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Neurosurgeon's kickback trial set for June 25; Searcy doctor also target of whistleblower lawsuit.

DOCTORS WHO KNEW PATRICK Chan in Canada thought he was an excellent neurosurgeon.

"Patrick is a very energetic, hard working, loyal [and] moral" surgeon, Dr. J. Max Findlay, head of the division of neurosurgery at the London Health Science Centre in Ontario, wrote in a January 2000 letter to the Arkansas State Medical Board. "He is committed to [the] best medical practice and to excellent patient care."

After Chan received his Arkansas medical license in 2000, though, complaints started pouring in to the medical board about Chan, who specialized in neck and back surgeries at the two Searcy hospitals that have since merged, Central Arkansas Hospital and White County Medical Center.

By 2003, lawsuits started appearing in White County Circuit Court accusing Chan of malpractice and performing surgeries when they weren't medically necessary in an attempt to increase revenue.

But the biggest blow against Chan, 43, of Searcy, came in September when he was charged in U.S. District Court with four counts of taking kickbacks from medical suppliers to use their products in Medicare and Medicaid patients.

The charges center on Chan allegedly taking kickbacks on products distributed by Orthofix Inc. of McKinney, Texas, and other medical supplier companies. Chan allegedly cut a deal to receive half of all commissions Orthofix made off sales generated by Chan's surgeries, minus any amount necessary for tax purposes.

Chan is scheduled for trial on June 25. If convicted, he faces up to five years in prison, a $25,000 fine or both, for each count. While Chan could receive the maximum of 20 years in prison, if convicted on all counts, that is unlikely because of the sentencing guidelines.

Chan's phone number in Searcy was unlisted and he couldn't be reached for comment.

Chan's criminal defense attorney, James Wyatt of Little Rock, said, "At this point we have pied not guilty and there's a trial date. And how that resolves itself I don't have a crystal ball to tell you, but we're just defending against it at this point."

A spokesperson for Orthofix was unavailable for comment.

Whistleblower Lawsuit

Chan is also facing a whistleblower lawsuit from a medical supply salesman who is suing Chan on behalf of the government for allegedly submitting false claims to Medicare and Medicaid.

John Thomas, who was an employee of Nu Med Technologies Inc. of Tulsa, sold instruments and devices used in spinal surgery that were almost exclusively made by Medtronic Sofamor Danek Inc. He has sued Chan in U.S. District Court in Little Rock in an attempt to recover damages on behalf of the government under the False Claims Act.

Chan's attorney in the civil case, Stuart P. Miller of Little Rock, has asked for the case to be dismissed. That motion is pending.

Thomas also alleged that several medical suppliers--including Michael Bailey, president of the Bailey Management Group Inc. of Little Rock--were part of the kickback conspiracy.

Bailey's attorney, Chuck Banks of Little Rock, has asked the court to dismiss Bailey and Bailey Management as defendants because Thomas failed to link either to any false claims that were allegedly submitted to the government.

"We don't believe that case has merit," Banks said last week. "My client has a distinguished career in the medical device community [and] a good reputation. And we filed a motion to dismiss, and we look forward to that being granted."

That motion is pending.

One of Thomas' attorneys, Michael Mitchell of Little Rock, said he wasn't sure exactly how much Chan billed Medicare and Medicaid, but the total could be in the millions. Thomas will get to pocket 15 to 25 percent of any money he recovers on behalf of the government.

While awaiting trial, Chan, who surrendered his medical license in October, is free on a $4 million cash bond and a pledge of $290,000 worth of property, which includes some of his medical equipment. Chan, though, must stay inside his Searcy home and can leave only between 9 and 11 a.m. on Tuesdays for shopping and running errands.

Better Days

Chan received his medical degree from the University of Alberta (Canada) in 1990. In 1997, he went to work for the School of Medicine at the University of Alabama at Birmingham, where he seemed to excel.

"[Chan] is a ... caring physician," wrote Dr. Christopher Y. Cai, the chief resident in neurological surgery at Birmingham, in an undated letter in Chan's file at the Arkansas State Medical Board. "He has excellent communication skills with the patient and their family. He is fondly remembered by all those who have worked with him in Birmingham."

Other doctors who worked with Chan in the 1990s didn't have a problem with his medical skills.

"We found him to be a very dedicated, interested and technically excellent surgeon," wrote Dr. P.B.R. Allen of Edmonton, Alberta, in a January 2000 letter to the Arkansas State Medical Board. "He has always demonstrated the highest personal and professional integrity."

Chan told the board in a May 2000 letter that he was "very excited and proud to be able to join the medical community in Searcy to provide the very unique and much needed neurosurgical and spine services."

And he planned on working himself ragged.

"I have decided that I will be on call every day, every night, and every weekend for at least the first 12-18 months of my practice," Chan wrote. "I am used to working very long hours in my practice. In the past, I have worked for nearly 16 months without taking a vacation. These facts are cited merely to emphasize that I do have the ambition, tenacity, endurance, determination, and the ability to make things work."

But things didn't work.

Early Warning Signs

Dr. Scott Schlesinger of Little Rock warned the State Medical Board in a letter dated Jan. 31, 2002, that nurses were having trouble reaching Chan or an on-call substitute when a patient needed attention.

"If Dr. Chan has no one covering for him, this could pose a significant problem to the patients he cares for," Schlesinger wrote. "I want to bring it to your attention that we feel it is imperative that Dr. Chan have someone in his community willing to cover for his patients that he chooses to care for."

Chan, in his response to the board, said he had no excuse for forgetting to arrange physician coverage when he was unavailable.

"I WILL BE MORE COGNIZANT AND I WILL NOT FORGET TO ARRANGE FOR COVERAGE WHEN I AM OUT OF TOWN NEXT TIME," Chan wrote, apparently using capital letters to emphasize his resolve.

The medical board took no action against Chan.

Then patients started filing complaints.

On Dec. 1, 2004, Kenneth Hare of Searcy complained the procedures Chan performed on him were unnecessary.

"The only reason I think of is that he wants to make money doing procedure and after procedure," Hare and his wife, Donna Hare, said in a letter to the Medical Board. "I hear in the community that he plans on making lots of money so he can retire in his forties."

The Hares also wrote that they wondered how he could perform so many operations in a short period of time.

"For example, [Chan] did a spinal tap procedure on

my husband and the staff stated he had been in surgery all night finishing up a brain surgery at 2:30 a.m. the same day and had a full day scheduled for the remainder of the day," the couple wrote. "Is he taking something either prescription or nonprescription to keep himself going."

Chan denied the allegations in a response on Jan. 12, 2005.

"I want to reassure Mr. and Mrs. Hare, and any other parties or individuals that I did not and will not purposely perform any unnecessary procedures on any patients," Chan wrote.

Chan also said he worked "extremely long hours" because he was the only neurosurgeon in town and "I love my work."

"I have never and will never take any prescriptive or non-prescriptive substance to keep myself going," Chan wrote, bolding and italicizing a section of the sentence for emphasis.

The board found no evidence that Chan violated the Arkansas Medical Practices Act, and no action was taken.

Patients Sue

Since the criminal charges were filed in September, several of Chan's former patients have turned to filing lawsuits in White County Circuit Court instead of going to the State Medical Board.

One lawsuit was filed at the end of 2006, while another was filed in early 2007.

The most recent lawsuit against Chan was filed May 24 by Eddie Don Glenn, 49, of Bald Knob.

Glenn told Arkansas Business that he was suffering from back pain and was referred to Chan at the end of 2005.

Glenn, who had worked as a plastic molder for gun companies, said Chan pushed for him to have back surgery.

Otherwise, Chan allegedly warned, Glenn could lose control of his kidney functions at any time.

Glenn wanted time to think about the surgery and getting his affairs in order because he wouldn't be able to work for six months after the operation. But Chan became "agitated," Glenn said, when he asked for time to think. So Glenn went ahead with the surgery.

After the operation, "as the days went by, the worse it got," he said.

He said surgery was supposed to relieve the pain, but it didn't. Glenn asked Chan about it.

"He just told me I was going to have to deal with it," Glenn said.

Now Glenn said he is unable to work and takes a handful of pain pills daily.

Glenn's claims are supported by Dr. Jim Moore, a Little Rock neurosurgeon who has practiced medicine for more than 40 years.

"The patient was submitted, therefore, to a very major operative procedure with little, if any in the way of justification from the neurosurgical standpoint," Moore wrote in an affidavit filed in the case.

Moore also said that Glenn's back problems will never be resolved.

"It is my opinion ... that the negligent actions of Dr. Chan directly and proximately cause Mr. Glenn to consent to unnecessary surgeries, undergo medically unnecessary procedures, and incur a lifetime of problems as a result of such surgeries," Moore wrote.

Glenn is seeking unspecified damages.

Kickbacks Alleged

In 2002, Thomas, the medical supply salesman, told then-U.S. Attorney H.E. "Bud" Cummins that he believed Chan was performing unnecessary surgeries and receiving kickbacks from other medical supply companies.

Through the summer of 2003, Thomas said he continued talking with Cummins about Chan and continued to provide examples, according to his lawsuit.

In the spring of 2003, Chan performed surgery on the spine of a patient who was more than 80 years old "and therefore likely covered by the Medicare program," Thomas said in the lawsuit. "This patient had such a progressed stage of cancer that the patient was expected to live only a few more weeks and could not benefit from this surgery."

Thomas claims the anesthesiologist who assisted in the surgery questioned the need for the surgery, which led to a shouting match between the two doctors. In the end, Chan went ahead with the operation.

While Thomas said he never gave Chan money, another salesperson who sold products for Orthofix, Osteotech Inc. of Eatontown, N.J., and other suppliers, allegedly did, according to the criminal file against Chan in U.S. District Court in Little Rock.

The sale rep, who isn't identified in the documents on file, told investigators that Chan asked him (or her) in late 2003 or early 2004 about the possibility of receiving payment in exchange for using some of the salesperson's products.

The salesperson declined to give cash but offered software for use in Chan's clinic instead.

"Dr. Chan advised that he did not need software and that he only wanted cash," according to the affidavit filed by FBI Special Agent Justin Beach.

At that time, the salesperson agreed to split the commission checks with Chan, Beach wrote.

In January 2004, the salesperson made the first payment to Chan--$3,000 in cash. Beach said the payment corresponds to the time in which Chan began using Osteotech products.

Between January 2004 and June 2006 the salesperson paid a portion of his commission to Chan. Most payments were around $7,000 to $8,000 a month, and the witness estimated that he paid Chan around $200,000 in cash during the period.

To deliver the money, the witness placed the money in a manila or FedEx envelope and dropped it off at Chan's clinic at 1120 S. Main St. in Searcy.


On July 17, the salesperson met with Beach and other government officials and told them what was going on. The salesperson agreed to cooperate further and on July 31 made another payment to Chan of $15,000.

But this time, the sales rep was secretly recording the transaction.

"Dr. Chan took the package containing the $15,000 without question mg and appeared to place me package in a drawer of his desk in his office," Beach wrote.

On Sept. 5, another payment of $8,000 was made to Chan, and it was also recorded.

Chan was charged on Sept. 14 in U.S. District Court in Little Rock.

On Oct. 8, Chan wrote a letter to the medical board surrendering his license.

"I have stopped treating patients and I am closing my office," Chan wrote. "I would like to take this opportunity to thank you and the members of the State Medical Board for the support and help that you have kindly extended to me over the years."

By Mark Friedman
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Comment:Neurosurgeon's kickback trial set for June 25; Searcy doctor also target of whistleblower lawsuit.
Author:Friedman, Mark
Publication:Arkansas Business
Geographic Code:1U7AR
Date:Jun 11, 2007
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