Critical Condition

AIDS researcher of high repute. Proprietor of a glamorous Miami Beach spa. Target of a federal criminal probe. The many sides of Dr. Lionel Resnick.

In 1990, for instance, at the dermatology clinic where he worked, Resnick sidestepped scandal after the death of another doctor's patient who had received ultraviolet light therapy. And then there is his latest venture. According to more than a half-dozen former employees and clients at Imagen, Resnick has been known to misrepresent the services rendered at the spa in order to collect additional money from insurance providers.

Defense lawyer Sharpstein says such allegations are nonsense concocted by disgruntled ex-employees and other enemies.

But even some of Resnick's defenders concede there is a sad logic to all the accusations: The family legacy of attracting controversy has finally caught up with the youngest, quietest Resnick.

If officials from UM, or Mount Sinai, or even the FBI want evidence that Resnick used his publicly funded lab for personal reward, they won't have to look hard. The doctor freely admitted as much three years ago, in a sworn deposition taken after David Acer's insurance company CIGNA hired Resnick to testify in a civil lawsuit filed by Richard Driskill, one of the dentist's HIV-infected patients.

"Tell me the parameters of what you were to be paid for this research," Driskill's attorney asked Resnick during the December 1991 deposition.

"One hundred and fifty dollars an hour," Resnick replied.
"Describe for me more specifically how your group was to be paid by CIGNA."
"Wasn't really a group that was to be paid by CIGNA per se. It was based on $150 an hour [as] my rate, and the group itself was performing as part of a research project, funded by my own research."

"So do you have people that work under you in your lab?"
"Yes. I have a number of people who work under me."
"Are they also paid $150 an hour by CIGNA if they're working on this case?"
"No. No one else in my lab is paid by CIGNA."

In fact, the equipment in Resnick's lab, and the employees he supervised, were funded with public monies, primarily federal grants. Though the money was explicitly earmarked for specific research projects, by his own admission Resnick was using these resources to pursue private research for which he alone was paid.

When Driskill's lawyers showed Resnick's statement to their own experts, the reaction was immediate. "I saw something in there that just blew my mind," recalls one, a highly respected AIDS researcher. "This guy was openly admitting that tens of thousands of dollars were going straight to his pocket, based on work being done with federal research money. When you receive a grant from the government, that's for the betterment of mankind. You're not allowed to take that money and subvert it into a private endeavor."

Resnick did not actually subvert money into a private endeavor; what he did was more complicated. The lab at Mount Sinai was funded by a system known as "direct cost reimbursement," which meant that whenever Resnick needed money A to pay for staff salaries, equipment, et cetera A he submitted a form to Mount Sinai, detailing the specific grant projects for which the outlay was needed. Mount Sinai would pay the money, then pass on the information to the grant provider for reimbursement.

By failing to note that he also was devoting lab staff and equipment to private projects for which he was paid, Resnick was not complying with federal regulations. "What he should have done was note every time he used those resources for his own business," Resnick's civil attorney Alan Kluger acknowledges. "He simply didn't realize he had to do that."

But federal investigators say Resnick's actions may amount to fraud, because when he signed off on the reimbursement forms, he was misrepresenting to the government how the public funds were being spent.

All this was obvious to the scientist who reviewed Resnick's deposition three years ago. He was so furious, he says, that he called officials at the National Institutes of Health (NIH), one of the entities that had funded Resnick's lab. But after faxing them the relevant pages of the deposition, he says, he never heard back from them.

Resnick, meanwhile, continued to conduct research, both private and public, at the Mount Sinai lab. A lot of research.

According to a preliminary audit Mount Sinai officials ordered after they discovered Resnick was using the lab for private work, the doctor billed hundreds of thousands of dollars to a variety of entities over the past five years. He conducted numerous blood tests and clinical studies for companies hoping to develop AIDS medications. Last year, for instance, he billed $105,000 to a California company called Applied Immune Sciences Inc. The audit also includes the prospectus for a proposed study for Hoffmann-LaRoche, with an estimated budget of $875,000. Additional documents indicate Resnick was working with Searle, Abbott, and other pharmaceutical firms. He also charged lawyers for providing expert testimony, often based on work performed at the Mount Sinai lab. In the Driskill case alone, he billed $182,400. The City of Miami Beach paid Resnick $43,000 for a pair of high-tech DNA tests later used to defend a suit against the city. Mount Sinai's audit shows that Resnick's biggest customer was the University of Miami. Since 1989 UM has paid him more than $600,000, most of it in federal grant money, to conduct complex blood tests and other research for Dr. Margaret Fischl.

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