Civil suit continues medical fraud case

There was a time when Dr. Doron Feldman was known for his work as a pediatric anesthesiologist.

He was well-regarded in his field, a man with a reputation for passionate advocacy, both inside and outside hospitals, on behalf of sick children.

Now, the Williamsville doctor is at the center of a high-stakes legal fight – both a criminal prosecution and corresponding civil case – that has implicated another prominent doctor and sent Feldman to prison for two years.

As part of a plea deal with federal prosecutors, Feldman admitted conspiring with the other doctor and Debra Bulter, an administrator, to steal $1.46 million from the University at Rochester.

Like Feldman, Bulter is going to prison.

The other doctor, identified in court papers as “Doctor 1,” was never charged and probably never will be.

“There are no other people under investigation,” U.S. Attorney William J. Hochul Jr. said recently. “We have charged the people for whom we were able to develop sufficient, courtroom quality evidence of a crime.”

The other doctor, according to a civil suit filed by Feldman’s former practice, is Dr. James Foster, former head of anesthesiology at Kaleida Health System. Before joining Kaleida, Foster was chief medical officer of Women & Children’s Hospital in Buffalo.

Foster’s lawyers say the suit is groundless and say federal investigators cleared Foster of any wrongdoing.

“There was a comprehensive investigation of the matters involving Dr. Feldman and Ms. Bulter, and Dr. Foster wasn’t prosecuted because he did nothing wrong,” said James W. Grable Jr., one of his lawyers.

Feldman’s lawyer says his client paid his court-ordered restitution of $1.46 million and is now going after Foster and Bulter for their share of the amount.

“Obviously, it’s ill-gotten gains,” said Daniel C. Oliverio, Feldman’s defense lawyer. “We’re going to try and recover it.”

In his plea deal, Feldman admitted receiving $630,000 for his role in the scheme and says Bulter and Foster received $530,000 and $300,000, respectively.

His admissions ended an IRS investigation that, once it became public, shocked the local medical community with its allegations of fraud and kickbacks.

Advocate at Children’s

Recognized as one of the region’s most prominent pediatric anesthesiologists, Feldman was also a leading and public advocate for keeping Women & Children’s Hospital a separate free-standing facility during the debate over its future.

In a pre-sentencing report to the judge, his lawyer submitted more than 140 letters of support, many of them from fellow doctors urging leniency.

They pointed to Feldman’s reputation as a highly skilled physician and his compassion for sick children to suggest he can better serve society out of jail. Feldman ended up getting two years in prison.

“We’re hopeful he’ll still have a medical license,” Oliverio said of his client, “but we still have to go through the process.”

During his sentencing, Feldman acknowledged his mistakes in court and was asked if greed motivated him.

“Naivete, stupidity, greed,” he told Chief U.S. District Judge Frank P. Geraci Jr. “A lot of biblical type of faults.”

For Bulter, a program administrator at the University of Rochester, the consequences were even more severe. She got three years in prison and was ordered to pay $4.2 million in restitution to the university and to the doctors’ practice, then known as CGF Anesthesiology Associates of Buffalo.

“She had the key role,” said Assistant U.S. Attorney Richard A. Resnick.

To hear Resnick talk, it was Bulter’s role as a university insider that fueled the fraud. As a program administrator, she was able to produce fraudulent documents for services that were never provided, according to court papers.

Prosecutors say Bulter also diverted money to the doctors that should have gone to their practice. The money was payment for four additional anesthesiologists.

“Under the contract, it was CGF who guaranteed the four additional doctors,” Resnick said, “but the payments were made to Feldman, Bulter and Doctor 1.”

Prosecutors say the investigation into Feldman and Bulter is significant because it exposed the risks a large medical institution can encounter when a powerful insider turns against it.

In this case, the result was a $4.2 million loss to the two victims, the university and CGF. That loss includes the $1.46 million owed by Feldman.

“Someone who defrauds that type of institution,” Hochul said of the university, “is really making the larger community vulnerable to higher medical costs.”

The IRS, which led the investigation into Feldman and Bulter, described their operation as a “false invoicing scheme.” Those type of schemes are often used to steal from a business with or without the participation of the principals or officers.

“What makes this investigation a little different is that the crimes took place in a hospital setting and the defendants were a hospital administrator and a physician,” said Shantelle P. Kitchen, special agent in charge of the New York office of the IRS-Criminal Investigation division. “Yet, the use of false invoices is not uncommon.”

Civil case

While the criminal prosecution is over, the civil battle involving Feldman, Foster and their former medical practice is just getting started.

CGF, eager to recoup some of the money it lost, accused Foster of conspiring with Feldman and Bulter to operate a “kickback” scheme that lasted nine years, according to court papers filed in the case.

“Because of all of this, CGF was tarred with a bad reputation, a reputation they didn’t want or deserve,” said K. Michael Sawicki, a lawyer for the practice.

Because of the criminal prosecution, the practice has changed its name to Great Lakes Anesthesiology, Sawicki said. And Foster or Feldman are no longer are associated with it.

Foster’s lawyers say the allegations are baseless and have already been proven so by a federal criminal investigation. They also think the two sides will eventually come together and reach a resolution.

“Doctors should practice medicine and not be fighting over money,” said Grable, one of Foster’s lawyers.

Sawicki says the group is determined to get its money back.

And what about Feldman’s counterclaim that he’s the one still owed money?

“It’s silly,” Sawicki said of his claims. “Here’s a guy who took money that wasn’t his and now claims he didn’t get money he was owed.”

The civil suit continues in State Supreme Court.

Originally published in The Buffalo News on Apr. 19, 2015.