Dr. Francis B. Chiaramonte, stung by charges that his year-old Southern Maryland Medical Center had overcharged patients more than $1.8 million, lashed back yesterday at the state commission whose auditors made the allegations.

Rates originally set by the Maryland Health Services Cost Review Commission for his 300-bed hospital in Clinton were too low. Chiaramonte said. Moreover, keeping up with the commission's rules and regulations alone could cost $750,000 to $1 million a year in additional staff, he said.

"I don't think we're overcharging at all," Chiaramonte said after a Baltimore meeting of the commission, which sets a maximum rate for every service provided by every hospital in the state. "In fact, there has been some undercharging."

"The first two or three months, the hospital didn't charge for $200,000 to $300,000 in emergency room supplies," Chiaramonte said. "Nobody kept track."

Chairamonte, the driving force behind the proprietary (for profit) hospital, said the medical center had been through two financial directors. State health commission staff members said they have dealt with seven different persons acting in that capacity.

"You're doing something solo (and then it begins to look good); then everybody begins to show concern," Chiaramonte said. For years, he said, nobody cared about his hospital project until it became a going concern.

However, when the hospital's financial reports became overdue, the commission dispatched its own investigators this summer to look into its operations.

The auditors found that the hospital had billed surgical patients for an extra hour of surgery, marked up supplies used for patients by 240 percent, overcharged by 30 percent for some laboratory tests and charged for services the hospital was not authorized to perform.

"They seem to be a law unto themselves," Health Services Cost Commissioner Natalie Bouquet said yesterday. "I'm looking at 13 pages of criticism covering practically every department in the hospital," said Chairman Alvin M. Powers. "I've never seen such a thing. The magnitude is tremendous."

Gary Alexander, Chiaramonte's attorney, said that although his client did not agree with the auditor's findings, changes in hospital procedures had already been instituted in the week since the report was released to them. "The hospital may contest some or any of the findings," he said. Nevertheless, he added, "the hospital has effectively ceased and desisted already from the major charges in the report."

The hospital built by Chiaramonte, a urological surgeon, will have its say at hearings that the commission decided yesterday to hold "as soon as possible." In the meantime, a more complete investigation will be performed in coming weeks by commission auditors.

The hospital, in the interim, has hired its own team of outside accountants and experts to pinpoint problems that may exist, Alexander said.

"Our people haven't delivered their financial reports to the commission in a timely manner," Chiaramonte said. "This is very upsetting to the (hospital) board and very embarrassing."

Several hospital employes said yesterday that the turnover at the Clinton facility was enormous. "I've been gone six months and I probably wouldn't know anyone if I went back today," said Ted Giovanis, who left his post as hospital comptroller in March to become a rate analyst with the state hospital commission.

"Things were chaotic when I started working there in February," Giovanis said. "About the only thing that was set up were the rates. There was also just about no statistics system, no way of keeping financial records. That was the first thing I tried to work on."

Since Giovanis' departure, Chiaramonte has hired the Hospital Corporation of America, to manage the hospital.