Judge denies move to stop Desai testimony in bankruptcy case

Chief U.S. Bankruptcy Judge Mike Nakagawa on Tuesday denied a bid by Dr. Dipak Desai to stop his sworn examination before creditors from moving forward.

Following a brief hearing, Nakagawa ruled from the bench that the examination could resume as scheduled on June 12, but he would issue a written order on whether it could proceed beyond that date.

James Hill, a lawyer for William Leonard Jr., the trustee in Desai's bankruptcy case, said he needed as many as three more days to complete the examination because of the Desai's lack of cooperation.

Hill told Nakagawa that he believed the physician at the center of the hepatitis C outbreak was feigning memory loss to duck key questions under oath about his finances.

"Dr. Desai has frankly been faking it," Hill said in arguing to continue the examination. "Dr. Desai is a malingerer."

Cecilia Lee, an attorney for Nevada Mutual Insurance Company, Desai's malpractice carrier, said she also wants an opportunity to question him about his finances.

Desai's bankruptcy lawyer, John Hansen, argued that there is no need to move forward with the examination because Desai can provide no meaningful testimony about his finances.

Hansen said he is "completely baffled" that Leonard and Nevada Mutual wanted to proceed further.

Any line of questioning would be a waste of time and money for Desai, his creditors and the Bankruptcy Court, he argued.

Desai, 62, claiming to be confused and suffering from memory loss, offered little information when Leonard and his lawyers grilled him for three hours on April 3 until the examination had to be cut short at the day's end.

It was Desai's first testimony in any legal proceeding since health officials broke the news in early 2008 about the hepatitis C outbreak at his clinics.

Desai appeared to display a lack of understanding of the bankruptcy process and the state of his financial affairs, according to transcripts of the examination.

His answers, however, appeared to fly in the face of state medical experts who in January found Desai competent to stand trial on criminal charges. The experts concluded Desai had exaggerated cognitive impairments from two strokes.

Desai and nurse anesthetists Keith Mathahs, 75, and Ronald Lakeman, 64, each face 28 felony charges, including racketeering, insurance fraud and neglect of patients. They are to stand trial on Oct. 22.

The charges revolve around seven people who authorities say were infected with the potentially deadly hepatitis C virus at Desai's clinics in 2007.

Contact reporter Jeff German at
jgerman@reviewjournal.com or 702-380-8135.