Too Big to Care: How Massive Medical Groups Are Harming and Killing Patients

"I love you and I'll be waiting."

That was the last thing Debra Nenni McNamee said to her mother, Constance Nenni, before the 76-year-old was wheeled into surgery in March of 2010.

It was supposed to be a simple "in and out" procedure, though Nenni would be placed under anesthesia, according to McNamee. The orthopedic surgeon, Dr. Spyros Panos, planned to tidy up some calcified bone in her right knee that was causing the active senior some pain when she tended the garden surrounding her Hopewell Junction home in upstate New York. Panos assured Nenni she'd be up and walking again in no time.

Less than 24 hours later, McNamee said, Nenni collapsed on the bathroom floor and died in her son's arms. An autopsy revealed that she succumbed to a pulmonary embolism, a rare but dangerous complication of anesthesia caused by a blood clot breaking free and blocking the lungs' main arteries.

If the story ended with a grieving family left wondering how this could happen to a relatively healthy woman after a routine surgery, it would be tragic enough. But by the time Nenni went under the knife, the Hudson Valley Surgical Center at Saint Francis Hospital, Panos, and Mid Hudson Medical Group (his employer) were already the subject of at least seven civil lawsuits claiming Panos had purposely faked, botched, and misrepresented thousands of surgeries for more than a decade.

McNamee says she wasn't aware of Panos's alleged deception until the medical examiner called to explain that her mother's medical records didn't track with the surgeon's post-op report. Despite his jotting notes about performing six major procedures on Nenni, including extensive micro fracture repair, tendon repairs, and smoothing down arthritic wear, McNamee said she was told that the autopsy revealed Panos had done none of those things.

Panos's lawyer did not return calls from VICE News for comment.

A few weeks after her mother's death the local paper, the Poughkeepsie Journal, ran a story about the first wave of Panos lawsuits. McNamee says she quickly ran to gather up all of her mother's records and begin the search for a lawyer to file her own case.

"My mother, because of her age, was at high risk for complications from anesthesia, and he subjected her to that risk for nothing," McNamee says. "How was he allowed to use patients like my mother as human cash registers for so long?"

Red Flags Everywhere
That's a legitimate question, according to Dr. Todd Albert, the surgeon in chief and the medical director of the Hospital for Special Surgery in New York City. The first red flag should have been the number of patients Panos was seeing and operating on, Albert, who does not know Panos or anyone else involved with his case, notes.

Court records show that Panos often scheduled more than 90 patients a day on his days in the office. He scheduled as many as 24 surgeries a day.

"The busiest surgeons in the US might do 10 to 15 surgeries a day if they are smaller type surgeries," Albert said.

Statistics support Albert's thinking. The average orthopedic surgeon typically schedules no more than 32 procedures a month, according to American Academy of Orthopaedic Surgeons statistics.

In a recent deposition for a pending civil action, the former CEO of Mid Hudson, Dr. Joseph Garvey, said he was made aware of Panos's high volume of office visits but the group had no policy against it and no one stopped it. Garvey, through his lawyer, did not respond to requests from VICE News for an interview; in his deposition he said that at one point there was a discussion with Panos about putting the brakes on his office visits though he couldn't remember the outcome of the conversation.

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Why No One Blew the Whistle
Everyone who saw the schedule should have been suspicious of that many procedures especially over such a long period of time, asserts Albert. Certainly the regular anesthesiologist and the group of nurses in the operating room with Panos should have known he was faking or misrepresenting surgeries he was billing for. Schedulers, billers, and record keepers should also have questioned Panos's unusually high activity, he says.

Panos's surgical overdrive did appear to be an open secret, according to plaintiffs lawyers and others familiar with the cases. Yet when VICE News reached out to more than a dozen physicians in the area, through their lawyers, only one agreed to be interviewed on the condition his identity remains anonymous.

"You can't tell me the guy with the gas at the head doesn't know the guy isn't operating on the knee. They've done thousands of these before and they absolutely knew," the anonymous doctor says, adding that even several towns over he had been hearing whispers about Panos for years.

"Dr. Smith" says he prefers not to reveal his name for the same reason many people never blew the whistle on Panos: fear of retribution. Mid Hudson, which was recently sold to the Mt. Kisco Medical Group, had a virtual lock on medical employment in the area. Losing your job means losing your livelihood, he says.

Others may have kept silent in order to keep patients within the practice, notes Arthur Caplan, the director of medical ethics at NYU Langone Medical Center in New York. Patients who go elsewhere for care — even if it's clearly better care — take their insurance and out-of-pocket dollars with them, he says.

"Doctors are sometimes pressured by administrators and their peers to direct patients to someone within their group even if they don't view them as top notch," Caplan explains. "If, say, you're in a small market and you keep sending your cancer patients to more experienced expert centers with better facilities, pretty soon your group's oncologist is out of business."

Whatever the reason, the "human cash registers" were ringing since 2006 and possibly earlier, according to Nancy McGee, a lawyer representing more than 150 of the 260 civil suits against Panos, Mid Hudson, and several local hospitals.

"If he does 24 surgeries a day, that is disproportionately out of sync with other surgeons, and he is making an outrageous sum of money," she says.

From 2007 to 2011, when he was fired, Panos and Mid Hudson Medical Group filed claims for over $35 million to insurance companies, Medicaid, and Medicare. Of that, $13 million was paid, according to court documents. At times Panos could have been generating $80,000 or more per day in surgeries for Mid Hudson and the hospitals where he worked, says McGee's legal partner, J.T. Wisell.

It Was Pay for Play
Panos attended the Albert Einstein College of Medicine. After his residency, he joined Mid Hudson in 1999 and practiced there until his dismissal in 2011. For many years he was the sole orthopedist in the group, and by all accounts he was revered. On a blog he posted in 2011 shortly after his firing, he claimed a patient once described him as the "21st century Marcus Welby." Even Nenni recalls that he was quite charming during her mother's office visits.

Panos may have been personally incentivized to keep up his high volume activity, according to Dr. Smith, who said he was offered a contract by Mid Hudson that he believes is similar to the one Panos may have signed.

"The contract gave me a percentage of the income the group made on every test I ordered," Dr. Smith says. "I was told I could make an extra $60,000 a year by doing nothing different — just by ordering tests."

"Net production earnings," as it was referred to in the contract, financially rewarded physicians for each pill, test, and procedure they ordered. It creates an environment in which doctors may be tempted or even pressured by their peers to code for higher insurance payouts, says Brian Brown, a lawyer for more than 10 of Panos's ex-patients.

"Direct financial incentives can distort a doctor's priorities," says Brown, whose own mother is one of Panos's alleged victims; he allegedly faked a rotator cuff repair of her shoulder while ignoring a broken collar bone for more than two years, Brown says.

While renegades like Panos are probably rare, they aren't unheard of, Caplan says. He points to Tenet Healthcare Corp., a large, Texas-based medical care provider that has paid more than $1 billion over the last decade to settle a series of criminal lawsuits for fraud, overbilling, kickbacks, and other allegations — plus another half million to settle hundreds of civil lawsuits. Tenet's payments included $395 million to settle unnecessary-surgery complaints involving 769 cardiac patients at a California hospital and $31 million to end lawsuits on behalf of 106 heart surgery patients — including 20 deaths from post-operative complications — at a Florida hospital.

"He's an extreme case but you don't need to be a Panos to do this," Brown asserts. "When your contract clearly shows you are compensated for the number of procedures you do, and you have shareholders breathing down your neck and you've got kids in private school, there's a temptation to put patients at risk for your own financial gain."

Too Big to Care
The era of the independent doc is over, Caplan says. In order to navigate increasing regulations and the burgeoning cost of practice, the majority of physicians in this country are now under contract with multispecialty medical groups with at least 50 doctors, which in turn are getting snapped up by hedge funds, hospitals, and corporations, he says.

Buyers expect a healthy bottom line from their investments, Caplan says. Evidence suggests their expectations are being met.

Tenet, despite its legal troubles, reported a profit of $527 million in the fourth quarter of 2014, up from $424 million in the same period last year, according to Marketwatch. The company's revenue rose from $8.836 billion to $9.636 billion. Meanwhile, a recent Becker's Hospital Review report projects a steady 5.5 percent yearly growth for physicians' practices through 2022, driven by Medicare and increasing insurance coverage through Obamacare.

While managed practices can create efficiencies, Caplan says he is concerned they may lead to monopolies that control healthcare pricing, especially in smaller to medium markets. He also wants doctors to remain obligated to their patients rather than to corporations.

"As medical practices grow larger, they care more about profits and less about patients. They are spending so much time on the business side of things they are losing ethics," he says.

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Mid Hudson did seem to be laser-focused on revenue and growth between 2007 and 2012, when former chief operating officer Patricia Gandolfo ran the company and Panos was at the height of his activity.

Gandolfo's LinkedIn profile described Mid Hudson as a "distressed 60 year old multispecialty practice" that she increased "to 150 physicians and 750 employees." "Mid Hudson grew from $19 million in net revenue to $100 million in five years," her profile further boasted. And partner earnings grew "from an average of $219,000 to $469,000" during her tenure.

Gandolfo declined to be interviewed. Her LinkedIn profile was taken down shortly after VICE News reached out for comment.

Yet patient safety and quality control didn't appear to be a priority for the group, at least among the top brass.

In his deposition testimony, Garvey indicated the group had a policies and procedures manual to cover quality control, but he was fuzzy on the details. When asked a series of questions by plaintiff lawyer Wisell, Garvey claimed the group had a policy binder with protocols for patient chart audits, complaint reviews, and employee evaluations, but he did not know where it was kept, was not familiar with its contents, and was unsure about how it was implemented.

No Patient Protection
In his deposition Garvey also claimed he was not aware of a single complaint against Panos until 2011. That same year he told the Poughkeepsie Journal that Panos's reputation and popularity within the medical community was "akin to Derek Jeter," the retired captain of the New York Yankees. The group never received any communications from Medicare, Medicaid, the New York Office of Medical Professional Conduct, or any other professional or government agency until 2010, he claimed in his deposition.

When Mid Hudson became aware of Panos's alleged violations, Garvey told the paper in the same 2011 article, "the group had to move with all certainty to ascertain what the facts were," adding that Panos was ultimately fired for not meeting the group's "professional standards."

Panos himself said in a recent deposition that his only suspension from Mid Hudson — in 2011 shortly before his firing — was "self-imposed." But in her own recent deposition Gandolfo said the group was aware that Panos was seeing too many patients on his office days as far back as 2007.

The hospitals too failed to rein in Panos. Although Saint Francis hospital and its lawyers did not return requests for comment, in 2011 former hospital spokesman Larry Hughes told the Poughkeepsie Journal, "The patient is the doctor's, not the hospital's, responsibility."

Following the Money
What ultimately took Panos down was not malpractice or even Nenni's death. It was the money.

Sometime in 2010, the U.S. Postal Service received a complaint from either a consumer or a physician that Panos was submitting fraudulent insurance claims, explains Postal Service spokeswoman Donna Harris. In 2014 Panos pleaded guilty to one count of felony health care fraud involving insurance payments for surgeries and office-based procedures to which his employer was not entitled. He was sentenced to four and a half years in federal prison, followed by two years of supervised release, ordered to pay $5 million to the government and make restitution of up to $5 million. He is now serving his sentence in a federal prison in Pennsylvania.

It was only when his fraud came to light that he voluntarily surrendered his New York State medical license sometime in 2013, Wisell says.

For now the fraud case against Panos remains open, Harris says. But McNamee says she believes that's not good enough. She recently wrote a letter to the Dutchess County district attorney asking that homicide charges be filed against Panos.

"He intentionally took a 76-year-old woman knowing she did not need surgery and subjected her to anesthesia out of greed so he could keep on getting money from insurance and Medicare," she says. "It was a vicious, premeditated crime, and I think he should pay criminally for what he did."

Although Mid Hudson and hospital representatives did not respond to VICE News for comment on this story, they have denied any wrongdoing in all legal proceedings. In 2014 defense lawyers made a motion for a gag order to seal the litigation from the public in the pending civil cases but it was denied by the court.

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