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When is a tax a contribution?  What is in the contract?

The New York Times Sponsored by Starbucks

December 23, 2002

Two Brothers Confront Columbia Over Payment of a 'Dean's Tax'

By ALISON LEIGH COWAN

Marc and Steven Odrich might as well be an advertisement for Columbia University. Their parents met there and eventually joined the faculty, and the brothers earned degrees from its college and medical school.

The two brothers completed residencies in ophthalmology at Columbia, then won appointments to the medical school's faculty and secured admitting privileges at its affiliate, New York-Presbyterian Hospital.

But now, as a result of a falling-out with the medical school over the brothers' refusal to turn over 10 percent of their receipts as a "dean's tax," they have lost all privileges at the hospital and are locked in a bitter lawsuit with the university where they have spent much of their lives.

Their battle comes amid hints of labor unrest among Columbia's physicians. Faculty representatives recently invited a labor activist to address the group about his experience unionizing doctors.

The Odrich brothers' case is being watched by hospital administrators and doctors all over New York, as it goes to the heart of several questions critical to many of the city's physicians: How much can a medical school legitimately ask of part-time faculty members who use its facilities and enjoy its good name? And what form can that contribution legally take?

Columbia's doctors with full-time faculty appointments there are more than 1,000 are essentially employees of Columbia University, and a portion of the revenue they generate from seeing patients typically goes to the medical school in support of its academic mission. "There is a tax, if you want to call it a tax," Dr. Gerald Fischbach, dean of the faculty of medicine at Columbia, said of the $12.5 million in funds that he controls. "I call it a contribution. It is a tax levied on physicians on their income to help the place run."

The Odriches were not employees, but part-time faculty members who owned their own practice, when the dispute erupted. According to Columbia, they are part of a group of 100 or so private practitioners whose ranks have thinned as the medical school moves to a model built around full-time faculty members. The Odriches say they have no indication that other part-time faculty members are paying a dean's tax. The school has thus far refused to divulge that information in court or in interviews.

In September, a lower court judge sided with the brothers in finding that Columbia had violated state laws barring fee-splitting when it demanded a percentage of all of the Odriches' billings, even those collected from patients who merely visited the brothers in their offices in Manhattan and Riverdale, in the Bronx, and in no way used Columbia's facilities. Judge James A. Yates of State Supreme Court in Manhattan called the arrangement "especially troubling" and a case of "overreaching."

Unhappy with that decision, Columbia brought in Floyd Abrams, a prominent lawyer, to help with an appeal. On Wednesday, he convinced an appellate judge, Joseph P. Sullivan, to issue an interim stay at least until a five-person appellate panel considers the matter.

"The issue of whether part-time faculty members at the medical school can be required to pay a dean's tax is one which goes well beyond the two Odrich brothers," Mr. Abrams said in an interview.

Indeed, an affidavit by a medical school official, Dr. Thomas Q. Morris, warned that unless the decision was stayed, "a serious opening of the floodgates problem could develop."

The Odrich brothers Marc, 44, and Steven, 40 have had different arrangements with their alma mater over the years. They started out working part time, each spending half a day a week teaching at New York-Presbyterian's clinics to pay their share of the school's upkeep. That arrangement seems typical of the way universities handle part-time faculty members.

In March 1998, they sold the assets of their practice to Columbia for $38,000 and became full-time faculty members, or employees. The university gave each of them pay packages worth roughly $150,000 and relieved them of having to fret about making ends meet.

About two years ago, the brothers decided they no longer wished to be full-time employees and notified the school. Marc Odrich said he lost patience after seeing patients receive bills sent out from Columbia that were hard to decipher. Steven bristled when patient files were sometimes carelessly left in plain view while being taken from office to office. He also mentioned being frustrated with how the school spent advertising dollars and ran clinical trials.

Dr. Henry Lodge, a Columbia internist who represents 500 doctors who belong to the school's society of practitioners, said those views were shared by some other doctors. "A lot of physicians think Columbia University is not very competent at running practices," he said.

The Odriches said they did not quibble when the school asked them to pay $140,000 to buy back their practices' assets. They said they were then told they could continue as part-timers, but would have to turn over 10 percent of all future revenue to the school. Half would go to the ophthalmology department and half to the dean, to be spent at his discretion.

Marc Odrich said he immediately worried that the arrangement was illegal. As doctors, he said, "one of the things they've drilled into our skulls is you can't split fees. It's illegal."

New York State generally bars doctors from sharing fees with people who are uninvolved with a patient's medical care. Those safeguards are meant to shield doctors from making decisions that might harm patients or drive up health care costs. There are exceptions to the law, which Columbia believes apply in this case.

So when Columbia refused to yield after months of negotiations and then, in July 2001, terminated the brothers' hospital privileges, they sued. "To have them yanked out under our feet was too much to bear," said Steven Odrich, who estimates the fight has cost them $100,000 in legal fees so far.

They have some company. Ten obstetricians recently hired a lawyer after being told they had 21 days to agree to make a certain contribution to the dean or lose hospital privileges. The deal they negotiated has not yet been put in writing, but is believed to leave their privileges intact, while requiring they pay a flat fee to the dean.

Dr. Fischbach refused to discuss their case beyond saying, "it ended amicably."


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