Albany abuzz over health care soap opera

Albany --- Charles Rehberg didn't want fame. He just wanted, he says, to inform people about the financial practices of a powerful hospital system here.

But now the Albany accountant has been indicted on six criminal charges, putting his reputation on the line in this southwest Georgia city of 76,000, where the local media are closely following the unusual twists and turns of the case.

From a parking lot threat to a civil lawsuit and countersuit, and allegations of terrorism and retaliation, the story of Rehberg and a local surgeon, Dr. John Bagnato, has been the talk of Albany.

It's been a mix of health care and Hollywood, involving real-life Georgians who have inspired fictional TV and movie characters. And it calls into question the actions of the local district attorney's office, which allegedly investigated the case "as a favor" to the hospital system, according to affidavits by two people. The district attorney denies the favoritism allegation.

The saga begins with faxes --- sent anonymously over seven months in 2003 and 2004 --- that criticized the financial practices of Phoebe Putney Health System, whose centerpiece is 443-bed Phoebe Putney Memorial Hospital.

About 20 editions were faxed to area leaders at dozens of fax numbers. They started with the "Top 10 Most Highly Guarded Secrets At Phoebe." Called the "Phoebe Factoids, " the faxes featured information about Phoebe's financial holdings, executive salaries and political connections.

Phoebe officials were infuriated. The hospital system, through an attorney, hired private investigators who were former FBI agents and aggressively hunted the identity of the faxers.

The system's chief executive officer recently compared the fax campaign to terrorism.

"We live in a society that has plenty of terroristic activities, " with hospitals identified as potential targets, said Phoebe CEO Joel Wernick. When an organization "is bombarded" with faxes, it has an obligation to find out where they're coming from, he said.

"We believe there's an organized negative campaign against Phoebe Putney, " Wernick said.

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

Phone records requested

The office of District Attorney Ken Hodges requested grand jury subpoenas for phone records. 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, announcing the litigation at a news conference.

But just days before the lawsuit was filed, the former FBI agents hired by Phoebe confronted Rehberg at his office across the street from the sprawling Phoebe campus. The investigators blocked his pickup, Rehberg said, and threatened him and his family.

Meanwhile, as Rehberg was circulating the faxes in late 2003 and early 2004, with the help of Bagnato, the two also were gathering information about Phoebe's financial practices involving patients with no health insurance. The two, who work at Albany Surgical, 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 and Bagnato eventually took that information to Richard Scruggs, a Mississippi trial attorney known for his legal fight against the tobacco industry, portrayed in the movie "The Insider." Scruggs, using that information as a catalyst, spearheaded the filing of lawsuits nationally against nonprofit hospitals, including Phoebe, in 2004.

Shortly after the Phoebe lawsuit against Rehberg, both he and Bagnato came forward to admit their consultants' role in the Scruggs-led lawsuits. In Georgia, the lawsuit against Phoebe over the uninsured was dismissed by a lower court, but that decision is being appealed. And the two men later acknowledged they were behind the Phoebe faxes.

Phoebe dropped its lawsuit against Rehberg in October 2004. But it filed a complaint with the Federal Communications Commission, asking the agency to investigate the faxes. Rehberg has continued to pursue his countersuit against the hospital system.

No longer anonymous, Rehberg and Bagnato began to gain national media attention as health care whistle-blowers.

But recently Rehberg and Bagnato have had their professional and personal reputations questioned as the district attorney's investigation resulted in criminal charges of making ''harassing phone calls'' for their faxing activity.

"It has taken a toll on me financially, professionally and physically, " Rehberg says.

The criminal investigation of the faxes involved several unusual developments --- and considerable star power.

Last May, Hodges, the county district attorney, recused his office from the faxes investigation, citing a Journal-Constitution report about his office turning over subpoenaed information to Phoebe --- an action that has been criticized by criminal defense attorneys not involved in the case.

Grand jury information "should remain confidential and secret, " said Atlanta criminal defense attorney Steve Sadow. "If you use a grand jury to obtain information and hand it over to a private party, it's clearly improper."

The Journal-Constitution also reported Hodges received political contributions from Phoebe executives and others connected to Phoebe, and that his wife had been hired by Phoebe Putney Memorial Hospital.

And the newspaper reported that two individuals in sworn statements say they were told that Hodges' office investigated the faxes case as "a favor" to the hospital system.

Hodges denied the allegations of Beth McKenzie and Rita Ellis, executives at a nonprofit organization, saying they had animosity toward him and his office.

Hodges has said there was no connection between the campaign contributions, his wife's job and his subpoena actions.

And he defended the practice of sharing information.

"It's very typical of this office to share information about the status of an investigation on a pending matter with the victim, " he said.

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, particularly in racketeering cases or when the victim has "a substantial amount of financial resources."

But Rehberg's attorney, Converse Bright, said the payment shows Phoebe is "financing part of the prosecution."

Taking over the case after Hodges recused himself was the district attorney from Houston County, Kelly Burke, who filed criminal indictments on Dec. 14. Burke issued a news release saying that "harassing telephone calls are not a form of protected free speech."

The indictments charged Rehberg and Bagnato with six misdemeanor counts of making harassing phone calls via fax machine. They and investigator Jim Bowman, sent by Scruggs to protect Rehberg after the parking lot confrontation, also faced aggravated assault and burglary charges, which are felonies.

'Matlock' inspiration

The indictment of Bowman brought some legal firepower io the case. The investigator is represented by Bobby Lee Cook, the legendary Georgia defense attorney who was the model for TV's "Matlock" character.

Cook, who has practiced law for 55 years, said the prosecutors' case is the "worst example of overreaching, egregious, offensive conduct I've ever witnessed. ... This is like being in a Third World country."

Cook said he had a tape recording that would prove there was no assault or burglary. He would not release the recording or give details on its contents.

The alleged burglary took place in the home of James Hotz, an Albany doctor. Hotz has fame in his own right: His experiences were the basis for the book that led to the Michael J. Fox film "Doc Hollywood, " the story of a young physician in a Southern town.

Hotz declined to comment on the assault and burglary charges.

Bagnato and Rehberg said they have never visited Hotz's home. There was no police or law enforcement report of a burglary or assault at that residence, said Ralph Powell, Bagnato's attorney. And the indictment listed no date for the burglary or assault.

U.S. Rep. Sanford Bishop, listed as a victim of the faxes in the Dec. 14 indictments, said he was never victimized."I find the whole issue surprising, " he said.

Bishop, a Democrat whose district includes Albany, also said that "no investigator or governmental agency ever spoke to me or asked me any questions about this. ... I was unaware my [fax] phone records were subpoenaed and taken before a grand jury. I'm concerned how grand jury records got passed on to private parties."

With some problems in the initial indictment, officials asked the grand jury for a new one, which was issued Feb. 16. The new indictment jettisoned the harassing phone call charge related to Bishop, so Bagnato and Rehberg now face five harassing phone call charges.

The new indictment also dropped the felony charges --- aggravated assault and burglary --- replacing them with a "simple assault" misdemeanor charge, which Bowman, Bagnato and Rehberg face.

Under that count, Hotz, listed as the victim, was placed "in reasonable apprehension of immediately receiving a violent injury" because there was a suggestion of a weapon, the indictment said.

Prosecutor Burke said the grand jury decided to change the assault and burglary charges from a felony to a misdemeanor after questioning Hotz.

Burke said that while investigators may not have talked to Bishop, they talked to his office, which reported receiving faxes. Still, the grand jury dropped the charge in its second indictment.

Burke added that he has prosecuted many cases with no police report being filed. "There were written complaints filed with appropriate authorities'' in the faxes case, Burke said, but he declined to be specific.

Meanwhile, Bagnato and Rehberg say the indictments have hurt their reputations.

"Even though the charges are bogus, people may wonder, do they want to be involved with someone previously charged with a felony?" Bagnato said. "I'm a physician who relies on his reputation."

Rehberg says he has been smeared as well.

"Your accounting reputation is based on trust and honesty, " he says. "But these charges have put a mark on me that I think will never come off."

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