At a recent conference on physician problems in the current healthcare environment, a number of participants discussed the questions: How did we get here and where do we go from here? Several physicians who suffered the brunt of Medicare investigations and had consequently been incarcerated and who were currently out on bail, gave personal testimony. One of the narratives was instructive in regards to the current media interest in medical errors and medical fraud. Fortunately, most of the cases presented were free of medical errors and, in retrospect, did not involve medical fraud. However, this was of no interest to the federal prosecutors and did not prove to be a disadvantage for conviction, imprisonment and fines.

Jeff Rutgard, MD, whose last speech was to a federal judge six years earlier, talked about the personal aspects of his case. He was charged with $65,000 of Medicare fraud. He hired a nationally celebrated attorney. After advising Dr Rutgard that he could lose his freedom, this renowned attorney stated that it would require 3-4 months of full-time preparation and a one million dollar advance to cover this work. However, at the pretrial court appearance, Dr Rutgard’s attorney was not prepared for his case. Both the nationally renowned attorney and local attorney he hired filed an affidavit stating that they were both unprepared. The judge denied Dr Rutgard’s constitutional right to be effectively represented and proceeded to trial with an ill-prepared defense. Dr Rutgard was found guilty of $65,000 of Medicare fraud. The judge told the prosecution that $65,000 was minuscule as an amount of fraud for a very busy doctor for his entire practice. The prosecutor asked the judge to extrapolate this $65,000, which represented less than 0.1% of Dr Rutgard’s practice, to all the Medicare proceeds received. None of the individual charges for examinations and surgeries were ever found to be fraudulent. Never-the-less, he was fined $16 million and given an 11-year prison sentence. He was denied bail pending his appeal, unlike most attorneys and judges found guilty of fraud or bribes, and was sent to prison without the courtesy of saying goodbye to his wife and 5 children. From prison, it took Dr Rutgard three years to file an appeal. The appellate court, after reviewing the available evidence, found only $45,000 of billings in question and stated it was unfair to extrapolate to millions of dollars without evidence and without allowing Dr Rutgard to defend the charges. The case was sent back for re-sentencing. However, it was sent back to the same judge who then required an admission of guilt to allow Dr Rutgard out of prison after the five years served. The judge did not require that the attorneys return the money, despite their admission that they had not complied with their hiring contract.

After the verdict, several jurors stated that they understood a guilty verdict to include a period of probation, community service, and a fine. One juror, interviewed by the San Diego Union, stated that he felt Dr Rutgard was innocent but voted him guilty because it would cost our government too much money to allow the doctor a new trial.

The verdict was based on false testimony given by Dr Rutgard’s office manager and a close friend he hired as a biller. The other billers who signed statements disputing the fraud were never allowed to testify. Three years later in another trial, the same office manager and assistant biller were deposed and stated that Dr Rutgard had not fraudulently billed Medicare. At this point, Dr Rutgard firmly believes he was the victim of disgruntled and dishonest ex-employees.

In the next issue we will present our interview with a physician from our own midst with a similar Medicare story and some thoughts about what we must do to prevent these manufactured crimes.