Hospital exec framed doctor on gun charge, lawsuit says

Doctor-investors allege that CEO Bruce Mogel has history of fraud, abuse and revenge. His lawyer calls accusations “sour grapes.”

By RONALD CAMPBELL
The Orange County Register Thursday, July 17, 2008

A group of doctors is accusing one of Orange County's top hospital executives of setting up a physician on a phony gun charge. When Santa Ana police briefly arrested Dr. Michael Fitzgibbons at Western Medical Center-Santa Ana in June 2006, the lawsuit says, Bruce Mogel was watching from a window.

"People don't know how powerful I am," he said, according to the lawsuit.

The lawsuit by Orange County Physicians Investors Network charges Mogel, chief executive of Integrated Healthcare Holding Inc., with breach of fiduciary duty and fraud. The suit also names the IHHI. IHHI attorney David Robinson described the suit as "a case of sour grapes and revenge."

It is the latest shot in a long-running duel between IHHI and the physicians' network, which holds 43 percent of the company's stock. Mogel, through an alliance with controversial medical entrepreneur, Dr. Kali Chaudhuri, controls 40 percent.

IHHI owns four central-county hospitals – Western Medical Center-Santa Ana, Western Medical Center-Anaheim, Coastal Communities Hospital in Santa Ana, and Chapman Medical Center in Orange – that together have 762 beds, 12 percent of the county total. The company has lost $104 million since 2005, including $39 million in the 12 months that ended in March. The doctors assert that Mogel repeatedly lied about his past and wasted company money. Among the allegations:

• Mogel used $10,000 in company funds to arrange for a gun and a pair of black gloves to be put in Fitzgibbons' car, where the police found them. IHHI had sued Fitzgibbons for defamation after he complained publicly about conditions at Western Medical. Fitzgibbons won the lawsuit after the state Court of Appeals ruled that IHHI had tried to silence him.
• Mogel lied about his previous employment with Alta Healthcare. The lawsuit says Alta fired him for embezzlement and sued him. Mogel settled that action for $225,000, according to the new lawsuit. The new suit claims that to pay that settlement Mogel "may have embezzled it from IHHI."
• Mogel charged a $1,500 dinner, including $300 bottles of wine, to the company. In attendance: company officers and directors.
• Mogel has helped Medical Capital Corp., IHHI's primary lender, retain a financial stranglehold on the company. Medical Capital charged 14 percent on its initial loan in 2005.

Robinson, IHHI's lawyer, said that the leader of the physicians' network, Dr. Anil Shah, is blaming Mogel for problems that he, Shah, created.

"The amazing thing is, that under Mr. Mogel's leadership, IHHI is weathering the financial crisis Dr. Shah and (the physicians' group) played a part in creating," Robinson said in a written statement.  Robinson said a committee led by retired Orange County Superior Court Judge C. Robert Jameson, an IHHI independent director, is investigating the gun charge and other allegations against Mogel. He said the company can't comment on those allegations until the investigation wraps up.

The physicians' network has been trying for more than a year to oust Mogel. In April, according to the new lawsuit, it asked the board of directors to fire him and sue him for wrongful conduct.  The doctors aren't the only ones unhappy with Mogel.

A June 17 letter attached to the complaint quotes former IHHI President Larry Anderson as saying Mogel "has lied to everyone, including the board, about his actions." Asked under oath about allegations of improprieties by Mogel, Anderson refused to answer, the letter says, "out of fear for his own security, safety and the well-being of himself and his family."

Contact the writer: 714-796-5030 or rcampbell@ocregister.com

Editor’s Note:  The Health Care Council regrets the continuing problems at Western Medical Center.  We consider this hospital to be an essential part of the health care safety net in central Orange County, and have been deeply concerned as these matters have surfaced.  We testified before the Board of Supervisors last year, and we attended both of Dr. Michael Fitzgibbons’ trials, as well as the State Senate hearing conducted by then-Senator Joe Dunn, and we will continue to support all efforts to keep Western Medical Center viable and functioning to continue serving the people of Orange County.

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