Lawyers nearing plea agreements in Dr. Dipak Desai’s federal health care fraud case

Prosecutors and defense lawyers are close to striking plea agreements for imprisoned Dr. Dipak Desai and his former clinic manager, Tonya Rushing, in the federal health care fraud case stemming from the Las Vegas Valley hepatitis C outbreak, the attorneys said Wednesday.

“We’ve made substantial progress,” Assistant U.S. Attorney Crane Pomerantz told Senior U.S. District Judge Larry Hicks during a status hearing in the case, which is now set for trial on Aug. 8.

Pomerantz said there has been a “substantial effort” to resolve the case over the past month and that he last met with Desai’s lawyers, Richard Wright and Margaret Stanish, on Monday and with Rushing’s lawyer, Robert Draskovich, on Tuesday.

Rushing has a two-week deadline to accept a plea deal, but any agreement with Desai hinges on whether he is competent to understand and accept the deal, the lawyers said. Desai must first undergo a federal psychiatric evaluation, which could take as long as 75 days.

Wright and Pomerantz said they would file a stipulation asking for the mental examination, and Hicks promised to quickly approve it. Desai will have to be removed from the Nevada prison system and transported to a facility within the federal system capable of conducting the evaluation.

Desai, 64, is serving time at the Northern Nevada Correctional Center in Carson City, which has a medical and mental health unit.

Wright told Hicks on Wednesday that his client’s mental condition has deteriorated since his state criminal trial last year. Pomerantz said he agreed to the mental evaluation, but his position now is that Desai is competent to stand trial.

Questions about Desai’s mental health because of strokes he suffered before and after the 2007 outbreak contributed to a two-year delay in the state trial.

He spent six months being evaluated at the state’s secure mental health facility in Sparks before experts found him competent to stand trial. The experts concluded he was exaggerating the strokes’ effects.

On July 1, a jury convicted Desai of all 27 criminal counts related to the outbreak, including second-degree murder in the death of infected patient Rodolfo Meana, 77. Co-defendant Ronald Lakeman, a nurse anesthetist, was acquitted of the murder charge but found guilty of 16 counts.

District Judge Valerie Adair later sentenced Desai to life in prison with the possibility of parole after 18 years. She ordered Lakeman to spend eight to 21 years behind bars.

Both Desai and Rushing, a prosecution witness at the state trial, are facing one count of conspiracy and 25 counts of health care fraud in the federal case.

The case, which was filed in April 2011, has been delayed a half-dozen times, primarily because federal prosecutors agreed to allow the state case to proceed first.

Desai and Rushing are accused of carrying out a scheme from January 2005 to February 2008 to inflate the length of medical procedures and overbill health insurance companies.

Until now, defense lawyers have not addressed Desai’s competency in federal court because their efforts were focused on the state case.

The state charges, which included criminal neglect of patients and insurance fraud, involved the hepatitis C infections of Meana and six other patients at Desai’s now-closed Endoscopy Center of Southern Nevada on Shadow Lane in 2007. Health officials genetically linked the blood-borne virus in those patients to the clinic.

Another infected patient, Michael Washington, 73, died in Texas in August. District Attorney Steve Wolfson hasn’t decided yet whether to pursue additional murder charges against Desai and Lakeman over Washington’s death.

During the trial, prosecutors contended unsafe injection practices involving the anesthetic propofol led to the outbreak.

A combination of double-dipping syringes into propofol bottles used on multiple patients spread the virus from source patients infected with hepatitis C on two dates in 2007, prosecutors alleged.

Desai gave up his medical license after health officials disclosed the outbreak in 2008.