Medical fraud case expands

Less than six weeks before trial, federal prosecutors have expanded their criminal case against a Las Vegas lawyer and a medical consultant accused of conspiring with doctors to cheat injured clients and enrich themselves.

A federal grand jury returned a revised indictment this week against personal injury lawyer Noel Gage and medical consultant Howard Awand. Defense attorney Thomas Pitaro, who represents Gage, promptly objected and asked that prosecutors be barred from presenting the new allegations when his case goes to trial Feb. 19.

"Given the history of this case, the short time remaining until trial and the significant changes to the charges contained" in the revised indictment, Pitaro wrote, allowing prosecutors to proceed to trial with the new allegations "would subject Mr. Gage to prejudice."

Gage declined to comment other than to say, "My trial will be an exposé of an ill-conceived, wrongful prosecution."

Senior U.S. District Judge Justin Quackenbush previously scheduled a hearing for Jan. 18, and Pitaro requested that he consider the defense objection at that time. Awand's trial has been delayed until Oct. 29, but Gage has invoked his right to a speedy trial.

Quackenbush, who is based in Spokane, Wash., will conduct both trials in Las Vegas.

Los Angeles attorney Harland Braun, who represents Awand, said the new allegations did not come as a surprise. Prosecutors previously sought permission to admit them as evidence in the case.

Quackenbush had not yet ruled on the motion, which prosecutors withdrew this week after filing the new indictment. Braun said the revised indictment will not change the way he defends the case.

"Mr. Awand never did anything but help lawyers with legitimate cases and help clients to be properly compensated," he said. "And we're going to trial in October to prove that."

Awand was the first defendant charged in the case, but a superseding indictment added Gage as a defendant in May. That document claimed the conspiracy occurred between about September 2001 and about December 2003, but a second superseding indictment returned this week claims the conspiracy occurred between early 1999 and late 2005.

The latest indictment also adds four fraud counts and increases from two to 11 the number of civil cases that prosecutors allege were involved in the conspiracy. The document claims Gage had a role in nine of those cases.

Although the latest indictment lists only the first names and last initials of the clients in those cases, the Review-Journal has obtained the full names of several of the clients. They include Melodie Simon and Carlos Pachas, whose cases appeared in the original indictment. Gage negotiated multimillion-dollar settlements for both clients.

Simon, a 49-year-old health teacher at Cheyenne High School, said she has no opinion about the criminal case but will testify if subpoenaed for the trial.

"I know nothing," she said this week. "I know absolutely nothing."

According to the latest indictment in the case, Simon was a "41-year-old former Olympic athlete" when she underwent reconstructive back surgery in August 2000. The surgery resulted in complications and a second surgery, which left her paralyzed from the sternum down.

Simon said she was a member of a U.S. Olympic volleyball team in the late 1970s but did not participate in the Olympic Games. She declined to discuss that period of her life further.

As for the criminal case, Simon said she would rather not be involved.

"I assume our American system will handle it," she said.

Prosecutors claim it was in connection with Simon's case that Awand and Gage became associated with each other.

In mid-2001, according to the most recent indictment against the pair, Awand arranged to meet Gage after learning that the lawyer was representing Simon in her medical malpractice case against those responsible for her paralysis.

Sometime during that year, the document alleges, Awand suggested to Gage that he sue the anesthesiologist and others, rather than the surgeons who operated on Simon. The indictment identifies the doctors only by their last initials, but the Review-Journal previously has identified the surgeons as John Thalgott and Mark Kabins and the anesthesiologist as Daniel Burkhead.

According to the document, Gage understood that he could not sue the two surgeons if he wanted to receive referrals and other benefits from Awand.

In the fall of 2001, the indictment alleges, "Gage fraudulently abandoned any effort to sue Dr. T and Dr. K, although he knew they could potentially be defendants in a medical malpractice case brought on" Simon's behalf.

According to the indictment, Gage knew that another medical consultant had found at least one expert witness "who would have opined that Dr. K caused or contributed" to Simon's injuries.

In January 2002, Gage sued Burkhead's medical group, Summit Anesthesia Consultants.

About four months later, according to the indictment, "Gage and Awand knowingly and intentionally caused Dr. T and Dr. K to testify falsely and fraudulently in depositions" by making it appear that the anesthesiologist was responsible for Simon's injuries and that "Dr. K was not responsible, when Gage and Awand then and there well knew that they had potentially viable malpractice claims" against the two surgeons and that they were concealing the agreement not to sue them.

"Additionally," the document alleges, "Gage then and there well knew that Dr. K testified falsely by denying that he had spoken with Gage before the deposition."

Kabins' lawyer, David Chesnoff, said his client has not been charged with a crime.

"Dr. Kabins is a well-respected and honorable man who has not testified falsely in any proceeding," Chesnoff said.

Thalgott's lawyer could not be reached for comment Friday.

According to the indictment, Gage filed a lawsuit in June 2003 against Burkhead, the radiologist and Sunrise Hospital "in which he fraudulently failed to name Dr. T and Dr. K as defendants."

The indictment claims Gage falsely told Simon that he could not get an expert to submit an affidavit against the two surgeons who operated on her.

In April 2004, according to the indictment, Gage agreed to settle Simon's lawsuit against Sunrise Hospital for $50,000 and against the radiologist for $285,000. In June 2004, he settled the lawsuit against Burkhead and Summit Anesthesia for $2 million.

According to the indictment, 40 percent of each settlement went to Gage and the lawyer who had referred Simon's case to him. Simon said she agreed to pay Gage 40 percent, and she received just what she expected from the settlements.

"If the doctors or the lawyers did something wrong, I'm not the judge and jury," she said.

Simon, a longtime Las Vegas resident, is married and has a daughter who also teaches at Cheyenne High School. She said she is trying to live her life the best that she can and does not dwell on her paralysis or the allegations surrounding her former lawyer.

"I'm just trying to be the best person I can ever be," she said.

According to the indictment, Pachas suffered a traumatic brain injury in August 2001 while undergoing a procedure to remove kidney stones. The injury left him "in a permanent vegetative state."

Gage filed several lawsuits in connection with Pachas' injuries, and the indictment claims they resulted in settlements totaling about $18 million. According to the indictment, Gage fraudulently paid Awand $780,000 from his attorney fee in one of the cases and intentionally concealed the payment from Pachas' wife "and other individuals entitled to know about the payment."

Gage later made payments totaling $315,320 to Awand's companies, and the indictment also claims he concealed those payments from Pachas' wife and others.

Pachas' wife could not be reached for comment Friday. Attempts to reach other clients whose cases appear in the latest indictment also were unsuccessful.

In a Jan. 4 document, Pitaro urged Quackenbush to stop the attempt by prosecutors to use the seven new civil cases as evidence against Gage.

"The addition of these seven cases to the trial vastly expands the case, will lengthen this trial by weeks and weeks, will require the relitigation of complicated civil cases not handled by Mr. Gage, will unfairly and unduly prejudice Mr. Gage, and will multiply the documents and witness testimony that the jury will need to sort through in reaching its verdict," Pitaro wrote.

Contact reporter Carri Geer Thevenot at cgeer@reviewjournal.com or (702) 383-0264.