Las Vegas personal injury attorney Noel Gage surrendered to the federal government Tuesday after he was indicted on charges related to a wide-ranging scheme that involved inflated medical costs and jacked-up settlements.
Those fraudulently boosted costs allowed Gage, local physicians and an out-of-state medical consultant to pad their pockets illicitly, authorities said.
Gage is the second person indicted in connection with what authorities allege was a multimillion-dollar ruse. Gage faces 18 felony charges including conspiracy, mail fraud, money laundering, aiding and abetting and obstruction of justice.
Authorities are seeking to seize up to $8 million in property and funds in connection with the case.
Gage, who was released from custody, is scheduled to go to trial July 30.
The attorney spent most of Tuesday, his 69th birthday, in the custody of the U.S. marshal's office. In the afternoon, Gage made his initial appearance in court. When asked to respond to the charges during a brief appearance in federal court Tuesday, Gage answered, "Absolutely not guilty."
In March, a federal grand jury in Las Vegas indicted Indiana resident Howard Awand. Awand "purported to be" a medical consultant, federal prosecutors said.
Authorities alleged that Awand recruited a network of doctors who agreed to refer patients to him and that he would refer the patients to personal injury attorneys, including Gage. Gage would provide Awand access to clients' confidential medical and legal information, authorities said.
Awand and Gage would steer the clients to doctors who would provide their services on a medical lien basis, all the while concealing that Awand had agreed to buy the lien at a steep discount, authorities allege. The clients would be required to pay the full value of the liens, and Awand then would pay kickbacks from the profits to those involved in the scheme, according to the indictment.
The health providers received kickbacks for providing false testimony for the personal injury claims, and the lawyers promised not to sue the participating doctors for medical malpractice, authorities alleged.
Gage was a recipient of the kickbacks, according to the indictment, but it does not specify who paid Gage or how much he received.
Acting U.S. Attorney Steve Myhre indicated Tuesday afternoon that more indictments are to come in the case, but he would not say how many more people he expects will be charged.
"This is a continuing investigation; it's wide-ranging and expansive," Myhre said after Gage's initial appearance in court. "It will continue into the foreseeable future."
The indictment handed up against Gage shed light on what authorities alleged was a corrupt relationship that Awand established with Gage and other doctors and lawyers. Gage paid Awand and the doctors for the referrals, according to the indictment.
Once Gage represented the clients, he provided access to their confidential medical records to Awand, "falsely and deceitfully representing to the client that Awand was a medical consultant, without revealing that, in truth and in fact, Awand was part of a broad scheme to defraud," the indictment said.
Awand and Gage persuaded the clients to seek medical treatment from health providers who agreed to treat the patients on a medical lien payment basis, meaning patients could pay their bills after their injury claims were settled. "The medical lien allowed healthcare providers to charge clients for services and procedures at grossly inflated prices," the indictment said.
The health care providers, according to court documents, had a secret agreement to sell the medical liens to Awand at a "steep discount."
In their efforts to obtain settlements or judgments, Awand and Gage filed lawsuits against individuals involved in the claim or insurance carriers, according to the indictment. Health care providers involved in the scheme offered testimony that included false or misleading statements, according to the indictment.
After claims were settled, the inflated medical lien costs were deducted from their settlements, and the participants in the scheme then got kickbacks out of the windfall, authorities alleged.
The indictment outlined a case in which a patient became "profoundly and permanently disabled" after treatment from health care providers not involved in the scheme. A physician working with Awand learned of the case and had the patient referred to Awand.
In September 2001, Awand referred the case to Gage. At the encouragement of Awand and Gage, the client signed medical liens for treatment received through June 2003.
"Gage and Awand knowingly misled Client 1 to believe that Client 1 was personally liable for the full face value of the lien when they both well knew that Awand would purchase the lien at a discount," the indictment said.
Gage and Awand filed lawsuits against "individuals and insurance agencies" on behalf of the client, according to the indictment.
During a two-year period ending in December 2003, Gage disbursed more than $7 million in proceeds from the settlement of the client's lawsuits. Gage paid Awand $1 million from the settlement, explaining to his client that the payment was for contingency fees, the indictment said.
On top of that, Awand got $347,754 from the proceeds, and Gage told his client that payment was to settle liens with Valley Hospital Medical Center, the indictment said. Awand had bought those liens for the discounted price of $130,000, the indictment said.
Gage paid Awand an additional $12,000, explaining to the client the money was for another medical lien, the indictment said. But that lien, issued by a doctor who was a participant in the scheme, was actually for $5,000, according to the indictment.
Awand and Gage also withdrew another $430,000 from the settlement and explained that payment was needed to pay off additional contingency fees, the indictment said. The money instead went to the physicians who participated in the elaborate plan, the indictment said.
In the indictment, federal prosecutors outline a second client's case that involved a similar pattern of behavior by Awand and Gage.
The obstruction of justice charge against Gage stems from his grand jury testimony. When the grand jury requested to see certain documents from Gage's office, the attorney failed to produce checks written to Awand or his medical consulting companies, the indictment said.
A second witness tampering charge was added to Awand's case on Tuesday. He is expected to appear in federal court later this week.
After Gage's court appearance Tuesday, he declined to comment on the case. He indicated that he is confident he will be cleared of the charges.
"Are you going to give me this kind of news coverage when I'm adjudicated?" he asked reporters outside the courthouse.
Gage was admitted to the Nevada State Bar in 1998. He earned his law degree from the University of Michigan in 1962, according to the Web site lawyers.com. The site said Gage, who is a partner in the firm Gage & Gage, specializes in products liability, personal injury, employment discrimination, medical malpractice and general civil practice.