Surgeon’s indictment might revive fraud case

A federal grand jury might have resuscitated the government’s case against a handful of doctors and lawyers when it indicted orthopedic spine surgeon Mark Kabins, the one figure who caused legal proceedings to sputter last year.

The indictment against 48-year-old Kabins was unsealed Wednesday. Kabins made his initial appearance in court, pleading not guilty to one count of conspiracy and seven counts of mail and honest services fraud.

“The conduct of the government is outrageous,” said Kabins’ attorney David Chesnoff. “We’ll prove the charges should never have been brought against Dr. Kabins.”

During the brief hearing Wednesday afternoon, Chesnoff indicated that he planned to request that First Assistant U.S. Attorney Steven Myhre and Assistant U.S. Attorney Daniel Schiess be disqualified from the case. Chesnoff refused to elaborate.

Kabins is the latest to be charged in connection with allegations of a scheme to defraud clients involved in personal injury lawsuits. Charges were dismissed against medical consultant Howard Awand and personal injury attorney Noel Gage last year after the government refused to grant use immunity to Kabins.

Attorneys for Gage and Awand said Kabins’ testimony would have contradicted that of Dr. John Thalgott, Kabins’ former partner who testified on the government’s behalf. Federal prosecutors have appealed visiting U.S. District Judge Justin Quackenbush’s ruling.

“This has nothing to do with the dismissal of the Gage case,” U.S. Attorney Gregory Brower said. “It’s a matter of record that Dr. Kabins has been a target of the investigation.”

Brower said nothing should be made of the timing of the indictment. The government simply ensures that the grand jury is given all the evidence before it is presented with an indictment.

“This investigation like any investigation, it takes a lot of work,” Brower said.

The government claims Gage, Awand, Kabins and Thalgott were members of a corrupt network of doctors and lawyers who worked together to boost medical costs and inflate legal settlements. They then split the proceeds from lucrative settlements, according to prosecutors.

The primary focus of the investigation is the treatment of Melodie Simon, who sought to take legal action after she was paralyzed following routine back surgery in 2000.

Simon hired Gage to determine what caused her paralysis and prosecute whomever was responsible. Instead of pursuing medical malpractice lawsuits against Kabins and Thalgott, who performed the surgery and whom the government claims were responsible, Gage instead pursued legal action against anesthesiologist Dan Burkhead.

Rather than securing the $8 million to $10 million settlement Gage initially suggested was probable, Simon received $2.3 million, according to prosecutors. After attorneys fees and costs, she received $1.3 million.

During Gage’s trial, prosecutors told jurors that the day after Simon’s surgery, Thalgott left for a fishing expedition in Idaho. When Simon began to experience numbness in her legs, she alerted hospital staff members, who notified Kabins.

Schiess said Kabins waited 11 hours to perform emergency surgery when it was known that internal bleeding was causing Simon’s paralysis. Schiess said prior to filing a lawsuit against Burkhead, Gage deposed Kabins and Thalgott, but never inquired about the delay.

Schiess suggested that Gage backed off Kabins and Thalgott because they were part of the illicit network and if he had sued the surgeons, Awand would deny him lucrative referrals. Schiess said as a result of not suing the physicians, Awand referred a lawsuit to Gage that ultimately netted an $18 million settlement.

Despite a threat of being sued, Thalgott and Kabins met with Gage, raising questions about their relationship, Schiess said. The government said during that meeting, the three hatched the plan to blame Burkhead for the injuries.

The government claims that Kabins falsely designed his testimony to carry out the scheme during a civil deposition taken in Simon’s case.

“Defendant Kabins, Noel Gage, Howard Awand and Dr. Thalgott had mutually beneficial financial arrangements among themselves that conflicted with Melodie Simon’s financial interests in her medical malpractice claims,” the indictment against Kabins states.

Thalgott, who was granted immunity by the government, testified during Gage’s trial. Gage successfully argued that if they put Kabins on the stand, he would contradict Thalgott’s testimony.

“The government has used its power to get Dr. Thalgott to provide them with testimony that is beneficial to the government’s case by giving him limited use immunity, but has not given the same benefit to Dr. Kabins, whose testimony will provide important and contradictory testimony, thus undermining the government’s case,” Gage’s attorneys argued. “The government should not be permitted to benefit from this ploy.”

The government denied immunity to Kabins because it said he was a target of its investigation, but Quackenbush sided with Gage’s attorneys.

Prior to Gage’s trial, Kabins was interviewed for nearly 10 hours by an FBI agent during a “proffer session.” Proffer sessions allow an individual to provide information to the government; the information cannot be used to prosecute the individual, only to further the investigation.

According to Kabins’ statement to federal authorities, he never believed he did anything to harm Simon.

“If Kabins would have been sued in the Simon case, he would have fought it ‘tooth and nail’ and would have won the case against him,” according to the report from the proffer session.

“When you represent someone who claims his innocence over and over again, it’s a pleasure to do it,” Chesnoff said outside of court Wednesday. “He’s a fighter; he knows he did nothing wrong.”

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