United States v. Paulus, No. 19-5532 (6th Cir. 2020)
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Paulus, a cardiologist at KDMC, was first in the nation in billing Medicare for angiograms. Audits indicated that in multiple cases Paulus reported a higher degree of blockage in his patients’ arteries than their angiograms reflected, inserted a stent, and billed insurers. Before Paulus was indicted, the government informed him that its consultants had reviewed 496 of Paulus’s procedures and concluded that 146 were unnecessary and that KDMC’s consultants had reviewed a random selection of Paulus’ procedures and found 75 angiographic films with minimal blockage. A jury convicted Paulus of healthcare fraud and making false statements relating to healthcare.
Before sentencing, the government disclosed to Paulus for the first time the “Shields Letter,” indicating that KDMC's independent experts had reviewed 1,049 of Paulus’s cases and flagged 75 procedures as unnecessary. KDMC offered to refund Medicare for those procedures. Paulus knew that KDMC had identified 75 of his procedures as problematic but did not know that KDMC had reviewed 974 other procedures that it apparently found non-problematic. The government had planned to use the Letter at trial but KDMC objected. After an ex parte hearing, the district court held that the information was inadmissible and ordered that the parties not disclose any more information about the KDMC Review. The district court denied Paulus’s motion for a new trial, sentenced Paulus to five years’ imprisonment, and ordered him to pay $1,156,102.23 in restitution.
The Sixth Circuit vacated. KDMC's attorney-client privilege claims did not justify and ex parte hearings and the evidence withheld from Paulus violated his Fifth Amendment rights under “Brady.” The Letter had “potential exculpatory value” and Paulus lacked a readily available means to get the missing details. Paulus was prejudiced and “it doesn’t matter how blameless” the prosecution was.
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