BY ELIZABETH HAYS | NEW YORK DAILY NEWS | Monday, April 13, 2009

Hematology tech Athhar Prizada preps blood samples for storage at Analytical Diagnostic Labs in Sheepshead Bay. (ADAMS FOR NEWS)

It began as a nasty argument between the owner of a Sheepshead Bay medical lab and a top state Health Department official and escalated into full-scale harassment to drive the lab out of business, the owner charged.

At one point, state Health Department officials set up a surveillance camera and interrogated immigrant employees to scare them into turning against their bosses, say court papers.

“What they did was just outrageous," said David Jaroslawicz, a lawyer for Analytical Diagnostic Labs

(ADL). “If they get away with this, it’s literally a fascist state." The incidents began after the September, 11, 2001 World Trade Center attacks when lab owner Gershon Sontag argued with state Health Department official Betty Kusel over whether the lab was qualified to do anthrax testing, said Sontag. Kusel charged Sontag’s request was “morally reprehensible that when the nation is under attack we seek business opportunities," according to Sontag.

Sontag, a volunteer paramedic who had rushed to Ground Zero, was upset by Kusel’s claim. “It hit a switch in me," he said.

When Sontag complained to other health officials that Kusel had blocked his lab from doing the testing, she retaliated by launching a campaign to shut him down, Sontag charged. “Ever since, my life has been a living hell," he said.

Sontag charged in court papers that for years after, Kusel and other state health officials harassed him and intimidated his employees, many who are Pakistani immigrants. According to Sontag:

• In a June 2006 e-mail, a colleague of Kusel’s told a staffer to go through ADL’s employee roster looking for “Pakistani imports."
• During a visit in August 2006, investigators interrogated employees about their immigration status - even though they were all legal and had the required licenses.
• An investigator stationed himself with a video camera at ADL’s rear entrance hoping to catch illegal employees fleeing over a fence.
• State officials routinely sent investigators to the lab on Jewish holidays when they knew Sontag, an Orthodox Jew, wouldn’t be there.

ADL also claimed that since 2004, officials have harassed a string of the lab’s medical directors by withholding their licenses and pressuring them to quit.

Last September, U.S. District Court Judge Brian Cogan threw out the lab’s harassment suit against the state on technical grounds - though he backed up many of Sontag’s harassment claims and concluded state officials “demonstrate a level of malice inconsistent with merely trying to ensure compliance with state regulations."

A former top-ranking Health Department official who held Kusel’s job as Director of Regulatory Affairs submitted a court statement in support of ADL, called the treatment “outrageous."

“My overall assessment of what has taken place here is that the defendants have behaved like a gang of thugs, utterly abusing their power," wrote Mary Anne Kowalski.

Sontag appealed Cogan’s decision in February. Health officials declined to comment because of the pending litigation.

Three state elected officials - Sen. Carl Kruger (D-Sheepshead Bay) and Assembly members Helene Weinstein (D-Canarsie) and Dov Hikind (D- Borough Park) - are demanding a probe into the state’s treatment of the lab and its Pakistani employees.

“It goes without saying that language and behavior which displays an obvious bias against any ethnic, racial or religious group has no place in any agency in our city, state and nation," wrote Kruger in a March 28 letter to state Health Department Commissioner Richard Daines.