A three-judge federal appeals court in Denver last week tossed out the judge's acquittal of one of the Kansas City Medicare kickback defendants and reinstated the jury's guilty verdict.
Dennis McClatchey, 56, former chief operating officer of Baptist Medical Center in Kansas City, Mo., was convicted by the jury in April 1999 of participating in a conspiracy to pay and accept bribes for referrals of Medicare patients.
But U.S. District Judge John Lungstrum later acquitted McClatchey from the bench after he reviewed the evidence against him. Lungstrum did not reverse the convictions of three other defendants: Dan Anderson, former chief executive officer at Baptist, and brothers Ronald LaHue, D.O., and Robert LaHue, D.O., whose practice referred nursing home patients to Baptist and other hospitals.
Those defendants have filed appeals before the same 10th Circuit Court of Appeals in Denver, and several national healthcare associations have joined in (June 12, p. 2).
Tanya Treadway, the assistant U.S. attorney for Kansas, appealed Lungstrum's acquittal of McClatchey.
The appeals court panel not only agreed unanimously with Treadway's view on the matter, but it also threw out Lungstrum's decision ordering a new trial for McClatchey should his acquittal be overturned.
After his acquittal, McClatchey had gone back to work as senior vice president for corporate communications for Health Midwest, the Kansas City, Mo., hospital system that owns Baptist hospital. McClatchey was not available to talk about his situation last week.
Jim Gember, who is spokesman for Health Midwest, said the day after the decision: "We are saddened and shocked by yesterday's event. His co-workers, colleagues and friends will continue to support him. Our thoughts and prayers are with Dennis and his family."
Last Wednesday McClatchey was placed on administrative leave with pay pending resolution of his legal matters.
Charles German, attorney for McClatchey, said after a cursory review of the opinion that "further appeals are warranted. We have a deadline of June 27 to ask the full U.S. Court of Appeals in Denver to hear a full appeal or at least part of it."
He said the appeal to the 11-judge court would request a new trial and would ask for a closer look at the jury instruction that allowed the jurors to convict if "one purpose" of the payments was to induce illegal referrals.
The one-purpose test is the subject of five amicus briefs filed by the national healthcare associations.
"It was very premature of the court to rule on this, in my opinion," given that this critical jury instruction is the subject of an appeal the court has not yet heard, German said.
If no relief is granted there, German said, he would consider taking the appeal to the U.S. Supreme Court.
McClatchey is free on his own recognizance. No sentencing can be scheduled until the appeal is completed. Lungstrum would hand down the sentence.