Bad search in medical fraud case leaves key questions unanswered

Rarely does a major federal prosecution go belly up because a search warrant was unconstitutional.

But a federal case alleging five Las Vegas doctors were accepting kickbacks from owners of sleep clinics to get them to prescribe unnecessary medical tests for heart patients is pretty much dead on arrival.

U.S. District Judge Philip Pro suppressed all the evidence seized in the case being prosecuted by acting U.S. Attorney Steve Myhre and Assistant U.S. Attorneys Crane Pomerantz and Roger Went, leaving prosecutors with almost nothing to use. The Nevada Health Care Fraud Task Force investigated the case, with agents from the FBI, the IRS, the U.S. Department of Health and Human Services inspector general, and the Nevada attorney general.

The doctors weren’t indicted; they weren’t even identified in the 2005 indictment, although I think the public has a right to know who they are. Instead, charges were filed against the now defunct SDI Future Health and its owners Todd Kaplan and Jack Brunk, both of California.

Pro’s decision could be appealed, Myhre said Wednesday. "We’re still reviewing the case and evaluating options."

Stan Hunterton, the Las Vegas defense attorney for SDI, said, "This is an extremely rare event. One wonders how you can spend so much time on an investigation, have a search warrant affidavit reviewed by two or three assistant U.S. attorneys and have it be so defective. Unless they get the Court of Appeals to overturn Judge Pro, they don’t have a case."

In his April 4 order, Pro said the search warrant was unconstitutional because it didn’t provide guidance for the 42 agents involved in the 2002 search of the company’s headquarters in Westlake Village, Calif. "The particularity deficiencies in the Search Warrant, the failures of the supervising search agent, and the wholesale seizure of the majority of SDI’s documents, and computer files, including many having no relevance to the persons, entities or subject matter under investigation, lead to the conclusion that the actions of the searching agents constituted an impermissible general search which warrants suppression of all evidence seized," Pro wrote.

Some 50,000 documents were seized, and in March 2005, SDI, Kaplan and Brunk were charged with conspiracy, health care fraud, money laundering and tax evasion.

The indictment alleged the SDI officials conspired with five Las Vegas doctors to authorize unnecessary sleep tests and fraudulent cardiac risk assessment studies. The sleep apnea and heart monitoring tests cost between $1,775 and $5,350 each and various insurance companies were billed for the costs, including Medicare, Blue Cross/Blue Shield and Sierra Health.

Prosecuting those who pay kickbacks to doctors who prescribe unnecessary tests is a good thing. But federal agents have to play by the rules, and it’s Pro’s job to make sure they do.

Sadly, if this was a righteous prosecution lost because of a poorly written search warrant, the public is the biggest loser. A trial would have disclosed the names of those doctors apparently willing to take kickbacks.

If between January 1999 through June 2002 your doctor prescribed that you take a diagnostic test called a polysomnography test or a cardiac risk assessment using SDI, you might ask yourself whether you needed the test.

SDI operated in Las Vegas and at least 10 other states, but is now defunct. Federal officials said more than 15,000 patients were referred to SDI for these tests.

The most horrifying part of the indictment is not the big bucks in taxes evaded or the kickbacks to the doctors, even the $22 million allegedly ripped off. The most disturbing allegation is that SDI falsely represented to patients that they suffered from heart diseases or disorders, when they did not. If true, that’s beyond cruel.

Federal officials need to be prosecuting complex health fraud cases in Las Vegas in order to protect the public. So it’s a huge disappointment to see this case go kaput because of that rarity of rarities, an unconstitutional search warrant.

Jane Ann Morrison’s column appears Monday, Thursday and Saturday. E-mail her at Jane@reviewjournal.com or call 383-0275.