[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[Extensions of Remarks]
[Pages 19298-19299]
[From the U.S. Government Publishing Office, www.gpo.gov]



ARE DRUG PROFITS NECESSARY TO RUN AN ONCOLOGY PRACTICE? NOT IN THE CASE 
  OF ONE FLORIDA PRACTICE! ONCOL- OGISTS PARTNERS HID $2.6 MILLION IN 
   DRUG PROFITS FROM OTHER DOCTORS--DIDN'T PUT DRUG PROFITS INTO THE 
                                PRACTICE

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                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Monday, September 25, 2000

  Mr. STARK. Mr. Speaker, Medicare has delayed reducing the level of 
reimbursement for various chemotherapy drugs, because of lobbying by 
some oncologists and drug companies that the profits are essential to 
cover the cost of running an oncology medical practice.
  Hmmmmmmm.
  Not in one Florida practice, where a lawsuit between several partners 
who are gastroenterologists and oncologists reveals how the oncologists 
pocketed millions in profits from drugs, didn't put the money into the 
practice, and (apparently) the practice was successful in more than 
meeting its costs.
  I am happy that HCFA is going to review its reimbursement of the 
costs of administering chemotherapy drugs. I hope they will check out 
this court case, before they buy all the arguments of the industry.
  The following excerpts from the court case were provided by an 
attorney from Florida and I submit into the Congressional Record:

                                                    July 24, 2000.
     Re Summary of Information that you may find Illuminating and 
       Helpful in Understanding the False Drug Pricing Scheme that 
       Generates Huge Kickbacks From Medicare and Medicaid to 
       Oncologists; Medical Practice Partners' Litigation Between 
       Gastroenterologists and Oncologists Over Profits from the 
       Sale of Chemotherapy Drugs From Medicare, Medicaid and 
       Private Insurance Being Kept Secretly by the Oncologist 
       Partners and not shared with the Gastroenterologist 
       Partners.

       Dear Representative Stark: The original complaint in the 
     Chetan Desai, M.D., et al. v. Jayaprakash K. Kamath, M.D., et 
     al. case charges that two (2) oncologists made 2.6 million 
     dollars in profits from the sale of chemotherapy drugs 
     between 1993 and 1997 (page 4 para.10). Additionally, the 
     complaint charges that the two oncologists in 1997 overdrew 
     their compensation by approximately $385,000 (page 4, 
     para.11). By the time the Amended Complaint was filed, the 
     feuding doctor partners and their lawyers had realized that a 
     public fight in written documents over 2.6 million dollars in 
     chemotherapy profits for two oncologists in four years' worth 
     of practice may raise eyebrows of the court and law 
     enforcement. Therefore, the

[[Page 19299]]

     Amended Complaint and the depositions were done with an 
     agreement between the feuding parties not to mention the 2.6 
     million dollars worth of chemotherapy profits in four years 
     for two oncologists gut to only discuss chemotherapy profits 
     in general and the $385,000.00 1997 overdraw of compensation. 
     Nevertheless, the accounting exhibits, Plaintiffs' Exhibit 
     No. 33, Defendants' Exhibit No. 12 and Plaintiffs' Exhibit 
     No. 34 show the tremendous profits in ``reimbursement'' for 
     chemotherapy infusion and other infusion drugs from Medicare 
     over the actual costs in obtaining the drugs from the 
     manufacturers.
       The following are some excerpts from the depositions in the 
     case:
       1. Geetha Kamath, M.D. is one of the oncologist defendants, 
     the wife of the gastroenterologist defendant who allegedly 
     changed the accounting system so that the oncologists got all 
     the benefit from the sales of oncology drugs. You will note 
     that the oncologists testified that it was common knowledge 
     among all the partners, administration and all physicians 
     generally that huge profits were made from the sale of 
     oncology drugs. However, the gastroenterologists and some 
     administrators (and physicians that we have interviewed in 
     other specialities that oncology) testified that they had no 
     idea that huge profits were made by oncologists merely from 
     the sale of the drugs from their reimbursement from Medicare 
     and Medicaid.


     Excerpts of Testimony of the Deposition of Geetha Kamath, M.D.

       (A) Deposition of November 6, 1998 of Geetha Kamath, M.D.
       Page 156, Line 21.--I always thought that it was such a 
     well known fact that drugs are profitable; it's a known fact 
     in the medical community as far as I am concerned.
       Page 163-164.--Exhibit No. 34 is a history of gastro and 
     onco collections which reflect the increase in collections by 
     oncologists between 1987 and 1995.
       (B) Deposition of November 11, 1998 of Geetha Kamath, M.D.
       Page 8, line 25 through Page 9, line 5.--Profit from 
     chemotherapy drugs went to the oncologists. Profits from the 
     sale of chemotherapy drugs were not shared by the 
     gastroenterologists.
       2. Belur S. Sreenath, M.D. is a gastroenterologist 
     plaintiff. He sued the defendant oncologists because of their 
     failure to distribute money from chemotherapy profits.


   Excerpts of Testimony of the Deposition of Belur S. Sreenath, M.D.

       (C) Deposition of September 17, 1998 of Belur S. Sreenath, 
     M.D.
       Page 23, line 6 through 23.--The gastroenterologists do not 
     make any money from the sales of drugs. They write a 
     prescription and the patients go to the patients' pharmacists 
     and get their prescriptions filled. (essentially the same 
     testimony on page 24, line 20-25)
       Page 39, line 21 through Page 40, line 5.--He sued the 
     oncologists because they diverted the profits from 
     chemotherapy drugs in the amount of $385,000.00
       Page 72.--The gastroenterologists were aware that 
     oncologists were being paid more from insurance companies and 
     Medicare; however, they didn't know that the large profits 
     were from the sale of chemotherapy drugs.
       Page 124.--That Dr. Sreenath knew in 1997 the revenue from 
     one oncologist, Dr. Geetha Kamath was $2,490,000.00 and Dr. 
     Sreenath's total revenue was only $363,909.00 but he only 
     understood that each oncologist was making a lot more money 
     than he was but he didn't know that it came from the profits 
     from the sale of chemotherapy infusion drugs.
       Page 127.--He first relized that there was so much 
     chemotherapy profits in the end of the year of 1997.
       3. Pothen Jacob is a gastroenterologist partner suing for 
     his share of the 2.6 million dollars in chemotherapy drug 
     profits.


        Excerpts of Testimony of the Deposition of Pothen Jacob

       (D) Deposition of July 14, 1998 of Pothen Jacob:
       Page 107.--More than 2.6 million dollars in profits from 
     chemotherapy drugs were paid by GOA to the defendants from 
     1993 to the filing of the suit in April 1997.
       Page 51.--The oncologists are paid for a professional 
     component when they administer the chemotherapy drugs and 
     they also get reimbursed separately for the oncology drugs 
     administered.
       Page 60.--Medicare pays for the chemotherapy drugs at a 
     parallel or same time that the oncologists have to pay the 
     manufacturers for the chemotherapy drugs.
       Page 61.--The dramatic difference in revenues between the 
     oncologists and the gastroenterologists are the chemotherapy 
     drug profits received by the oncologists.
       Page 66.--Gastroenterology physicians' receipts were lower 
     in 1995 and 1996 because reimbursement was lowered for 
     gastroenterology services and the cost of malpractice 
     insurance was higher.
       Pages 71-72.--Endosopic procedures are personally done by 
     gastroenterologists. Chemotherapy is not personally 
     administered by an oncologist but by a nurse.
       Page 83.--For drugs by gastroenterologist, the patient pays 
     the cost, either buying from GOA at cost or buying it from 
     the pharmacy.
       Page 155.--The first time he learned of the extent of 
     chemotherapy sales' profits in GOA was in the middle of 1997 
     when they were investigated entering MSO.
       4. Debra Mitchell was the administrative nurse who was 
     demoted in salary by the administrator physician partner, Dr. 
     Jay Kamath, husband of one of the oncologists. He hired a 
     second administrator just to work for the two oncologists.


       Excerpts of Testimony of the Deposition of Debra Mitchell

       (E) Deposition of July 14, 1998 of Debra Mitchell, R.N.:
       Page 75-76.--In December of 1997, oncologist Dr. Geetha 
     Kamath had revenue of $2,497,938.00 and oncologist Anil 
     Raiker had revenue of $1,327,570.00
       Page 82-83.--The old reports only showed Medicare 
     allowables. The new reports showed the amounts being 
     reimbursed by Medicaid (reviewing Exhibit 11).
       Page 83.--GOA first began tracking the cost of the 
     chemotherapy drugs in November of 1996.
       Page 85.--The only doctors that saw the chemotherapy 
     reports were the oncologists. The GI doctors were never given 
     copies of the chemo reports.
       Page 86-87.--In November of 1996, the witness was told by 
     the accountant Odalys Lara there's profit in chemotherapy 
     drugs. Exhibit No. 12 sets up the spread sheet showing the 
     month to date and the year to date profits for each of the 
     oncologists for the sales of chemotherapy drugs.
       5. Odalys Lara was the CPA for GOA from April 1994 to the 
     date of her deposition on September 3, 1998.


         Excerpts of Testimony of the Depositon of Odalys Lara

       (F) Deposition of September 3, 1998 of Odalys Lara, C.P.A.:
       Page 14.--When she began, she did not know that there was 
     any profit in the sale of chemotherapy drugs.
       Page 25-26.--She first found out there was profits in the 
     sale of chemotherapy drugs in July or August of 1997.
       Page 32-33.--Plaintiffs' Exhibit No. 4 is a report of 
     infusion and chemotherapy drug profits by year in 1994, 1995, 
     1996 and 1997.
       Page 35.--In 1994 profits from the sale of infusion and 
     chemotherapy drugs for two oncologists went from $489,000.00 
     in 1994 to $814,000.00 in 1997. From 1994 to 1997, 2.6 
     million dollars in chemotherapy and infusion drug profits 
     were made by the two oncologists. Those totals do not 
     indicate the reimbursements from private insurance which is a 
     separate figure. These figures only include Medicare's 
     reimbursements. It is a conservative figure because insurance 
     companies reimburse more.
       There's some very good gem testimony regarding the huge 
     profits made by oncologists from Medicare for the sale of 
     infusion and chemotherapy drugs. Also there is excellent 
     testimony about how the knowledge of these huge chemotherapy 
     drug sales profits was kept secret from partner physicians 
     who were not oncologists. However, these gems are buried in a 
     morass of deposition harangue.
       I trust that this information will be useful for people 
     reviewing the frauds against the Medicare and Medicaid 
     Programs in the infusion, and oncology drug business.

     

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