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Crimes and Misdemeanors - A Death in the Hospital

Crimes and Misdemeanors

A Death in the Hospital /Articles /Crimes and Misdemeanors

In December, 2001, we wrote a document questioning certain activities of Noah Berkowitz, M.D., Ph.D., while he was a student at the National Cancer Institute. Dr. Berkowitz did his medical residency training at the NCI that was completed in June, 1998. Shortly after completing his training, Physician Choice Inc., a company he started while still a student at the NCI was bought for $1,000,000 by a New York based cancer information company known as IMPATH.

The interested reader, following the link given below, can read “Noah Berkowitz – the NIH Years” including all exhibits. We raised the question as to how a student, still in the midst of training, could possibly initiate and operate a company that the IMPATH marketing literature described as “…a leading provider of post-clinical, pre-marketing, cost/benefit analyses to pharmaceutical and biotechnology companies in connection with new oncology drugs entering the marketplace.” Two months after completion of his medical residency training, IMPATH stated “Dr. Noah Berkowitz, the founder of PCI, brings impressive credentials as an academic oncologist and immunologist. His experience with pharmaceutical and biotechnology companies relating to clinical trial design, efficacy evaluation, pharmacoeconomic studies and market assessment greatly enhances our capabilities in the information services area.”

We asked how it was possible for a student in residency training to do all this?  Did he do this with the use of Government information he had access to while still a student at the National Cancer Institute? What exactly was IMPATH buying for $1,000,000 and were there other beneficiaries of this money at the NCI?

Our original document was sent to the United States, Senate Health Committee, the Federal Bureau of Investigation and the Postal Inspector (upon their request). We never received a reply. We have since learned that much has occurred since our document was sent. IMPATH now stands accused of securities fraud and the principals of the company are facing multiple class actions suits and an SEC investigation.

IMPATH was a company with over 1200 employees and an annual income of over one quarter of a billion dollars. Immediately after completion of his residency, Dr. Berkowitz’s became Vice President of Information Services for IMPATH. He maintained his private residence in Silver Spring, Maryland, not far from the National Cancer Institute in Bethesda. We speculated in our document that his actual role was to serve as a ‘listening post’ for research data at the NCI that could be used by IMPATH to grow their business. One of the major components of the company was the “IMPATH Predictive Oncology” division (IPO) which was made possible, according to their press release, by the acquisition of Dr. Berkowitz’s ‘Physician Choice, Inc.’

The reader of this document should read reporter David Willman’s recent expose (12/22/04) of the unethical behavior of multiple researchers at the National Institutes of Health (see http://www.latimes.com). Dr. Berkowitz appears to have been using Government data  gathered at the NCI for personal profit. According to the LA Times, this seems to have been commonplace. (see the end of this document for instructions on How to View the Exhibits)

On October 22, 2001, IMPATH announced it was reimbursing the Government $9 million dollars to settle an investigation over their Medicare billing practices. IMPATH declared bankruptcy in the summer of 2003 after an SEC audit alleged they had systematically misrepresented their accounts receivable to their investors. Dr. Berkowitz left the company after the initial Medicare investigation was commenced.

However, the $1,000,000 IMPATH paid Dr. Berkowitz for Physician Choice, Inc. was not well-spent from the point of view of their investors. It is now known (see below) that the income of the company continued to lag expectations and this knowledge was deliberately kept from the public.

On February 10, 2003, the CEO of the company, Dr. Anu Saad, resigned abruptly. On July 30 of the same year, the company announced that they were “investigating possible irregularities involving overstated accounts receivable…” This roiled the stock market since it was now obvious that the earnings per share IMPATH had been claiming were grossly overstated. Trading in the stock was halted.

There are now numerous class action suits in the Federal Courts over securities fraud by IMPATH.

The Bill of Particulars describes how IMPATH recklessly and knowingly misled the public about their business in order to inflate their stock price. It states (p. 38), “The ongoing fraudulent scheme described in this complaint could not have been perpetuated over a substantial period of time, as has occurred, without the knowledge and complicity of the personnel at the highest level of the Company, including the Individual Defendants.” Dr. Berkowtiz is not one of the defendants at this point.  After leaving IMPATH, he briefly emigrated to Israel where he was a 1981 graduate of Yeshivat Har Etzion.  He has since returned to the United States as Chief Executive Officer of HaptoGuard, Inc., a biopharmaceutical company in New Jersey. 

The reader of “Noah Berkowtiz, M.D. – The NIH Years” will see that Dr. Berkowitz
was most likely also part of the “scheme” to defraud the Public. Dr. Berkowitz joined IMPATH just shortly after completing his studies at the National Cancer Institute. Yet he is presented to the public as a seasoned, independent researcher and businessman earning $500,000 yearly from his activities. This characterization of Dr. Berkowitz was part of the fraud IMPATH perpetuated on the public.