As discussed in the prior post, Healthcare Fraud and the Ordeal of Dr. Richard Paulus; Part I, the Sixth Circuit reinstated the healthcare fraud convictions of Dr. Richard Paulus, the court concluding that the statistical evidence presented by the government's experts indicated a disproportionate tendency amounting to a "lengthy pattern" by Dr. Paulus to overstate the arterial blockage indicated by an angiogram. So central was this statistical evidence that the opinion's author, Judge David McKeague, began it by quoting Mark Twain's adage that “there are three kinds of falsehood; lies, damnable lies and statistics.” More statistical evidence, previously withheld by the government, came to light back in the district court following remand.
Before the government indicted Dr. Paulus, it conducted a lengthy investigation and provoked the hospital, Kings Daughter Medical Center (KDMC) in Ashland, Kentucky, where Dr. Paulus practiced to do its own self-audit. According to the Sixth Circuit, "KDMC's consultants reviewed 1,049 of Paulus's cases and flagged 75 of his procedures as unnecessary." The 7% rate of unnecessary procedures was far, far lower than the 25% - 100% (this last number itself being incredible) rate asserted by the government's experts at trial. This lower percentage, as the Sixth Circuit observed, "was less consistent with systemic and purposeful fraud and more consistent with occasional mistakes or diagnostic difference of opinion between cardiologists." Put another way, this lower percentage was more like quibbling around the edges, especially given that cardiologists acting in good faith reach widely varying conclusions about the degree of arterial blockage indicated by an angiogram.
The government did not disclose to Paulus the report generated by KDMC's consultants, having been ordered not to ("inexplicably" the Sixth Circuit described it) by the district judge, the conscientious and hard-working Hon. David L. Bunning. Prior to trial an ex parte hearing had been conducted involving only the prosecutors and counsel for KDMC that resulted in a ruling that the government was not to disclose the KDMC report and that it was inadmissible. The government, it should be noted in fairness, argued that the report was Brady material and should be disclosed. Nevertheless, the district court erred and ruled that it was not to be disclosed to Paulus prior to trial. When the report came to light when the case was remanded for sentencing, Paulus moved for a new trial based on the Brady violation, a motion the district court denied and Paulus was sentenced to five years imprisonment and surrendered to federal custody in June 2019.
The Sixth Circuit again reversed. Having conceded that the report was Brady material, the government fell back on the argument that Paulus should have been able to find out about it before trial with even minimal investigation. This argument was rejected, the court observing that "[w]e would have to completely ignore the record to accept the government's argument here."
The prejudice to Paulus by withholding the report was manifest: "Because the KDMC Review found misdiagnoses in a much smaller percentage of cases than the government experts found (around 7% compared to nearly 50%), the study tends to refute the government's evidence that Paulus systematically misdiagnosed the amount of blockage in his patients' arteries." That would seem all too plain.
Paulus II had the same panel as Paulus I, Judges Alice Batchelder, Richard Griffin and David McKeague, who again wrote the court's opinion, which includes excellent analysis of the trial evidentiary utility of the KDMC report had it been disclosed as required by Brady.
A status conference has been scheduled for April 13, 2020, to discuss further proceedings, i.e., whether the government wishes to re-try Dr. Paulus.
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