Judge rejects hospital's charges against whistleblowers

By Andy Milller

The Atlanta Journal-Constitution

Editor's note: This story was published in 2006.

A judge has thrown out criminal charges against two health care industry whistleblowers who criticized the financial practices of Albany's main hospital system.

Charles Rehberg and Dr. John Bagnato had faced six misdemeanor charges over the sending of anonymous faxes about Phoebe Putney Health System to Albany area leaders. The faxes --- sent in 2003 and 2004 --- featured information about the financial holdings, executive salaries and political connections of Phoebe's health system, whose centerpiece is 443-bed Phoebe Putney Memorial Hospital.

The criminal case has involved two district attorneys and three separate grand jury indictments. It has been the talk of Albany, a southwest Georgia city, for months.

Superior Court Judge Harry Altman has dismissed five counts of harassing phone calls against the whistle-blowers. In his order, signed Monday, Altman agreed with defense lawyers' argument that faxes are not phone calls, and thus not subject to the criminal statute cited by prosecutor Kelly Burke.

Altman also threw out a misdemeanor charge of simple assault against Rehberg, Bagnato and a third man, private investigator Jim Bowman, saying the count was too vague.

Rehberg said Tuesday that he felt vindicated by the ruling.

"I think it was absurd that we were indicted --- not once but three times --- for acts that are not even a crime, as well as for crimes that never occurred, " he said.

Bagnato, a prominent Albany surgeon, said the indictments and prosecution were "a vindictive act" pushed by the hospital system.

A spokeswoman for the Phoebe system, Jackie Ryan, declined to comment on the judge's action, saying it would be inappropriate. Ryan, though, denied that Phoebe had orchestrated the prosecution, saying that "these indictments came from a grand jury."

Phoebe, in pursuing the anonymous authors, had asked the office of Dougherty County's district attorney to investigate the faxes, which the hospital system said were filled with inaccuracies.

DA Ken Hodges' office requested grand jury subpoenas for phone records. And after receiving the phone information, the DA's office turned it over to Phoebe. The trail led to Rehberg, and Phoebe sued him in August 2004.

Burke, the district attorney of Houston County, entered the fax case last year after Hodges recused his office from the fax investigation, citing a Journal-Constitution report about his office turning over subpoenaed information to Phoebe.

Hodges' subpoena action was criticized as improper by criminal defense attorneys not involved in the case, who said grand jury information should remain confidential.

Albany media recently reported that a bill for the phone records was sent by Hodges' office to a law firm that represents Phoebe. Hodges told reporters that sending a bill to a victim is occasionally done, especially in racketeering cases or when the victim has "a substantial amount of financial resources."

But Rehberg said Tuesday, "It is very clear that this entire prosecution was designed and driven and funded by Phoebe."

Hodges' office Tuesday referred a reporter to Burke's office. Burke was out of town Tuesday, his office said. He did not respond to an e-mail asking for comment and whether he planned to appeal.

The original indictments in December charged Rehberg and Bagnato with six misdemeanor counts of making harassing calls.

They and Bowman also faced aggravated assault and burglary charges, which are felonies.

The second indictment in February dropped one of the phone counts and the burglary charge, and changed the assault charge to simple assault, a misdemeanor. The grand jury later issued a third indictment to change language in the assault charge.

"This thing has been a waste of everyone's time and money, including the taxpayers' , " said Ralph Powell, an attorney for Bagnato.

As Rehberg, with the help of Bagnato, circulated the faxes, the two also were gathering information about Phoebe's financial practices involving patients with no health insurance. The two came to believe that Phoebe Putney Memorial Hospital and other nonprofit hospitals were overcharging the uninsured and then aggressively seeking payment --- thereby violating their charitable obligation as tax-exempt organizations.

Rehberg, an accountant, and Bagnato eventually took that information to Richard Scruggs, a famed Mississippi trial attorney.

Scruggs, using that information as a catalyst, spearheaded the filing of lawsuits nationally against nonprofit hospitals, including Phoebe, in 2004.

Bowman, the third man indicted in the fax case, was an investigator for Scruggs sent to Albany to protect Rehberg after a parking-lot confrontation with investigators hired by Phoebe.

Phoebe dropped its lawsuit against Rehberg in October 2004. But Rehberg has continued to pursue a countersuit against the hospital system.