Desai pleads not guilty to federal charges in hepatitis C case

Dr. Dipak Desai made another appearance in court Thursday, this time to plead not guilty to federal charges stemming from the hepatitis C outbreak.

Desai, 61, who also is charged locally in the outbreak, and his clinic manager, Tonya Rushing, face a May 22 trial on conspiracy and health care fraud charges.

The indictment alleges the pair carried out a scheme from January 2005 through February 2008 to inflate the length of medical procedures and overbill health insurance companies.

Desai appeared in District Court on Tuesday, as his lead lawyer, Richard Wright, launched a bid to challenge state medical experts who concluded Desai was competent to stand trial on criminal charges brought by the district attorney's office in a separate case tied to the outbreak.

On Thursday, Wright entered the not guilty plea to the federal charges on Desai's behalf, and told U.S. Magistrate Judge Bill Hoffman, "I don't believe he is competent."

Unlike Tuesday's court appearance, however, Desai on Thursday walked into the federal courthouse and the courtroom unassisted. He wore a white dress shirt with black stripes and black pants.

But several times when Hoffman asked Desai questions, including one about whether he understood the charges, Desai mumbled his words and nodded his head, making it difficult to understand his answers.

Federal prosecutors have not taken a position on the competency issue, and they appear to be willing to let it play out in District Court, where Desai faces a March 12 trial.

Outside the courtroom, Wright would not say whether he intended to push the issue in federal court.

The federal case has caused friction between the U.S. attorney's office and the district attorney's office, which last year obtained an indictment against Desai and two of his nurse anesthetists on felony charges of racketeering, insurance fraud and neglect of patients.

The charges revolve around seven people who authorities say were infected with the potentially deadly hepatitis C virus at Desai's endoscopy clinics. The outbreak was made public in 2008.

Rushing, 43, is a key witness for the district attorney, and after her arraignment in the federal case earlier this year, she told the Las Vegas Review-Journal she was angry at federal prosecutors for indicting her, knowing she was cooperating in the local case. She also denied participating in the alleged health care fraud scheme.

Federal prosecutors have chosen not to indict the two nurse anesthetists charged with Desai in the local case, Keith Mathahs and Ronald Lakeman. Mathahs is cooperating in the federal case.

The legal sparring over Desai's competency to assist his lawyers, meanwhile, threatens to delay the local trial.

Medical experts from Lake's Crossing, the state's mental hospital in Sparks, concluded Desai has exaggerated the effects of two strokes. But Wright contends the strokes left his client mentally impaired.

A district judge is waiting until November to set a hearing on Wright's competency challenge.

On Thursday, Hoffman allowed Desai, who has surrendered his license to practice medicine in Nevada, to remain free on his own recognizance but ordered him to stay in the custody of his wife, Kusum. That leaves his wife responsible for any violations of his pretrial release.

Hoffman also restricted Desai's travel to Clark County. Desai already has surrendered his passport in the local case, where he is free on $1 million bail.

Assistant U.S. Attorney Crane Pomerantz told Hoffman that the federal case has "many tens of thousands of pages" of documents but no court-approved recordings.