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Las Vegas Attorney Accused of Role in Med Mal Kickback Scheme


Posted on Feb 25, 2008

WHEELCHAIR-BOUND: Woman tells of operation, case

Attorney accused of role in kickback scheme

When Melodie Simon prepared to undergo routine back surgery to replace screws holding a fused lumbar disc together, the former Olympian never expected she would be bound to a wheelchair for the rest of her life.

On Thursday, Simon was lifted out of her wheelchair and onto the witness stand to testify about the tragic surgery and the lawyer who prosecutors allege cut deals that kept him from suing the surgeons who performed the 2000 operation and held secret meetings that cheated Simon out of larger settlements.

"My legs just buckled underneath me; they just gave out," Simon told jurors softly, recalling her first attempt to walk just days after the Aug. 2, 2000, procedure. "I was in tears and quite in a panic."

Simon, a 41-year-old mother at the time, hired personal injury attorney Noel Gage to find out what went wrong after spinal surgeons John Thalgott and Mark Kabins tried to fix her nagging disc.

"She went to Mr. Gage and said, 'If you are going to be my attorney, I want you to tell me what really happened. I want you to be honest with me. I want you to treat me as your sister,'" Assistant U.S. Attorney Daniel Schiess told jurors during his opening statements in the government's case against Gage.

"Mr. Gage looked her in the face and said, 'Call me your brother,'" Schiess said.

But the government said Gage failed to fulfill his duty to provide honest services and committed fraud when he was offered a deal by self-proclaimed medical consultant Howard Awand.

The government alleges Awand worked with Thalgott and Kabins and offered to refer lucrative cases to Gage if the attorney backed off his doctor friends.

That is when Gage became involved in a web of Las Vegas doctors and lawyers who worked with Awand to jack up medical costs, to protect physicians from being sued for medical malpractice and to share kickbacks to make millions of dollars, the government alleges.

Schiess told jurors that three days after Awand sent Gage a case that ultimately settled for $18 million, Gage turned his focus on the Simon tragedy from the surgeons to anesthesiologist Dan Burkhead.

"Mr. Gage looked at the case and realized that the case was worth millions," Schiess said. "Millions to the family and millions to the attorney."

Schiess said Gage agreed to share his 40 percent of the settlement with Awand, an ethics violation for lawyers.

Gage successfully sued Burkhead and Sunrise Hospital and Medical Center, where the surgery was performed. Simon received a $2.3 million settlement.

After attorney fees and costs, Simon received $1.3 million, which she testified will never cover the costs of her medical needs.

Gage's attorney, Thomas Pitaro, disputed the government's allegations Thursday and described his client as "a skilled, knowledgeable and dedicated attorney."

Pitaro said personal injury attorneys lose nine out of 10 medical malpractice cases against doctors. And instead of receiving no settlement, Gage went after the more vulnerable Burkhead and was awarded the limit under insurance policies. Gage crafted a successful strategy to persuade the surgeons to testify against Burkhead, strengthening his case, he said.

Pitaro said Burkhead was responsible for puncturing a sac protecting Simon's spine. Extensive internal bleeding caused the nerves to push up against the spine and turned the one-time Olympic volleyball player into a paraplegic.

But Thalgott testified he thought there was a strong case against the surgeons because Kabins waited 11 hours to perform emergency surgery when it was known that internal bleeding was causing Simon's paralysis.

Thalgott, who was on a fishing expedition in Idaho when the first signs of paralysis struck Simon, said his fear was that a medical malpractice lawsuit was imminent.

"The moment I heard there was weakness (in Simon's legs), I was terribly afraid I would be sued," Thalgott said.

He described a well-calculated scheme to protect himself and Kabins from being sued. Thalgott, whose liability insurance tops out at $3 million per occurrence, said Gage took part in a secret meeting to discuss the plan.

"We are going to have a meeting that never happened," Thalgott quoted Gage as saying.

During the private, 10-minute meeting, the four agreed to blame Burkhead, he said.

The government alleges that Gage went forward with a deposition but never asked any questions pertinent to Simon's care. He never asked why Kabins waited hours to perform emergency surgery or whether Thalgott ever called in to check on his patient, the government alleges.

Thalgott said Awand hired Las Vegas attorney Robert Eglet to represent the doctors during the deposition. He acknowledged that was the first time he did not have his own attorneys represent him during litigation.

Thalgott also acknowledged that though the deposition took place a year after the catastrophic surgery, he never looked at Simon's records or researched what might have caused the paralysis. He said he knew that Awand's friendship with Gage and Eglet was a positive sign.

"I thought a deal was going to be taken and we were not going to be sued," Thalgott said.

Thalgott, who approached the government in 2006 and is immune from prosecution, said he tailored his testimony during the deposition to place the blame on Burkhead.

Awand, who has been described as the ringleader in the scheme, is the only other player who has been charged in the case.

Thalgott said he first met Awand in the late 1990s when the consultant visited the business Thalgott shared with Kabins.

"He was in the office all the time with Dr. Kabins; routinely, daily, in and out constantly," Thalgott said.

Awand brought in boxes of patient files for Kabins, and the majority of the patients were involved in litigation, Thalgott said. The patients used medical liens rather than health insurance policies for medical treatment, he said.

He said that with liens, doctors receive 100 percent of the cost of care they provide; insurance companies reimburse about 10 percent of the cost.

Thalgott, who estimated he earned $2 million a year at the time, said Kabins earned 300 percent more than he did.

Thalgott is expected to return to the stand at 8 a.m. today, when he will be cross-examined by Gage's team.

Contact reporter Adrienne Packer at [email protected] or (702) 384-8710.

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