UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA, ex rel. 

Syed Rahman, M.D.,

Plaintiff-Appellee,

and

SYED RAHMAN, M.D.; ONCOLOGY

ASSOCIATES, P.C.,

Plaintiffs,

v.

DOUGLAS COLKITT, M.D.; DERDEL

RIVERSIDE ONCOLOGY ASSOCIATES,

P.C.; DERDEL CHESAPEAKE ONCOLOGY

ASSOCIATES, P.C.; KEY WEST

ONCOLOGY ASSOCIATES, P.A.; TAMPA  No. 01-2386

ONCOLOGY ASSOCIATES, P.A.;

COMMUNITY RADIATION THERAPY

ASSOCIATES, P.C.; JEFFERSON

RADIATION ONCOLOGY CENTER, LP;

ONCOLOGY SERVICES CORPORATION;

NIXON EQUIPMENT CORPORATION;

THOMAS JEFFERSON REAL ESTATE

CORPORATION; GEORGE WASHINGTON

REAL ESTATE CORPORATION; OAKTREE

CANCER CARE, INCORPORATED;

KEYSTONE ONCOLOGY, LLC;

ROSEWOOD CANCER CARE,

INCORPORATED,

Defendants-Appellees, 
DVI FINANCIAL SERVICES, 

INCORPORATED,

Party in Interest-Appellant,

MERRILL COHEN, Chapter 7 Interim

Trustee of EquiMed, Incorporated,

Intervenor-DefendantAppellee,

and

JERRY DERDEL, M.D.; JOANNE

RUSSELL; ONCOLOGY FUNDING

CORPORATION; STONEBORO ONCOLOGY

ASSOCIATES, P.C.; WARREN

ONCOLOGY ASSOCIATES, P.C.;

PHOENIXVILLE ONCOLOGY ASSOCIATES,

P.C.; LITTLESTOWN ONCOLOGY

ASSOCIATES, P.C.; LEHIGHTON 

ONCOLOGY ASSOCIATES, P.C.; EXTON

ONCOLOGY ASSOCIATES, P.C.; BUCKS

COUNTY ONCOLOGY ASSOCIATES, P.C.;

GREENBELT CANCER TREATMENT

CENTER, L.P.; ATLANTIC RADIATION

ONCOLOGY, L.L.C.; DERDEL

RANDALLSTOWN ONCOLOGY

ASSOCIATES, P.C.; DERDEL UNION

MEMORIAL ONCOLOGY ASSOCIATES,

P.C.; TREASURE COAST ONCOLOGY

ASSOCIATES, P.A.; LAUDERDALE

LAKES ONCOLOGY; ST. LAWRENCE

ONCOLOGY, P.C.; LIBERTY ONCOLOGY

ASSOCIATES, P.C.; KINGS PLAZA

RADIOLOGY, P.C.; SOUTHERN NEW

JERSEY CANCER TREATMENT; 

2 UNITED STATES v. COLKITT
WILLIAMS COUNTY ONCOLOGY



ASSOCIATES, P.C.; PARK ONCOLOGY ASSOCIATES, P.C.; PARKS ONCOLOGY ASSOCIATES, INCORPORATED; GREATER HARRISBURG CANCER CENTER, INCORPORATED; MGH CANCER TREATMENT CENTER, L.P.; ONCOLOGY SERVICES CORPORATION OF LAWNWOOD; KEYS CANCER CENTER LIMITED PARTNERSHIP; XCC, INCORPORATED; GPCC, INCORPORATED; IRCC, INCORPORATED;

KRTC, INCORPORATED; LVCC, INCORPORATED; MGHCC, INCORPORATED; MHCC, INCORPORATED; MARYLAND GENERAL CANCER CENTER, INCORPORATED; ST. LUCIE COUNTY RADIATION ONCOLOGY

,



LIMITED; ONCOLOGY ASSOCIATES, PC

OF INDIANA; ONCOLOGY ASSOCIATES,

PC OF ALBEMARLE; ONCOLOGY ASSOCIATES, PC OF LIFE CARE; ONCOLOGY ASSOCIATES, PC OF HERITAGE HILLS; DERDEL MARYLAND GENERAL ONCOLOGY ASSOCIATES, PC; KANKAKEE ONCOLOGY ASSOCIATES,

PC; ONCOLOGY ASSOCIATES, PC OF PITTSBURGH; ONCOLOGY ASSOCIATES

,

PC OF HARRISBURG; PLEASANT HILLS ONCOLOGY ASSOCIATES, PC; ONCOLOGY ASSOCIATES, PC OF LEBANON; FLAGSTAFF ONCOLOGY ASSOCIATES, PC; FORT PIERCE ONCOLOGY ASSOCIATES, PC;



UNITED STATES v. COLKITT3
GREENWAY ONCOLOGY ASSOCIATES, 

PC; GREATER PITTSBURGH ONCOLOGY

ASSOCIATES, PC; NORTHWEST

RADIATION TREATMENT SERVICES,

INCORPORATED; MARLTON ONCOLOGY,

PC; RANDALLSTOWN ONCOLOGY

CENTER, INCORPORATED; WESTCHESTER

ONCOLOGY, PC; CHESAPEAKE

REGIONAL CANCER CENTER,

INCORPORATED; UNION MEMORIAL

ONCOLOGY CENTER, INCORPORATED;

CANCER CENTER OF NORTHERN

ARIZONA PARTNERSHIP; TRI STATE

ONCOLOGY ASSOCIATES,

INCORPORATED; SALISBURY RADIATION

ONCOLOGY CENTER, INCORPORATED;

HERITAGE HILLS MEDICAL, LP;

RIVERSIDE ONCOLOGY; MEDTREND 

HEALTH SYSTEMS, INCORPORATED;

BROWARD RADIATION THERAPY

CORPORATION; LAKE OKEECHOBEE

CANCER CENTER, INCORPORATED;

LAWNWOOD REGIONAL CANCER

CENTER, LP; ST. LAWRENCE

ONCOLOGY PC OF OGDENSBURG;

PMCB, INCORPORATED; ST.

LAWRENCE ONCOLOGY, PC OF

BROOKLYN; ONCOLOGY SERVICES

CORPORATION OF KEY WEST,

INCORPORATED; ONEONTA RADIATION

ONCOLOGY, PC; ONCOLOGY SERVICES

CORPORATION OF TAMPA,

INCORPORATED; GREENBELT CANCER

TREATMENT CENTER, L.P.; BILLING 

4 UNITED STATES v. COLKITT
SERVICES, INCORPORATED; NATIONAL



MEDICAL FINANCIAL SERVICES CORPORATION; COLKITT ONCOLOGY GROUP, INCORPORATED; SKYLINE ONCOLOGY ASSOCIATES, P.C.; MALONE ONCOLOGY ASSOCIATES,

P.C.; JMR MEDICAL ASSOCIATES,

P.C.; CAROLINA CANCER CARE, LLC; SOUTHERN ONCOLOGY, P.A.; EASTERN PENNSYLVANIA ONCOLOGY, LLC; MASSACHUSETTS RADIATION ONCOLOGY SERVICES, P.C.; CHESTER COUNTY ONCOLOGY, LLC; FLORIDA ONCOLOGY, P.A.; COASTAL ONCOLOGY, LLC; ALBEMARLE REGIONAL CANCER CENTER, LP; KINGS PLAZA INCORPORATED,



Defendants,

v.

HIGHMARK, INCORPORATED, d/b/a Xact

Medicare Services; NORIDIAN MUTUAL INSURANCE COMPANY, d/b/a

Blue Cross/Blue Shield of North

Dakota; AETNA INCORPORATED; BLUE CROSS/BLUE SHIELD OF FLORIDA, INC.; HEALTH CARE SERVICE CORPORATION,

A Mutual Legal Reserve Company; TRAILBLAZER HEALTH ENTERPRISES, INCORPORATED; BLUE CROSS & BLUE SHIELD OF MARYLAND, INCORPORATED

;

EMPIRE BLUE CROSS AND BLUE SHIELD;



UNITED STATES v. COLKITT5
GROUP HEALTH INCORPORATED; BLUE 

CROSS/BLUE SHIELD OF WESTERN

NEW YORK, INCORPORATED; CIGNA

CORPORATION; CONNECTICUT GENERAL

LIFE INSURANCE COMPANY;

NATIONWIDE MUTUAL INSURANCE

COMPANY,

Third Party Defendants,

STEADFAST INSURANCE COMPANY;

RELIANCE INSURANCE COMPANY;

HERBARD, LIMITED; JOHNSON & 

JOHNSON FINANCE CORPORATION;

MOBILE DIAGNOSTECH, INCORPORATED;

A. JEROME DIGIACOBBE, JR.; CALVIN

ZONTINE; TREATMENT CENTERS

LIMITED PARTNERSHIP; PFG CAPITAL

CORPORATION; REGIONAL MEDICAL

SERVICES, INCORPORATED,

Parties in Interest,

SOVEREIGN BANK,

Movant. 

6 UNITED STATES v. COLKITT
In Re: EQUIMED, INCORPORATED, 

a/k/a EquiVision, Incorporated,

Debtor.

MERRILL COHEN, Interim Trustee for

the Bankruptcy Estate of EquiMed,

Incorporated,

Plaintiff-Appellee,

and

MOBILE DIAGNOSTECH, INCORPORATED;

A. JEROME DIGIACOBBE, JR.; CALVIN

ZONTINE,

Plaintiffs,

v.

DOUGLAS COLKITT, M.D.; GEORGE  No. 01-2387

KEISTER; PAUL CASTRO; EDWARD

RUSSELL, JR.; DONALD GALLO; JUDE

SPAK; JEFFERSON RADIATION

ONCOLOGY CENTER, LP; OAKTREE

CANCER CARE, INCORPORATED;

KEYSTONE ONCOLOGY, LLC;

ROSEWOOD CANCER CARE,

INCORPORATED; MARCY L. COLKITT;

ONCOLOGY SERVICES CORPORATION;

DERDEL RIVERSIDE ONCOLOGY

ASSOCIATES, P.C.; DERDEL

CHESAPEAKE ONCOLOGY ASSOCIATES,

P.C.; KEY WEST ONCOLOGY

ASSOCIATES, P.A.; TAMPA ONCOLOGY

ASSOCIATES, P.A.; COMMUNITY

RADIATION THERAPY ASSOCIATES,

P.C., 

UNITED STATES v. COLKITT 7
formerly known as Community 

Radiology Associates, P.C.;

SALISBURY ONCOLOGY ASSOCIATES,

P.C.; ALBEMARLE ONCOLOGY

ASSOCIATES, P.C.; OAKLANE

CANCER AND HEMATOLOGY CLINIC,

P.C.,

Defendants-Appellees,

and

JOANNE RUSSELL; LAWNWOOD

REGIONAL CANCER CENTER, LP; ST.

LUCIE COUNTY RADIATION ONCOLOGY,

LIMITED; ONCOLOGY ASSOCIATES, PC

OF HARRISBURG; ONCOLOGY

ASSOCIATES, PC OF INDIANA;

ONCOLOGY ASSOCIATES, PC OF

LEBANON; PLEASANT HILLS ONCOLOGY 

ASSOCIATES, PC; GREATER

PITTSBURGH ONCOLOGY ASSOCIATES,

PC; STONEBORO ONCOLOGY

ASSOCIATES, P.C.; PHOENIXVILLE

ONCOLOGY ASSOCIATES, P.C.;

LITTLESTOWN ONCOLOGY ASSOCIATES,

P.C.; LEHIGHTON ONCOLOGY

ASSOCIATES, P.C.; EXTON ONCOLOGY

ASSOCIATES, P.C.; BUCKS COUNTY

ONCOLOGY ASSOCIATES, P.C.; DERDEL

MGH ONCOLOGY ASSOCIATES, PC;

GREENWAY ONCOLOGY ASSOCIATES,

PC, a/k/a Greenway Oncology

Associates, P.A.; DERDEL

RANDALLSTOWN ONCOLOGY

ASSOCIATES, P.C.; DERDEL UNION

MEMORIAL ONCOLOGY ASSOCIATES, 

8 UNITED STATES v. COLKITT
P.C.; FORT PIERCE ONCOLOGY



ASSOCIATES, PC, a/k/a Fort Pierce

Oncology Associates, P.A.; OKEECHOBEE ONCOLOGY ASSOCIATES

,

P.A.; TREASURE COAST ONCOLOGY ASSOCIATES, P.A.; LIBERTY ONCOLOGY ASSOCIATES, P.C.,

formerly known as St. Lawrence

Oncology, P.C.; ONEONTA RADIATION ONCOLOGY, PC; SKYLINE ONCOLOGY ASSOCIATES, P.C.; MALONE ONCOLOGY ASSOCIATES, P.C.; MARLTON ONCOLOGY, PC; SOUTHERN NEW JERSEY CANCER TREATMENT; WILLIAMS COUNTY ONCOLOGY ASSOCIATES, P.C.; TRI-STATE ONCOLOGY ASSOCIATES, INCORPORATED; FLAGSTAFF ONCOLOGY



ASSOCIATES, PC; KANKAKEE ONCOLOGY ASSOCIATES, PC; HOLYOKE ONCOLOGY ASSOCIATES, P.C.; JMR MEDICAL ASSOCIATES, P.C.; CAROLINA CANCER CARE, LLC; SOUTHERN ONCOLOGY, P.A.; EASTERN PENNSYLVANIA ONCOLOGY, LLC; MASSACHUSETTS RADIATION ONCOLOGY SERVICES, P.C.; CHESTER COUNTY ONCOLOGY, LLC; FLORIDA ONCOLOGY, P.A.; COASTAL ONCOLOGY, LLC; COMPREHENSIVE PHYSICS AND REGULATORY SERVICES, LIMITED; JOHN DOES 1-25,

Defendants,

v.



UNITED STATES v. COLKITT9
NIXON EQUIPMENT CORPORATION, 

Movant-Appellee,

DVI FINANCIAL SERVICES,

INCORPORATED,

Movant-Appellant,

THE PROVIDENT BANK,

Party in Interest-Appellee,

and

UNITED STATES OF AMERICA;

RESPONSE ONCOLOGY, INCORPORATED;

STEADFAST INSURANCE COMPANY;

RELIANCE INSURANCE COMPANY (In 

Rehabilitation); TREATMENT CENTERS

LIMITED PARTNERSHIP; PFG CAPITAL

CORPORATION; INDIANA HOSPITAL;

INDIANA HEALTHCARE, INCORPORATED;

INDIANA HEALTHCARE PROPERTIES,

INCORPORATED; HERBARD, LIMITED;

JOHNSON & JOHNSON FINANCE

CORPORATION; REGIONAL MEDICAL

SERVICES, INCORPORATED,

Parties in Interest,

SOVEREIGN BANK,

Movant. 

10 UNITED STATES v. COLKITT
In Re: NIXON EQUIPMENT 

CORPORATION; GEORGE WASHINGTON

REAL ESTATE CORPORATION; THOMAS

JEFFERSON REAL ESTATE

CORPORATION,

Debtors.

DVI FINANCIAL SERVICES,

INCORPORATED,

Claimant-Appellant,

v.

MERRILL COHEN,

Trustee-Appellee,  No. 01-2388 and

EQUIMED, INCORPORATED,

Creditor,

v.

STEADFAST INSURANCE COMPANY;

RELIANCE INSURANCE COMPANY;

INDIANA HOSPITAL; INDIANA

HEALTHCARE, INCORPORATED; INDIANA

HEALTHCARE PROPERTIES,

INCORPORATED; TREATMENT CENTERS

LIMITED PARTNERSHIP; PFG CAPITAL

CORPORATION; UNITED STATES OF

AMERICA,

Parties in Interest. 

UNITED STATES v. COLKITT 11
In Re: EQUIMED, INCORPORATED, 

Debtor.

DOUGLAS COLKITT, M.D.,

Plaintiff-Appellee,

DVI FINANCIAL SERVICES,

INCORPORATED,

Claimant-Appellant,

and

BILLING SERVICES, INCORPORATED, a

Delaware corporation; JOANNE

RUSSELL; JEROME DERDEL, M.D.,  No. 01-2389

Plaintiffs,

v.

STEADFAST INSURANCE COMPANY, a

Delaware corporation; RELIANCE

INSURANCE COMPANY OF ILLINOIS, an

Illinois corporation,

Defendants,

and

MERRILL COHEN, Chapter 7 Trustee

of EquiMed, Incorporated,

Trustee-Appellee. 

Appeals from the United States District Court

for the District of Maryland, at Baltimore.

Alexander Harvey II, Senior District Judge.

(CA-95-2241-H, CA-00-1216-H, BK-00-11147, AP-00-1180-8,

CA-01-2676-H, BK-00-20825-PM, BK-00-20826-PM,

BK-00-20827-PM, CA-01-3014-H, AP-00-1430)

12 UNITED STATES v. COLKITT
Argued: January 21, 2003

Decided: April 2, 2003

Before WIDENER, WILKINSON, and NIEMEYER, Circuit Judges.

Affirmed by unpublished per curiam opinion. 

COUNSEL

ARGUED: Andrew C. Kassner, DRINKER BIDDLE & REATH,

L.L.P., Philadelphia, Pennsylvania, for Appellant. Philip H. Lebowitz,

PEPPER HAMILTON, L.L.P., Philadelphia, Pennsylvania, for

Appellees. ON BRIEF: Leslie Gillin Bohner, Kirke D. Weaver,

DRINKER BIDDLE & REATH, L.L.P., Philadelphia, Pennsylvania,

for Appellant. Matthew R. Goldman, Wendy J. Gibson, BAKER &

HOSTETLER, L.L.P., Cleveland, Ohio; Richard A. Robinson,

BAKER & HOSTETLER, L.L.P., Orlando, Florida; Michael E.

Tucci, MORRISON & HECKER, L.L.P., Washington, D.C.; Robert

D. McCallum, Jr., Assistant Attorney General, Michael F. Hertz,

Polly A. Dammann, J. Christopher Cohn, Daniel A. Spiro, Frances M.

Toole, Commercial Litigation Branch, Civil Division, UNITED

STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Thomas

M. DiBiagio, United States Attorney, Tamera L. Fine, Assistant

United States Attorney, Baltimore, Maryland; Robert Sanker, KEATING, MUETHING & KLEKAMP, P.L.L., Cincinnati, Ohio, for

Appellees.

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

UNITED STATES v. COLKITT 13
OPINION

PER CURIAM: 

In this appeal, DVI Financial Services, Inc. challenges the district

court’s approval of a complex "global" settlement of several related

cases, essentially contending that the global settlement agreement

failed to recognize DVI’s security interests in assets that were disposed of by the agreement. 

The cases covered by the global settlement agreement arose from

claims that Dr. Douglas Colkitt, Dr. Jerome Derdel, Colkitt’s wife,

and more than 80 healthcare entities (cancer centers and affiliated corporations) owned, operated, or controlled by Colkitt engaged in a

fraudulent billing scheme, causing losses to the federal Medicare and

CHAMPUS programs in excess of $12 million. Drs. Colkitt and Derdel were physicians specializing in radiation oncology. 

In one action involved in the settlement, the United States prosecuted claims against Colkitt, his partners, and his businesses, demanding $86 million in treble damages and penalties. 

The principal business through which Colkitt operated, EquiMed,

Inc., was involuntarily placed into bankruptcy by its creditors, and a

trustee was appointed. The trustee commenced an adversary action

against many of the defendants named by the United States in its

action, seeking to recover for the EquiMed estate losses that were

allegedly caused by fraud, breach of contract, and other similar conduct. 

Following EquiMed’s bankruptcy, three subsidiaries of EquiMed

filed voluntary Chapter 11 proceedings, and those proceedings were

consolidated with the EquiMed bankruptcy. 

Contemporaneous with these proceedings, EquiMed and various

other related plaintiffs commenced actions against two insurance

companies, Steadfast Insurance Company and Reliance Insurance

Company, in State court in Pennsylvania, seeking coverage for some

of the losses sustained by EquiMed and other companies. Those cases

14 UNITED STATES v. COLKITT
were removed to federal court and transferred to the District of Maryland for consideration in the bankruptcy of EquiMed. 

The parties to these various adversary actions negotiated a complex

settlement agreement that involved the creation of an estate in the

custody of the bankruptcy trustee, the sale of various properties of

EquiMed’s subsidiaries, the modification of related settlement agreements entered into by some of the parties, and various releases. 

DVI, a creditor of EquiMed and some of its subsidiaries, objected

to the global settlement agreement, arguing that its security interest

in various of EquiMed’s assets were not recognized by the agreement.

DVI had provided equipment financing to EquiMed and its subsidiaries, and it secured its loans with a security agreement covering the

equipment and other assets of EquiMed including its accounts receivable and contract rights. DVI asserted that its security agreement covered EquiMed’s interests in management services agreements under

which EquiMed operated the cancer centers in exchange for net profits from those cancer centers. DVI also asserted that it had a security

interest in offset rights in promissory notes given by subsidiaries Keystone Oncology, LLC, Oaktree Cancer Care, Inc., and Rosewood

Cancer Care, Inc., all of which were surrendered as part of the settlement agreement. 

The district court rejected DVI’s assertion of security interests in

both the management services agreements and the offset rights in the

surrendered notes. With respect to the management services agreements, the court stated that the agreements could not be characterized

as "accounts receivable" or "contract rights," which were covered by

the security agreement. The court pointed to the fact that the Pennsylvania Uniform Commercial Code, which governed the security agreement, distinguishes "account" from "general intangible," defining

"account" (and "contract right") as "[a]ny right to payment for goods

sold or leased or for services rendered which is not evidenced by an

instrument or chattel paper, whether or not it has been earned by performance," and defining "general intangible" as "[a]ny personal property . . . other than goods, accounts, chattel paper, documents,

instruments, investment property and money." 13 Pa. Cons. Stat.

§ 9106; see also U.C.C. § 9-106 Official Comment (stating that the

term "contract right" is included in the definition of "account"). The

UNITED STATES v. COLKITT 15
court determined that the relationship between EquiMed and the various cancer centers to which it supplied management services was a

continuing undertaking rather than a simple contract between the parties for the sale of services. On that basis, the court characterized the

agreements as general intangibles, and because Provident Bank, not

DVI, had the lien on EquiMed’s general intangibles, the court rejected

DVI’s claim to any value in the management service agreements and

any proceeds they contributed to the settlement. 

The district court also stated that even if DVI did hold an interest

in the management services agreements, that interest was likely extinguished prior to bankruptcy based on "convincing" evidence that the

agreements were terminated pre-petition. The court also recognized

that any valid interest of DVI in the agreements could not then attach

because, given the extensive network of relationships between the

various corporations owned and operated by Colkitt, settlement of the

adversary proceeding "cannot be characterized as being the recovery

of accounts receivable or contract rights" but rather "the bundle of

various intangible rights" related to the entire operating business of

the cancer centers. The court noted, as an example, that EquiMed’s

right to control the cancer centers derived not only from the management services agreements but also from its option to purchase each

center for one dollar. 

With respect to DVI’s claimed interest in the proceeds contributed

to the settlement through the surrender by Keystone, Rosewood, and

Oaktree of their offset rights in the promissory notes, the district court

held that DVI had no lien on the proceeds because DVI had no security interest in the rights themselves. The court also found that the

rights were surrendered in exchange for a release from Provident

Bank, the holder of the notes, rather than any release from the trustee

as to liability for fraudulent conveyance of assets subject to interests

claimed by DVI. 

DVI appealed the district court’s order approving the global settlement agreement, asserting the same arguments that it did before the

district court. 

We have carefully reviewed the record and considered the arguments of counsel made in their briefs and at oral argument. For the

16 UNITED STATES v. COLKITT
reasons set forth in the district court’s opinion, see United States ex

rel. Rahman v. Oncology Associates, P.C., CA-95-2241-H, CA-00-

1216-H, BK-00-11147, AP-00-1180-8, CA-01-2676-H, BK-00-

20825-PM, BK-00-20826-PM, BK-00-20827-PM, CA-01-3014-H,

AP-00-1430 (D. Md. Nov. 1, 2001), we affirm the judgment of the

district court.

AFFIRMED

UNITED STATES v. COLKITT 17