Editor’s Note: The Texas Lawbook is providing continuous coverage of the Forest Park Trial. Look for updates each day of the proceedings.
To see earlier coverage, simply keep scrolling below.
Day 29: New questions, complicated answers, Toledo on the line
Jurors concluded a fourth day of deliberations Monday without reaching any verdicts in the Forest Park medical fraud trial.
The three men and nine women on the jury will return at 8:45 a.m. Tuesday to resume their deliberations.
In all, they’ve spent roughly 19 hours deliberating since receiving the case Wednesday afternoon. The trial is in its eighth week.
Nine defendants, including five doctors, face a variety of bribery and kickback charges in the case. They’re accused of taking millions of dollars in payoffs from Forest Park Medical Center of Dallas, a now-bankrupt surgical hospital, in exchange for steering patients there.
The jurors sent out two notes on Monday, their fourth and fifth since the deliberations began. The first dealt with what would occur if they were unable to agree unanimously on whether some defendants charged with conspiracy are guilty; the second dealt with a technical question, based on the language of the jury charge, concerning whether unanimous agreement is required for a question regarding the objectives of the alleged conspiracy.
U.S. District Judge Jack Zouhary, the visiting judge who presided over the trial, has returned to his home jurisdiction in the Northern District of Ohio. By teleconference, he conferred repeatedly, and at length, with counsel for both sides before answering the jury’s questions.
Both questions Monday dealt with the sole conspiracy count of the indictment underlying the Forest Park trial. Since that count is the only one of the 17 before the jurors that is aimed at all nine defendants, the questions shed no light on which of the defendants the jurors might be (or might have been) undecided about.
Day 28: Two charges dropped (very quietly); a juror falls ill
Jurors concluded a third, shortened day of deliberations Friday without reaching any verdicts in the Forest Park medical fraud trial.
The three men and nine women on the jury will return at 8:45 a.m. Monday to resume their deliberations.
They quit for the week after lunch on Friday, when one juror complained of feeling ill.
In all, they’ve spent about 12 hours deliberating since receiving the case late Wednesday afternoon.
Nine defendants, including five doctors, face a variety of bribery and kickback charges in the case. They’re accused of taking millions of dollars in payoffs from Forest Park Medical Center of Dallas, a now-bankrupt surgical hospital, in exchange for steering patients there.
Most of the payoffs, under the government’s theory, were funneled to the doctors under the guise of “marketing payments,” monthly stipends ostensibly intended to promote both the physicians and the hospital.
The federal grand jury indictment underlying the trial originally included 19 counts. Two of those counts were dismissed, at the government’s request, at the close of evidence.
Both of the dismissed counts were directed at only one of the nine defendants, Jackson Jacob, who owned companies (shell companies, according to prosecutors) through which Forest Park channeled money to physicians, legitimately or otherwise, depending on whether one believes the prosecution or the defense.
As Jacob is named in 14 of the remaining 17 counts, it’s not clear what benefit he might derive, if any, from the dismissal of those two counts.
Day 27: Three notes, a hint of disagreement and a substitute for the substitute judge
Jurors deliberated for more than eight hours Thursday without reaching any verdicts in the Forest Park medical fraud trial.
The three men and nine women on the jury will return at 8:45 a.m. Friday to resume their deliberations.
On Thursday, they sent out three notes:
One asked the definition of misprision of a felony, a crime to which two government witnesses had pleaded guilty, under their agreements to cooperate with authorities.
One asked where among the voluminous exhibits they have with them in the jury room they could find certain checks.
One asked whether, if they disagreed about one defendant in one of 10 counts under the federal Travel Act, they had to return a not guilty verdict, or if that meant they were a hung jury.
U.S. District Judge Sidney Fitzwater, sitting in for Judge Jack Zouhary, who presided at trial, answered the notes by, in essence, 1) providing the verbatim text from the U.S. criminal code that defines misprision of a felony, but reminding the jurors that none of the defendants at trial is charged with that crime; 2) instructing the jurors that they have all the exhibits at their disposal (and we’re not going to look through them for you); and 3) they must be unanimous to return a guilty verdict on each and every count, but that it’s far too early for them to consider themselves hung up.
The Forest Park case was originally assigned to Fitzwater. He relinquished it when, in 2017, he was dispatched to Amarillo (like Dallas, part of the Northern District of Texas) to help alleviate a backlog of federal criminal cases there. Zouhary, from the Northern District of Ohio, was brought to Dallas as a visiting judge to oversee Forest Park.
Nine defendants, including five doctors, face a variety of bribery and kickback charges in the case. They’re accused of taking millions of dollars in payoffs from Forest Park Medical Center of Dallas, a now-bankrupt surgical hospital, in exchange for steering patients there.
Now, The Jury Decides
Day 26: An ‘objectionable’ photo, ‘naked pleas to sympathy’ and 9 questions of intent
Jurors began deliberating Wednesday in the Forest Park medical fraud trial. Just barely.
After more than 11 hours of closing arguments and final instructions from U.S. District Judge Jack Zouhary, the jury of three men and nine women retreated to begin their deliberations around 4:10 p.m. Less than an hour later, the judge’s clerk announced that the jurors had gone home for the day.
They return to the Earle Cabell Federal Building and Courthouse in downtown Dallas at 8:45 a.m.
No one knows for sure, of course. But this could take a while.
There are nine defendants on trial facing, collectively, 19 felony counts.
In essence, the government alleges that Forest Park Medical Center of Dallas, a now-bankrupt, physician-owned surgical hospital on the North Central Expressway near Forest Lane, raked in hundreds of millions of dollars in less than four years by paying bribes and kickbacks — $40 million in all — to doctors and others who agreed to steer patients to the hospital. The payoffs were typically disguised, prosecutors contend, as “marketing money” or consultant fees.
Every last one of the defendants is guilty of taking part in “a massive bribery scheme” perpetrated by Forest Park from 2009 through 2012, said Assistant U.S. Attorney Andrew Wirmani, who delivered the government’s final closing argument.
“These defendants made millions and millions of dollars manipulating the system,” he told the jurors. In the process, he said, they “defrauded” the municipalities, school districts, and private employers who pay to provide health-care coverage for their employees.
Forest Park was an “out-of-network” hospital during the years of the alleged conspiracy. As such, prosecution witnesses testified, it billed insurance companies at far higher rates than what in-network hospitals agree to charge, under their negotiated contracts with major insurers.
As he had in his opening statement on Feb. 21, Wirmani argued that the question before the jury was a simple one: Did Forest park pay the defendants for surgeries?
“Do you believe,” he said Wednesday, “that this $40 million goes out the door with the mere hope” that the doctors receiving the money will send patients to Forest Park?
Or do you believe that there was a clearly understood quid pro quo?
Sorting through the charges, however, may not be a simple task for the jury.
Not all nine defendants are accused in each count; in fact, only the first charge, conspiracy to pay and receive health care bribes and kickbacks, lists all of them. The other 18 counts are directed at various subsets of the defendant group, which includes five doctors, a former top administrator at Forest Park, a former employee of his, and two people who had business relationships with the physician-owned surgical hospital.
Beyond sorting all that out, the jurors must, in deliberating many of the counts, unanimously agree that the accused acted “knowingly and willfully” to break the law. An oft-repeated theme in the defendants’ closing arguments was that however corrupt Forest Park’s intent might have been, the doctors receiving the monthly checks believed they were acting lawfully – they believed their written marketing agreements with the hospital were legitimate and permissible, and that their lawyers had told them as much.
“Dr. Nicholson acted in good faith,” said Tom Melsheimer, the lawyer for Dr. Nick Nicholson, a weight-loss surgeon. The people at Forest Park who put together the dollars-for-surgeries racket may well have had criminal intent, “but they didn’t share that with Dr. Nicholson,” Melsheimer said.
“This was their bribery scheme. … Dr. Nicholson was different,” he said, referring to a rogues gallery of original defendants in the case who took plea bargains and cooperated with federal authorities.
Among that group were:
- The two doctors who were the principal founders of Forest Park, bariatric surgeon Wade Barker and anesthesiologist Richard Toussaint;
- Alan Beauchamp, the administrator who ran the hospital until he was ousted around the time the federal investigation into Forest Park came to light;
- Dr. David Kim, a weight-loss surgeon who admitted to taking almost $4.6 million in bribes and to cheating on his income taxes;
- Kelly Loter, an advertising executive who helped recruit surgeons to Forest Park and who spent the hospital’s “marketing money” putting together ad campaigns for Nicholson and two spinal surgeons on trial, Dr, Douglas Won and Dr. Michael Rimlawi;
- And Andrew Hillman, a jack-of-all-trades medical fraud artist now in a federal prison who, too, helped bring surgeons and administrator Beauchamp together.
Some of the defendants’ closing arguments were, in Wirmani’s words, “naked pleas to sympathy.”
“He’s dedicated his life to helping people,” defense lawyer Jim Burnham said of his client, Dr. Mike Shah, a pain-management physician. He repeatedly reminded the jury that Shah did his residency at a Boston teaching hospital run by Harvard Medical School. And he implored the jurors to “send Dr. Shah home” to his “three beautiful children” and to the patients who so depend on him.
Tom Mesereau, Rimlawi’s defense lawyer, said his client was “a fantastic spine surgeon, dedicated and passionate about what he does, not a criminal.”
Mesereau was admonished by Judge Zouhary for ending his closing argument by showing the jury a color photograph of the 47-year-old surgeon holding his infant son, a photo that had not been admitted in evidence or previously used as a trial exhibit.
“This is objectionable!” Assistant U.S. Attorney Katherine Pfeifle exclaimed, quickly rising in protest against the stunt.
The judge agreed and instructed the jury to disregard the photograph.
Knew, But Didn’t Do;
Did, But Followed Orders;
Doesn’t Deserve To Be Here
Day 25: The difference between knowing and doing, ‘Carli’s unfortunate problem’ and ‘It’s still a bribe’
The nine defendants in the Forest Park medical fraud trial are rapacious bandits who put lucre above concern for the welfare of patients and, in the process, helped drive up healthcare costs for the rest of us.
Or they’re the victims of a witch hunt by zealous federal prosecutors, nine true and innocent people who never should have been hauled into court in the first place.
The 12 jurors responsible for deciding which of those two narratives to believe will begin the process of sifting through the voluminous evidence on Wednesday.
Closing arguments in the bribery and kickback trial began Tuesday before a standing-room-only crowd in U.S. District Court in downtown Dallas and are to conclude Wednesday morning.
The closely watched Forest Park trial is one of the most far-reaching federal prosecutions in the country alleging corruption and insurance fraud by a hospital and prominent physicians associated with it.
The government contends that from early 2009 through 2012, Forest Park Medical Center of Dallas, a physician-owned surgical hospital, took in $200 million in questionable insurance benefits – “dirty money,” as Assistant U.S. Attorney Katherine Pfeifle called it Tuesday – by paying off doctors and others to steer patients its way.
The bribes and kickbacks totaled $40 million, according to the 2016 federal indictment underlying the current trial. Much of that money, the indictment says, was funneled to doctors in the form of monthly “marketing money.”
The now-padlocked hospital’s two principal founders, Dr. Wade Barker and Dr. Richard Toussaint, have pleaded guilty and are cooperating with authorities, as is the executive who ran Forest Park during the years in question, Alan Beauchamp.
As an out-of-network hospital – one not under contract with major insurers to provide services at fixed, negotiated rates – Forest Park could bill those insurers at far higher rates than what in-network hospitals have agreed to charge.
In particular, prosecutors said, Forest Park sought out well-insured patients in need of weight-loss or spinal surgeries. The former procedures can be done in high volume; the latter command high surgical fees.
“Those are gold for a scheme like this,” Pfeifle said, delivering the prosecution’s 135-minute closing argument. Insurance fraud, she said, is a crime that affects everyone who pays for medical coverage.
“The greed of the defendants impacted us as a community,” she said.
Defense lawyers for four defendants completed their closing arguments Tuesday. Those defendants are Mac Burt, Beauchamp’s co-administrator at Forest Park; Carli Hempel, the non-medical director of Forest Park’s bariatric services; Jackson Jacob, who owned the companies through which Forest Park channeled its marketing payments to physicians; and Dr. Douglas Won, a back surgeon and the co-founder of the Minimally Invasive Spine Institute, a once-thriving clinic along the North Central Expressway near Walnut Hill Lane.
Still to come are closing arguments for five defendants: Dr. Michael Rimlawi, Won’s onetime partner at MISI; Dr. Shawn Henry, a Fort Worth back surgeon; Dr. Nick Nicholson, a bariatric surgeon and the founder of the Nicholson Clinic for Weight Loss Surgery; Dr. Mike Shah, a pain-management physician; and Iris Forrest, a nurse accused of steering worker’s compensation patients to Forest Park.
Pfeifle said no fewer than 16 witnesses testified that the millions of dollars Forest Park paid to the defendants “was for surgeries. There is no doubt about it.”
The legitimate-looking marketing agreements the doctors signed with Forest Park were nothing but a smokescreen, she said.
“The bribery scheme was concealed, it was papered up, and it was disguised,” she told the jurors.
She said “we as patients deserve to know” that our doctors are basing important medical decisions — like whether to cut us open, mess around in there, and sew us back up — on what’s in our best interest, not on whether a corrupt hospital is slipping those doctors monthly checks under the table.
Several patients of the defendant doctors, she said, testified that they were given no choice when their surgeries were scheduled at Forest Park; and that they had no idea that Forest Park was paying their doctors to bring them there. “They deserved to know that their surgeries were motivated by money,” she said. “And none of these doctors ever told them that.”
Masking the payments as “marketing money” changed nothing, she said. Even when the doctors used the Forest Park money for legitimate marketing – billboards, TV spots, print and Internet ads, and so forth – they were receiving illegal remuneration in exchange for patient referrals.
“Whether it’s marketing money or a bag of money, it’s still a bribe,” Pfeifle said.
Ed Tomko, Burt’s lawyer, said his client may have known about the payments to doctors – may have been present when they were discussed – but that the law requires that the government prove Burt “knowingly and willingly” acted in furtherance of the bribery and kickback scheme. No such proof was offered, Tomko said.
“There is a difference between knowing and doing,” he said. “And knowing is not enough to be convicted of a felony.”
He acknowledged that Burt, along with Beauchamp, was (at least at one time) a millionaire – thanks to his tenure as one of Forest Park’s top bosses.
“If you’re going to convict someone because he made money, we could have saved seven weeks here,” he told the jurors.
Phillip Hayes, Hempel’s lawyer, echoed his client’s testimony: That she had no idea the marketing payments were illegal, and that, in any case, she was just doing what Beauchamp, her boss, told her to do.
“Carli’s unfortunate problem,” he said, was that she worked for a scamp whom she’d trusted.
“Everything she did was at the approval and direction of Alan Beauchamp,” he said, adding, “Everybody knew he ran everything” at Forest Park.
He said it was “unconscionable” that Beauchamp told Hempel and other Forest Park employees that everything the hospital was doing was perfectly legal and had been blessed by lawyers.
Sarah Wirskye, Jacob’s lawyer, offered a similar defense. Her client’s companies, she said, wrote the monthly checks to doctors “at Alan Beauchamp’s complete direction.” And he had no idea, because Beauchamp never told him, that there was anything fishy about the payments.
“You’ve heard absolutely zero evidence that Jackson Jacob knew that what he was doing was illegal,” she said.
Jacob’s fee for writing the checks – more than $500,000 in less than four years – was “good money,” she said, but nothing compared with the millions of dollars that passed from Forest Park through Jacob’s hands to marketing entities serving or controlled by the recipient doctors.
Paul Coggins, Won’s lawyer, said his client did nothing wrong. The marketing money, Coggins said, was just that. It wasn’t paid in exchange for patient referrals, he said, and, by benefitting Won’s practice it automatically benefitted Forest Park.
Not only that, Coggins said, it benefitted the public at large, because the minimally invasive spinal surgery techniques that Won helped pioneer result in shorter, safer operations, shorter hospital stays, shorter recovery times, and fewer post-surgical complications.
Coggins also asked why, if Won’s marketing contracts with Forest Park were nothing but sham agreements, did his client spend thousands of dollars having reputable health-care lawyers review and revise the agreements?
“Sometimes,” said Coggins, a former U.S. attorney for the Northern District of Texas, prosecutors want a conviction so badly they don’t see what’s in front of their eyes.”
Justice in this case, he said, would be allowing Won to return to the practice of medicine.
“He’s at the peak of his profession,” Coggins said. “He deserves to be in an operating room helping his patients, and not in this courtroom.”
Defense Rests, No Rebuttal
Day 24: ‘Grey zone’ operations, creative P&L and an ‘I’d probably be dead now’ defense
Testimony ended Monday in the Forest Park medical fraud trial.
U.S. District Judge Jack Zouhary told jurors they should expect to begin deliberations Wednesday. He’ll deliver jury instructions at 9:30 a.m. Tuesday. After that, closing arguments are to begin.
With nine defendants in the case, those arguments likely will spill over to Wednesday, the judge said.
The defense rested Monday afternoon, after six days in which defendants called 20 witnesses. There was no rebuttal case from the U.S. attorney’s office.
The defendants, including five physicians and a top administrator from Forest Park Medical Center, are accused of taking part in a multimillion-dollar bribery and kickback racket. According to a 2016 indictment, Forest Park paid physicians and others to steer high-dollar patients to the doctor-owned surgical hospital. The payments, the indictment says, were in many cases disguised as “marketing money,” ostensibly provided to promote both Forest Park and the doctors receiving the monthly checks.
The boutique hospital in North Dallas closed in 2015. Its two principal owners, Dr. Wade Barker, a weight-loss surgeon, and Dr. Ricard Toussaint, an anesthesiologist, have pleaded guilty and are cooperating with federal authorities. So is Alan Beauchamp, who ran the hospital and, by his own admission, put together the scheme to “buy surgeries” by offering doctors $100,000 or more a month in “marketing money.”
On Monday, defense lawyers called, in quick succession, eight witnesses, most of them on the stand for only a short time, to chip away at financial details of the government’s case or to attest to the healing skills and character of various defendants.
Two patients of Dr. Michael Shah, a pain-management physician, testified that his treatments, some of them administered at Forest Park, brought them relief after they’d abandoned hope of getting better.
“I was blessed to find Dr. Shah. …If it hadn’t been for Dr. Shah, I’d probably be dead by now,” Phillip Connor, a retired truck driver for the U.S. Postal Service, told Jim Burnham, Shah’s defense lawyer.
Connor said chronic back problems necessitated the insertion of metal rods and screws into his neck. Until Shah treated him with injection therapy, he said, he suffered from migraines that would all but paralyze him, sometimes for weeks on end.
Katrina Davis, a nurse at the Dallas VA Medical Center, began seeing Shah after a patient at the veterans’ hospital fell on her, twisting her back and leaving her unable to work for more than a year.
Both Connor and Davis said that when they were scheduling their treatments through Shah’s office, neither he nor his staff tried to direct them to Forest Park, instead offering them options on where to go.
The federal indictment alleges that Forest Park and Shah had a covert deal under which he got a 10 percent kickback on the insurance payments the hospital collected for patients he referred there. As federal employees, both Connor and Davis had workers’ compensation insurance through the U.S. Department of Labor – insurance that paid 100 percent of their medical expenses for treatment of work-related injuries.
Assistant U.S. Attorney Marcus Busch asked Davis, “Did he tell you that he was getting a 10 percent kickback?”
“I don’t believe he would do it,” she replied.
Satish Kumar, pastor of Metro Church of God in Farmers Branch, appeared as a character witness for defendant Jackson Jacob, who is accused of running shell companies through which Forest Park channeled its payoffs to doctors and others. For his services, the government claims, Jacob got a cut of the funds he helped launder.
Kumar described Jacob as kind and generous, always willing to dig deep to help a fellow in need.
“He’s a man true to his word,” the pastor told Jacob’s lawyer, Sarah Wirskye. “When he says something, he does it.”
On cross-examination, the pastor acknowledged that he knew nothing about Jacob’s business dealings.
A fraud investigator hired by the government testified earlier that Jacob’s companies, principally one called Adelaide Business Solutions, appeared to have had no business purpose other than to receive monthly payments from Forest Park and to cut checks to doctors on the hospital’s pad.
The jury almost heard Monday from the father of another defendant, Dr. Nick Nicholson, a bariatric surgeon.
Dr. Dan Nicholson, also a surgeon, served as a financial adviser to his son’s Nicholson Clinic for Weight Loss Surgery. Dan Nicholson was summoned to the stand, but excused after lawyers for both sides, conferring at sidebar with Judge Zouhary, agreed that Tom Melsheimer, Nick Nicholson’s defense lawyer, could, in lieu of testimony, read to the jury an email exchange between father and son.
The Dec. 29, 2008 exchange, Melsheimer suggested, shed light on Nick Nicholson’s state of mind as he was negotiating with Forest Park about possibly entering into a marketing agreement with the hospital. Forest Park opened in March 2009.
In the exchange, Dan Nicholson implies that Beauchamp, the chief administrator at Forest Park, might not be entirely trustworthy (an assessment essentially confirmed by Beauchamp’s sworn admissions earlier in the trial that he was a crook and fraud artist par excellence).
Dan Nicholson noted that Beauchamp was making $450,000 a year at a hospital where he was chief operating officer before Forest Park. If that hospital was successful enough to pay Beauchamp that much, “why would Alan leave them?” Dan Nicholson asked his son.
Nick Nicholson replied that, yeah, Beauchamp was a slippery one. If he reported an annual income of $450,000, “I bet the real number is somewhat different.”
He said of the Forest Park officials with whom he was negotiating, “We all know they’re probably functioning in the grey zones.” The important thing, he said, was that he, Nicholson, “make sure we’re acting ethically and within all legal bounds.”
“As long as we behave in an ethical fashion and take care of the patients,” Nick Nicholson wrote, “I think we can leave them to their own creative reporting of their P&L [profit and loss] statements to the public.”
Profile: The Genteel Judge
U.S. District Judge Jack Zouhary keeps one eye on civility, the other on the clock
Voir dire had scarcely begun in the Forest Park medical fraud trial when the first juror tried to talk his way out of serving.
“Juror No. 2” explained that he was a high school teacher with lots of big spring events coming up – class trips and interscholastic competitions and testing and … He just didn’t see how he could be away from his classroom for six weeks.
U.S. District Judge Jack Zouhary wasn’t buying it. After 13 years on the bench and, before that, 30 years in private practice, he’s questioned thousands of citizens summoned to jury duty. Very few of them wanted to be there.
“When I read the flimsy excuses given by those notified of jury service, I cringe,” Zouhary wrote in a commentary published in 2017 by The Toledo Blade, his hometown newspaper.
Zouhary listened patiently to Juror No. 2, then asked him, doesn’t your school use substitute teachers? Don’t schools use substitutes all the time? Isn’t that what substitute teachers are for?
The judge refused to excuse No. 2. “But I’ll be happy to come talk to your class about civics,” he said.
Zouhary made his point — not just to the teacher, but to the other potential jurors who may have been mulling their own excuses as they sat in the courtroom awaiting their turn at voir dire. There’s a reason it’s called jury duty.
But the point was made in a kindly way. He didn’t browbeat the teacher, or lecture him on civic responsibility, or embarrass him in front of the room. That’s simply not in Jack Zouhary’s nature.
In court, and especially with jurors, he’s amiable, accommodating, always gracious, unfailingly polite.
“Friends and colleagues often describe him as a ‘gentleman,” said Mike DeWine, the Republican governor of Ohio. As a U.S. senator back in 2005, it was DeWine who recommended Zouhary for a federal judgeship.
“Those who have known and worked with him through the years speak warmly of his even temper and cordial demeanor,” DeWine said in presenting Zouhary at his confirmation hearing before the U.S. Senate Judiciary Committee,
“Attorneys who have appeared before him – criminal and civil, prosecution and defense – speak in glowing terms of his talent, fairness, and excellent judicial temperament.”
DeWine’s assessment is supported by the comments of lawyers quoted (not by name) in the Almanac of the Federal Judiciary. The almanac, published by Wolters Kluwer Legal & Regulatory U.S., includes profiles of every member of the federal judiciary. In addition to providing basic biographical and professional information, the almanac interviews practitioners who’ve argued cases before each judge.
They give Zouhary uniformly high marks: “He’s very bright.” “His legal ability is excellent.” “He’s a very cordial guy.” “He’s easy to get along with.” “He has a perfect demeanor.” “He’s neutral.” “He’s fair.”
The harshest criticism from the interviewees is that Zouhary doesn’t waste time or let lawyers do so: “He’s a rocket docket and wants to get things done.” “He’ll push to make sure you have all your ducks in a row.” “He’s very diligent about keeping his docket clean and he issues prompt decisions.” “He gets a little too involved as opposed to just letting the parties put on their cases.”
A writer in an earlier age searching for one word to describe Zouhary might have settled on “courtly.” Or “genteel.”
He’s charming. It’s disarming.
And unless he’s a terrific actor, it’s no affectation.
I’d bet $1,000 that if the teacher had asked him, the judge really would have gone and talked to his class.
*** *** ***
Bradley Lagusch moved to Toledo three years ago from Columbus, Ohio, to become executive director of the Toledo Bar Association.
He’d hardly settled in when he got a call from Zouhary, inviting him to come by the judge’s chambers for lunch.
When he arrived for their lunch, he was surprised. Not only did Zouhary want to meet him. “He’d invited every one of the judges on the federal bench in Toledo.”
After welcoming him, Lagusch said, “Judge Zouhary assured me that all of the judges supported the bar association’s efforts to advance and promote the legal profession in Toledo. He said it was something they were committed to. They’d help us with whatever we needed.
“At first I didn’t know what to say. It was really a remarkable gesture.”
Robert C. Tucker, a business litigator and partner with the Toledo firm of Robison, Curphey & O’Connell, clerked for Zouhary in 2009 and 2010. “He was a great teacher and mentor for me,” Tucker said.
Zouhary, he said, is “a very careful, very good writer.” Drafts submitted to the judge invariably came back abundantly, meticulously marked up with questions, suggestions, and editing marks.
“It was good, constructive feedback,” Tucker said, diplomatically.
Zouhary, he recalled, liked to bring bakery goods to conferences with his clerks.
“He’s just a caring person,” Tucker said. “He was genuinely interested in us, in how things were going, in what he could do to help us. As someone just out of law school, that meant a lot to me.
“But I did gain a few pounds.”
The bakery goods remain a custom. At least once during the Forest Park trial, the judge has brought cookies for the jury.
*** *** ***
Zouhary, as we Texans like to say, isn’t from around here.
The Forest Park case — a dispiriting epic of greed, corruption, doctors, bribery, doctors, greed, money laundering, insurance manipulation, overpriced surgeries, greed, and doctors – was originally assigned to U.S. District Judge Sidney Fitzwater of Dallas.
Fitzwater relinquished it when, in 2017, he was dispatched to Amarillo (like Dallas, part of the Northern District of Texas) to help alleviate a backlog of federal criminal cases there – a backlog exacerbated by a rash of retirements and unfilled vacancies.
Zouhary, from the Northern District of Ohio, was brought to Dallas as a visiting judge to oversee Forest Park.
I asked him if he’s ever been to Amarillo. He has not.
So when I said Fitzwater got the short end of the deal, the joke, without a cultural context, may have foundered.
Zouhary’s style of humor, often on display in court, might be categorized as “temperate Midwestern.” It’s folksy and good-natured, never cruel or caustic. It’s hard to imagine him telling any joke that wouldn’t be appropriate at a Rotary Club luncheon.
At his confirmation hearing in 2006, he told the Senate Judiciary Committee that he employed humor in court to tamp down tempers and nudge lawyers past uneasy moments.
“There are times when it does get tense,” he said. “Humor can be a great way to defuse the situation and allow the parties to resume a professional decorum.”
In the Forest Park trial, prosecutors and defense lawyers had a brief disagreement over one exhibit – but not brief enough, in the judge’s view. The back-and-forth got snippy, and he quickly called a sidebar, where an animated discussion continued.
“Counsel,” Zouhary said afterward, “I would politely ask that you reduce your intake of caffeine, please.”
One day, with 5 p.m. nearing, the prosecution was wrapping up direct examination of a witness.
Zouhary didn’t want to make the witness return the next morning. He hoped defense lawyers could squeeze in their questions quickly. But with nine defendants in the case, there were, potentially, nine defense lawyers ready to take their turns at cross-examination.
Hoping against hope, Zouhary started to ask the defense lawyers if they thought they’d be brief. Then he checked himself. Among this group, brevity is not a core competence.
“I guess that was somewhat a rhetorical question,” he said. He told the witness to come back in the morning.
He sometimes keeps an eye on the clock that’s high on the courtroom wall to his left, above the crowded, L-shaped defense table. His checks occur more frequently, and more impatiently, when he senses an ebb in the jury’s endurance, when he thinks a lawyer’s questions are growing repetitive or veering off topic, and on days at the end of a week when he’s going home and has a plane to catch.
The lawyers would do well to notice when his interest in the clock intensifies.
During one protracted cross-examination, Kelly Vickers, one of the defense lawyers for Dr. Douglas Won, started to turn to one more in what had been a long sequence of exhibits.
“Let’s take a look at…” she said.
“The clock?” Zouhary chimed in, smiling.
Vickers picked up the pace.
Later that same day, a cross-examination by Chris Lewis, the lawyer for Dr. Shawn Henry, stretched inexorably toward 5 p.m. The judge had made it clear that one juror needed to leave by 4:45.
“Were you aware…” Lewis started to ask the witness.
“Were you aware of what time it is?” the judge interrupted.
Lewis wrapped it up.
*** *** ***
Zouhary joined the bench after a long, lucrative career as a commercial litigator and business lawyer in Toledo. He was nominated by President George W. Bush on Dec. 14, 2005, to succeed U.S. District Judge David Katz, who had assumed senior status.
Three months later, on March 16, 2006, the Senate confirmed his nomination by a vote of 96-0.
He was born in Toledo on Dec. 18, 1951, the son of Lebanese immigrants. Toledo has been his home ever since. It’s where he and his wife, Kathleen, also a lawyer, raised two daughters, Katie Marie and Alexis.
The Ivy League lured him eastward, but only briefly. The valedictorian of his high school class, he was accepted into Dartmouth College and graduated cum laude in 1973. He soon headed home, enrolling in law school at the University of Toledo, where he earned his J.D. in 1976.
He was hired out of law school by Robison, Curphey & O’Connell, a firm that traces its lineage in Toledo back to 1874. Over the next 23 years, he cultivated a varied, business-oriented civil practice, doing trial and appellate work involving antitrust issues, labor law, real estate, environmental regulation, probate and estate planning, insurance defense and medical malpractice defense.
In 2000, he was named senior vice president and general counsel of S.E. Johnson Cos. Inc. of Maumee, Ohio, a highway contractor not to be confused with S.C. Johnson of Racine, Wisc., the maker of Windex, Pledge, Raid, Scrubbing Bubbles, and Ziploc bags.
He tried his hand at electoral politics in 2004, running for a seat on the Court of Common Pleas in Lucas County, the county of which Toledo is the seat. The Court of Common Pleas is Ohio’s state trial court of general jurisdiction, the equivalent of state district court in Texas.
Zouhary lost the election by more than 30,000 votes, but made it onto the state court nonetheless. Months after his defeat, Bob Taft, then Ohio’s Republican governor, appointed Zouhary to fill a vacancy on the Court of Common Pleas. He’d been there just a short time when the White House called.
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As a jurist, he’s probably best known for his fervent, almost zealous embrace of a movement to promote civility and professionalism in the legal community. He promotes it in speeches to law students, legal gatherings and civic groups across Ohio. One lecture, delivered last October at the University of Akron School of Law, was titled, “Civil Litigation is Not an Oxymoron.”
“The practice of law changed from the time I first started,” he told senators at his confirmation hearing. Civility and professionalism “for whatever reason … tended to deteriorate, and I think it is perhaps reflective not just of our judicial system but society as a whole.”
In private practice, he said, he was able to represent clients effectively and energetically “and yet maintain a professional decorum. It does not have to reduce to the lowest level.”
“I, of course, take that with me to the bench and in my courtroom strive to maintain the highest… standards of civility and professionalism.”
The Toledo Bar Association’s vision statement extols the city as “a unique place to practice law in a culture of camaraderie, collegiality, competence and mutual trust,” language that could have been lifted directly from one of Zouhary’s speeches.
Lagusch, the bar association’s executive director, noted that Toledo’s legal community is small. His group has 1,400 members, compared with 11,000 for the Dallas Bar Association.
“Your adversary in a case today may your adversary in a different case three years from now,” he said. “So lawyers here find ways to get along, even when they’re on opposing sides. They don’t have a choice. They have to treat one another decently. They can’t be clawing at each other’s throats.”
Judges, Zouhary says, can help shape the conduct of the lawyers who come before them. By extension, they can change the profession.
If a judge is cordial and collegial, if she’s even-tempered and well-mannered, then smart lawyers – even those to whom such comportment may not come easily – will take their cues from the bench. To do otherwise would not serve the lawyers’ interests or those of their clients.
The rising tide of decorum lifts all boats.
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The Forest Park trial is entering its seventh week.
I’ve been there from the start, and Zouhary hasn’t once raised his voice in the courtroom.
He may have come close.
After one objection Tom Mesereau, the lawyer for Dr. Michael Rimlawi, rose and asked, oddly, “Can I comment?”
The judge looked vexed and perplexed. “No! No comments!” he replied sternly.
Mesereau sat down.
And after a moment, Zouhary reversed himself. “Okay, briefly — make your comment,” he said with a smile.
Mesereau did so. He kept it brief.
Four prosecutors and maybe 18 defense attorneys took part in questioning the government’s 47 witnesses. (The prosecution rested two weeks ago. Defense testimony began last Monday.)
Many of those lawyers, clever and vigorous advocates, could have irked a different judge.
Often during the trial, I’ve thought of Richard Matsch, the brilliant but flinty former chief judge for the District of Colorado. Matsch didn’t get angry; I think he was born that way. He hated grandstanding in his courtroom, and one of his many ironclad rules was that once he made a ruling, all discussion was over. A lawyer incautious enough to test the limits of this policy would quickly find them. “Sit down and shut up!” the judge would explain.
Zouhary’s approach couldn’t be more different.
“I promised myself when I took the bench that I would not forget my years as a trial lawyer,” he said at his confirmation hearing, adding that he always tries to “remember what it is like to be on the other side of the bench.”
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On a last, personal note: Judge Zouhary has gone out of his way to be courteous and helpful to me throughout the Forest Park trial.
This isn’t just rare for a federal judge; in my long experience, it’s unprecedented.
At the start of the trial, he asked, through his clerk, if I would stop by during a break and introduce myself. (He knew The Lawbook was covering the trial because we’d written to him in advance, requesting authorization to bring a laptop and cellphone into court.)
When we met, we chatted about Ohio State football (he’s a Buckeyes fan), Notre Dame (I’m an Irish fan), his family back home, my background as a reporter, and the capricious early spring weather in North Texas.
Once, when the jury was taking its morning break but the parties were present in court, he thanked me from the bench, by name, for what had been a small act of courtesy on my part.
In one excruciatingly embarrassing moment, my cellphone rang while a witness was testifying. It was the one and only day I’d forgotten to silence it before entering the courtroom. Zouhary could have been furious. He had every right.
My ringtone is “Here Come the Irish,” which the judge apparently recognized as the song played just before kickoff at every Notre Dame home football game.
He looked my way as I silenced the damned thing, then said: “I don’t know whether to smile or stand up.”
And when I needed a place to plug in my laptop, Zouhary gave me permission to move a heavy wooden bench in the hallway outside his courtroom and place it next to the only outlet around. (If this seems a minor thing, try walking into any federal building and moving furniture around. See what the armed security officers do.)
Throughout the Forest Park trial, that bench and outlet have served as an office, spartan but immensely convenient, for which I’m grateful.
I mean, it’s not a baked cookie, but…
Day 23: A rough restart, a Sunday workday and a good word for ‘Dr. Nick’
A longtime practice manager for Dr. Nick Nicholson testified Friday that his boss never steered patients to Forest Park Medical Center, and never instructed his staff to do so.
Denise Cleere said the decision on where Nicholson’s bariatric surgeries would take place (like most surgeons, he had privileges at a number of hospitals) depended on an array of factors, including the patient’s health and clinical needs, the availability of operating rooms, Nicholson’s schedule, the patient’s schedule, and what the patient’s insurance would or would not cover.
What was never a factor, she said, was Nicholson’s $70,000-a-month marketing payments from Forest Park.
Federal prosecutors contend that those payments, which added up to more than $3.6 million for Nicholson, were Forest Park’s way of masking bribes to the well-known weight loss surgeon for patient referrals.
After six weeks, the trial of Nicholson and eight other defendants is winding toward its conclusion. U.S. District Judge Jack Zouhary told jurors at the end of Friday’s session that he hoped they would get the case to begin deliberations by next Wednesday.
That was a day later than the judge’s earlier estimate. Tom Melsheimer, Nicholson’s attorney, said he has one more witness to call, perhaps the last witness for any of the nine defendants.
Zouhary and lawyers for both sides met in his chambers after court adjourned Friday to work on the jury charge. The judge said they’ll reconvene on Sunday.
Cleere is clearly fond of Nicholson and his father, surgeon Dan Nicholson. She described “Dr. Dan” and “Dr. Nick” as caring, conscientious physicians who always have their patients’ best interests at heart.
During cross-examination by Assistant U.S. Attorney Andrew Warmani, Cleere acknowledged that she and other staff members at the Nicholson Clinic for Weight Loss Surgery kept in touch with Forest Park personnel about which of Nicholson’s patients the doctor-owned hospital would accept. The government says Forest Park, an out-of-network hospital, billed insurance companies at far higher rates than what in-network hospitals can charge under the terms of their contracts with insurance carriers. Only patients with out-of-network benefits would be covered if they were sent to Forest Park.
She also said she knew about Forest Park’s policy of charging patients only what they would pay at an in-network hospital as their share of the hospital bill.
The market effect of this policy, insurance executives have testified, was to sweep away a financial deterrent to patients’ going out of network and racking up huge bills. Normally, a patient’s portion of a hospital bill for an out-of-network surgery could run to tens of thousands of dollars. If the same surgery could be done at an in-network hospital, the patient’s out-of-pocket costs would be much less – and more of them, according to the government, might squawk about their doctors sending them to Forest Park.
Earlier Friday, Assistant U.S. Attorney Katherine Pfeifle completed her barbed cross-examination of one of Nicholson’s co-defendants, Dr. Michael Rimlawi, a spine surgeon.
Rimlawi is the only one of the five doctors among the defendants who chose to take the stand. The government says he and his former business partner, Dr. Douglas Won, a co-defendant, took $8 million in payoffs from Forest Park.
As he had the previous afternoon, Rimlawi accused the government of frightening and coercing witnesses who’d testified earlier that he was a willing participant in Forest Park’s dollars-for-surgeries racket.
He challenged the mental stability of one of them, Dr. David Kim, who pleaded guilty to accepting almost $4.6 million in bribes and kickbacks from Forest Park and is cooperating with authorities.
“I think Dr. Kim had a meltdown after you guys indicted him,” Rimlawi said.
He questioned the accuracy of the government’s charts.
He challenged Pfeifle’s choice of words. She’d ask a question about the marketing money Forest Park had paid to him. He’d correct her, insisting that Forest Park hadn’t paid him a dime. The money, he said, went to third-party marketing companies, some of which were controlled by Rimlawi’s relatives or business associates. She would then pointedly follow up with another question about “the money Forest Park paid you.”
After a few answers like, “That’s completely untrue,” “I never said that,” and, “You’re completely wrong, Ms. Pfeifle,” Zouhary interceded, as he had Thursday evening.
“Everybody chill out!” he told Rimlawi and Pfeifle, rising from his chair.
“I was hoping we would have a smoother start than we did,” the judge said, “as compared with yesterday’s finish.”
There were those among the spectators who, truth be told, were hoping the opposite.
‘I’m totally confused sometimes why I’m even here’
Day 22: Dishwasher-to-doctor, the weariness of jurors and water on the brain
Dr. Michael Rimlawi, one of the surgeons on trial for taking bribes and kickbacks from Forest Park Medical Center, swore Thursday that he’s innocent. And he’s can’t believe anyone would think otherwise.
“I’m totally confused sometimes why I’m even here,” the 47-year-old doctor said.
He later added, “I never took a kickback or a bribe.”
Rimlawi said he had no inkling that there was anything improper about his accepting monthly payments of $100,000 or more from Forest Park to cover the advertising costs of his medical practice, the Minimally Invasive Spine Institute.
“I never for one second thought that it was illegal. Not for a second,” he said.
The 47-year-old spine surgeon was the second of nine defendants in the Forest Park case to take the stand in his own defense. The other was Carli Hempel, a non-medical administrator at Forest Park.
With the defense case winding down, it’s unlikely that any of the other four doctors on trial will take the stand.
U.S. District Judge Jack Zouhary told the jurors at the end of Thursday’s session that he hopes testimony, closing arguments and jury instructions can be completed in time for them to begin deliberations next Tuesday. The trial began with jury selection on Feb. 20.
On Thursday, outside the presence of the jury, Zouhary cautioned the lawyers for both sides not to dawdle as they wind toward the conclusion of testimony.
“This case has taken longer than it should have,” he said. “This group,” he said, motioning toward the empty jury box, “has been very attentive. I can feel their weariness. I can feel my weariness.”
Rimlawi was on the witness stand for more than four hours Thursday, and he’ll return on Friday.
He said that after Forest Park approached him about marketing his minimally invasive surgical technique — as a way to promote both him and the hospital — he consulted with his business lawyers about how to properly set up a marketing contract. And he followed their advice.
Had any of those lawyers warned him to steer clear of the arrangement, he said, “I would not in a second have been involved in it. … I thought 100 percent that it was totally legitimate.”
The government contends Forest Park bribed Rimlawi and other surgeons to steer patients to the hospital, disguising the bribes in many cases as marketing payments.
On direct examination, Rimlawi said he took part in no such illicit arrangement.
“This is just crazy to me. … There was no side deal,” he told his chief defense lawyer, Tom Mesereau of Los Angeles.
“They say it. It’s not true.”
On cross-examination, Assistant U.S. Attorney Katherine Pfeifle recited the litany of witnesses, at least nine in all, who testified that it is true – that Rimlawi was paid by Forest Park to steer surgeries to the doctor-owned hospital.
In each case, Rimlawi questioned the incriminating witness’s motives or knowledge or both.
“So all of these folks who paid bribes that we’ve heard from, and all of these folks who received bribes that we’ve heard from, that was their deal. That was not your deal, correct?” Pfeifle asked.
Correct, Rimlawi replied.
Later, Pfeifle said: “Forest Park paid you $100,000 [a month] with no strings attached. That’s what you want us to believe?”
“Yes,” the doctor answered.
He took umbrage at the government’s contention that by engaging in medical fraud, he and the other Forest Park defendants pass the costs to anyone who pays for health insurance – that insider deals between hospitals and doctors increase the payouts that insurance companies must make, and, therefore, drive up insurance rates.
“I actually save healthcare costs,” Rimlawi said.
He explained that because his minimally invasive surgical technique, compared with traditional back surgeries, shortens hospital stays and recovery times, necessitates fewer blood transfusions and reduces the odds of post-surgical infections, Forest Park’s promotion of his practice helped hold down the costs of treatment.
“I’m actually saving healthcare dollars, not costing more,” he said.
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Lawyers despise the phrase “coaching witnesses,” but it’s standard practice for them to prepare witnesses for testifying before a jury.
At least they try.
For very long moments on the stand, Rimwali seemed less-disciplined and more directionless than a first-grade soccer team, a quality that did not go unnoticed by the presiding judge.
He rarely answered questions in one or two words when 500 would do. He would answer questions he was asked with monologues about things he wasn’t asked. So discursive were his soliloquies that U.S. District Judge Jack Zouhary repeatedly interceded to shut him up. “Let me suggest,” the judge said, “that we try and shorten our answers, please.”
During cross-examination, he accused the government of pressuring and scaring witnesses, coercing people to concoct false accusations against him in exchange for plea bargains, and “ruining my reputation in the community” by getting in touch with his former patients and telling them “Dr. Rimlawi took bribes and kickbacks.”
“I’m not guilty,” he said. “I did not do this stuff. I feel like they’re twisting facts.”
He suggested that one of his former patients, who testified that Rimlawi steered him to Forest Park — where the bill for his back surgery was exorbitant — was unreliable because he suffered from water on the brain.
In his answers, he sometimes called Assistant U.S. Attorney Katherine Pfeifle “Ms. Pfeifle,” except when he grew flustered. She then became “Mrs. Pfeifle.”
His first real job, he told her, was as a dishwasher. He worked hard to get to college, then make it through medical school to become a surgeon.
As a young doctor in Dallas, he said, he was living in an apartment and driving a rundown car. But by 2008, by dint of talent and hard work, he was able to purchase a nice house and drive nicer cars, he said.
“I believe I lived near you,” he told Pfeifle.
“But you moved up,” the prosecutor shot back.
According to records of the Dallas Central Appraisal District, in 2012 Rimlawi purchased an 8,900-square-foot home near Preston Road and Walnut Hill Lane. The five-bedroom home, with five full bathrooms, four half-baths, four wet bars, three fireplaces, and a pool cabana, is valued for tax purposes at $4.2 million.
‘Perfectly Lawful’ Agreements
Day 21: Safe harbor certainty and warnings too pricey to ignore
A prominent healthcare lawyer testified Wednesday that there was nothing illegal about three surgeons’ accepting hundreds of thousands of dollars a month in marketing payments from Forest Park Medical Center.
The lawyer, William Meier, a Hallett & Perrin shareholder, said he knew the doctors’ agreements with Forest Park were legitimate, because he’s the one who wrote them.
Not only that, he said, he spent “hundreds of hours” researching, drafting, and revising the agreements, explaining their provisions and implications to the doctors, and consulting with them once the agreements were executed to make sure his clients were in compliance with the law.
The three surgeons with whom he worked on the marketing contracts, Dr. Douglas Won, Dr. Michael Rimlawi and Dr. Nick Nicholson, are among hundreds of physicians Meier has represented over the years in healthcare-related matters. The three are also among nine defendants in the Forest Park bribery and kickback trial.
Meier, who speaks with the unfaltering assuredness of a corporate attorney accustomed to billing at $515 an hour, was the most compelling defense witness thus far. The defendants began calling witnesses on Monday, and expect to wrap up this week.
His testimony was a cannonball aimed at one of the pillars of the government’s case: that Forest Park bribed surgeons to steer patients to the hospital and hid the payoffs by disguising them as monthly “marketing payments.”
Nothing could be farther from the truth, Meier testified.
“You advised Drs. Rimlawi and Won that accepting marketing payments from Forest Park, if done appropriately, was perfectly lawful, correct?” said Tom Mesereau, Rimlawi’s defense lawyer.
“Correct,” Meier replied.
He gave similar responses to questions from Paul Coggins, Won’s lawyer, and Tom Melsheimer, Nicholson’s lawyer.
Meier said that in drafting the agreements, he made sure to include language to bring them into conformity with “safe harbor” provisions that protect doctors from being found in violation of federal laws and regulations involving personal-service relationships with healthcare institutions.
Those safe harbor guidelines, he said, include that an agreement be in writing; that it contain a reasonable description of the services being rendered; that its duration be of at least a year; that it set compensation in advance, at fair market value; that the compensation not take into account the value or volume of business between the parties (that is, that it be at a fixed rate, not based on some percentage of business done); and that it conform with all applicable state and federal laws.
“Were you giving him your best advice about the right way to do this?” Melsheimer asked, referring to his client Nicholson.
“Absolutely,” Meier said.
The government had sought unsuccessfully to exclude Meier’s testimony, arguing that whatever the lawyer advised his clients about how to set up a legitimate marketing agreement with Forest Park was irrelevant to the criminal case, since the physicians had ignored Meier’s advice and broken the law.
Prosecutors said the doctors had no “good-faith misunderstanding about the legality” of what they’d done, despite having been “repeatedly and emphatically warned them that this conduct was unlawful.”
On cross-examination Wednesday, Assistant U.S. Attorney Andrew Wirmani tried to draw a distinction between what a contract says and what the parties actually do.
A lawyer, he said, can’t determine a client’s intent or predict a client’s future actions “by writing something down on a piece of paper.”
Wirmani also noted that, according to prosecution witnesses, the marketing contracts were drafted and signed only after the doctors had already agreed to take part in the bribery scheme to send business Forest Park’s way in exchange for cash.
Alan Beauchamp, the former chief administrator of Forest Park, testified under a plea agreement that he recruited Won, Rimlawi, Nicholson and others into the conspiracy, then helped arrange ways to funnel the payments to them through written agreements between third-party business entities representing the hospital and the physicians.
The language of the contracts was meaningless, Beauchamp said.
“We papered it up to make it look good,” he testified.
Meier said that contention was preposterous.
He said he knew Won, Rimlawi, and Nicholson were sincerely interested in making sure their arrangements with Forest Park were legitimate. “I spent weeks with these gentlemen,” he said. “They clearly demonstrated their intent to me.”
Meier said Forest Park benefitted from underwriting ad campaigns for the doctors, even if those ads directly promoted only the doctors’ private practices and not Forest Park. Patients. he said, pick a surgeon, not a hospital. So marketing that boosts the former’s business automatically helps the latter.
Wirmani noted that Nicholson, Won and Rimlawi remain clients of Meier’s, and that he’s made a lot of money off of them.
“They are very good clients of the firm, yes,” Meier replied.
Defense lawyers said that’s further evidence that the doctors intended to operate within the law. If the marketing agreements were nothing but “a smokescreen for improper behavior,” said Mesereau, Rimlawi’s lawyer, the doctors wouldn’t have needed a top-dollar healthcare lawyer to draft them.
“If they were scammers and fraudsters and only wanted an agreement for show,” he asked Meier, the doctors wouldn’t have spent hundreds of hours consulting with their lawyer about the agreements, would they?
No, Meier replied, and “they wouldn’t have had to spend hundreds of thousands of dollars, either.”
Day 20: A clean tax return, a parade of pressure-free patients and screws in people’s spines
Defense lawyers for two spinal surgeons accused of taking bribes from Forest Park Medical Center sought Tuesday to convince jurors that their clients are clean as a sanitized scalpel.
A string of defense witnesses said they’d seen nothing improper while working with Dr. Douglas Won or Dr. Michael Rimlawi, two former business partners who started the Minimally Invasive Spine Institute on North Central Expressway near Walnut Hill Lane.
The two surgeons are among nine people on trial in the Forest Park case. U.S. District Judge Jack Zouhary said he expects the case to go to jurors early next week.
The defendants are accused of taking part in a bribery and kickback conspiracy in which Forest Park paid surgeons to steer business to the boutique surgical hospital.
On Tuesday, the second day of defense testimony:
- Teresa Ford, a healthcare lawyer, said she’d been hired by Won in 2009 to review a contract between an arm of Forest Park and a media company that did marketing for the doctor. Won, she said, made a point of telling her that “none of the money would be running through his practice.”
The government contends that Forest Park funneled payoffs to doctors through third-party entities to disguise the bribes and kickbacks.
- Donna Peterson, a certified public accountant, said she prepared the 2011 tax returns for a marketing company affiliated with Won and that it appeared to be a legitimate company.
- Michelle Bastidas, a former office administrator for Rimlawi, said there were several factors involved when deciding where to send a patient would be sent to for surgery. “The type of insurance the patient had played a role,” she said, but there was no concerted effort to steer Rimlawi’s best-insured payments to Forest Park, as the government contends.
- Jessica Quezada, Rimlawi’s surgery scheduler for the past 13 years, said he’s never pressured his staff to steer patients to Forest Park, and that a patient’s insurance benefits played no role in determining where a surgery would take place.
Earlier, government witnesses who’d been patients of Rimlawi’s testified that they were told their operations would take place at Forest Park, and that they were given no choice.
- Andrea Hunter, a nurse practitioner who worked with Rimlawi, said she liked assisting with surgeries there because it had exceptional equipment and a well-trained support staff. “When you’re putting screws in people’s spines … you don’t want the mediocre guy,” Hunter said. “You want the best guy.”
The defense has contended since opening statements that it was the hospital’s excellence – not monthly, under-the-cover checks – that led doctors to send patients there.
On cross-examination, Assistant U.S. Attorney Katherine Pfeifle asked Hunter: “Did he ever tell patients, ‘By the way, I’m getting paid $225,000 a month by Forest Park’?”
“No,” the nurse practitioner said.
A First Defense
Day 19: ‘I did what they told me to do’
The defense opened Monday with a defendant in the Forest Park bribery and kickback trial.
Carli Hempel, a former administrator at the North Dallas surgical hospital, testified in her own defense Monday morning.
She said she believed the monthly payments that Forest Park made to doctors who brought in high-dollar surgeries were perfectly legal.
The same was true, she swore, of a plan she helped devise to sell private information about people on Medicare and Medicaid. That wasn’t a clientele Forest Park wanted, in part because the government programs didn’t pay enough. But another hospital eager to have the business was willing to pay Forest Park $350 per name.
“At any point did you feel that you were breaking the law or doing anything wrong?” her lawyer, Phillip Hayes, asked.
“I did not,” she answered firmly.
Besides, she said, she was just following orders.
“I did what they told me to do,” she said, in a sour echo of the “Nuremberg defense.”
During cross-examination, Assistant U.S. Attorney Katherine Pfeifle implied that when Hempel was interviewed by federal investigators – once before her 2016 indictment and once afterward – she acknowledged the shady nature of Forest Park’s dealings.
Hempel was the first witness in the defense phase of the bribery trial of nine defendants. U.S. District Judge Jack Zouhary told the jury last week that he hopes deliberations can begin by next Tuesday (April 2). At least one other defendant, Dr. Michael Rimlawi, has indicated he plans to testify.
Putting ‘bodies on the table’
Hempel went to work for Forest Park in 2008, months before it opened. Her initial responsibility, she testified, was recruiting surgeons. Forest Park’s boss, Alan Beauchamp, testified earlier that he wanted surgery patients — “bodies on the table,” he once called them – on the day the doors opened.
Central to this recruiting effort were the hospital’s agreements to provide surgeons with “marketing money.” Defense lawyers say this was just good business: Robust marketing would boost the public profiles of the spinal and bariatric surgeons Forest Park was wooing. More billboards and TV commercials would bring the doctors more patients, which inevitably would mean business for Forest Park.
“Everyone at the hospital knew we were marketing doctors,” said Hempel, whose title at Forest Park was director of bariatric services.
She added, “We do marketing to increase business, and our business was surgery.”
Not quite, according to federal authorities. They say Forest Park’s business was buying surgeries by bribing doctors to steer patients there.
Beauchamp, testifying under a plea agreement, acknowledged as much.
He said the Forest Park’s “marketing program” was a ruse, and that the doctors pocketing the money knew they were doing so illegally.
The plan from the beginning, he said, was to bribe surgeons to use his hospital — even though those same surgeons had staff privileges at other area hospitals, where the same surgeries would have cost far less.
The bribes, Beauchamp testified, were passed from the hospital to the physicians through third-party businesses and hidden in written marketing agreements as a way cover everyone’s tracks.
Hempel testified that she relied on Beauchamp’s assurances that the “marketing program” was on the up-and-up.
“I took the word of my boss, who’d worked in healthcare for 30 years,” she said. She described their professional relationship as close; before and after Forest Park, she said, they worked together at other healthcare institutions.
Joint marketing by doctors and hospitals is legal and not uncommon in the industry. Slipping monthly checks to doctors to help stimulate their private practices or some form of joint marketing between doctor and hospital is legitimate. Buying patient referrals is different: It’s felonious.
Hempel said when was she first interviewed by federal agents, in August of 2016, she was surprised to hear them use the phrase “bribery and kickbacks.” She’d always just thought of Forest Park as a thriving, reputable, innovative business. “I had no reason to suspect anything else.”
She was surprised yet again, she testified, when she was indicted and arrested three months later.
To this day, she says, she doesn’t think Forest Park did anything wrong.
Pfeifle said Hempel told a different story in her interviews with authorities. She called the marketing payments “money for surgeries,” according to one agent’s notes. And she said she’d instructed people who worked for her to discount the patients’ portions of bills, or waive the payments altogether, so they wouldn’t raise questions that would draw scrutiny from insurers or regulators.
Names for $350
If insurance companies knew what Forest Park was up to, the interview notes quoted her as saying, “they wouldn’t want to pay.”
Hempel said she didn’t recall saying those things. If that’s what the interview notes say, they’re wrong.
The proposal to sell referrals of Medicare and Medicaid patients to another hospital, which Hempel helped put together, never got off the ground.
But if it had, there would have been nothing wrong with it. These were potential candidates for surgery who were reaching out to Forest Park or to doctors affiliated with it. Forest Park didn’t accept Medicare or Medicaid coverage. So sending them elsewhere was really a way to help them get the care they needed.
There are nine defendants. There has been no discussion in open court (though surely there has been in chambers) of how many witnesses, if any, each defendant plans to call. Through his attorney, one other defendant, Dr. Michael Rimlawi, has said he plans to testify.
And what about charging $350 for each name?
“You would not agree that selling Medicaid and Medicare leads is a kickback?” Pfeifle asked.
“I would not,” Hempel said.
The Government Rests
Day 18: Seven more court-days? Maybe; ‘Only two more questions…’? Not a chance.
The government has rested in the Forest Park medical fraud trial.
After a short morning session Wednesday, U.S. District Judge Jack Zouhary called a recess until 8:45 a.m. Monday, when the defendants will start presenting evidence.
Before dismissing jurors to enjoy their long weekend, the judge told them they may get the case to begin deliberations by April 2 – a week from next Tuesday.
That would leave seven court days for the defense cases, government rebuttal, closing arguments and jury instructions.
The judge’s timetable could prove optimistic, given the number of defense lawyers (considerably greater than the number of defendants, which is nine), their combined list of more than 200 potential witnesses (they promised to whittle it down before Monday), and the fondness some of them have for the spoken word (“Your honor, I have one or two questions” is a figure of speech, largely unrelated to the number of questions it precedes).
The trial began with jury selection on Feb. 20. The government called its first witness, a West Texas chiropractor, the next day; and its 47th and final witness, an Aetna healthcare analytics specialist, on Tuesday.
The government claims that Forest Park Medical Center of Dallas, a doctor-owned hospital that was near the intersection of Forest Lane and the North Central Expressway, was the nexus of a criminal conspiracy in which doctors and others accepted millions of dollars in bribes and kickbacks in exchange for sending patients Forest Lane’s way. In particular, the hospital sought out well-insured patients in need of expensive surgeries.
As a result of the bribery scheme, authorities say, Forest Park took in $200 million in insurance payments in just four years, from 2009 through 2012
The defendants are a weight-loss surgeon, three back surgeons, a pain-management doctor, a former top executive of Forest Park, and three others who were affiliated with the hospital.
All deny through their attorneys that they broke the law. The payments they received from Forest Park, they say, were the fruits of legitimate business arrangements – marketing agreements, consulting contracts, and so forth. The surgeons, through their lawyers, have said they directed patients to Forest Park not because they were on the take, but because it was a first-class surgical hospital with spacious, well-designed operating rooms, the latest in equipment and technology, and a skillful, dependable staff.
The nine defendants on trial were among 21 people indicted in 2016 as a result of a federal investigation into Forest Park’s financial dealings. Charges against one defendant, a Tyler doctor, were dismissed. A separate trial is pending for another defendant, a San Antonio lawyer who handled workers’ compensation cases.
Ten of the original defendants pleaded guilty and agreed to cooperate in the investigation. Among them were Alan Beauchamp, who was Forest Park’s top executive, and the two doctors who started the hospital, bariatric surgeon Wade Barker and anesthesiologist Richard Toussaint.
Beauchamp and Barker testified at trial for the government. Both said Forest Park’s plan from the moment it opened was to turn a fast profit by “buying surgeries” — paying doctors under the table for patient referrals. Both said the doctors who accepted the money – some of them more than $100,000 a month — were willing participants in what they knew was a criminal scheme.
Day 17: The 47th witness, a 5 percent anomaly, ‘Aetna SIU’
The government all but rested its case Tuesday in the Forest Park medical fraud trial.
The only things standing in the way are nine potential cross-examinations. (OK, and one redirect.)
Toward the end of the 17th day of the federal bribery and kickback trial, prosecutors called their 47th and final witness. Assistant U.S. Attorney Katherine Pfeifle was able to get through her direct examination of R. B. Harris, a healthcare analytics executive with Aetna, but the clock ran out before lawyers for the nine defendants could cross-examine him.
He’ll return to the stand Wednesday morning, when U.S. District Judge Jack Zouhary has promised jurors a short day, followed by a long weekend; after a truncated Wednesday session, the trial is in recess until next Monday.
Earlier Tuesday, two municipal supervisors, one from Allen and one from Dallas, described for jurors how their cities’ self-funded employee group health plans work.
Their implicit message, reinforcing an argument the prosecution made in its opening statement, was that medical insurance fraud costs everyone: inflated claims for benefits translate to higher costs for employers – in their case, higher costs for taxpayers.
The 2016 federal indictment underlying the Forest Park trial says the doctor-owned hospital was at the center of a vast, lucrative scam: Forest Park took in hundreds of millions of dollars, the indictment says, by bribing doctors and others to steer patients there. In particular, Forest Park sought to attract well-insured patients in need of costly surgeries.
Five doctors, a former top administrator of Forest Park, and three others who were affiliated with the now-defunct North Dallas hospital are on trial.
Harris, the Aetna executive, testified that soon after Forest Park opened in 2009, his company began to notice “abnormalities” in claims submitted by the hospital.
“We were seeing very high per-case costs from Forest Park Medical Center, he said. And an oddly large number of Aetna’s policyholders were having surgeries there.
The latter blip was particularly odd, he said, since Forest Park was “out of network,” meaning it hadn’t signed a contract with the insurance giant to provide services at fixed, negotiated rates.
Patients in many group plans have the option of going out of network, but relatively few do.
For one thing, insurers discourage the practice by making patients pay more as their share of the bill. Out-of-network providers, Harris testified, typically bill insurance companies at rates 30 to 50 percent higher than the in-network prices.
For another thing, as other prosecution witnesses have noted, the Dallas area enjoys an abundance of sophisticated, established hospitals that have network contracts with Aetna and other large carriers. There’s little that a patient can’t find in the way of care at one of those hospitals.
In August of 2010, he said, the “abnormalities” were referred to Aetna’s special investigations unit.
The company, and federal regulators, eventually learned that Forest Park was getting around the deterrent of higher costs to patients by reducing or simply waiving patients’ co-payments, while billing out the insurer’s portion at exorbitant rates.
From 2009 to 2012, the government claims, Aetna patients should have owed Forest Park $24 million in co-payments. But only $1.2 million, about 5 percent, was collected – a discrepancy Harris characterized as “fraudulent.”
A patient who’s told the hospital won’t charge her a dime may think she’s getting a good deal, he said. But in the long run, she’s not.
Waiving co-payments, he said, and, thus, inviting patients not to worry about how much their insurance company is being billed, “is going to drive up healthcare costs for the whole market. … More people will pay than just that one member.”
Companies that are self-insured through Aetna, faced with inflated bills, will either limit employees’ future coverage, Harris testified, or raise their premiums.
That’s essentially what happened in Allen, said Monika Kretschmer, the city’s human resources director. Allen, whose self-funded insurance program is administered by United Healthcare, has stopped offering its employees the option of using out-of-network doctors and hospitals because of the high costs.
She testified about a city employee who had back surgery at Forest Park. For a two-day stay in the hospital, his insurance bill was $400,000, she said. “That was astronomically high,” she said. The hospital bill for the employee’s procedure should have been no more than $100,000, she said.
Molly Carroll, who used to supervise healthcare coverage for 21,000 city of Dallas employees, their families, and retirees, said Dallas, too, has ceased to offer out-of-network benefits through its self-funded program.
Day 16: Cross-x questions (ask/repeat), a government ‘mega-contract’ and no rest for the prosecution
The Dallas Cowboys are either a football juggernaut, America’s team, the winningest franchise in NFL history.
Or they’re a bunch of directionless, overpaid underachievers who haven’t done squat in the post-season in almost a quarter-century.
It all depends on which numbers you choose to look at.
That was the message to jurors from defense attorneys Monday in the Forest Park medical fraud trial in U.S. District Court in Dallas. Lawyers for the nine defendants spent almost seven hours cross-examining a certified fraud examiner hired by the government.
Missy Parks, a partner in the national auditing firm of Myers and Stauffer, testified last week on direct examination that Forest Park Medical Center of Dallas paid off the defendants to steer patients to the surgical hospital between 2009 and 2012.
In her direct testimony, punctuated with colorful charts and graphs, she led the jury down a paper trail, tracing millions of dollars in payments from insurance carriers to Forest Park, from Forest Park to shell companies, and from those shell companies to the doctors or to business entities they controlled.
The government alleges that Forest Park, a for-profit, physician-owned hospital, made a fortune in a short time by paying bribes and kickbacks for patient referrals. The hospital sought out well-insured patients and specialized in surgeries – in particular, costly spinal and bariatric surgeries. Forest Park, a luxurious “boutique” hospital on the North Central Expressway near Forest Lane, closed its doors in 2015.
Parks told Assistant U.S. Attorney Katherine Pfeifle on direct examination that her analysis was based on hundreds of thousands of documents – from insurance claims, bank accounts, corporate filings, real estate records, emails, Forest Park’s paperwork and other sources.
In a marathon cross-examinations Monday – one that left jurors and even some defense lawyers looking punchy by day’s end – the defendants sought to dent Parks’s credibility by intimating that she’s in the government’s pockets and by reviewing, often with stupefactive repetition, the many things her analysis didn’t cover: the bank records she hadn’t reviewed, the statutes she wasn’t familiar with, the credit card statements she hadn’t seen, the Internal Revenue Service filings she hadn’t looked at, the calculations she hadn’t performed, the testimony she wasn’t familiar with, the doctors whose surgeries at Forest Park she hadn’t considered, the time periods she hadn’t taken into account.
Re-direct examination of Parks is to take place Tuesday morning.
During Monday’s noon recess, outside the presence of the jury, Judge Jack Zouhary said the prosecution could rest Tuesday, but it was unclear whether that timetable was thrown off by Parks’s unexpectedly long time on the witness stand
Monday was the 16th day of trial. The government so far has called 42 witnesses.
Chris Lewis, the lawyer for Dr. Shawn Henry, one of the defendants, introduced the Dallas Cowboys analogy in questioning Park’s analysis. (Parks, who lives in Baltimore, allowed that she’s a Ravens fan.)
Lewis suggested that a government witness could “manipulate” statistics to show whatever he or she wanted.
“There can be some cherry-picking going on” he said, to “prove whatever I wanted to prove.”
Defense lawyers also elicited testimony from Parks that the documents she used to create her summarizing charts and graphs were provided by prosecutors; that she discussed with prosecutors what her graphics would show and how they would show it; that the government has paid her auditing firm about $700,000 for its work on the Forest Park case; that she’s billing out at a rate 238.75 an hour; that Myers and Stauffer has a “mega-contract” to provide the federal government with auditing services; and that the firm does no work for private clients – only for government entities, including the FBI.
Those financial relationships, suggested Scott Thomas, a defense lawyer for Dr. Nick Nicholson, make the firm a “captive” of federal authorities.
That theme was echoed by Tom Mesereau, the lead attorney for Dr. Michael Rimwali.
“Are you telling this jury that you have no bias in this case?” he asked.
“No. I’m just here to do my job,” Parks replied.
Following the Money
Day 15: A paper trail, ‘Johnny Diamonds’ and a certified fraud examiner
It was follow-the-money day for jurors in the Forest Park medical fraud trial, and there was a lot to follow.
For nearly three hours Thursday, Missy Parks, a certified fraud examiner from the auditing firm of Myers and Stauffer, led the jury through the paper trail she created for the government, tracing tens of millions of dollars from health insurance companies to Forest Park Medical Center of Dallas; from Forest Park to shell companies; and from those shell companies to physicians or to companies the physicians controlled.
The doctors, five of whom are among the nine defendants in the U.S. District Court trial, then spent the hospital’s money, Parks testified, to market their own practices, finance building improvements, cover payroll and other office expenses, travel, and buy the sorts of luxury items that rich people like to buy.
One company controlled by defendant Douglas Won, a spinal surgeon, had a $47,000 expenditure to “Mercedes Benz.”
Another of his companies bought something from Louis Vuitton that cost $1,678. That company also wrote three checks, totaling almost $73,000, to jewelry stores, including one called Johnny’s Diamonds. The memo line on each check to a jeweler said it was for “marketing.”
A company controlled by defendant Mike Rimlawi, another spinal surgeon and Won’s onetime business partner, apparently spent $10,000 on Dallas Stars tickets.
Yet another company, one Rimlawi and Won controlled jointly, spent $21,700 on a party to celebrate the grand opening of their clinic, the Minimally Invasive Spine Institute, Parks said. According to earlier government testimony, that party was catered by Wolfgang Puck.
The central allegation in the trial is that Forest Park, a doctor-owned hospital, made a fast, vast fortune by paying bribes and kickbacks to physicians and others in exchange for their steering patients its way – in particular, well-insured patients in need of expensive spinal or bariatric surgeries.
Most of the bribes and kickbacks, the government says, came in the form of “marketing money” or “consulting fees.”
Lawyers for the defendant surgeons argue that the financial arrangements with Forest Park were legal and legitimate – that by marketing themselves with Forest Park’s money, for example, the doctors were also promoting the hospital. More importantly, they said, there were never any quid pro quo agreements to steer patients to Forest Park in exchange for cash.
Parks’s colorful charts and graphs told a different story.
Working with federal investigators, she testified, she compiled information from hundreds of thousands of pages of insurance claims, bank accounts, corporate filings, real estate records, Forest Park documents and other sources.
The records mostly covered different periods from 2009, when Forest Park opened, through 2012, when the “marketing program” – or, as the government likes to call it, the bribery and kickback conspiracy – began to come under scrutiny. Under different management, the hospital stayed open until 2015, but it struggled. It’s padlocked now.
The companies through which Forest Park made monthly payments to doctors – principally one called Adelaide Business Solutions – were shells, she testified. Adelaide, owned by defendant Jackson Jacob, seemed to have no business function “except to write checks,” she said.
The doctors did indeed use the vast majority of the money they got from Forest Park for marketing – billboards, TV spots, print ads, websites and so forth. But, Parks said, all of that marketing promoted the doctors; none of it promoted Forest Park.
The surgeons on trial all had privileges to operate at various area hospitals besides Forest Park. While some of them continued to take their business to Forest Park after the monthly payments dried up at the end of 2012, the volume of that work declined, Parks said.
Cross-examination of the auditor will take place Monday, when the trial enters its fifth week. U.S. District Judge Jack Zouhary told jurors the government expects to rest next week.
A Walk Amid the Acronyms
Day 14: ‘Papered-up’ payments, a jumble of jargon…’Oh, shit’
Beverly Oliver was a young associate from Jackson Walker, less than three years out of law school at the University of Texas, when she took a job as assistant legal counsel at Forest Park Medical Center of Dallas.
That was in February of 2012. Eight months later, she testified Tuesday, she was at a board meeting of the management company that ran the North Dallas surgical hospital when she was shown a list of doctors and marketing companies affiliated with them. Penciled in next to the names were various amounts – the monthly “marketing” payments Forest Park was making, through a shell company, to each entity on the list.
Her reaction was immediate, and not very lawyerly.
“Oh, shit,” she said.
Those payments of “marketing money,” totaling, eventually, $1.2 million a month, are at the heart of a medical fraud trial in U.S. District Court in downtown Dallas. Nine defendants, including five physicians and a former top administrator of Forest Park, face charges of bribery, receiving kickbacks, conspiracy, and money laundering. The trial, in its fourth week, is one of the most far-reaching medical fraud trials in the country.
The U.S. Attorney’s Office for the Northern District of Texas alleges that the defendants took part in a multimillion-dollar “pay for play” scheme. In exchange for under-the-table payments, the government alleges, doctors and others steered high-dollar surgeries to Forest Park from 2009, when the doctor-owned hospital opened, through the end of 2012, when the conspiracy unraveled.
Oliver is now senior managing counsel for United Surgical Partners International Inc., a company owned by Tenet Healthcare Corp. that provides ambulatory surgical services.
Testifying for the government in the Forest Park trial, she said that when she told her boss, Forest Park’s general counsel, Charlene Wandrisco, about the list of doctors and payouts, Wandrisco, a fellow Jackson Walker alumnae, was “stunned,” “surprised” and “concerned.”
Wandrisco had helped draft various marketing agreements and consulting contracts with doctors in Forest Park’s behalf. What neither lawyer knew at the time, Oliver said, was that the chief purpose of those contracts was to mask illegal payments to doctors who agreed to steer patients to Forest Park.
As Alan Beauchamp, the crooked executive who ran Forest Park, testified earlier, “we papered it up to make it look good.”
Oliver said she and Wandrisco sought outside counsel and recommended that the hospital’s “marketing program” be frozen, so every contract and payment could be scrutinized. In many cases, she said, the entities receiving monthly checks through Forest Park had provided no invoices or other documentation to support the payments. On paper, it looked like the entities were jointly marketing Forest Park and the surgeons. But in reality, she eventually learned, the money was going straight (or indirectly) into the docs’ pockets.
“Reviewing an agreement for what it is and how it’s implemented,” she testified, can be two very different things.
‘People make mistakes’
Wednesday morning’s testimony was largely an amalgam of acronyms and a jumble of jargon, as the government called to the stand bureaucrats from two federal health insurance programs.
Tim Revenaugh, a senior investigative analyst with the U.S. Department of Labor’s Office of Workers’ Compensation (DOL-OWCP), and Ed Deharte, a supervisor in the Office of Personnel Management (OPM), gave jurors a winding walk through, respectively, the Federal Employee Compensation Act (FECA) and the Federal Employees Health Benefits Program (FEHBP).
FECA provides workers’ compensation benefits to civilian government employees injured on the job. FEHBP provides health care insurance, through contracts with private providers, to 8 million federal employees and their families.
Both insurance programs are listed as victims in the federal indictment underlying the current trial. The indictment says that from 2009 through 2012, Forest Park paid $40 million in bribes and kickbacks to doctors and others to refer high-profit, well-insured patients to the North Dallas surgical hospital. In that time, the indictment says, Forest Park collected $200 million in insurance claims. The hospital’s “tainted and unlawful” billings included $19 million in FECA claims and $456 million in claims to patients covered under the FEHBP, according to the indictment.
Revenaugh and Deharte testified, sometimes in excruciating detail, about co-payments and co-insurance, HMOs and HSAs, pre-authorizations and provider enrollment forms, out-of-pocket expenses and out-of-network hospitals.
There was also discussion, especially on cross-examination, of what, exactly, a bribe or a kickback is.
Defense lawyers suggested that their clients did nothing unethical or fraudulent, since they thought, rightly or wrongly, their financial arrangements with Forest Park were legitimate business relationships.
“People make mistakes,” said Chris Lewis, the lawyer for Dr. Shawn Henry, a back surgeon.
Consider the poor
According to government witnesses, Forest Park typically billed insurance companies at rates far higher than many other Dallas-area hospitals. That should have meant much steeper co-payments for Forest Park’s patients. To get around that, witnesses have said, Forest Park and the surgeons it was working with would assure patients that the hospital would waive or greatly discount the patients’ portion of the bill. If the patients were billed at all, hospital employees have said, Forest Park would make only passing efforts to collect.
Four of the doctors on trial are surgeons: Henry, Dr. Douglas Won, Dr. Mike Rimlawi, and Dr. Nick Nicholson; the fifth, Dr. Mike Shah, is a pain-management physician.
Patients for all four surgeons have testified that said they never would have consented to have their surgeries done at Forest Park if they’d been forced to pay the thousands of dollars, sometimes tens of thousands of dollars, that they owed the hospital under the terms of their insurance coverage.
In one novel line of cross-examination, Tom Mesereau, the lawyer for Rimlawi, suggested that waiving patients’ bills was Forest Park’s way of helping the poor, a suggestion that may have seemed odd to jurors, given persistent defense characterizations of the hospital as an elite, luxurious institution with state-of-the-art technology, well-appointed private rooms and gourmet meals prepared to order by a staff chef — the “Ritz Carlton” of surgical hospitals, as one defense lawyer put it early on.
Mesereau pressed on in the face of all that.
Questioning Deharte, Mesereau observed that if a hospital didn’t waive patients’ payments – if its policy was to collect every penny owed, come hell or high water – then “low-income people could not go to that facility, correct?”
Deharte replied – though not at all concisely – that as an out-of-network hospital, one not under contract with insurers to provide services at fixed, negotiated rates, Forest Park was free to set its prices however it chose.
The implication was that if Forest Park really wanted to help poor folks, it could have simply lowered its surgery prices. Legally, there was nothing to prevent it from charging two bucks, instead of $250,000, for a spinal surgery.
According to the indictment, Forest Park paid Rimlawi $4,952,500 in bribes and kickbacks over a period of less than four years.
‘I would have tried to find a different surgeon’
Day 13: Signature regret, free car washes and a soft waive at co-pays
A former controller for Forest Park Medical Center of Dallas testified Tuesday that he quit after 13 months because he thought the hospital’s books were fishy and when he raised questions with top management, he never got satisfactory answers.
That testimony reflected the view expressed earlier by a former office employee of Dr. Douglas Won, one of the defendants in a federal bribery and kickback trial stemming from Forest Park’s operations. The office bookkeeper testified that she was forced to resign after expressing concerns about his office’s financial practices, telling the spine surgeon she didn’t think she would “look good in orange.”
And six patients of other physicians on trial in the case testified that they were steered to Forest Park by their doctors; that they didn’t know the now-defunct surgical hospital was billing their insurance companies at far higher rates than what other area hospitals would have charged; and that they had no idea that their physicians were getting monthly payments of “marketing money” – or, as prosecutors put it, “bribes and kickbacks” – from Forest Park.
It was a busy day of prosecution testimony in the trial of nine Forest Park defendants, including five surgeons and a former top administrator at the hospital. The trial, before visiting U.S. District Judge Jack Zouhary, is in its fourth week.
de minimis expenses…lots of them
David Wheeler, a certified public accountant with more than 20 years’ experience in the healthcare industry, told jurors about his experience as Forest Park’s controller from the summer of 2010 to the summer of 2011.
Wheeler, who now works for a physicians’ group in Birmingham, Ala., said he became suspicious at Forest Park when he would receive monthly requests for checks of $1 million or more for “marketing” expenses, with no accompanying invoices or other supporting documentation.
According to the government’s theory in the case, Forest Park paid bribes and kickbacks to doctors to bring high-dollar surgery cases to the hospital, disguising the payoffs as “marketing money.”
Wheeler said he asked his boss, Theresa Bachelor, Forest Park’s CFO at the time, why the small surgical hospital was spending such an enormous amount each month on marketing.
“Really, I never got a response that was satisfactory to me,” he testified.
He said he found it odd that the physician-investors who owned Forest Park were receiving monthly distributions of up to $400,000 or $500,000 each. The hospital, after all, was new, small, and doing business in a highly competitive healthcare market, one that includes several large, established medical centers.
The huge monthly distributions to Forest Park’s owners, he said, were “indicative of the profits that were being made.”
The government claims Forest Park raked in more than $200 million in insurance payments from 2009 through 2012, largely by paying $40 million in bribes and kickbacks to doctors and others who agreed to steer patients to the now-padlocked hospital.
Wheeler said he also questioned, to no avail, Forest Park’s expenses for gifts to doctors, including free car washes and tickets to concerts and sporting events. Individually, the expenses were de minimis, he said, but, collectively, there were a bunch of them. And they struck him as irregular.
Under direct examination by Assistant U.S. Attorney Marcus Busch, Wheeler said he’s worked for several hospital companies over his career, including Baylor Scott & White and Tenet Healthcare, and that he’s never seen such expenditures for gifts to doctors. Hospitals, he said, have to tread carefully to avoid even the appearance of paying remuneration to doctors for funneling business to the hospitals.
Wheeler said he decided to leave Forest Park because its financial dealings, and management’s seeming indifference to the questions he raised, were “something that became of grave concern to me.” He said he wasn’t about to risk losing his license as a certified public accountant.
Under cross-examination by Ed Tomko, the lawyer for defendant Mac Burt, who was one of Forest Park’s top administrators, Wheeler acknowledged signing in Forest Park’s behalf a “representation letter,” an instrument attesting to the accuracy of financial statements submitted by a company to outside auditors, in April 2011.
In the letter, Wheeler stated that he knew of no “fraud or suspected fraud” by anyone in Forest Park’s management.
On re-direct examination by Busch, Wheeler said he didn’t know at the time he signed the representation letter that the $1 million in monthly “marketing payments” from Forest Park was being used to induce doctors to send surgeries to the hospital.
Had he known that, “I would not have signed it,” he said.
‘I didn’t look good in orange’
Earlier, Faith Tellez, a former office employee of defendant Won and his onetime partner, defendant Michael Rimlawi, testified about steering patients of the two spinal surgeons to Forest Park — provided they had the right kind of medical insurance.
Tellez processed insurance billings and handled other paperwork for Rimlawi and Won at their outpatient clinic, the Minimally Invasive Spine Institute, on North Central Expressway near Walnut Hill Lane. Later, when Rimlawi and Won dissolved their business partnership, she went to work for Won.
She said she knew Forest Park was paying to market MISI through billboards, TV commercials, and the like.
And, she said, even though Rimlawi and Won had privileges at other area hospitals, she and others at MISI were instructed to schedule patients for surgery at Forest Park if those patients had “out-of-network” insurance coverage, meaning they were covered even for work done at hospitals that didn’t have network contracts with their insurance carriers.
Out-of-network hospitals typically bill insurance companies at higher rates than what in-network hospitals agree to charge – and Forest Park certainly did.
Tellez testified that patients of Won and Rimlawi were assured they wouldn’t have worry about the higher co-pays that insurance companies impose to discourage patients from going out-of-network. They might receive bills, she would tell patients, but no one would try to collect on them.
She said the arrangement between Forest Park and MISI made sense to her, at least at first. Forest Park was just up the road, along the North Central Expressway near Forest Lane. And the doctor-owned hospital “was pretty much like walking into a luxury hotel.”
“We prided ourselves on being a boutique clinic. So we would send our patients to a boutique hospital,” she said.
Later, however, when she went to work for Won at his new practice, she began to have misgivings about some financial practices, she said. When she raised those concerns, telling Won, “I didn’t look good in orange,” she was asked to resign, she testified.
The surgery was fine, but…
John Keck, a patient of Rimwali’s, needed back surgery to address complications from a herniated disc.
Rosalie Rich turned to defendant Nick Nicholson, a bariatric surgeon, after being advised by her regular doctor that she should consider a gastric bypass to control her weight.
They and other patients of defendant doctors in the case wound up at Forest Park. The six patients who testified Tuesday all had group health insurance.
All testified they paid nothing, or almost nothing, as their portion of the hospital bill.
On cross-examination, none of them said they took issue with care that their doctors had provided.
The government’s line of questioning, however, focused on the cost, not the quality, of that care.
Keck, a software engineer for Ratheon, said he was troubled to learn after his surgery that Forest Park had billed United Healthcare, which administered Ratheon’s self-insurance program, more than $273,000. United Healthcare paid more than $236,000 on the claim.
Keck said he’d researched his surgery online, and he knew the going hospital rate was no than $74,000 – and often far less.
“I felt guilty,” he said, knowing his co-workers would share in the cost of his surgery through their payroll contribution to Ratheon’s self-insurance fund.
Keck testified that when he later raised the issue with Rimlawi — and mentioned that he’d also complained to United Healthcare and to Ratheon’s human resources department — Rimlawi “was visibly upset,”
“He said, ‘They didn’t charge you, did they?’” Keck testified. “I said, ‘No, but that doesn’t matter.’”
Rich, now a retiree living in Durango, Colo., underwent three surgeries at Nicholson’s hand – her initial gastric bypass at Baylor University Medical Center in Dallas around 2009; and two follow-up procedures at Forest Park, one in 2011 and one in 2012.
She was asked by Assistant U.S. Attorney Marcus Busch if she would have consented to going to Forest Park – which billed Aetna, her insurance carrier, more than $108,000 for her two surgeries there – if she’d known Nicholson “was receiving bribes or kickbacks from Forest Park.”
“I would have tried to find a different surgeon,” she answered.
‘I Haven’t Ran A Lot of Companies’
Day 12: A doleful Richard Crenna, a Capital Grille-ing and an extra $2,500 a month
For a guy who owned a hospital, Dr. Wade Barker didn’t pay much attention to owning a hospital.
Or so he swore Monday in court.
Barker, a weight-loss surgeon, was a co-founder of, and one of the principal investors in, Forest Park Medical Center of Dallas. The now-padlocked surgical center, according to federal investigators, was at the heart of an audacious, multimillion-dollar bribery and kickback scheme. The government alleges that from 2009, when the glitzy North Dallas hospital opened, through the end of 2012, Forest Park made under-the-table payments to physicians in exchange for patient referrals and for performing high-margin surgeries there – notably, spinal and bariatric procedures.
Under a plea bargain, Barker took the stand Monday as a prosecution witness in the trial of nine people, including five physicians, who were affiliated with Forest Park. The trial, in U.S. District Court in Dallas, is in its fourth week. It’s expected to continue through the end of March.
The government, he testified, has agreed to recommend a sentence of no more than five years to six years and five months in prison in exchange for his cooperation and truthful testimony.
Barker testified that he took $100,000 to $125,000 a month from his own hospital in exchange for performing surgeries there. He also talked about his role in recruiting other doctors into the scheme, including some of the defendants. And he said that defendant Mac Burt, one of Forest Park’s two top administrators, was in on the conspiracy.
Consistent with testimony from previous government witnesses, Barker said the payments were typically funneled through shell companies and disguised as “marketing money.”
Barker, like other doctors who got the monthly checks, said he did indeed use the money for marketing — billboards, TV and radio spots, brochures and the like. But the hospital’s real purpose in making the payments, he testified, was to buy surgeries.
“It was common sense that we were not giving marketing money to generate cases for another hospital,” he said.
He said he and Dr. Richard Toussaint, an anesthesiologist, decided to start a physician-owned hospital after they learned, working together at a previous institution, that the hospital was making many times as much on each surgery as the doctors were getting.
As an out-of-network hospital, one not under contract with group insurance companies to do work at fixed, negotiated rates, Forest Park was able to charge exorbitantly, sometimes billing carriers more than $200,000 for a single back surgery.
Barker said he and Toussaint brought in other doctors as minority investors, and hired Burt and another longtime healthcare executive, Alan Beauchamp, to run Forest Park. (Toussaint and Beauchamp have also entered into plea bargains with the government. Toussaint could still be called to testify in the trial, which entered its fourth week; Beauchamp, the confessed architect of the bribery and kickback plot, testified earlier.)
Barker and Beauchamp both testified that all four of them – Barker, Toussaint, Beauchamp and Burt – understood from the get-go what the plan was: To make a fortune by paying off doctors to steer patients to Forest Park. All of them knew it was illegal, they testified, as did the physicians who were recruited into the scam.
“We basically wanted high-volume, high-margin surgeries,” he said.
The money rolled in. Barker said Forest Park’s underwriting of his advertising, to the tune of $100,000 or more a month, “made an enormous difference in the volume of patients coming to my practice.”
But beyond the general outline, the surgeon testified, he had only a vague idea of what was happening day-to-day at the hospital he helped start and of which he owned a big chunk. He said he left to others, mostly Beauchamp and Toussaint, the details of a fraudulent enterprise that drove his hospital into bankruptcy, flushed his medical career down the toilet, and has him headed to a federal prison.
‘A perfectly righteous, good deal’
At 54, Barker bears a resemblance to the actor Richard Crenna. Through most of his four hours on the stand Monday, he looked doleful and uneasy. (Imagine Crenna impersonating Eeyore.)
His testimony affirmed an old joke among commercial litigators: As businesspeople, doctors usually make outstanding doctors.
Pressed for details on Forest Park’s finances, he repeatedly gave answers like, “I wasn’t part of that discussion,” “I have no direct knowledge of that,” and “I didn’t completely understand it.”
He said he spent maybe an hour a week in meetings related to the management of Forest Park. The rest of his 10- or 11-hour workdays, he said, was taken up with surgeries or patient consultations.
He served on the board of the management group that ran Forest Park, he said, but he only attended perhaps half of its meetings.
He testified about a dinner at the Capital Grille at the Crescent in Uptown, where, he said, he helped woo Dr. Nick Nicholson, one of the defendants. But under cross-examination by Tom Melsheimer, Nicholson’s defense lawyer, he said he could recall no discussion at that dinner of the amount of “marketing money” Nicholson was to receive, or the number of surgeries Nicholson was expected to perform at Forest Park.
In a trial where the government has provided defense attorneys with more than 1.5 million documents that could be used as evidence, Barker couldn’t cite a single email or text exchange with Nicholson. In fact, he acknowledged, he barely knew Nicholson, a fellow bariatric surgeon, and rarely saw him at Forest Park because they operated on different days.
Another defendant, Dr. Shawn Henry, is accused by the government of having taken $30,000 a month, $840,000 in all, in bogus consulting fees to funnel cases to Forest Park. The payments were made, according to prosecutors, through a commercial real estate company, the Neal Richards Group, that Barker and Toussaint formed. Other government witnesses have testified that they couldn’t point to any consulting that Henry did for that money.
“Of course, he was expected to bring cases to Forest Park,” Barker testified.
Henry was getting $30,000 a month, according to prosecutors. But Toussaint was sending over $35,000 a month from Forest Park to the Neal Richards Group to cover those payments. The leftover $5,000 was then split between Toussaint and Barker, according to records.
Barker said he wasn’t sure why, but “I didn’t mind getting an extra $2,500 a month.”
He told Chris Lewis, Henry’s defense lawyer, that he had no idea how the consulting fees were conveyed to Henry, no idea when Henry’s consulting contract began or ended, no idea what consulting advice Henry might have provided to Beauchamp or to the Neal Richards Group, no idea whether Henry had run the arrangement past a lawyer (Lewis says his client did), and no idea whether, from Henry’s standpoint, the consulting contract might have appeared to be a “a perfectly righteous, good deal.”
In fact, he said, he’d been to the offices of the Neal Richards Group, his own commercial real estate company, maybe twice.
On re-direct examination, Assistant U.S. Attorney Katherine Pfeifle asked Barker, “Have you, in your career as a surgeon, ever had anyone offer you $840,000 with no strings attached?”
“No,” the doctor replied.
However, he added, “I haven’t ran a lot of companies.”
‘No profit’ from a mercy mission
In January 2010, days after a catastrophic earthquake in Haiti, Toussaint, Barker’s partner, chartered two Gulfstream IV jets from Love Field (later joined by a third private aircraft) and led a mercy mission of doctors, nurses, and others from Forest Park to treat the island nation’s wounded.
The trip, at the time, drew gushy praise from Dallas news outlets. Toussaint, in their instant narrative, was a humanitarian hero.
“We’re there to save lives, and the sooner we get there the quicker we can get that done,” he told NBC5.
“They needed help and supplies, and we just felt a compulsion to do something,” he told The Dallas Morning News.
Barker, in his testimony Monday, said Toussaint’s trip infuriated him, and that he expressed his anger to others in Forest Park’s management.
It wasn’t that he minded helping suffering Haitians, Barker said. It was that Toussaint hadn’t checked with him, Burt or Beauchamp first.
“He just did this unilaterally,” Barker testified. Toussaint, he said, charged the charter of the jets to Forest Park, and he packed the planes with medical supplies swept from the hospital’s shelves.
“We weren’t going to make any profit by spending this money.” Barker testified.
Minimally Invasive Invoicing
Day 11: Marketing, A $5 Million Mansion and Catering by Wolfgang Puck
Two Dallas spine surgeons used monthly payments of “marketing money” from Forest Park Medical Center as a giant ATM, spending tens of thousands of dollars from the hospital on, among other things, a lavish reception, catered by Wolfgang Puck, for the clinic they owned, according to testimony Thursday in their federal bribery trial.
One of the two, Dr. Doug Won, also dipped into the so-called marketing funds to pay more than $158,000 in construction-related costs on the multimillion-dollar mansion he had custom-built on two acres in Preston Hollow, a government witness testified.
And a third spine surgeon, Dr. Shawn Henry of Fort Worth, got $30,000 a month through Forest Park for “consulting work” that appears to have involved neither consulting nor work, according to prosecution witnesses.
Henry, Won, and Won’s former business partner, Dr. Mike Rimlawi, are among nine defendants on trial in U.S. District Court in Dallas in a case alleging widespread fraud at Forest Park, a physician-owned surgical hospital that opened in North Dallas in 2009 and closed in 2015.
In a nutshell, the government claims Forest Park “bought surgeries” by paying off doctors, chiropractors, and others to steer patients to the hospital. Typically, the payments to doctors were disguised as “marketing money” funneled through shell companies, prosecution witnesses have testified.
If the doctors wanted to use the monthly payments, sometimes $100,000 or more, to advertise their practices, that was fine with Forest Park, according to the government’s theory of the case; if they didn’t, that was fine, too – as long as they continued to push surgeries Forest Park’s way.
Defense lawyers for the doctors on trial, five of the nine defendants, have countered that their clients did nothing wrong – that the physicians’ financial arrangements with Forest Park were legal, legitimate joint-marketing ventures. Co-marketing between doctors and hospitals is an accepted industry practice; taking money under the table to steer patients to a particular hospital, on the other hand, is a federal felony.
A home office
On Thursday, prosecutors called to the stand Simmie Cooper, the general contractor who built Won’s “very large, modern custom home” in 2011 on Inwood Road near Walnut Hill Lane. (Very large, in this case, means 12,512 square feet, according to the Dallas Central Appraisal District, which values the home for tax purposes at $5,202,820.)
Cooper was shown a series of checks, in amounts ranging from $14,551 to $61,544 written to his contracting company from a marketing entity affiliated with Won. Each check matched to the penny an invoice the builder had sent Won for work on the Inwood Road house. Yet, the notation on each was an abbreviation for “business office development” or “office development.”
“At any point, did you ever do business office development for Dr. Won?” asked Assistant U.S. Attorney Katherine Pfeifle?
“No, I did not,” the homebuilder said.
On cross-examination, Mario Nguyen, one of Won’s attorneys, asked if there wasn’t a “home office” in the mansion. Cooper replied that it was a study.
Another government witness Thursday was Greg Long, who handled marketing for the Minimally Invasive Spine Institute, a heavily advertised outpatient surgical clinic that was owned by Won and Rimlawi. He testified under a grant of immunity.
Long said the $200,000 to $225,000 a month his company received through a “marketing” entity associated with Forest Park was, for the most part, used for marketing – billboards, TV spots, internet ads and so forth.
Still, he said, he thought the expenditures were “questionable” because “Forest Park expected surgeries to be done at their facility in exchange for the marketing moneys provided.”
He also testified that the Forest Park cash was used to pay a $12,257 catering bill from Wolfgang Puck for a grand opening reception at the Minimally Invasive Spine Institute in April 2011, a fete intended, he said, to make “a big splash that MISI was here.”
Tom Mesereau, Rimlawi’s lawyer, noted on cross-examination that Forest Park officials attended the catered reception, where they could mingle with lots of physicians, including some from out of state. His suggestion was that footing Wolfgang Puck’s bill was a legitimate promotional expenditure that could benefit the hospital.
The day’s final witness was Derrick Evans, a commercial real estate executive who used to work for the Neal Richards Group, a real estate firm created by the two physicians, Richard Toussaint and Wade Barker, who were Forest Park’s principal owners. Both Toussaint and Barker have pleaded guilty in the bribery and kickback case and could be called as prosecution witnesses.
Evans’ title at the Neal Richards Group was chief executive officer. But the firm, he acknowledged, was really run by Toussaint and Barker.
He said he was approached by Toussaint and Alan Beauchamp, the top administrator at Forest Park, in 2009 and told that he should hire Henry, the Fort Worth back surgeon, as a medical consultant for an expansion of the hospital that the Neal Richards Group was overseeing.
“I don’t know that I needed one,” he said, but he signed a contract anyway under which the real estate company was to pay Henry $30,000 a month – $305 an hour for up to 100 hours of consulting a month.
After that, he said, he never saw an invoice from Henry, never consulted with him about anything, and knows of no services that Henry provided for the Neal Richards Group or Forest Park.
Toussaint, he said, handled all payments from the real estate company.
The trial resumes Monday.
As an “out-of-network” hospital, one not under contract with major insurance carriers to provide services at fixed, negotiated rates, Forest Park could bill extravagantly for surgeries, especially spinal and weight-loss surgeries.
Normally, patients covered by group healthcare plans are discouraged from going out of network by having to pay a significantly higher percentage of the costs of their care. Forest Park got around that, witnesses have testified, with a nod-and-a-wink: Patients were told the hospital wouldn’t charge them any more than what their co-payments would have been at an in-network facility; and sometimes, Forest Park made no attempt to collect even that lower co-pay.
Meanwhile, the hospital would bill insurers, including UnitedHealthcare, Aetna, Cigna, and others, many times what the in-network charges would have been for the same surgical procedures.
The 2016 indictment from which the current trial emanates alleges that Forest Park took in $200 million in insurance benefits in less than four years, while paying $40 million in kickbacks and bribes.
Won’s cut, it says, was $5,945,000. Rimlawi’s was $4,952,500, Henry’s $840,000.
‘Raise your right hand – as best you can’
Day Ten: An Orange Jumpsuit (with cuffs)
The defendants in the Forest Park Medical Center fraud trial got a glimpse Wednesday of one dark ending that could await them when a witness entered the courtroom in chains, handcuffs, and an orange prison uniform.
Andrew Hillman, originally indicted along with the nine defendants in the bribery and kickback trial, testified for the government about his efforts to recruit doctors to the now-defunct North Dallas surgical center by “giving them money to bring patients to the hospital for surgery.”
Hillman, a longtime entrepreneur in the healthcare field and, by his own account, a serial scam artist, told the jury in U.S. District Court that four of the nine defendants – Drs. Doug Won, Mike Rimlawi, Nick Nicholson and Shawn Henry – were among those he helped induce to steer surgeries to Forest Park in exchange for monthly payoffs, disguised as consultant fees or “marketing money.”
He said a fifth defendant, Mac Burt, one of the two top administrators at Forest Park, was in on the surgeries-for-bribes plot from the get-go.
Like several government witnesses in the first 10 days of the trial, Hillman was testifying under a plea agreement – but he was the first to appear in prison garb. The others are awaiting sentencing after the conclusion of the current trial.
Hillman, unlike the others, has been accused by federal authorities of a smorgasbord of illegal schemes, including but not limited to participating in the Forest Park bribery and kickback conspiracy.
Facing the possibility of up to 65 years in prison, he cut a deal with the government last fall, pledging to cooperate with authorities in exchange for a recommendation that he spend no more than 5 to 15 years in prison.
In custody since last July, he’s incarcerated at the Federal Correctional Institute in Seagoville.
He appeared in court Tuesday wearing his baggy orange prison uniform over a white, crew-neck T-shirt and navy slip-on sneakers. His hands were cuffed together in front of him, and locked to a chain around his waist.
“Raise your right hand – as best you can,” said the court clerk when he swore Hillman in.
Gift cards for pee cups
With his onetime business partner, Semyon Narosov, Hillman ran a network of pharmacies and testing labs that, according to court documents, paid kickbacks to doctors and their associates for sending over costly prescriptions to be filled, regardless of whether the prescribed drugs were “in the best interest of the patients.”
They gave strangers $50 gift cards to pee into cups in Whataburger restrooms, according to the documents, then sent the urine samples to their own labs for costly, pointless testing for which they billed insurance companies.
They bought a medical marijuana dispensary in California, then shipped pot, more than 100 kilograms of it, to states across the country, including Texas, where marijuana sales and possession remain illegal.
They were brokers working with Alan Beauchamp, who ran Forest Park with Burt and who has confessed to being the mastermind behind the hospital’s bribes and kickbacks to doctors and others. Hillman testified that he and Narosov were to receive 10 percent of the net profits Forest Park made from surgeries by doctors on the take to steer business there.
And after the Forest Park scam collapsed, in late 2012 or so, Hillman said, he and Narosov started a new chain of hospitals, Victory Medical Centers, to carry on the same illegal practice of paying doctors for surgeries, recruiting some of the same doctors who’d done business with Beauchamp at Forest Park.
On cross-examination, Chris Lewis, Henry’s defense lawyer, asked him, “Mr. Hillman, is it fair to say that for the past 10 years you’ve been a one-man crime spree?”
Not exactly, Hillman replied. “I had a partner, sir.”
Narosov has also pleaded guilty and could be called as a prosecution witness.
Assistant U.S, Attorney Andrew Wirmani acknowledged that his witness has a sordid criminal record. But most of the time, he noted on redirect examination, Hillman was in cahoots with crooked physicians.
Is bribery, he asked, “a crime you can engage in alone, or do you need another willing participant.”
You do indeed, Hillman answered.
Pomp and nasal
If there’s a weight room for inmates at Seagoville, Hillman seems not to have found it. At 43, he’s pasty and paunchy. He struggled awkwardly, in his handcuffs, to take a sip of water or remove his glasses to read documents he was shown.
In his exchanges with defense counsel on cross-examination, he was smug, at times condescending, but not in a way that evoked a figure of power and authority, someone to be reckoned with. Rather, he came across more as an irritating combination of nasally nebbish and know-it-all.
He didn’t just spar with the defense lawyers, who include some of the shrewdest, most savvy trial lawyers in North Texas; he admonished them, time and again, to do a better job with their questions.
“You’re confusing things,” he told Tom Mesereau, the lawyer for Rimlawi. “I don’t agree with your comment,” he told Paul Coggins, the lawyer for Won.
Tom Melsheimer, the lawyer for Nicholson, suggested that his client had every reason to believe that when Hillman talked to Nicholson about doing weight-loss surgeries at Forest Park, the doctor was dealing with a reputable healthcare professional.
You didn’t say at those meetings, “I’m really a fraudster and a cheat?” Melsheimer asked.
“No, sir, Hillman replied.
And you weren’t wearing an orange jumpsuit and handcuffs, like you are today?
And you weren’t accompanied, like today, “by two U.S. marshals standing five feet from you?”
“They’re FBI agents,” Hillman corrected him.
When a juror sneezed in the middle of one of his answers, he stopped in mid-sentence, turned to the juror and said, “Bless you.”
He brought a fast halt to the proceedings when he told Mesereau, famously the criminal defense lawyer for Michael Jackson, “I’ve looked at your resume…”
“Whoa, whoa, whoa, whoa,” U.S. District Judge Jack Zouhary broke in, but not before the disgraced pop singer’s name was out of Hillman’s mouth.
Day Nine: ‘Bring gall bladders – something’
Once a famous weight-loss surgeon, Dr. David Kim no longer operates. On Tuesday, though, he did his best to stick a knife in an old friend.
Kim testified in U.S. District Court that from 2009 to 2012, he took millions of dollars in bribes from Forest Park Medical Center of Dallas, the now-shuttered hospital at the center of a sweeping medical fraud investigation.
And, he said, so did Nick Nicholson, his close friend, a fellow bariatric surgeon, and one of nine defendants on trial in the Forest Park case.
Kim recounted a conversation in which Nicholson told him, “We need to monetize our patients as much as we can.” The result, Kim told jurors, was that both he and Nicholson struck illegal deals with Forest Park, in which they were paid to funnel patients to the hospital and perform surgeries there.
The bribes, according to Kim and other government witnesses, were disguised as “marketing money” doled out by the hospital to doctors on a monthly basis through shell companies created to mask the payments.
Kim also implicated two other defendant doctors, spinal surgeons Doug Won and Mike Rimlawi, in the bribery scheme. He testified about separate conversations in which they acknowledged that they, too, were receiving the monthly payments. And he said defendant Mac Burt, one of Forest Park’s two top administrators, knew doctors were being bribed to drive business to the North Dallas hospital.
On all those points, he corroborated the testimony of the witness who preceded him, Alan Beauchamp, Burt’s partner in running Forest Park and the confessed architect of the dollars-for-surgeries bribery scheme.
Kim, the ninth prosecution witness, appeared under a plea agreement, as had Beauchamp. Both were among 21 people indicted in 2016 in connection with a federal investigation of Forest Park — one of the most far-reaching medical bribery and kickback investigations in years. The current trial, of five doctors and four others associated with Forest Park, stems from that indictment.
Federal authorities say Forest Park took in $200 million in insurance billings in less than four years, while shelling out $40 million in bribes and kickbacks to doctors and others who sent patients to the physician-owned hospital. Both Kim and Nicholson were investors in Forest Park.
Kim pleaded guilty to one felony count in the 2016 indictment, soliciting or receiving illegal remuneration, and to a separate charge, not part of the Forest Park indictment, of filing false income tax returns.
“I accepted money in exchange for patients, sending patients to Forest Park,” he testified, adding, “And I cheated on my taxes.”
In exchange for his cooperation, the government pledged to recommend that he be sentenced to no more than five years in prison; if convicted of everything he was charged with in the indictment, he could have been locked up for 20 years.
He didn’t mention it on his direct examination by Assistant U.S. Attorney Andrew Wirmani, but Kim also agreed to pay the government $5.1 million in restitution related to the tax-evasion case. That came out on cross-examination by Kelly Vickers, a lawyer for Won. Kim also told her that over the years, he’d failed to report $18 million in income on his federal tax returns.
Defense attorneys for the doctors on trial contend that the financial arrangements their clients had with Forest Park involved legitimate marketing or consulting agreements, and that there was no quid pro quo agreement tying the payments to the numbers of surgeries each doctor steered to the hospital. The doctors, their lawyers have said, operated at Forest Park, on the North Central Expressway near the LBJ Freeway, because it was convenient to their offices and, more importantly, because it was a top-flight surgical hospital.
Kim, however, recounted a conversation with Beauchamp in which the latter expressed his displeasure that Nicholson wasn’t sending more surgeries Forest Park’s way in exchange for the $70,000 in “marketing money” Nicholson was getting each month.
“Hey, your buddy Nicholson, he needs to bring more cases to the hospital if he wants his marketing checks,” Kim recalled the hospital executive’s telling him.
Kim said he relayed the message to Nicholson, advising him to pick up the pace. “If you can’t bring a weight-loss surgery, bring gall bladders – something.”
Nicholson’s reply, Kim said, was “I understand and I will.”
Kim began his more than four hours of testimony by telling the jury that he’s no longer a doctor. He said he voluntarily relinquished his medical license in 2017.
“After long and painful consideration, and long soul-searching, I felt that I no longer deserved to practice medicine. … I dishonored my profession,” he said.
But under cross-examination by Tom Mesereau of Los Angeles, Dr. Rimlawi’s lawyer, Kim acknowledged that the Texas Medical Board would have yanked his license anyway, once he pleaded to two federal felonies.
Mesereau also got Kim to acknowledge that he’d been involved in a “scam” to pass off weight-loss surgeries, which some insurance policies wouldn’t cover, as surgeries to repair hiatal hernias, which would be covered. Kim also acknowledged telling patients in need of follow-up bariatric surgeries to show up at Forest Park’s emergency room, so they could be admitted, with any follow-up care covered by insurance where it might not otherwise be.
Tom Melsheimer, Nicholson’s lawyer, questioned the depth of the friendship between Kim and Nicholson. Kim told him on cross-examination that he didn’t know where Nicholson lived, had never visited his home, didn’t know the names of Nicholson’s two sons, and couldn’t say where the boys went to school.
“Some friend,” Melsheimer said.
Referring to Kim’s guilty plea in the tax-evasion case, Melsheimer said, “You come before this jury as a convicted liar.”
Kim testified that both he and Nicholson did independently use the money from Forest Park for legitimate marketing. Both weight-loss surgeons became well-known in the greater Dallas area once they appeared in TV commercials and were featured on billboards along well-traveled highways.
Still, Kim said, taking Forest Park’s money and using it to promote their separate practices was wrong – and they both knew it.
“It’s all the same,” he testified. “It was just a bag of money.”
Among the fineries that defense lawyers have pointed to in portraying Forest Park as an elite, attractive hospital was its employment of a chef who would prepare gourmet meals for patients, each of whom enjoyed a spacious private room.
But Kim said fancy meals were of no benefit to bariatric surgery patients, who weren’t allowed to eat for days after they were operated on. Their diet, he testified, was restricted to protein shakes, which, wherever they’re served, “taste pretty yucky.”
Day Eight: A Shell Company and ‘Administrative’ Leave
No one should trust this grifter, least of all the jury.
That was the predictable message Monday of defense attorneys cross-examining Alan Beauchamp, the former chief operating officer of Forest Park Medical Center, in the federal kickback and bribery trial of five physicians and four others who were affiliated with the now-defunct North Dallas surgical hospital.
One by one, for more than seven hours, defense lawyers took their whacks at Beauchamp, who has admitted paying bribes to surgeons for performing operations at Forest Park; and kickbacks to doctors, chiropractors and others for referring patients there. Beauchamp is testifying for the government under a plea agreement.
Last week, through five hours of direct examination by Assistant U.S. Attorney Andrew Wirmani, Beauchamp implicated each of the nine defendants as knowing, willing co-conspirators in the payoff scheme.
According to a 2016 federal indictment, Forest Park paid out $40 million in bribes and kickbacks from 2009, when it opened, through 2012, when Beauchamp and his fellow administrators were ousted. In that same time, the indictment said, the hospital collected $200 million in insurance benefits for surgeries and other procedures performed there.
Re-direct examination of Beauchamp is to take place Tuesday morning. After that, the government’s next scheduled witness is Dr. David Kim, a bariatric surgeon who, like Beauchamp, is cooperating with prosecutors under a plea agreement.
The defense hopes to persuade jurors that Beauchamp is singing for Uncle Sam to save his own hide (which is true) and that he’s a lifelong liar and con artist (which, he says, used to be true but isn’t now).
It was a long day for Beauchamp, one in which he answered dozens of defense questions with “I can’t remember,” “I can’t recall,” “Possibly,” or “I’m not sure.” Last week, on direct examination, he testified in a voice that was firm and assertive. Repeatedly during Monday’s cross, U.S. District Judge Jack Zouhary had to remind him to speak up and into the microphone.
Tom Melsheimer, the lawyer for Dr. Nick Nicholson, practically sprinted from the defense table to the attorneys’ podium when it was his turn to grill Beauchamp.
In recruiting Nicholson, a weight-loss surgeon, to Forest Park, “you did not present yourself as the fraud and criminal you are today, did you?” Melsheimer asked.
“No sir,” Beauchamp answered.
In general, Melsheimer went on, when he approached doctors about working with Forest Park, “you didn’t tell them, ‘I’m a crook and a fraud,’ did you?”
“No, sir,” Beauchamp answered.
“It strikes me, sir,” Melsheimer later said, “that there were really two Alan Beauchamps” — the admitted swindler now testifying for the government, and the “well-known, well-versed, capable, competent health care expert” that Beauchamp presented himself as for 40 years. Nicholson, Melsheimer suggested, assumed he was dealing with the honest, trustworthy Alan Beauchamp — not with the architect of a vast, blatant medical fraud.
Paul Coggins, the lawyer for Dr. Douglas Won, elicited on cross-examination an admission from Beauchamp that he took $1 million over the years from a company, Adelaide Business Solutions, that the government says was a shell entity created as a vehicle for funneling payments to doctors and others. (One of the nine defendants in the case is Jackson Jacob, an acquaintance of Beauchamp’s who owned Adelaide.)
In what was “really an embezzlement scheme,” Coggins said, Beauchamp would submit invoices in the amount of $20,000 or $25,000 to Adelaide and be paid, for doing nothing. Beauchamp admitted doing so, saying the two doctors who were principal owners of the hospital, Richard Toussaint and Wade Barker, were aware of what he was doing. Both Toussaint and Barker have pleaded guilty in the case and are cooperating with prosecutors.
Beauchamp also admitted to Coggins that he took part in an illegal scheme, which never came to fruition, to “sell” lower-paying Medicare and Medicaid patients to another hospital. (Forest Park greatly preferred patients with comprehensive private medical insurance that would allow billings at far higher rates.)
The government, Coggins said, never charged Beauchamp in the embezzlelments, and agreed not to prosecute him for roughly 18 other felonies for which he could have been sentenced to 130 years in prison. His agreement with the government calls for a maximum of 10 years in prison, in exchange for his admitting to two felony counts.
Beauchamp said a lesser sentence was certainly an inducement to accept the plea bargain. But, he added, he pleaded guilty because “I was guilty.”
Tom Mesereau, the lawyer for Dr. Mike Rimlawi, the co-founder, with Won, of the Minimally Invasive Spine Institute, got Beauchamp to acknowledge that he lied when first questioned by federal investigators looking into Forest Park’s financial dealings. Beauchamp told the government initially that the payments to doctors were legal marketing expenditures, and that many other hospitals had similar marketing programs. He also testified under Mesereau’s cross-examination that he told doctors he was seeking to sign up that the payments were legal.
Later, under his deal with the government, Beauchamp would say the “marketing money” he paid out to doctors was for the sole purpose of buying their surgeries for Forest Park; and that the doctors knew it.
Chris Lewis, the lawyer for Dr. Shawn Henry, a spine surgeon, elicited testimony that brought to light numerous inconsistencies in Beauchamp’s statements during seven meetings with federal investigators from September of 2013 to May of 2015, as well as inconsistencies between those statements to authorities and his trial testimony.
At one point, Beauchamp acknowledged, he told the government that Henry wanted $500,000 a year to steer surgeries to Forest Park. Another time, the doctor’s supposed price tag was $1 million a year, and twice, according to the investigators’ summaries of those sessions, he said Henry wanted $1 million a month.
“I think that’s a typo,” Beauchamp said of the $1-million-a-month figure.
He was off by nine months in telling authorities when monthly payments of $30,000 to Henry ended in 2011. The payments, ostensibly consulting fees paid to Henry by a real estate company controlled by Drs. Toussaint and Barker, were, in the government’s theory of the case, bribes.
And he couldn’t explain why, if the monthly payments were a quid pro quo for Henry’s performing surgeries at Forest Park, the doctor continued to operate there for eight months after the consulting contract expired.
Beauchamp previously testified that he expected doctors to perform a certain number of surgeries a month at Forest Park in exchange for their consulting fees or “marketing money,” and that doctors who underperformed saw their payments reduced or eliminated altogether.
He could offer no explanation, however, for why the payments to Henry were never lowered or cut off, even though the doctor never once, during the 28-month tenure of his consulting contract, achieved the 25 to 30 surgeries for which Beauchamp had penciled him in.
“You’re saying this was a pay-to-play scheme?” Lewis asked.
“Yes,” Beauchamp answered.
“You pay if they play?”
“If they don’t play, you don’t pay?”
Yet, Beauchamp acknowledged, his own records from Forest Park records reveal no such direct correlation in Henry’s case.
More than one defense attorney noted that initially, Beauchamp sought immunity from prosecution; and that only when it became apparent to him that that wouldn’t fly, he pleaded guilty in exchange for 10 years in prison.
Lewis asked him if his goal in dealing with the government wasn’t to get as little time behind bars as possible, while taking as little responsibility as possible for his crimes.
The reduced sentence was certainly a potent incentive, Beauchamp acknowledged.
“But my goal was: the jig’s up, I got caught, come clean.”
Beauchamp parted ways with Forest Park in October 2012, for what’s been described only as “misconduct unrelated to this case.”
Though jurors are clearly curious, Judge Zouhary has allowed nothing more to be said in open court about the reasons Beauchamp left the hospital.
In February 2017, D magazine, quoting from what it said was an internal Forest Park memo, reported that Beauchamp was accused of sexually harassing hospital employees, “including employees whom Beauchamp demoted because they refused to reciprocate his sexual advances.” The magazine said Forest Park’s human resources department had investigated harassment complaints against Beauchamp; it did not say whether the allegations were related to his departure.
Beauchamp took issue with Melsheimer’s saying he was fired by Forest Patrk. “I was placed on administrative leave,” the witness said.
“Well,” the defense attorney shot back, “it’s been a heck of a long administrative leave, hasn’t it?”
Day Seven: Two ORs and Gourmet Breakfast
Forest Park Medical Center was a cushy place for doctors, even if they weren’t getting bribes or kickbacks.
“We washed their cars for them. We served them gourmet breakfasts. We got them front-row, courtside seats to Dallas Mavericks games,” said Alan Beauchamp, the former chief operating officer of the former surgical hospital that’s at the center of a medical fraud trial in U.S. District Court in Dallas.
Beauchamp, who pleaded guilty to two felony counts, is testifying for the government in the trial, where five doctors and four other defendants stand accused of bribery, accepting kickbacks, conspiracy and money-laundering.
Through five hours of direct examination Wednesday and Thursday by Assistant U.S. Attorney Andrew Wirmani, Beauchamp described in detail how he recruited doctors to the North Dallas hospital when it opened its doors in 2009. In many cases, he said, he did so by bribing doctors to funnel business his way.
Because he and the doctors knew what they were doing was illegal, Beauchamp testified, he and others at Forest Park, including defendant Mac Burt, his former partner in running the hospital, set up elaborate ruses to mask the payments as consulting fees, professional service fees, or “marketing money.”
“What does ‘marketing money’ mean?” Wirmani asked.
“Buying surgeries,” Beauchamp replied.
Cross-examination of Beauchamp by Paul Coggins, the lawyer for Dr. Douglas Won, a spinal surgeon, had barely gotten under way Thursday afternoon when the trial was recessed until Monday morning.
With Coggins just getting warmed up, and eight more defense lawyers waiting for their shot at a potentially damning government witness, Monday stands to be a long and unkind day for Alan Beauchamp.
In addition to offering doctors monthly payoffs, some of them $100,000 or more, Beauchamp said, he would woo them by treating them like royalty. Many recruiting meetings took place over drinks and dinners at high-end spots including Sambuca and the Mercury Grill. Beauchamp always picked up the tab.
He testified that his motto in dealing with doctors whose surgeries would bring in millions of dollars was: “Do what you can to say yes.”
If a surgeon wanted the use of two operating rooms, he got it. If a surgeon wanted to operate at night or on weekends, he could. If a surgeon requested a piece of equipment that the hospital didn’t have, Forest Park would find it for him.
Coggins, in his early cross-examination, sought to impress upon jurors that Forest Park was to hospitals what a Stradivarius is to fiddles. He characterized it as a “state-of-the-art” surgery center with a “world-class” staff and the latest in technology, all of which meant an unrivaled patient care.
Staff members were instructed that if they were in Beauchamp’s office and a doctor stopped by, the staffers were to get up immediately and leave, “so the doctor wouldn’t be kept waiting.”
Coggins and the defense lawyers for the other doctors on trial will argue that their clients didn’t need to be bribed – and weren’t – to bring their business to Forest Park. They came because the physician-owned hospital was such a jewel.
Beauchamp confirmed in response to Coggins’s questions that the rate of infection among Forest Park patients was less than 1 percent, excellent for a surgical hospital. He acknowledged that Forest Park was, by far, the nicest hospital he’d worked in in 40 years as a health-care administrator.
All patient rooms were private. A staff chef prepared meals to order for patients. “A little better,” Coggins allowed, “than your typical hospital food.”
Still, magnanimity has its limits.
Beauchamp testified that one defendant, Dr. Shawn Henry, a Fort Worth spinal surgeon, pushed beyond those limits.
In exchange for sending surgeries to Forest Park, Beauchamp said, Henry got $30,000 a month. The payments were disguised as “consulting fees” paid by a real estate company that was owned by two of Forest Park’s founders, Dr. Richard Toussaint and Dr. Wade Barker. (Both of them have pleaded guilty and, like Beauchamp, are cooperating with the prosecution.)
A contract shown to the jury spelled out the duties Henry was to perform as a real estate consultant. In truth, Beauchamp said, Henry did none of those things. “He wanted money for his surgeries,” Beauchamp said. “We had to find a mechanism to pay him.” The “consulting” deal was that mechanism.
But Henry wanted more, Beauchamp said. At one point, the surgeon asked Forest Park to buy him four season seats to the Dallas Cowboys – in Jerry Jones’ luxury box, no less. The cost would have been $1 million.
Beauchamp testified that he and Burt said no.
But, the witness said, he couldn’t blame Henry for trying. The surgeon knew Forest Park was rolling in money. He knew that when a doctor wanted something, Forest Park did what it could to say yes.
“I guess there was no harm in asking,” Beauchamp said with a smile.
Day Six: “I bought surgeries”
The confessed architect of a vast and flagrant kickback scheme at Forest Park Medical Center of Dallas took the stand Wednesday in U.S. District Court and pointed an unwavering finger at his nine former associates on trial.
Alan Beauchamp, who was chief operating officer of the now-shuttered North Dallas surgical hospital, testified that he brought in millions of dollars from 2009 to 2012 by paying bribes and kickbacks to doctors for sending business his way.
In sum, he said, Forest Park “bought surgeries,” a practice he and every medical professional knew was illegal. The payoffs — sometimes totaling as much as $1.2 million a month — were disguised, he testified, as “marketing money” or consulting fees, and transmitted to doctors, lawyers, nurses, and others through shell companies created for that purpose.
“We papered it up to make it look good,” he said.
Asked by Assistant U.S. Attorney Andrew Wirmani if the doctors that he recruited into the scam were receptive, Beauchamp replied, “Oh, absolutely.”
The former hospital executive appeared as a government witness under a plea agreement. One of 21 people indicted in 2016 in connection with Forest Park’s financial dealings, he cut a deal with the prosecution, pleading guilty to two felony charges in hopes of being sentenced to no more than 10 years in prison.
His direct testimony resumes Thursday morning, after which he’ll be subject to cross-examination that could run into next week. (The trial is not in session on Friday.)
One by one, Wirmani ticked off the names of the five defendant physicians, Douglas Won, Nick Nicholson, Michael Rimlawi, Shawn Henry, and Mike Shah, and asked: “Is he one of the doctors that you bought surgeries from?”
“Yes,” Beauchamp replied.
The prosecutor then asked if each of the other four defendants — all employees or associates of Forest Park, including Mac Burt, who shared top executive duties with Beauchamp — knowingly took part in the conspiracy.
“Yes,” Beauchamp again replied.
Forget the co-pay
“Marketing money,” he testified, only went to doctors who agreed to perform surgeries at Forest Park or refer patients there or both. Beauchamp said he closely monitored the numbers of patients that each doctor on the take was sending his way; those who underperformed saw their monthly payoffs reduced or cut off, he said.
“If I was paying for their surgeries,” he said, “I wanted to make sure I was getting a return.”
The bribery and kickback scam paid off handsomely for the doctors involved, some of whom got $100,000 or more in illicit payments each month.
It was also lucrative for Beauchamp and Burt, his former co-administrator. Through a management company they formed, Beauchamp said, they were paid 3 percent of Forest Park’s collectible revenues. Split between them, he said, that amounted to “in excess of $1 million” a year for each of them.
In his charcoal suit, white-on-white French cuffs and russet tie, the bald-shaven, goateed former executive had the mien of someone who strides into a boardroom knowing the seat at the head of the table is his.
For 2 1/2 hours Wednesday, he answered Wirmani’s questions crisply and concisely, never appearing nervous, and never displaying a hint of remorse for what he’d done.
Thanks to his racket, he said, the hospital and its investors, including many of the doctors he bribed, were “making millions.”
He seemed almost boastful when he noted that Forest Park opened in mid-March of 2009 and was profitable by March 31.
Forest Park Medical Center was founded by two doctors, anesthesiologist Richard Toussaint and bariatric surgeon Wade Barker. They, too, have entered into plea agreements and could be called to testify for the government.
The hospital, on North Central Expressway near the LBJ Freeway, promoted itself as an exclusive surgical center with state-of-the-art equipment and a well-trained, attentive staff.
As an out-of-network hospital, one not under contract with major insurance companies to perform medical procedures at agreed-upon fixed rates, it could bill insurers far more for surgeries. The hospital did not accept Medicare or Medicaid patients, knowing it couldn’t charge them nearly as much as privately insured patients – and, according to prosecutors, knowing that Medicare and Medicaid fraud raise the odds of scrutiny from government investigators.
The business the hospital was most eager to attract – bariatric and spinal surgeries – could be billed out-of-network at $50,000 to $100,000 or more per operation, Beauchamp said, three or four times the typical in-network rate.
People covered by a group insurance program, such as that provided to employees of many larger companies, almost always have the option to seek care from providers outside their insurer’s network. They’re discouraged from doing so, however, by having to pay a higher percentage of the cost of the care.
That meant patients referred by their doctors to Forest Park would be stuck with a much higher co-payment than if they went to an in-network hospital. Forest Park and the doctors getting kickbacks for patient referrals got around that, Beauchamp said, by simply telling patients not to worry about the higher co-pay.
“We just didn’t collect it,” Beauchamp testified. That practice, according to the insurance carriers footing their share of the higher patient bills, amounted to fraud.
Earlier in the day, Kristin Moore, an accounts manager for United Healthcare, said the insurance services giant began fielding complaints about Forest Park’s “egregious billings and the dollars concerned” almost as soon as the hospital opened. The complaints, she said, came from Dallas-area employers providing health coverage to their workers through United.
Assistant U.S. Attorney Katherine Pfeifle asked Moore if, compared with other hospitals in the region, Forest Park was “an outlier, off the charts on costs.”
“They were,” Moore replied. “Forest Park really stood out.”
As Beauchamp implicated the defendants in crimes that could send them to prison for decades, some of doctors sat with blank expressions, while others scribbled notes, seldom looking up from their writing pads.
Only Burt, Beauchamp’s former partner, stared intently at the witness, his chin thrust out, his lips tightly drawn, the corners of his mouth turned downward.
Day Five: Out of Network
Forest Park Medical Center, the shuttered hospital at the heart of a federal bribery and kickback trial in Dallas, spent millions of dollars promoting the spinal surgeons and weight-loss doctors who did work there.
On that, everyone agrees. On everything else about Forest Park’s extensive, aggressive marketing program, not so much.
Prosecutors say the North Dallas hospital’s monthly marketing payments, which began shortly after it opened in North Dallas in 2009, were thinly disguised payoffs: In exchange for the money, the government says, doctors funneled patients to Forest Park. As an “out-of-network” hospital, Forest Park would bill patients’ health insurance companies at significantly higher rates than what “in-network” hospitals charge for the same procedures, under negotiated contracts with insurers.
Defense lawyers say the Forest Park’s marketing payments not only were legal — they were smart business for a new surgery center trying to crack a market already crowded with far bigger, better-known hospitals, many owned by chains with vast assets.
In testimony Monday and Tuesday, an advertising executive who was paid by Forest Park to put together marketing campaigns for three of the surgeons on trial — there are nine defendants in all, five of them doctors — described how the deals came about.
Kelly Loter, who owned Level 2, an ad agency now out of business, appeared under a plea bargain. Along with the current defendants, he was among 21 people indicted in 2016 in connection with Forest Park’s financial dealings. If convicted, Loter could have been imprisoned for five years.
In exchange for his cooperation, the government allowed him to plead guilty to one count of “misprision of a felony,” or failing to report a crime, for which he expects to receive probation. (Like other government witnesses testifying under plea agreements, Loter won’t be sentenced until after the trial, which began last week and could last another month or more).
Loter said Forest Park’s chief operating officer, Alan Beauchamp, arranged for Level 2 to receive $70,000 a month to promote Dr. Nick Nicholson and his Nicholson Clinic for Weight Loss Surgery; and $100,000 a month to promote Dr. Douglas Won and Dr. Michael Rimlawi, the co-founders of the Minimally Invasive Spine Institute.
The payments, Loter said, came from companies of nebulous purpose created and controlled by Beauchamp and others at Forest Park. Prosecutors said the entities were shell companies, nothing but conduits for cash.
Beauchamp has also entered a guilty plea and agreed to testify in the current trial.
The result of his deal with Beauchamp, Loter testified, was a spray of ads — on billboards, television and radio, in magazines, and online — for the three surgeons’ practices. Predictably, the marketing blitz caused business to spike. That meant more surgeries for Forest Park.
Loter testified that he met with Beauchamp from time to time to discuss the marketing campaigns. In those meetings, he said, Beauchamp expressed no interest in the content of ads; he was interested only in how many patients they were generating.
Loter said Beauchamp would share with him monthly reports on how many surgeries each doctor was performing at Forest Park and how many patients each was referring to the hospital. “Clearly, he was tracking them,” Loter said.
On cross-examination, defense lawyers for Nicholson, Won and Rimlawi noted that it was Loter, and not their clients, who was taking money every month from Beauchamp.
“Not a dime went to Dr. Won,” said Paul Coggins, Won’s lawyer. “Not a dime went to Dr. Rimlawi.”
That makes no difference, under the government’s theory. Prosecutors will argue that by paying the doctors’ marketing costs — in essence, handing them free advertising — Forest Park was indirectly slipping money to them, just as if it had bought them all luxury sports cars or picked up the tab for vacations to Aruba.
Defense counsel countered that Forest Park’s payments to Loter were legitimate expenditures — part of the hospital’s larger overall marketing strategy — since the ad campaigns for Nicholson, Won and Rimlawi benefitted both the doctors and the hospital. Such joint marketing programs are commonplace in the health-care industry, they argued, and perfectly legal.
Some, but not all, of the ads that Level 2 created for the doctors also mentioned Forest Park. But even those that didn’t were of value to the hospital, Loter acknowledged on cross-examination. More business for Nicholson, Won and Rimlawi would inevitable bring more business to Forest Park.
“If you had never said a word about Forest Park in any of these ads, Forest Park was still guaranteed to benefit, isn’t that correct?” asked Tom Mesereau, Rimlawi’s lawyer.
“That is correct,” Loter answered.
Tom Melsheimer, Nicholson’s lawyer, sought to puncture an argument central to the government’s case — that Forest Park and the doctors had a clear quid pro quo agreement: In exchange for the hospital’s marketing money, the surgeons funneled patients there.
Loter acknowledged during coss-examination by Melsheimer that his payments from Forest Park remained the same each month, even though the number of surgeries performed by Nicholson fluctuated — as did those of other surgeons.
Melsheimer also established through his cross-examination that Nicholson and other doctors from his clinic continued to perform surgeries at Forest Park — 2,000 in all — long after the marketing funds dried up in late in 2012 with a change in the hospital’s administration. Forest Park closed for good in 2015.
Day Four: A Critical Reading
Andrea Smith was a careful counter. Counting was her job, and getting her numbers right, she knew, was important to her boss, the man who ran Forest Park Medical Center in Dallas.
As Forest Park’s “referral coordinator,” Smith was in charge of keeping tabs on how much business various doctors were bringing in each month. How many surgeries did each doctor perform? How many patients did each refer for treatment? How did each doctor do this month, compared with the previous month?
Her “meticulously” compiled monthly reports, according to a federal grand jury, went to each doctor listed, and to Alan Beauchamp, Forest Park’s hard-charging, no-nonsense chief operating officer.
After seven hours of testimony from Smith, beginning last Friday afternoon and concluding Monday afternoon, jurors in a courtroom at the federal building in downtown Dallas were left to consider two starkly differing interpretations of what they’d heard. Which reading they find more plausible could ultimately prove crucial to nine defendants, including five doctors, on trial before U.S. District Judge Jack Zouhary on an array of charges accusing them, variously, conspiracy, money laundering, paying bribes and accepting kickbacks.
Lawyers for the defendants said Smith’s monthly reports were just routine office paperwork, the tedious but necessary documentation that any responsible hospital would maintain.
Tom Melsheimer, the lawyer for Dr. William Nicholson, a well-known weight-loss surgeon, noted that hospitals track all sorts of information about every interaction with every patient, from the moment he or she walks in.
“In fact,” he asked Smith, “it would be crazy not to have those records, wouldn’t it, ma’am?”
“I believe so,” she replied.
The government characterized Smith’s tracking work for Beauchamp as anything but routine. The monthly reports, prosecutors suggested, are a plain-lit paper trail left by corrupt hospital executives who were raking in hundreds of millions of dollars in insurance payments by bribing doctors to send business Forest Park’s way.
Illicit payments to doctors and others who made referrals totaled $40 million, according to prosecution filings in the case.
The 2016 indictment that’s led to the current trial said the purpose of Smith’s counts was as simple as it was illegal: “so bribe and kickback recipients could receive ‘credit’” for every patient they steered to Forest Park. The kickbacks were often disguised as legitimate payments for things like consulting services, joint marketing ventures, office-space rental, the indictment said. Money was usually conveyed from Forest Park to its recipients through third-party entities, usually shell companies created for no other purpose.
If the referral numbers weren’t what Beauchamp wanted to see, he wasn’t shy about letting those he was paying off know about it, according to the indictment. It recounts one email the executive sent to a chiropractor, who wasn’t identified by name, in December of 2011.
Despite being paid $150,000, the chiropractor wasn’t delivering the 20 to 40 patients a month that he’d promised, the indictment said. Beauchamp said they needed to talk.
“I want to sit down … to find out why my $150K investment has not produced Jack,” he was quoted as writing in the email.
Defense lawyers said their clients’ arrangements with Forest Park were legitimate business transactions. If anyone at Forest Park was doing anything illegal, it wasn’t the people sitting in court now. (Opening statements and questions from the defense in the trial’s first week suggest a concerted strategy to portray Beauchamp, who is not on trial, as the mastermind behind any fraud that occurred.)
Originally, 21 people were indicted, including Smith, Beauchamp, and the co-owners, Dr. Richard Toussaint, an anesthesiologist, and Dr. Wade Barker, a bariatric surgeon. Among others named in the indictment, all four of those individuals have entered into plea agreements with the government. Beauchamp, Toussaint, and Barker could all follow Smith in testifying as prosecution witnesses.
Indeed, all three of the government’s witnesses through Monday were testifying under plea deals. Smith’s appearance was preceded last week by that of Frank Gonzales, a West Texas chiropractor who said he was paid $385,000 for referring more than 500 patients to Forest Park.
The third prosecution witness, Kelly Loter, ran an advertising agency that, he said, received hundreds of thousands of dollars from Forest Park to cover the cost of marketing campaigns for doctors who referred patients to the hospital.
Among them, he said were three of the current defendants: Nicholson and two spinal surgeons, Dr, Douglas Won and Dr. Michael Rimwali.
The physician-owned hospital, spacious, modern and well-appointed almost to the point of ostentation, opened in 2009 near the intersection of the North Central Expressway and the LBJ Freeway. Owned by two doctors, Forest Park specialized in spinal and bariatric (weight-loss) medicine, two areas of medicine whose practitioners typically command lofty fees.
It appealed almost immediately to patients and surgeons alike. But within four years, Forest Park had collapsed under the scrutiny of federal fraud investigators.
Day Three (Updated): Witnesses For the Prosecution
Jurors in the Forest Park Medical Center kickback trial, still fresh in their civic role, got their first glimpse Friday of a courtroom kabuki they’re likely to see again and again in coming weeks. Call it The Art of the Deal, Felony Edition.
In a criminal case built, to a significant extent, on the testimony of confessed criminals, the jury will have to weigh one question again and again as it assesses the credibility of the doctors and others who were indicted in the Forest Park case, cut deals with the government, pleaded guilty, and agreed to testify against others:
Can you trust a crook?
The prosecutors say: Maybe not much. But you can trust crooks to try saving their own necks. And their deals with us require them to be truthful.
The defense says: There’s a reason we call them crooks.
Nine people, including five doctors, are on trial. Initially, a federal grand jury indicted 21 people, alleging a four-year, multimillion-dollar conspiracy by Forest Park’s executives to pay kickbacks to doctors for steering patients to the hospital for surgeries and other care. As an “out-of-network” hospital — and one that promoted itself as an exclusive, technoloically state-of-the art institution — Forest Park typically billed patients’ insurance companies at rates far in excess of the fee schedules that govern reimbursements to in-network providers, prosecutors say.
The indictment says the hospital took in $200 million and paid out $40 million in bribes and kickbacks in its roughly four years of operation.
Many of the 21 original defendants have pleaded guilty and agreed to cooperate with the government. Among them are Richard Toussaint and Wade Barker, the two doctors who were Forest Park’s principal founders and owners.
On Friday, Frank Gonzales, the government’s first witness — and the first admitted crook to appear before the jury — spent hours on the stand describing what he said was his longtime illicit arrangement with Forest Park. Gonzales, a Midland chiropractor, said he was paid $385,000 in kickbacks for steering more than 500 patients to the North Dallas hospital, which specialized, among other things, in back surgeries. He pleaded guilty to one conspiracy charge last summer and agreed to testify for the prosecution.
Most of the patients, he said, had been injured on the job and were covered by workers compensation insurance. Forest Park surgeons, he testified, ended up operating on one in five of the people he referred.
Forest Park rewarded him, he said, with monthly payments, sometimes as high as $15,000. Most of the money was disguised as fees for consulting services, of which he provided none.
At one point in his testimony Friday, Gonzales asserted, weakly, that he hadn’t thought the payoffs were illegal, since he had a written consulting contract with Forest Park. “I thought it was more or less legit … With the contract in place, I felt safe,” he testified under cross-examination by Chris Lewis, the defense lawyer for Shawn Henry, a Forest Park spine surgeon who had examined many of Gonzales’s chiropractic patients.
Later, however, the chiropractor acknowledged that “safe” and “legit” are two different things.
“The contract was just a cover-up,” he said under cross-examination by Ed Tomko, another of the defense lawyers.
On redirect examination by Assistant U.S. Attorney Marcus Busch, Gonzales admitted that he knew the deal was fishy from the get-go. “I never thought bribes were legal,” he said.
That waffling, and other inconsistencies in his story, led defense lawyers to punch away at Gonzales’s credibility and motives.
The prosecution noted that no promises of leniency had been made to Gonzales — and none are made to any cooperating witnesses. Gonzales, who faces up to five years in prison, won’t be sentenced until later. And the trial judge, not the prosecution, has sole authority to set that sentence.
Still, the prosecution is not without sway. The U.S. attorney’s office could ask the judge to go easy on Gonzales if it’s satisfied with the degree of his cooperation. No promises have been made, Gonzales testified, but the government could even recommend probation instead of prison time.
U.S. District Judge Jack Zouhary is under no obligation to heed the prosecution’s recommendation. But judges usually do.
That, suggested Lewis the defense attorney, gives a government witness every reason to please the government.
He asked Gonzales if the prosecution’s pledge “to go to bat for you with the judge” was “part of the carrot dangled in front of you that led you to cooperate.”
“Yes,” Gonzales replied.
Lewis pressed on.
“Your hope is that you will get probation in this case, is it not?”
“Yes,” the witness said.
That can only happen, the prosecutors reiterated, if Gonzales tells the truth. But as defense counsel noted, those same prosecutors, in fashioning their sentencing recommendation to the judge, are the ones who get to define truthfulness.
The only other witness Friday was Andrea Kay Smith, who had been Forest Park’s “referral coordinator,” working for Alan Beauchamp, one of the hospital’s founders and the executive who essentially ran it day-to-day. (The original Forest Park indictment, issued in November 1916, identified Beauchamp as Forest Park’s chief operating officer. Regarded by prosecutors as one of the chief architects of the bribery and kickback scheme, Beauchamp, too, has agreed to testify for the government.)
Like Gonzales, Smith appeared Friday under a plea agreement. She was among the first from Forest Park to strike a deal with the government; in February 2017, less than three months after she was indicted, she agreed to cooperate with authorities, pleading guilty to one count of concealing a felony, for which she was given five years’ probation.
Her role at the hospital, and in the kickback scheme, seemed to be that of uber clerk/whip-cracker. At Beauchamp’s direction, Smith maintained — “meticulously,” court records say — tracking documents showing the number of patients referred and surgeries performed by each doctor on the Forest Park payroll.
When doctors would receive what the indictment described as their monthly “bribe and kickback checks,” they would find, in the same envelope, an updated copy of Smith’s tracking list.
Since the size of the payouts was tied to the amount of business each doctor brought in, she said, her twin roles were to make sure doctors got “credit” for each referrals; and to make sure Beauchamp knew if anyone’s numbers were tailing off.
Smith returns to the witness stand Monday morning. Her roughly four hours of testimony Friday involved reviewing and describing, at the direction of Assistant U.S. Attorney Katherine Pfeifle, a numbing succession of emails, printouts, messages, ledgers, lists, and other documents, mostly related to numbers of patients in and dollars out.
With nine defendants in the Forest Park trial, there are nine sets of defense lawyers. That can mean nine rounds of cross-examination for each government witness, one reason the trial is expected to last six weeks.
Gonzales got off relatively easy — only five defense lawyers questioned him, and some only briefly.
Still, that was a lot of questions, especially after nearly an hour of direct examination Thursday afternoon.
On Friday, the chiropractor took the stand at 8:50 a.m. He stayed there until almost noon.
“The witness is excused. You may step down,” the judge said at last. He added dryly, “You may want to hurry before someone changes their mind.”
Day Two: Opening Statements
The doctors who founded Forest Park Medical Center of Dallas had a clear-eyed goal, a federal prosecutor said Thursday.
“They wanted to make as much money as they possibly could,” Assistant U.S. Attorney Andrew Wirmani said, delivering the government’s opening statement in a far-reaching medical fraud trial that began this week in U.S. District Court in Dallas. Five of the nine defendants are doctors; all could face long federal prison sentences if convicted.
To maximize Forest Park’s revenues, Wirmani said, top executives of the North Dallas hospital devised an audacious, corrupt business model: Through an intricate web of shell companies, hollow consulting contracts, questionable marketing agreements, fake leases and phony job titles, Forest Park funneled millions of dollars illegally to doctors; the doctors, in exchange, steered their well-insured patients to the high-end, high-priced, now-mothballed surgical center.
But for all the hospital’s alleged subterfuges, double-dealing, and accounting shenanigans – and for all the dozens of hours of testimony and thousands of pages of documents the jurors will be asked to evaluate over the next few weeks — at its heart, Wirmani said, the Forest Park scam could be summed up in six words:
“Surgeries for dollars. And dollars for surgeries.”
From its opening in the spring of 2009 through the end of 2012, Forest Park, the government contends, raked in $200 million, most of it in the form of high, out-of-network insurance payouts, (“Surgeries for dollars.) And it paid out $40 million in kickbacks (“dollars for surgeries”), mostly to doctors who sent patients there, performed surgeries there, and, in some cases, became investors.
Legal experts who follow health-care and white-collar fraud litigation nationwide have called the Forest Park prosecution one of the most far-reaching in years.
Initially, 21 people, including eight doctors, were indicted in the case. Ten people have pleaded guilty, some after cutting deals in which they agreed to testify against the remaining defendants. Among those now cooperating with the government are the two doctors who started Forest Park, Richard Toussaint, an anesthesiologist, and Wade Barker, a bariatric (weight-loss) surgeon.
The charges against the present defendants are baloney, their lawyers said in their opening statements.
The nine defense lawyers, addressing the jury in quick succession, offered variations on a few themes:
The doctors on trial are gifted, compassion healers who never had anything but their patients’ well-being in mind. When they sent patients to Forest Park, or performed surgeries there, it wasn’t because they were paid off. It was because the hospital was a state-of-the-art surgery center with the latest in medical technology and a dedicated, skillful staff. And any business arrangements the doctors had with Forest Park were completely above-board. If anyone at Forest Park was up to anything fishy, it wasn’t them.
“He’s bewildered as to why he’s even here, to be honest,” Tom Mesereau said of his client, Dr. Michael Bassem Rimlawi, a spinal surgeon. Rimlawi, he said, is the son of a doctor and a nurse.
“He grew up wanting to help people. He grew up wanting to cure people.”
Paul Coggins called his client, Dr. Douglas Won – who, with Rimlawi, co-founded the Minimally Invasive Spine Institute – a “visionary” and “one of the best spine surgeons in Texas.”
The payments Won got from Forest Park were for legitimate marketing of his practice, Coggins said.
“At no time in his wildest nightmares” did the doctor consider the money to be a kickback, Coggins said.
As for the non-doctors on trial, their lawyers, for the most part, depicted them as lower-level employees who did what they were told and didn’t ask many questions. “He was a worker bee,” Sarah Wirskye said of her client, Jackson Jacob, who oversaw a marketing program for Forest Park.
The government contends that the marketing program was nothing but a way to hide kickbacks to cooperating doctors; every month, Forest Park would put in money, sometimes $1 million, sometimes $1.2 million, according to Wirmani, the assistant U.S. attorney. And every month, Jacob would cut checks to a list of doctors.
“Jackson was repeatedly told that the Forest Park marketing program had been blessed by lawyers,” Wirskye said. “He simply did his job, and he had no reason to inquire.”
Late Thursday afternoon, prosecutors called their first witness, Frank Gonzales, a West Texas chiropractor. Last summer, Gonzales cut a plea deal with the government, admitting to one count of conspiracy and agreeing to testify about what he said was his kickback arrangement with Forest Park. He faces up to five years in prison, a sentence, he acknowledged, that could be reduced in exchange for his cooperation.
Gonzales said his chiropractic practice, in Midland and Odessa, mostly dealt with people injured at work or in car crashes. If patients needed medical treatment beyond what a chiropractor could offer, he said, he would refer them to Forest Park. In addition, he said, surgeons affiliated with the Dallas hospital, including Dr. Shawn Henry, one of the present defendants, would visit his clinics periodically and examine patients to see which were candidates for more extensive treatment.
In all, Gonzales said, he referred 514 patients to Forest Park, 108 of whom ended up on the operating table. For his services, he said, he received $385,000 in “bribes and kickbacks.” Some of the payments were disguised as consulting fees, he testified, even though he never consulted with anyone about anything. The only thing Forest Park wanted him to do, he said, was “drum up surgeries.”
Defense lawyers will have the opportunity to cross-examine the chiropractor Friday morning.
The government, in its opening statement, hinted at future testimony indicating that at least some of the surgeon-defendants used their corrupt gains from Forest Park to pursue extravagant lifestyles. Toward the end of his opening statement, Wirmani made a fleeting reference to Won’s $12 million mansion, luxury items from Louis Vuitton and a lavish dinner party at a Wolfgang Puck restaurant.
Some of the defense lawyers, meanwhile, suggested that they’ll seek, somehow, to put the health insurance industry – wildly unpopular with many consumers – on trial.
The insurers who got stuck, under the government’s theory, paying the bulk of Forest Park’s high out-of-network bills “are not the angels of good that the prosecution would have you believe,” said Mesereau.
Added Chris Lewis, representing surgeon Shawn Henry: “It’s the insurance companies that believe they’re the victims in this case. The problem is, insurance companies don’t make very good victims. … Insurance companies make awful victims.*
Day One: Jury Selected in Forest Park Trial
A federal jury of five men and nine women was chosen in Dallas Wednesday to hear evidence in what experts are calling one of the most far-reaching medical fraud prosecutions in years.
Opening statements in the so-called Forest Park case are to begin at 8:45 a.m. Thursday in a 15th-floor courtroom of the federal building in downtown Dallas.
Five doctors and four others affiliated with the now-shuttered Forest Park Medical Center of Dallas are accused of taking part in a multimillion-dollar kickback and bribery scheme from 2009 to 2013. According to the government, the defendants were paid illicitly to steer patients with gold-standard private insurance coverage to Forest Park, where the patients underwent sophisticated and costly medical procedures.
Defense counsel are expected to argue that there was nothing illegal or improper about their clients’ dealings with Forest Park. In pretrial filings, the defense characterized the medical center as “a premier facility with advanced technologies” that doctors were happy to recommend for its superb care, “to the great satisfaction of their patients.”
The trial is expected to last six weeks. Prosecutors have listed 80 potential witnesses and turned over to the defense more than 1.5 million documents that could be used as evidence.
Only 12 of the 14 jurors seated Wednesday will deliberate at the conclusion of the trial and render a verdict; the other two will serve as alternates – though none of them have been told who’s an alternate and who’s not.