Alleged kickback trial involving Dallas-area hospital has industry on high alert

February 25, 2019

Depending on who you believe, surgeons and administrators at the Forest Park Medical Center of Dallas were either greedy profiteers who used their influence with patients to enrich themselves or they are world-class caregivers who are unfairly being targeted by over-aggressive prosecutors trying to criminalize perfectly legitimate business contracts.

Five doctors and four other hospital officials are on trial in federal court in Dallas for a being involved in an alleged illegal kickback scheme that put tens-of-millions of dollars into their pockets.

Healthcare lawyers across the country are closely monitoring the case because it demonstrates how creative and vigorous federal prosecutors are willing to be in cracking down on medical officials suspected of fraudulent practices. They say there are similar kinds of arrangements at specialty hospitals around the U.S.

“This case is the most significant healthcare fraud case going to trial in the country right now,” says Bill Mateja, a former federal prosecutor.

Mateja and others say the federal government is using the Trade Act, a 1961 law law passed by Congress to help then-Attorney General Robert Kennedy pursue leaders of organized crime, in a way in which it has never been used before.

If prosecutors are successful in prosecuting the Dallas area surgeons, according to legal experts, medical officials across Texas and throughout the country need to be on alert.

“This is one of the largest and most important fraud cases in Texas over the past 10 years or more,” says Ansley, who is a former prosecutor. “Forest Park represents a very aggressive expansion by prosecutors of using an existing law to go after healthcare providers.”

Federal prosecutors obtained indictments against 21 Forest Park officials, including eight doctors, in December 2016. Ten of the defendants, including three physicians, pleaded guilty and some are expected to testify for the government as part of their plea agreements.

The charges were dismissed against Dr. Gerald Foox of Tyler. The case against San Antonio worker’s compensation lawyer Royce Bicklein has been separated from the others for trial purposes.

The trial is expected to last six to eight weeks.

Federal prosecutors listed 80 people on their witness list and provided defense attorneys with more than 1.5 million documents that could be used as evidence.

Federal prosecutors argue that the doctors and hospital officials - many of them also investors in Forest Park - referred patients with premium private insurance plans that paid lucrative out-of-network benefits to Forest Park for expensive medical procedures. In return, the surgeons were given “marketing dollars” to promote the medical center - money that some of the physicians used for personal luxury items, prosecutors allege.

The government claims that the alleged scheme, which ran from 2009 to 2013, generated more than $200 million in revenues for Forest Park, which, in turn, paid the defendants about $40 million in bribes or kickbacks.

“The prosecutions are a response to fraud-shifting - that is, sophisticated criminals have increasingly begun targeting private insurance companies with their kickback schemes in hopes of avoiding federal oversight and hence prosecution,” Assistant U.S. Attorney Andrew Wirmani wrote in court documents in the case.

“[The surgeons] treated their patients like commodities and failed to disclose these bribe payments to their beneficiaries,” Wirmani wrote. “Such conduct is - and always has been - illegal under the laws of various states.”

For their part, lawyers for Forest Park officials and the doctors going to trial this week plan to argue that there is nothing illegal about their clients’ activities, that prosecutors are trying to turn a routine practice in the medical profession into an illegal offense and that the surgeons relied on the advice of their lawyers that the contracts were legal.

“This case involves a novel attempt by the government to use the Travel Act to criminal conduct that is not criminal - a strategy that will impact numerous financial arrangements throughout the healthcare industry,” defense lawyers wrote in an unsuccessful brief seeking to have the case dismissed prior to trial.

“The surgeon defendants operated on their own patients at [Forest Park] because it was a premier facility with advanced technologies, and they performed high-risk surgeries there with a near-zero complication rate to the great satisfaction of their patients,” the lawyers wrote.

Lawyers for the surgeons argued that the Forest Park prosecution “differs substantially from a typical healthcare fraud case.”

For prosecutors to win, Mateja says they need to keep their arguments simple.

“This is a prime case where the government could easily screw up by making the case too complicated and thus making it too difficult for the jury to follow,” he says. “Prosecutors need to pound on the emails and documents showing that there is a quid pro quo.”

By contrast, defense lawyers are going to argue that their clients had no intent to commit fraud or violate any laws and that they were involved in these transactions only because their lawyers told them that it was okay.

“The issue is not whether the lawyers’ advice was good or bad, but whether the lawyers had the appropriate amount of information and that the surgeons acted based on the lawyers’ advice,” Ansley says.

For a longer version of this article and continued coverage of the Forest Park trial, please visit TexasLawbook.net.