Most charges dismissed

A federal court judge dismissed a slew of criminal charges against personal injury attorney Noel Gage on Monday, telling the prosecution it failed to present adequate evidence to allow jurors to consider convicting the 69-year-old defendant.

Senior U.S. District Judge Justin Quackenbush tossed 13 of 19 counts that Gage faced. Most of those counts related to Gage's dealings with the family of Carlos Pachas, who underwent kidney surgery and emerged from the operating room in a permanent vegetative state.

After Quackenbush's ruling, Gage's defense team, which was expected to begin its case Monday, rested without calling any witnesses to the stand. Defense attorneys opted to contest the remaining charges during closing arguments, which are scheduled to begin today.

Gage was charged in 2007 with fraud, conspiracy and money laundering. The government argued that Gage conspired with self-proclaimed medical consultant Howard Awand, who was also indicted, to jack up medical costs, protect physicians involved in the scam and share millions of dollars in kickbacks.

The Pachas family, who were referred to Gage by Awand, used liens to cover his treatments and hospital stay. Awand purchased the liens at discounted prices, then the family was required to pay the full amount when he secured an $18 million settlement.

According to the government, Gage paid Awand $780,000 from the settlement, disguising the payment as a contingency fee when it was actually a kickback for referring the lucrative case to Gage. Pachas' family was unaware of Awand's involvement or the payment.

Quackenbush said Monday that Gage's associate lawyer, Blaine Beckstead, worked most with the Pachas family and recommended in good faith to use liens to cover medical costs.

"The payment of a referral fee by Mr. Gage to Mr. Awand or splitting the legal fee in and of themselves may be violations of canons," Quackenbush said, referring to ethics codes that require attorneys to disclose to their clients the disbursement of settlement proceeds. "But the breach of a fiduciary rule in and of itself without monetary loss of property rights may not be the basis of convicting the payer of a felony."

Quackenbush said Gage's conduct might be of interest to the Nevada State Bar, but added he has no intention of reporting the alleged breach of ethics.

The six remaining charges are related to Melodie Simon, a former Olympian who underwent routine back surgery in 2001 and became paralyzed after internal bleeding caused nerves to push up against her spine. Experts said Dr. Mark Kabins, who performed the surgery with Dr. John Thalgott, should have responded immediately to the bleeding, which could have prevented Simon's paralysis.

The government said nearly 11 hours passed between the time Simon complained of a severe headache and when Kabins performed emergency surgery.

Assistant U.S. Attorney Daniel Schiess told jurors that Gage never diligently pursued medical malpractice lawsuits against Kabins and Thalgott because they belonged to Awand's network of doctors who agreed to lie on the stand during trials to secure more lucrative settlements for Awand's attorneys' clients. That translated into more money for all the players, Schiess said.

Schiess said Gage's secret agreement not to sue the doctors resulted in Awand referring the Pachas case to the attorney. With the help of Thalgott's false testimony, Gage sued the anesthesiologist, radiologist and hospital, landing Simon a $2.2 million settlement.

The government contends that if Gage had sued the surgeons, Simon could have received an $8 million to $10 million settlement.

Gage's attorney, Thomas Carlucci, said Gage had no case against the two surgeons and unless he went after the other parties, Simon likely would have ended up with nothing. Carlucci said Gage decided to "divide and conquer" when he persuaded the surgeons to testify against the anesthesiologist.

Quackenbush, who made his rulings outside the presence of the jury, said he struggled most with the evidence provided in the Simon matter.

"I probably spent more time on this decision than on any capital murder case I've had before me," he said.

Carlucci showed jurors a letter from Gage to the surgeons' attorneys well after a secret September 2001 meeting during which the government claims Gage agreed not to sue the physicians. The letter indicated that Gage was still pondering a medical malpractice lawsuit.

Schiess called the letter a "charade." Quackenbush agreed the letter was "a charade or façade to make it look like Mr. Gage was diligently considering claims against Dr. Thalgott and Dr. Kabins."

"The evidence doesn't show me or this jury what happened. Did it just die?" Quackenbush said. "There is a complete void as to what then went on with Melodie Simon's potential cause of action against Dr. Thalgott and Kabins."

Quackenbush allowed the six counts related to Simon to stand because he said there was a valid argument that Gage had a case against the surgeons and that he allowed that case to wither away days before he landed the Pachas case.

The most significant count still facing Gage is conspiracy because jurors can take into consideration Gage's behavior with the Pachas case, even though those specific charges were dropped.

Although he dismissed most counts against Gage, the judge, whose home court is in the Eastern District of Washington, said he was "offended with the conduct that has been evidenced in this case."

"What Las Vegas area resident would not be shocked by what they heard so far by actions of members of their medical community and possibly the legal community?" Quackenbush said.

Contact reporter Adrienne Packer at apacker@reviewjournal.com or (702) 384-8710.