substance that he obtained by falsely writing out a prescription for a legitimate patient. His diversion of the Valium, a felony under New York State law, points up the difficulties and dangers of administering anesthesia without supervision. Dr. Herman Turndorf, chairman of anesthesiology at New York University Medical Center, said that patients sometimes panic during surgery and require narcotic sedation. But because narcotics are a tightly controlled substance and not easily available, doctors sometimes try to compensate by administering more local anesthesia, which can be toxic in large quantities.

In mid-May, the Columbia University employee called the residents' voice-mail to make an appointment for another injection. Two weeks later, Dr. Yager returned the call, apologizing that they had been busy, and scheduled a procedure for her with Dr. Brady, again in Dr. Chaglassian's office. By then, the residents' business had begun to unravel: On May 11, Dr. Brady operated on the hairdresser, and soon after, she contracted the fateful infection.

Of course, the Columbia University employee knew nothing of this. Again, Dr. Brady canceled her procedure and rescheduled it for 5:15 P.M. on Tuesday, June 10, three days before he was scheduled to graduate. When the employee showed up, Dr. Yager was seated at the receptionist's desk in Dr. Chaglassian's empty office. He then paged Dr. Brady for the employee, and after a brief discussion told her that Dr. Brady was being delayed. The employee told Dr. Yager that she was unwilling to wait, and the procedure was canceled.

The next day, on a bizarre directive from Dr. Chiu, Dr. Brady went to the offices of the personal injury lawyer the Staten Island hairdresser had hired. His goal: to obtain a letter saying that the patient had consented to the liposuction, was satisfied with it and knew he was a resident. Apparently, Dr. Chiu had told Dr. Brady to "follow your conscience" in getting the letter. The implication was that if the Staten Island woman signed and the matter ended there, Dr. Brady would be able to graduate.

Dr. Chiu's advice simultaneously encouraged Dr. Brady to be dishonest and abandoned him to structure his own defense, said a prominent plastic surgeon. "I would be ashamed to give a resident any kind of advice like that. It's absolutely mind-boggling."

Yet Dr. David Halprin, a reconstructive surgeon who was trained by Dr. Chiu in Columbia-Presbyterian's program, said, "A lot of people would have fired Dr. Brady on the spot. But Dr. Chiu didn't do that, did he? He could have cut his head off, but he wanted Jim to start telling the truth. I don't think he was asking him to be dishonest. I think he was asking him to be a man."