Cardiac physicians attempt to settle case.

Byline: Tim Christie The Register-Guard

The professional lives of three Eugene heart surgeons are at stake in a long-running investigation into whether they allegedly defrauded Medicare and Medicaid.

The doctors, plus a fourth member of their practice who has retired, are trying to reach a settlement with state and federal investigators that would allow them to continue practicing medicine, according to federal court documents.

The broad terms of a proposed settlement are contingent upon state medical regulators agreeing not to strip the doctors of their medical licenses, according to a status report on the case, filed jointly by lawyers for the doctors and investigators with a federal judge in Portland.

The status report does not disclose any details of what the deal would look like, and none of the lawyers involved would talk about it.

Settlement talks have yielded no deal so far. State authorities have rejected a counterproposal offered by the doctors, and instead have given the doctors until Oct. 27 to accept the state's original offer the do cuments show.

Federal agents, joined by the state Department of Justice's Medicaid Fraud Unit, have been conducting a civil and criminal investigation into the practice of Drs. David Duke, Stanley Baldwin, Warren Glover and Richard Hicks since August 2003. Hicks is now retired.

If the three practicing doctors were to lose their medical licenses, that would leave Eugene with two cardiac surgeons.

In court records, the investigators allege that the doctors, all of whom now work for PeaceHealth, submitted false billing claims to the federal Medicare and Medicaid programs when they owned their own practice.

The joint status report has shed new light on the investigation. It discloses that the state's No. 2 law enforcement official has been involved in settlement talks mediated by a federal appellate judge, and it raises the prospect that the doctors could face charges alleging "inadequate patient care" in addition to or instead of the fraud charges.

The central allegation, according to an affidavit filed in March by a federal investigator, is that the doctors billed Medicare and Medicaid for surgeries in which a single doctor would be listed as the lead surgeon on one operation and as the assisting surgeon on a second operation that was going on at the same time. Or a single doctor would be shown assisting multiple surgeries that were happening at the same time.

For example, on March 30, 2000, the doctors' records show that Baldwin was the primary surgeon and Glover was the assistant on a case that began at 8:11 a.m., and that Baldwin was the assistant on a case led by Glover that began at 8:35 a.m. in a different operating room.

Medicare regulations specifically prohibit doctors from billing for assisting more than one surgery at a time.

While no charges have been filed, the lawyers disclose in the status report that they have been trying to reach a settlement in the case in talks mediated by Edward Leavy, a senior judge on the U.S. 9th Circuit Court of Appeals.

The report indicates that federal lawyers drafted a proposed settlement July 7, and on Aug. 7 lawyers for the doctors responded with a revised version, the report states. In addition, lawyers representing PeaceHealth, which bought the surgeons' medical practice in November 2004, "also suggested changes."

In addition to a settlement of criminal and civil charges, each doctor may be asked to a sign a 40-page "Integrity Agreement" with the Office of the Inspector General of the U.S. Department of Health and Human Services.

On Aug. 15, state Deputy Attorney General Peter Shepherd - Attorney General Hardy Myers' top assistant - "rejected most of the (doctors) proposed changes" and gave them until Oct. 27 to accept the state's original settlement offer, the status report says.

If the doctors were to accept the state's offer by Oct. 27, they would have six months to negotiate a deal with the state Board of Medical Examiners that would allow them to continue practicing medicine, the report says.

However, the settlement process may become more complicated, the status report says, "because, as the (doctors) interpret the state's position in Mr. Shepherd's letter, the state is now alleging inadequate patient care as an alternative theory to fraud."

The result is that the settlement talks are unlikely to be resolved any time soon, U.S. District Judge Anna Brown wrote.

The protracted nature of the settlement talks means Brown is likely to rule soon on a lawsuit related to the federal investigation. Federal agents filed the lawsuit when they learned about a legal file prepared by a Boston lawyer, Thomas Crane, on behalf of the doctors.

The doctors hired Crane, who specializes in defending and advising doctors in health care fraud and abuse cases, sometime before they sold their practice, called Cardiovascular Surgical Associates, to PeaceHealth in November 2004.

Last summer, PeaceHealth lawyers notified the government that they were in possession of the Crane file and would turn it over if the government obtained a court order.

The doctors' lawyers have sought to stop the government from getting the file, arguing that attorney-client privilege still exists between the doctors and Crane.

At the time the four doctors sold their practice to PeaceHealth in 2004, they were the only cardiac surgeons in Eugene. Since then, Hicks retired, and PeaceHealth has hired two other cardiac surgeons, Paul Koh and Hoang Chau Nguyen.