Four unindicted co-conspirators have been named in court documents filed in the huge Medicare kickback case in Kansas City. Included is the vice president for legal affairs at Baptist Medical Center, the hospital at the center of the probe.
At the same time, Assistant U.S. Attorney Tanya Treadway, who is prosecuting the case, has reaffirmed her take-no-prisoners reputation by again attacking defense lawyers.
Now, just four months from trial-last week the court set a Jan. 5, 1999, trial date in Kansas City, Kan.-Treadway has filed a motion to disqualify the lawyers for two defendants who have been under investigation since at least 1992 from appearing in court.
Treadway's motion, filed Aug. 21, also reveals the four unindicted co-conspirators as David Queen, a lawyer for Baptist; Kevin McGrath, director of medical staff development at Baptist; Craig Holden, an independent lawyer; and Gina Kaiser, vice president for legal affairs at Health Midwest, Baptist's parent.
Kaiser and McGrath "have been cooperating with the government pursuant to letter immunity agreements," the motion says.
The long-running case concerns the Blue Valley Medical Group, a geriatric practice based in Johnson County, Kan., and its relationship to Baptist Medical Center in Kansas City, Mo. The Justice Department alleges Baptist paid bribes to Blue Valley in exchange for Blue Valley's referral of Medicare-eligible nursing home patients to the hospital.
Blue Valley's principals, Ronald LaHue, D.O., and his brother Robert LaHue, D.O., were the first to be indicted, in June 1997.
In July this year, five more people were indicted on conspiracy and other charges: Baptist former Chief Executive Officer Dan Anderson, former Vice President for Outreach Services Ronald Keel, former Senior Vice President for Corporate Relations Dennis McClatchey, and two lawyers who advised the hospital on the arrangement with the LaHues, Ruth Lehr and Mark Thompson (July 20, p. 2).
The seven defendants maintain their innocence and are mounting a vigorous defense. U.S. District Judge John Lungstrum will hear the case.
In September 1997 Baptist settled civil charges with the government by paying a $17.5 million fine (Sept. 22, 1997, p. 2). One other hospital, Bethany Medical Center in Kansas City, Kan., which allegedly paid for Medicare referrals, also paid a fine to settle. Three other hospitals have been investigated for participating in the Blue Valley arrangement.
The LaHues' defense attorneys, Bruce Houdek and James Eisenbrandt, have themselves become an issue in recent motions Treadway has filed. She has asked the court to look into three potential sources of conflict of interest: that the lawyers will become "unsworn witnesses" in the trial, that Baptist is paying the legal fees for five of the defendants, and that the defendants may have a joint defense agreement.
Treadway is trying to disqualify Houdek and Eisenbrandt from representing the LaHues at trial because the attorneys were involved in the negotiations that are at the heart of the case against the doctors and the hospital executives. The lawyers "could possibly become defense witnesses and should be available for that purpose," the motion says. The defendants can't waive the conflict of interest, because it "inures to the disadvantage of the government, rather than to the disadvantage of your clients," Treadway wrote in a letter to the lawyers.
In her proposed compromise, Treadway says Houdek and Eisenbrandt could continue to represent their clients-just not in the courtroom. For that, the LaHues would have to appoint new attorneys.
Treadway said in pleadings she does not consider the LaHues' lawyers to have participated in the criminal conspiracy.
Another defense lawyer on the case, who did not wish to be identified, said: "The concern that's out there is that these guys have been on this case three or four years. Why is she now bringing it up at this late date?"
The LaHues will be at an enormous disadvantage if they have to hire new attorneys so close to trial.
In July, Treadway struck fear into the hearts of healthcare lawyers everywhere when she indicted Lehr and Thompson for their legal advice to Baptist. Her charge that they were part of the conspiracy to defraud Medicare has been widely decried by the healthcare bar (July 27, p. 14).
The U.S. attorney's office for Kansas declined to discuss the case. Treadway does not talk to the media.
Eisenbrandt said he fully expects to represent Ronald LaHue when the trial begins, but he didn't want to discuss defense strategy.
Houdek, Robert LaHue's attorney, could not be reached for comment.
Health Midwest is paying the legal bills for its three former employees-Anderson, Keel and McClatchey-as well as those for the two lawyers Lehr and Thompson. This is consistent with Missouri law and the hospital bylaws, a Health Midwest spokesman said.
If the defendants are found guilty, however, the hospital board could ask them to pay back the hundreds of thousands of dollars spent in their defense. That possibility, Treadway argues, inhibits them from pleading guilty.
She wants the defendants to declare they understand this conflict so that they could not file "ineffective assistance of counsel claims" if they are convicted.
Documents included with Treadway's motion also disclose that Anderson and Baptist knew six years ago that they were under investigation.
Treadway has also asked the defendants to reveal whether they have a joint defense agreement. She claims that a joint defense agreement could create a conflict of interest that would compromise effective legal representation.