San Francisco Chronicle - Monday, September 25, 2000
Sabin Russell, Chronicle Staff Writer

Ayazur Rahman, 49, obtained a state license in July 1999 granting his small Whittier (Los Angeles County) business, American Diagnostic Labs, the right to run medical tests on blood and tissue samples to screen for a wide variety of diseases.

Four years ago, Rahman was manager and chief executive of B.C.L. Clinical Labs, a suburban Los Angeles facility put out of business by state and federal regulators after investigators found evidence the lab was churning out phony results on prison medical tests.

"I have nothing to hide," he told a Chronicle reporter during an attempt to visit his lab last week.

But Rahman's previous involvement with a clinical lab accused of reckless misconduct raises serious questions about how and why he was allowed to return to the medical testing business.

State investigators, who learned of Rahman's connection to American Diagnostic Lab in July, have been closely monitoring the operation. "It is our perspective that this license should never have been issued," said Paul Kimsey, assistant deputy director for laboratory science at the state Department of Health Services. "When our investigation is complete, we will take appropriate legal action."

MEDI-CAL BID REJECTED

The state has already rejected a bid by Rahman to obtain clearance to bill for patients in the government Medi-Cal and Medicare programs

--a key hurdle needed for a lab business to be viable.

Department of Health Services spokesman Ken August said that state law gives the agency "broad authority" to protect the public health. "We will protect the public health," he said.

American Diagnostic was licensed by the state health department just two years after state and federal regulators had stripped B.C.L.'s certification after an investigation of questionable results turning up in prison medical clinics.

Rahman is identified in state documents as chief executive of B.C.L., where he managed day-to-day operations. His sister, Parveena Rahman Akhtar, was its owner. The lab ceased operations shortly after state inspectors paid a surprise visit in December 1996 and found evidence that the lab operators were simply typing phony results into a computer -- a scam known as "dry-labbing."

August said that Rahman's involvement in B.C.L. may have slipped through the licensing process because only the names of the lab owner and medical directors are required to be listed. Rahman's sister was listed as the lab's owner, while Rahman was listed as its manager.

A Chronicle investigation revealed the previously unpublicized B.C.L. case in July. It also found scant evidence that the California Department of Corrections took any steps to retest inmates once their test results were called into question -- despite explicit warnings from federal regulators that the lab's actions put patients in "immediate jeopardy." As a result of the Chronicle article, the Department of Corrections has been hand-searching records of 162,000 inmates incarcerated in the state's 33 prisons to find those who had tests performed by B.C.L. in 1995 and 1996. It will retest those who show no evidence of having a repeat test performed during the past four years.

INMATES' HEALTH JEOPARDIZED

So far, the search has turned up 4,000 prisoners who had tests run by B.C.L. Of those, 650 appear never to have been retested. The tests include critical screens for cervical cancer, AIDS and hepatitis and other infectious diseases.

Without retesting, these inmates could have lacked crucial information about their health and missed beneficial treatments. They also could have infected other inmates or been released back into society with diseases they did not know they had.

Documents obtained from the Department of Corrections through a Public Records Act request show that Rahman was B.C.L.'s primary contact with 11 prisons in extensive correspondence over the quality of the work performed. In 1995 and 1996, B.C.L. signed nine contracts worth $736,000 with various prisons.

EXTREMELY LOW BIDS

At several prisons, quality complaints by prison medical employees began cropping up almost as soon as B.C.L. took on the job. But the various prisons dealing with B.C.L. did not compare notes, and the lab kept winning Department of Corrections contracts with bids as low as half those of its competitors. In October 1996, two months before state health inspectors moved in, Dr. Antony Di Domenico, chief medical officer for Valley State Prison for Women in Chowchilla, wrote a memo detailing serious deficiencies with B.C.L.'s work, including an HIV test on one inmate that twice came out negative -- despite the fact the prison doctors knew the prisoner was HIV-positive.

In a termination letter to Rahman that same month, Di Domenico cited the HIV test problems as well as the case of a woman who tested negative for pregnancy, even though her pregnancy was already clinically obvious.

B.C.L.'s license was formally revoked on May 1, 1997. The lab was fined $20,000 -- a sum that has never been paid. State health department spokesman August said that a recommendation for criminal prosecution of B.C.L. was forwarded to the state attorney general's office but that no record of that recommendation is available, and no charges were ever filed.

STIFF REPRIMAND

In fact, investigators were told at the time that Rahman and his sister had fled the country. Dr. Ivan Serdar, an Irvine pathologist who was listed as laboratory director, informed federal officials in a March 1997 letter that he would not contest the closure of the lab because he couldn't reach the laboratory owner and manager, who (were) "allegedly out of the country."

Akhtar and Serdar were given the stiffest reprimand available under federal laboratory regulations: They were barred from "owning, operating or directing" another laboratory for two years -- a period that expired on May 1, 1999. However, state officials said they have the authority to withhold licensure from operators who are a threat to public health.

In his role as "manager" of B.C.L., Rahman himself was not sanctioned. His application to own a clinical laboratory breezed through apparently unchallenged after he applied in December 1998. Permission was granted in July 1999.

UNDER CLOSE SCRUTINY

Nevertheless, state health department inspectors say they have been watching American Diagnostic Labs closely since July. Rahman said in a brief interview that the laboratory passed a state inspection on July 20.

He said that the allegations made by state inspectors against B.C.L. were not true but that he did not have the $30,000 it would have cost to defend himself. "It was four years ago," he added.

American Diagnostic Labs is run out of a small office in a modest Whittier medical building. Most of Rahman's second-floor neighbors are dentists. A reporter visiting the office found it closed, but Rahman stopped by to collect blood samples from a locked box outside at the foot of the door -- samples that were apparently to be processed at another lab.

In addition, three Los Angeles county physicians who had signed on as directors of American Diagnostics resigned on July 20, after the Chronicle stories on B.C.L. were published.

One of them, Dr. Charles Panchari, said his Glenview Medical Group had decided six months ago to end its relationships with small clinical laboratories out of concern that there was too much "bending of the rules" going on among businesses of that size.

Panchari said he was unaware of the problems at B.C.L. or of Rahman's role there, but his group hastened its departure from American Diagnostic after hearing "through the grapevine" that Rahman had run into trouble in the past.

E-mail Sabin Russell at srussell@sfchronicle.com.

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