Physician says he's trying to heal himself of tax mess

Gregory A. Nelson sees himself as a dedicated physician, providing excellent care in impoverished city communities.

To the city, state and federal governments, however, Nelson, a 54-year-old general practitioner, is a chronic, willful deadbeat who has owed millions of dollars, been repeatedly censured by the court, and yet continued to rack up unpaid taxes.

Yesterday the city issued its list of most egregious tax delinquents. Nelson and his former medical practice appeared in the unenviable position of number one, with nearly $2.5 million in the way-past-due account.

Reached by telephone at his office in Mount Airy, where he was seeing patients, Nelson said his old practice no longer existed "because of the tax problem." He declined, however, to characterize its dissolution as a bankruptcy.

"I fell behind on my taxes, trying to serve the underserved community," he said. "The health-care industry changed dramatically, and with the consolidation of the industry and lower reimbursements, I couldn't keep providing the standard of care that my patients deserved."

At its peak, Nelson Medical Group had nine offices and 150 employees, he said. His current practice, Stenton Avenue Medical & Rehabilitation Center, is "a totally different business," with one office and a minimal staff, he said.

Nelson said he went to undergraduate and medical school at Boston University in the 1970s and did his internship and residency at Harlem Hospital. He comes from a family of health-care professionals, he said, noting that both his brothers, his father and two nieces are all in medicine, but that they practice separately from him.

Reams of documents indicate that Nelson, both personally and as the president and treasurer of Nelson Medical Group, has been dogged for decades for nonpayment of taxes.

According to these filings, Nelson owed the federal government more than $5 million, much of it for failing to pay employee withholding taxes.

Nelson's lawyer, Andrew D. Kessler, argued that "the Nelson Medical Group began to face serious financial problems due partially to decreasing reimbursements from health-insurance companies as well as skyrocketing malpractice-insurance premiums."

But the government presented evidence in court that Nelson personally earned $800,000 in 2005.

Even after he pleaded guilty to willfully failing to pay taxes, Nelson continued to spend $3,000 a month on a Center City apartment, $2,000 on a "fur," and thousands more on overnight stays at Four Seasons hotels. Court documents showed that he had substantial equity in investments - more than $300,000 in six commercial real estate properties, more than $50,000 in a 2001 Porsche, and approximately $600,000 in his family's home in Devon. (The house subsequently was sold in a sheriff's sale.)

Nelson, a longtime contributor to local and state Democratic politicians, also had recently purchased a 2004 Range Rover for approximately $80,000.

Transcripts of a court hearing in September 2006 indicate that Nelson had failed to follow through on previous court orders to live on an allowance and use the remainder of his income to pay down his tax debt.

In May 2006, the City of Philadelphia won a legal battle to have Nelson's medical clinics put into receivership. They were sold, but the proceeds went to pay the federal tax bill first, as required by law. City officials said they would continue to pursue him vigorously.

"He's still a practicing doctor, and there is always the possibility that he'll earn money in the future," said Daniel Cantu-Hertzler, chair of the corporate and tax group in the city's Law Department.

Nelson said his current practice "is smaller now, the overhead is less, and I'm paying all of my taxes in a timely manner because I never want that problem again."