Judge refuses to dismiss medical fraud case

A federal judge expressed concern Wednesday about the government's fraud case against a Las Vegas lawyer and a self-described medical consultant. But the judge ultimately rejected a defense request to dismiss the charges.

Senior U.S. District Judge Justin Quackenbush of Spokane, Wash., was assigned the case this month after Nevada's judges declined to hear it. He wasted no time taking charge of the case, immediately scheduling a hearing on pending motions.

Quackenbush heard arguments for 31/2 hours Wednesday before denying the motion to dismiss and denying requests by defendants Noel Gage and Howard Awand for separate trials. However, the judge spent the first 75 minutes of the hearing grilling acting U.S. Attorney Steven Myhre about his case.

"I want you to tell me specifically what you contend the doctors did wrong," Quackenbush told the prosecutor as the hearing got under way.

The indictment in the case accuses Gage, a personal injury lawyer, of scheming with Awand "for the purpose of gaining access to a network of doctors and healthcare providers controlled by and working with Awand."

"This access enabled Gage to obtain clients or client referrals, inflate his clients' personal injury claims artificially and fraudulently, and obtain false and misleading testimony from doctors in support of personal injury lawsuits," the document alleges. No doctors are named in the indictment.

At Wednesday's hearing, Quackenbush first asked Myhre to address allegations that Gage and Awand committed "honest services" mail fraud. The indictment notes that attorneys "have fiduciary and legal duties to provide their clients with honest services that are free from self-dealing, corruption, fraud, deceit and conflicts of interest."

According to the document, Gage paid money to Awand and doctors in Awand's network in exchange for patient referrals.

"Gage obtained the money for the payments from the client's settlements or judgments through false pretenses and false and materially misleading half-truths and omissions of material fact," the indictment alleges.

Quackenbush wondered aloud what crime had occurred if Gage made the payments, called "kickbacks" by prosecutors, from his own contingency fees. The judge conceded that such payments, often called "referral fees," present "serious ethical questions."

"If this case was that -- the payment of a referral fee -- where is there any loss at all to the client?" Quackenbush asked. Gage has said the case has "absolutely no victim."

"We don't concede there's no monetary loss," Myhre said at Wednesday's hearing.

Quackenbush, who was appointed to the federal bench by President Carter in 1980, previously spent more than 20 years in private practice and said he handled both sides of personal injury cases during that time.

"I just fail to see any monetary loss at all," he told Myhre.

But Quackenbush said he could not dismiss the charges against Gage and Awand without hearing all the evidence in the case.

Senior U.S. District Judge Lloyd George previously scheduled the trial for June 16, but Gage objected to the delay. While Awand waived his right to a speedy trial, Gage did not.

Quackenbush rescheduled the trial for Feb. 18. Myhre estimated that the trial will last four to six weeks, causing Quackenbush to grin and say, "I doubt it."

Myhre said a grand jury is continuing to investigate the case.

Gage has complained that prosecutors have turned over no evidence other than documents they obtained from the defendants. On Wednesday, Quackenbush set deadlines for prosecutors to give their evidence to the defendants.

"I was very pleased with the court's imposing deadlines on the government to make them obey the law and deliver the documents that they were supposed to do a long time ago," Gage said after the hearing. "Essentially, the court has prevented them from hiding the ball."

Gage said he also was pleased with the judge's comments about the case.

"I think he understands that the clients were not harmed," the lawyer said.