Carol Lam, a veteran healthcare fraud prosecutor and the U.S. attorney in San Diego, faces two conflicting priorities as she decides whether to prosecute Tenet Healthcare Corp.'s Alvarado Hospital Medical Center for a third time under the Medicare anti-kickback statute.
U.S. District Judge M. James Lorenz in San Diego declared a second mistrial in the case last month (April 10, p. 8). In both trials, prosecutors accused the three defendants -- Alvarado, its former Chief Executive Officer Barry Weinbaum and a subsidiary of Dallas-based Tenet Healthcare Corp. -- of conspiring to induce patient referrals by funneling overly generous physician relocation agreements to the practices of high-admitting physicians.
Lorenz granted Lam a delay that gives her until a May 22 hearing to reveal her next move. Lam's office declined to comment for this story.
A U.S. attorney must be credible when threatening to prosecute executives for their role in a white-collar crime, or else those executives won't agree to testify against their superiors, said Anton Valukas, a former U.S. attorney in Chicago who is now in private practice there. "A good example of this is the HealthSouth case with (Richard) Scrushy," he said. "The acquittal there probably emboldens others to go to trial."
The importance of the Alvarado case to Lam's office is greater because Lam personally conducted the second prosecution, Valukas said, adding that he is not familiar with the specifics of the case. Normally, Lam's personal role would almost guarantee another trial, but few cases are tried a third time, he said. Witness accounts will often differ between first and second trials, opening witnesses to harsher cross-examination in a third trial, he said.
Stuart Gerson, a former Justice Department official who served with Lam, said anti-kickback cases are difficult to win because most jurors expect hospitals to want to induce physicians to refer patients for admittance, while the government views any such inducements as bribes.
Gerson said the Justice Department was stung recently by an appeals court's reversal of the conviction of Frank Quattrone, a Credit Suisse First Boston investment banker who was tried twice on obstruction of justice and witness tampering charges and convicted the second time. "That has to be in the minds of the criminal division of the Justice Department," said Gerson, now a healthcare defense lawyer with Epstein Becker & Green.
Valukas also sees the possibility of folding a resolution to the Alvarado case into a global settlement, which may be enough for Lam's office to save face.