Posted 9/1/2014 12:00 am
Updated 4 weeks ago
It’s hard to imagine now, but at one time Dr. Eren Erdem and Dr. Scott Schlesinger were close friends.
So close that, back in 2003, Erdem bought his $740,000, 5,000-SF house in Little Rock’s Chenal Valley neighborhood specifically because it was two doors down from the 4,300-SF house that Schlesinger built in 1996. They vacationed together and spent 10 days in Turkey visiting Erdem’s home country and meeting his family.
Now the two are facing off in a bitter lawsuit in which Erdem accuses Schlesinger of betraying his trust, cheating him out of untold dollars and orchestrating funny business with insurance claims of a type state regulators have never seen before.
In his responses, Schlesinger has denied wrongdoing and insisted that Erdem was properly compensated for the services he performed. Both Erdem’s attorney, Tré Kitchens of Little Rock, and Schlesinger’s attorney, E. B. “Chip” Chiles IV of Little Rock, declined to comment last week about the case, which Kitchens filed in February.
Regardless of how the dispute is ultimately decided, the case serves as a cautionary tale about the importance of having a contract in place and how quickly a friendship can sour when money is involved.
Until last week, Erdem was an associate professor of radiology and neurosurgery at the University of Arkansas for Medical Sciences and chief of the university’s section of interventional neuroradiology. In 2008, he agreed to help Schlesinger with spinal injections and other procedures at his Legacy Neurosurgery Center and Arkansas Neurosurgery Clinic in Little Rock, and he did so on a part-time basis for more than four years without benefit of a written contract.
During that time, Erdem now charges, Schlesinger “actively deceived” him about the compensation he was owed, shortchanging him hundreds of thousands of dollars for medical services that Erdem provided to patients at Schlesinger’s clinics.
“Friendship is a wonderful thing,” said Chicago attorney Patrick Coffey, who is a partner at Whyte Hirschboeck Dudek S.C. Coffey isn’t involved in Erdem v. Schlesinger but handles health care disputes.
“Unfortunately when and if a problem arises in connection with a business relationship, you don’t find yourself in the best position when you don’t have the writing that actually identifies who’s responsible for what.”
Coffey said disputes over physician compensation are nothing new, but they seem to be getting more media attention. And when doctors sue doctors, he said, “you have people who get carried away with the lawsuit, start making allegations about conduct and the next thing you know, you’ve got all kinds of people looking at” the case.
“A standard feature in these kinds of disputes is an allegation of some type of misconduct on the part of one or both of the participants.”
And that’s exactly what’s happening in Erdem’s case. In the lawsuit, he accused Schlesinger and his clinics of billing insurance companies for procedures that Erdem performed but using Schlesinger’s provider number.
Erdem said he didn’t know that practice was going on. He continued to work at the University of Arkansas for Medical Science and wasn’t listed as a provider for many of the insurance companies that Schlesinger’s companies billed.
“Because of this deceptive billing,” Erdem said that he doesn’t know — and can’t know — the exact amount of the money he brought into the Schlesinger’s practice and how much he should have been paid.
The allegation of impersonating another doctor for billing purposes is a new one for the Arkansas Insurance Department’s Criminal Investigation Division. Investigators “couldn’t remember ever receiving a complaint of a doctor billing under another doctor’s name because the first doctor was out of network,” AID spokeswoman Alice Jones said in an email statement to Arkansas Business last week.
Friends Working Together
The friendship between Erdem and Schlesinger started in 2001. They grew so close that before Schlesinger had a heart procedure done, he asked Erdem to take care of his only daughter if anything were to happen to him. Erdem treated Schlesinger’s mother and didn’t charge her because “they were like family,” according to the lawsuit.
Erdem is one of two board-certified interventional neuroradiologists in Arkansas. Schlesinger owns or has the majority ownership of the Legacy Neurosurgery Clinic and Arkansas Neurosurgery Clinic.
In July 2008, Schlesinger asked Erdem to help him with spinal injections and other procedures at the clinics. According to Erdem’s complaint, Schlesinger agreed to pay Erdem his physician collections, minus a “small amount” for overhead.
Because they were such close friends, they didn’t put the terms in writing.
Joshua Silverstein, a professor of law at the University of Arkansas at Little Rock’s Bowen School of Law, told Arkansas Business last week that an agreement doesn’t have to be written down to be legally enforceable.
“Now, it’s a lot more difficult to prove the agreement existed if it’s not in writing, so written agreements are more likely to be enforced because of the issue of proof,” said Silverstein, who teaches contracts and other commercial law subjects.
He also said it’s better to have an agreement in writing because the parties don’t have to rely on their memories as to the terms of the agreement.
Erdem started working just half a day a week for Schlesinger, but soon he was working a full day a week or more at Schlesinger’s clinics.
Erdem’s main job, though, was at UAMS, where he directed the Division of Interventional Neuroradiology until last week. He also is well known in his field for treating vascular malformations of the head and neck, according to UAMS. His salary at UAMS was $363,200 for working 80 percent of full time.
He is scheduled to start working for Baptist Health in October, UAMS confirmed.
In addition to his UAMS pay, Erdem was being paid about $200,000 a year for the work he did for Schlesinger — work that Schlesinger described in a court filing as “excellent physician services to patients.”
In early 2013, Schlesinger and Erdem began discussions about forming a partnership. That’s when the trouble began.
Legacy’s former CEO, Ryan Solomon, told Erdem that his collections for 2012 were about $350,000, the lawsuit said. Solomon had been an attorney with the Rose Law Firm in Little Rock, but left the firm in 2012 to join Schlesinger’s company. (Solomon stayed at Legacy until March 2013, according to his profile on LinkedIn. Carl Vogelpohl became Legacy’s CEO in July.)
The $350,000 figure took Erdem by surprise. He had been paid approximately only $230,000 for 2012, from which Erdem concluded that he had been “cheated on the amount of his compensation,” the lawsuit said.
He subsequently learned that collections for his part-time work actually exceeded $600,000 in 2012, the lawsuit claims.
Erdem then turned to his friend and complained about being shortchanged and, he alleges, Schlesinger promised to correct the situation.
“For six months the Defendants strung Dr. Erdem along pretending to be working on a solution that would compensate Erdem for what he was shorted,” the lawsuit said.
In an email to Erdem that was attached as an exhibit to the lawsuit, Schlesinger said he would make sure that Erdem received approximately 75 percent of his physician collections.
“If any of our assumptions were inaccurate i [sic] fully apologize .. and am sorry,” Schlesinger wrote in the email. “And of course i [sic] will immediately have this corrected retroactively to day one.”
Schlesinger also said that he wouldn’t “cheat you out of anything.. in any way.”
Schlesinger promised to pay Erdem a bonus and get to the bottom of the dispute.
Schlesinger used the email to remind Erdem how close they were.
“You are a partner in my life … you are my friend .. and ‘brother,’” Schlesinger wrote. “It hurts my feelings a lot that you would think i [sic] would in any way shape of form treat you in a way other than as a partner and my dearest friend.. if I have failed you i [sic] am sorry.”
He also told Erdem that they should discuss problems instead of getting “so mad or upset.”
Erdem stopped working for Schlesinger in July 2013.
Erdem filed the lawsuit in February and named Schlesinger, Legacy Neurosurgery Center and Arkansas Neurosurgery Clinic as defendants. Erdem is suing on several counts, including fraud and breach of contract. He is seeking an unspecified amount of damages.
Kitchens, Erdem’s attorney, told Arkansas Business in February that to win his case, he’ll have to prove that there was an agreement and Schlesinger didn’t follow it. “And Schlesinger deceived Erdem and intended to do it,” Kitchens said at the time.
A three-day jury trial is scheduled for next May before Pulaski County Circuit Judge Tim Fox.