Dr. Dipak Desai came to Las Vegas with nothing.
But over three decades, the native of India built a lucrative medical empire thanks to his obsession with making money — even if that meant putting patients at risk or bilking insurance companies by falsifying records, according to grand jury transcripts detailing testimony from his former partners and employees.
They described him as a controlling, intimidating, stingy micromanager who would berate fellow doctors and employees if they did anything that hurt the bottom line — from using too much K-Y Jelly to taking too much time performing colonoscopies.
“Dr. Desai was a businessman,” said Tonya Rushing, Desai’s former clinic administrator. “He always watched over everything that we did, whether it was overtime, whether it was utilization of RNs versus LPNs, whether it was purchasing booties for patients to put on their feet or orange juice or blankets.”
Yet when his empire crumbled after a hepatitis C outbreak was linked to his clinics in February 2008, the man who often bragged about being worth $200 million vanished from the public eye, leaving others to stand before the public and media, his former partners testified.
More than two years later, the 60-year-old Desai reappeared June 11 to face a 28-count criminal indictment that includes charges of racketeering, insurance fraud and neglect of patients. Two former nurse anesthetists who worked for Desai, Ronald Lakeman and Keith Mathahs, also were charged in the indictment. All three have pleaded not guilty to the charges.
A county grand jury indicted the trio based in large part on testimony from former doctors, nurses and other employees at Desai’s Endoscopy Center of Southern Nevada on Shadow Lane, the epicenter of the hepatitis C outbreak.
Skimping on medical supplies
A common theme throughout the employees’ testimony was Desai’s singular focus on squeezing every dime out of his practice.
“He was a skinflint. He was very stingy,” said Dr. Eladio Carrera, who testified after prosecutors agreed not to press charges against him.
Desai, a gastroenterologist, ordered his staff to improve the bottom line any way possible, including skimping on medical supplies, reusing disposable devices and packing the clinics with an overwhelming stream of patients.
Dr. Clifford Carrol testified about an assistant who used only a small amount of K-Y Jelly to lubricate the scope he was about to insert into a patient for a colonoscopy.
“I said, ‘Why are you giving me so little?’ And she said, ‘Dr. Desai doesn’t want us to use too much K-Y Jelly for the procedures,’ ” he testified. “I said, ‘Just give me more K-Y Jelly. This is ridiculous.’ ”
Desai yelled at nurses for using too much tape to secure IV lines to patients’ arms, preferred sterile sheets to cover patients instead of blankets to save on laundry costs and limited the number of medical gowns staffers used each day, according to testimony.
“Even if there was a little fecal material on the gown, he would admonish me that that cost him $5 every time I threw that away,” said Carrol, whose testimony was included among 1,900 pages of grand jury transcripts.
Carrol, who testified under an agreement that his testimony couldn’t be used against him, was also troubled by Desai’s orders limiting the number of bite blocks used each day. A bite block holds a patient’s mouth open for endoscopic procedures down the throat.
The bite blocks were sterilized between patients in a high-end machine, but it didn’t make sense to reuse them when they cost so little, Carrol testified.
“It’s just embarrassing. We don’t need to do that. I just felt like our practice didn’t need to do things like that. We were the biggest practice in town,” he said. “I never felt that the bite blocks or any of the other things that he wanted, the K-Y or me throwing away my gown, was a safety issue for the patient on the table. I just thought they were unnecessary.”
Carrera said Desai stopped reusing bite blocks after Carrol confronted Desai about them.
Desai even resisted spending money on new devices that could improve patient safety or care, Carrol said, including a new product that could mark dangerous polyps during a colonoscopy so they would be easier to find and remove during surgery.
“Desai didn’t want us to purchase it. And I remember one of my partners saying, ‘I’ll buy it. I’ll buy it myself,’ ” Carrol told the grand jury.
Desai also ordered nurse anesthetists to reuse vials of propofol, the sedative used in the majority of endoscopic procedures, employees testified.
Nurse anesthetist Vincent Sagendorf said soon after he started working at the Endoscopy Center in October 2007, Mathahs told him to reuse propofol vials between patients.
“He told me that that was Dr. Desai’s order,” Sagendorf testified.
Local health officials blamed the outbreak on nurse anesthetists reusing propofol vials between patients after they had become contaminated by syringes that were reused on patients with hepatitis C.
Mathahs told Sagendorf that “Dr. Desai would have a hissy fit” if he threw away any propofol because it cost money, he said.
Sagendorf said he complied with the request, which had been standard practice wherever he worked, except with patients with hepatitis or HIV. He would throw those bottles away even if they had leftover propofol, he said.
He would also throw away partially used bottles brought to him by other nurses because he didn’t know whether they had used fresh needles each time they drew from the vials, he said.
“None of the other doctors cared whether you kept or threw away the propofol. Only Dr. Desai,” he said.
Carrera testified that he was unaware of the reuse of propofol vials and would have reported it to clinic management and the health district, if necessary, because it put patients at risk.
Maximizing patient volume
Desai also maximized profits by churning patients through the clinic, pushing their patience and his staff to the limit.
Ann Marie Lobiondo, a former endoscopy center nurse anesthetist, testified under immunity that she left the clinic twice, once in 2004 and a second time in 2007, because of the difficult working conditions under Desai.
She left the first time because Desai increased the number of patients scheduled for endoscopic procedures, from 20 a day to more than 40 a day, she said.
“Well, you’re working very hard non-stop,” she explained. “It’s very stressful.”
During her second stint at the clinic, as many as 80 patients a day were being handled thanks to a second procedure room, she said.
Lobiondo described the atmosphere as “rushed, hurried, sometimes chaotic, just very busy.”
She said Desai verbally reprimanded employees for not moving patients fast enough.
After Desai had a stroke in 2007 during a trip to India, he gave Carrol control over the Endoscopy Center for what was expected to be Desai’s three- to six-month recovery period.
Carrol immediately reduced the number of patients per day to no more than 64, a number typically reduced further by about 10 cancellations and no-shows.
“I know that that meant that there would be less revenue, of course, but I thought it would be better to have a schedule like that,” Carrol told the grand jury. “I had concerns about patients waiting too long and staff being stressed about the number of cases.”
Patients and workers were happier with the lighter workload, he said, but Desai returned to the office two weeks later and yelled at Carrol for cutting the number of patients without checking with him first.
“I was shocked and surprised because he had just told me two weeks ago that I was to make all the decisions moving forward at that center,” Carrol said. “He’s very overpowering, and he’s very strong. And I felt weak. I admit it. I felt rebuked. I felt timid.”
Desai carefully tracked how many patients the doctors were seeing and pressured them to see more “because of the bottom line, the income of the practice,” Carrera testified.
He also pressured doctors to complete their endoscopic procedures faster, he said.
“Very frequently he would berate me for being too slow,” Carrera said. “He would tell me that I needed to pick up my speed.”
Carrera said he told Desai he would take as long as necessary to be thorough and safe.
Desai had his own reputation for fast endoscopic procedures — maybe too fast.
Carrera said Desai performed a colonoscopy on one of Carrera’s patients and missed colon cancer. The patient sued but died before the case settled, he said.
Nurse anesthetist Lobiondo testified that on a daily basis, Desai would begin a colonoscopy before the anesthesia took effect.
“There were many times when a patient would actually say, ‘I’m not asleep yet’ or ‘Ouch,’ ” she said.
Once he started a colonoscopy, Desai usually finished in less than five minutes, former clinic medical assistant Marion VanDruff said.
That included withdrawing the scope in about a minute, she said.
“It was pretty quick,” she said. “We joked on the floor that it was almost like he was cracking a whip when he would take the scope out.”
The scope came out so fast that it spattered fecal matter and bodily fluids on the staffers and procedure room, requiring staffers working with Desai to change their protective clothing twice as often as when they worked with other doctors, she said.
Anesthesia time overbilling alleged
Desai’s quest for cash went beyond skimping on supplies and pushing patient numbers, witnesses said.
Lobiondo, the nurse anesthetist, testified that Desai often instructed her to record an anesthesia time of 31 minutes for each patient, even if a procedure took much less time, so that he could bill for the longer time and make more money.
With the clinic seeing 60 or more patients a day in its two surgery rooms, that meant Desai was billing for considerably more time than the clinic was actually operating each day, Lobiondo acknowledged.
According to Ryan Cerda, a data entry clerk who handled the clinics’ anesthesia billing through a side company owned by Rushing, the clinics billed $560 for more than 31 minutes of anesthesia. The price for procedures under 15 minutes was far less at $150, he testified.
Sagendorf, another nurse anesthetist, said on his first day of work that Mathahs told him Desai insisted he write at least 31 minutes of anesthesia time for every procedure. If he didn’t, someone would point it out, he said.
Carrol recalled coming across the unusual billing times in early 2008 after Lakemen gave a deposition in an unrelated malpractice lawsuit.
He later noticed that anesthesia start and end times were filled out on patients’ charts before the procedures had even begun, and he also saw that patients’ vital signs were already written on the charts, he testified.
“I was terrified by that and frightened and scared because I understood the implication of that, that the record had been falsified,” Carrol said.
Carrol asked a nurse anesthetist about the inflated anesthesia times.
“I asked the CRNA why did he do that, why was he recording this time before I even started the procedure,” Carrol testified. “He said, ‘Well, we were told it has to be 30 minutes or we wouldn’t get paid.’ I said, ‘Who told you that?’ He said, ‘You know who said that,’ but he didn’t say anybody’s name.”
Carrol said he went to Desai’s office with his “heart sort of pounding” and told him the times had to be accurate. Desai agreed. After what Rushing called the heated meeting between the two physicians, the reported anesthesia times went back to normal ranges, as little as eight minutes per procedure, she testified.
Concerned about her criminal liability in the billing process because she owned the billing company, she went to see Desai in tears, she said.
“I told him my concerns,” she testified. “I told him that the (nurse anesthetists) had been instructed by Dr. Carrol and myself ... that the times absolutely have to be accurate.”
Rushing said Desai cursed at her for questioning the accuracy of the anesthesia times and told her the times were accurate.
Soon after news of the hepatitis outbreak went public, Rushing called a meeting with four nurse anesthetists, including Sagendorf. She told them no one was allowed to mention Desai’s 31-minute add on times, Sagendorf testified.
He understood the implications.
“We were all in a lot of trouble,” he said.
Desai’s power pervasive
Inside the clinics’ power structure, Desai maintained an iron fist thanks to his powerful personality and a majority ownership stake that, according to Las Vegas police, allowed him to rake in $6.8 million in 2007.
“It was his practice,” Carrol testified. “He always ... made us understand it was his practice. He started it 29 years ago.”
Desai maintained a “powerful majority ownership” in the clinics and required the other doctors to sign agreements that prevented them from working in Southern Nevada for three years if they ever left the practice, he said.
In 2006, Dr. Rajat Sood led an effort to oust Desai from the practice. The effort failed, and Desai later removed Sood for what he said was a high rate of perforating patients’ bowels during colonoscopies, Carrera testified.
“Dr. Desai had a burning hatred for Dr. Sood after the attempt to put Desai out of the practice and ... he was looking for any reason to get rid of Sood at that point,” he said. Sood’s complication rate was unusual, “but I really think it was a personal vendetta by Dr. Desai against Dr. Sood for the most part,” he said.
Desai’s influence reached beyond the clinic walls, including a stint on the Nevada State Board of Medical Examiners, which oversees every medical doctor’s license.
When a grand juror asked Carrol why he didn’t report Desai to the board, he said he didn’t know he could at that time.
“I have to tell you embarrassingly, that maybe I didn’t understand that when I was an employee physician,” he said. “You also have to understand that Desai not only was powerful in his own little group, he was a member of the board. ... So it would be quite an event for me to say bring a complaint against him to the board.”
Rushing, who testified with immunity, told the grand jury that Desai ruled the business with an iron hand, slipping into occasional temper tantrums and discouraging his employees, including the physicians, from socializing with each other.
If they didn’t socialize, “people can’t connect the dots if everybody doesn’t know what everybody is doing,” Rushing said Desai told her.
Desai disappears after crisis
Yet when news of the hepatitis C outbreak went public in February 2008, Desai quickly relinquished the controlling grip over his medical empire.
“There was little if any input from the top,” Carrera testified. “Dr. Desai basically was hard to get a hold of, hard to get any commentary from concerning how to deal with this.”
Days before a news conference by health officials to announce the outbreak and recommend blood tests for 40,000 former clinic patients, Desai asked Carrera to read a prepared statement at the media event.
Desai said his cardiologist wouldn’t allow him to read it because of a heart problem, Carrera said.
“In my mind that was a rather disingenuous argument. He certainly seemed hale and hardy to me,” he said.
Carrera reluctantly agreed to read the statement and was assured by Desai and other doctors that they would stand next to him in front of the cameras and reporters.
Yet just before the news conference, Desai said he wasn’t feeling well and excused himself from attending, Carrera said.
“He was wearing his suit,” he said. “He looked like he was good to go and you know, at the last minute he just headed for the hills.”
During the news conference, Carrol stood by Carrera as he read the statement. Another doctor stood in the audience.
“Of course,” Carrera said, “Dr. Desai was nowhere to be seen.”