Callahan & Blaine Alleges Racketeering and Corruption in Lawsuit Filed Against Riverside Doctor Kali P. Chaudhuri

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Callahan & Blaine has filed a lawsuit in Riverside Superior Court seeking injunctive relief against Riverside physician Kali P. Chaudhuri, alleging racketeering and corruption practices by the doctor and his related companies.

Our healthcare system is delicate enough without the improprieties of corporate greed interfering with the care and treatment of patients.

A new lawsuit filed today alleges that Dr. Kali P. Chaudhuri engaged in fraud, racketeering and corruption with respect to a number of interrelated medical companies. Hemet Community Medical Group (“HCMG”) is a Chaudhuri-owned independent physician association (“IPA”) that contracts directly with HMOs for payment of medical services. Chaudhuri set up a series of related companies for the purpose of managing the millions of dollars paid each year by HMOs.

The suit -- Prime Partners v. Kali P. Chaudhuri, et al. (Case #: RIC 1117545, filed in Riverside CA Superior Court) -- alleges that in his control of millions of dollars from HMOs, Chaudhuri, along with his management company, KM Strategic Management (“KM”), has engaged in a pattern of fraud and racketeering. It is further alleged that Chaudhuri and KM, which is run by Michael Foutz, have cut off much-needed funds belonging to several medical groups that care for thousands of patients in Riverside County.

The suit alleges that Chaudhuri has a history of siphoning out money from medical groups and financially choking doctors’ ability to provide care to patients. According to the lawsuit, in 1999, Chaudhuri acquired the MedPartners medical group. Within the first 18 months, $30 million in assets had disappeared and Chaudhuri had run up a debt of $450 million to local doctors and other creditors. Having completely fleeced the entire healthcare operation, Chaudhuri then threw the company into bankruptcy, closed all 81 clinics, fired all employees, physicians, nurses, technicians, secretaries and other staff members – which the suit alleges disrupted medical care for over 300,000 patients and left most of them without access to their medical records. More than 2,000 employees and physicians were suddenly left without jobs and many were even told not to cash their last paycheck.

The suit alleges that Chaudhuri has begun depriving several medical groups in Riverside County of millions of dollars they need to operate their medical practices. The lawsuit charges that Chaudhuri’s management arm, KM, is currently withholding more than $1.5 million of net revenue from the Prime Partners medical group and at least $250,000 of net revenue from the Meadowview medical group.

The lawsuit also alleges that Chaudhuri has attempted to leverage ownership control of these medical groups by engaging in forgery, falsifying documents and concealing and misrepresenting financial records. According to the court filing, after applying economic duress to Prime Partners and Meadowview, Chaudhuri demanded a 51% ownership interest in the medical groups. When those groups refused to acquiesce to Chaudhuri’s coercion and began the process of trying to get out from under Chaudhuri’s control, Chaudhuri’s lawyers sent threatening letters to all of the new IPAs that Prime Partners and Meadowview attempted to engage.

The lawsuit charges that Chaudhuri’s wrongful conduct has been not only financial, but has also directly violated state and federal laws designed to protect patients. The lawsuit describes one instance of Chaudhuri hacking into the computer of a doctor, for the purpose of referring a patient to one of Chaudhuri’s own imaging companies. Not only did the doctor not approve the referral of the patient, the doctor had never even seen that patient before. Improperly accessing patient records violates the Health Insurance Portability and Accountability Act (“HIPAA”).

The suit alleges that Chaudhuri’s management company, KM, also sent more than 6,000 unauthorized letters to elderly patients telling them that they needed to switch their healthcare plan to one that would pay Chaudhuri’s company (HCMG) or else they would lose their doctor. To accomplish this, the suit alleges that KM asked some doctors to sign blank sheets of paper and then used those signatures to send out letters to the doctors’ own patients telling them to switch their healthcare plan.

The suit charges that, for those doctors who did not sign blank pages, KM manipulated their signatures off of other documents and placed them on the letters to the senior citizens. A letterhead was created for each doctor to make it appear as if the letter was coming from the doctor directly. The doctors did not approve of the dissemination of these letters to their elderly patients, and in fact did not know about them, but only learned of the letters when some were returned as undeliverable by the post office. These acts violate HIPAA and the requirements set forth by the federal Centers for Medicare & Medicaid Services (“CMS”) for healthcare plan marketing letters.

According to Marc P. Miles of Callahan & Blaine, the lawsuit seeks injunctive relief against Chaudhuri’s fraud and racketeering enterprise, in order to protect the health and safety of Southern California patients and to preserve the integrity of the healthcare system. Miles said the action also seeks to prevent Chaudhuri from repeating the MedPartners debacle, which devastated a large segment of the medical community and left patients stranded.

“Our healthcare system is delicate enough without the improprieties of corporate greed interfering with the care and treatment of patients,” says Marc P. Miles of Callahan & Blaine, Santa Ana, California, counsel for Prime Partners and Meadowview. “It is not enough to sift through the carnage often left by Dr. Chaudhuri, but instead action must be taken now to prevent wrongful acts and preserve quality healthcare.”

About Callahan & Blaine:
Callahan & Blaine is California’s Premier Litigation Firm and one of the leading complex business litigation firms in the state of California. In the last five years, Callahan & Blaine lawyers have obtained over $1.2 billion in verdicts and settlements. Based in Orange County, California, Callahan & Blaine handles commercial litigation cases nationwide. For more information, visit http://www.callahan-law.com.

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