Auditor: Former surgeon at University of Iowa Hospitals and Clinics diverted $1.9 million

IOWA CITY — The University of Iowa Hospitals and Clinics is strengthening its internal controls after a state auditor investigation found one of its former orthopedic surgeons diverted nearly $1.9 million in collections from the institution over 15 years.

Brian David Adams, 58, of Iowa City, is accused of depositing the diverted money into personal bank accounts, according a report released Thursday on the special investigation into UIHC and its Department of Orthopedics and Rehabilitation between July 1, 1999 through Dec. 31, 2014.

Investigators believe Adams — employed by UIHC from Dec. 5, 1992, until his resignation Aug. 21, 2014 — diverted the money, in part, by improperly billing insurance companies and law firms for services he performed and royalties and consulting fees he received for products he developed.

The services in question included those routinely provided by UIHC, like seeing and evaluating patients for work-related injuries, providing impairment ratings, and acting as an expert witness in legal matters involving UIHC patients, according to the report.

Investigators said diverted collections were deposited into bank accounts Adams established using the 'UIHC orthopedics' name and UIHC address — although 'the statements were sent to Dr. Adam's home address,' according to the report.

The $1.9 million in diverted collections included:

$404,875

for medical services provided by Adams to UIHC and non-UIHC patients that — according to his contract and UIHC policies — should have gone to the university

$426,446

for non-medical services, including depositions and expert witness fees related to UIHC that he didn't disclose as required

$1 million-plus

in consulting fees and royalties from companies he represented and helped develop products

Had more information been available in some cases, those totals might have been higher, according to the report.

Adams declined to be interviewed for the investigation, Auditor of State Mary Mosiman said. He could not be reached for comment for this story.

Johnson County Attorney Janet Lyness said her office is reviewing the auditor's investigation to determine whether criminal charges should be filed. Copies of the report also were shared with the Division of Criminal Investigation, the Attorney General's Office, the UI Department of Public Safety, and the state Board of Regents.

'Happy to pay it all back'

The regents' Office of Internal Audit requested the state review after the UIHC compliance helpline received a call in February 2013 alleging Adams was referring patients from medical records reviews to his own clinic.

Adams — who worked in a handful of UIHC clinics, including ambulatory surgery, orthopedics, and hand and wrist care — treated patients as part of his employment but also performed records reviews, provided second opinions to insurance companies, acted as an expert witness, consulted on product development, and presented at conferences and meetings.

In response to the caller's concerns, the regents' internal auditors conducted a review and found evidence Adams had seen patients, issued reports, and received insurance payments for services he provided that were not billed through UIHC.

'They identified documents which showed payments which should have been deposited with UIHC were received by Dr. Adams instead,' according to the report.

When internal auditors asked Adams about the discrepancies, he confirmed he wrote the letters and saw in clinic the patients in question, according to the report. He said his former department administrator approved the practice, although he didn't have written authorization.

'Dr. Adams also stated, 'I'll be happy to pay it all back,'' according to the report.

Once the state got involved, investigators executed search warrants in Adams' Iowa City home and in vehicles and obtained information from electronic devices and email accounts, according to state and court documents.

Using that information, investigators tallied diverted collections for medical services to both UIHC patients and those not confirmed as UIHC patients. They saw an increase in those collections in 2006 — from a total of $6,125 between 1999 and 2005 to $21,748 in 2006 alone, according to the report.

Total diverted collections for medical services continued to climb annually, peaking in 2011 with $94,639, auditors reported. They dropped off after that, falling by nearly $75,800 to $18,842 in 2013.

'The decrease corresponds to the time questions were raised regarding Dr. Adams,' according to the report.

Regarding non-medical services — including acting as an expert witness, providing depositions unrelated to UIHC or its patients, and conducting unrelated case reviews — investigators determined Adams violated the hospitals' conflict of interest and conflict of commitment policies.

'Physicians are required to inform UIHC when they are going to provide non-medical services,' according to the report. 'UIHC could find no records indicating Dr. Adams disclosed these non-medical services.'

According to the report, he filed only three disclosure forms — one for the 2010 budget year related to a speech at the University of Nebraska; one the following year reporting no anticipated compensation from outside parties; and one for 2012 disclosing a relationship with a medical manufacturing company, but excluding dollar amounts related to his contract with the entity.

Upon further investigation, however, the state found Adams had a business relationship with at least seven companies for which he either consulted or developed products.

Recommendations, follow-through

Other administrative violations auditors noted included Adams' opening of an unauthorized bank account that included the UI name and unapproved use of UIHC letterhead.

Based on its findings, the state recommended UIHC strengthen its internal controls by requesting local financial institutions annually provide information on accounts that include UIHC-related abbreviations, department names and addresses.

It also suggested UIHC officials be more proactive in their conflict of interest enforcement.

'UIHC does not attempt to verify the information provided by the physicians is complete or accurate,' according to the report. 'UIHC relies on the physicians' ethics to properly disclose all required or potential conflicts.'

UI spokesman Tom Moore said the institution is in the process of implementing the recommendations.