Rogue-Surgeon Case Raises Question of Who Knew What

The actions of a rogue orthopedic surgeon in Hopewell Junction, New York, is embroiling 2 hospitals and a large multispecialty medical group in a legal mess that raises the question of who knew what.

Spyros Panos, MD, pleaded guilty last month in federal court to a healthcare fraud scheme in which he billed Medicare, the New York State Insurance Fund, and private insurers for sometimes more than 20 procedures a day — some of them fake. He faces a maximum punishment of 10 years in prison when he is sentenced on March 7, 2014.

However, even then his legal troubles will not be over. More than 260 patients have filed malpractice suits against Dr. Panos, alleging surgeries that were botched, unnecessary, or imaginary.

"Sometimes he just threw a scope in there," said attorney Nancy McGee, whose law firm represents plaintiffs in roughly 150 cases. In one of his so-called operations, said McGee, Dr. Panos did not even make an incision.

Depending on the individual case, other defendants in the malpractice lawsuits are Mid-Hudson Medical Group, where Dr. Panos worked until 2011; Vassar Brothers Medical Center; St. Francis Hospital; and a surgery center on the St. Francis campus. These organizations, all based in Poughkeepsie, New York, looked the other way as Dr. Panos booked an excessive number of office visits and surgeries and as numerous patients underwent second and third procedures on the same body part, the lawsuits allege.

"Nobody questioned him," said Brian Brown, an attorney who has filed malpractice suits on behalf of 14 former patients. "But they didn't have a problem spending the money he brought in."

According to federal prosecutors, Dr. Panos generated more than $13 million in collections for Mid-Hudson Medical Group, which numbers more than 100 physicians, from 2006 to 2011. The group paid Dr. Panos, one of its shareholders, $7.5 million during a single 5-year period. The government has begun to recover some of this money. When Dr. Panos pleaded guilty to healthcare fraud, he agreed to forfeit $5 million in assets.

Prosecutors bent on recovery have not stopped there. In November, Mid-Hudson Medical Group agreed to forfeit $5 million in a civil settlement with the US Attorney's Office in the Southern District of New York. The medical group asserted clean hands in the agreement, stating it "had no involvement in, knowledge of, or participation in the unlawful activity or any other criminal activity" taking place in the group and that it was an "innocent owner" of the $5 million.

"[Mid-Hudson Medical Group] and the government wish to resolve this matter and the government claim to [the money] without resorting to further litigation," the settlement stated, adding that the forfeiture "in no way constitutes or should be interpreted as an admission of liability or wrongdoing by any of the parties."

This court filing casts no aspersions on Mid-Hudson Medical Group. Rather, the original complaint against Dr. Panos describes how he tried to keep the group in the dark. It states that beginning about 3 years ago, he told Mid-Hudson Medical Group that "the fraudulent insurance claims were the result of clerical errors."

However, the group may have felt a sting in the federal announcement about its forfeiture settlement, issued by US Attorney Preet Bharara, an aggressive fraud-buster in New York City who made the cover of Time magazine last year.

"The laws are clear and formidable when it comes to the bilking of health insurance providers," Bharara was quoted as saying. "You cannot be permitted to keep and enjoy illicit proceeds of fraud."

The settlement suggests that the federal government is done with at least Mid-Hudson Medical Group. However, a spokesperson for the Department of Justice told Medscape Medical News that the investigation of the Panos fraud case is "open and ongoing." What remains unanswered is whether the government will name other criminal or civil defendants or seek additional forfeitures from other parties.

"Dr. Care" Was in a Hurry

"Dr. Spyros Panos is 'Dr. Care,' " says a blog bearing the physician's name. "A patient once described him as the '21st Century Marcus Welby.'

"He may not be Robert Young, but Dr. Spyros Panos is a modern doctor exuding the same vintage charm."

Judging by other accounts, however, Dr. Spyros was Dr. Hurry. Federal prosecutors said that in addition to often performing 20 or more procedures each day, Dr. Spyros "routinely saw at least 60 patients per office day at the medical group, and at times saw more than 90."

One patient in that jam-packed schedule was Patricia Moran. She sued Dr. Spyros for malpractice, alleging that he performed a phantom shoulder reconstruction in 2009 that lacked the customary surgical hardware.

"When you have an appointment with him, it is so brief," a 2011 article in the Poughkeepsie Journal quoted Moran as saying. "He comes in, moves you around a few minutes, and gives you a [prescription]. I don't think he spent more than 2 minutes with me."

Plaintiffs' attorney Nancy McGee said that Dr. Panos' speedy ways may help explain the botched surgeries alleged in many of the malpractice cases. "Sometimes there wasn't enough cement on an implant piece, so it loosened," McGee told Medscape Medical News. "It's not taking the time to do the job."

The federal case against Dr. Panos zeroed in on fraud as opposed to malpractice. Prosecutors cited these examples:

• Dr. Panos performed arthroscopic surgeries only to bill them as more expensive open surgeries.

• He billed for procedures that were never performed.

• He billed insurers for removing "loose bodies" from patients — bone fragments yielded by an arthroscopic joint "clean-up," for example — when in fact no loose bodies were removed, or else they were too small to warrant reimbursement.

The malpractice cases against Dr. Panos, who surrendered his New York medical license this summer, understandably concentrate on alleged damage to patients as opposed to insurers. In general, they assert that Dr. Panos provided improper and unnecessary treatment as well as neglected to render the care patients actually needed.

Plaintiffs' attorney Nancy McGee said that many of Dr. Panos' patients underwent revision surgery and turned out fine, but a significant number ended up disabled. "Many people can no longer work," she said.

Patrician Moran is one of Dr. Panos' patients claiming disability. Because her shoulder did not get the treatment it needed, she developed permanent nerve damage, which ended her career as a mammography and X-ray technician, say Brian Brown, her attorney.

Malpractice Cases Include 1 Fatality

Another lawsuit filed by Brown alleges a wrongful death. Constance Nenni died in March 2010 from a pulmonary embolism shortly after she underwent what she thought would be calcium removal from her arthritic right knee, said her daughter Debra Nenni, a medical recruiter.

"We watched a healthy, 76-year-old woman whom we thought would outlive us all go in for a simple surgery and die the next day," Debra Nenni told Medscape Medical News. Debra Nenni said her mother was in the operating room for less than 10 minutes, yet Dr. Panos billed for 5 major procedures that were never performed.

Unlike the federal criminal litigation, the Nenni suit and others like it fault Mid-Hudson Medical Group for letting Dr. Panos run amok. According to the Nenni suit, the group practice should have questioned Dr. Panos' high volume of procedures and office visits, recognized the high number of patients who were operated on without any prior diagnostic tests, and heeded warnings from other employees about the quality of the surgeon's care. Court records indicate that Dr. Panos had worked at the group for roughly 12 years.

Mid-Hudson Medical Group fired Dr. Panos in July 2011. Joseph Garvey, MD, the group's president, told the Poughkeepsie Journal that Dr. Panos was terminated "for not meeting our professional standards."

The group practice did not respond to repeated requests for an interview. Also declining to comment were Dr. Panos' civil and criminal attorneys, Vassar Brothers Medical Center, and St. Francis Hospital, once a joint-venture partner with area surgeons in the ambulatory surgery center on its campus. That partnership dissolved earlier this year, with St. Francis absorbing the center into its operations, according to the Poughkeepsie Journal.

Dr. Panos and the US Constitution

Parties in litigation normally are reluctant to speak to the press, but the lack of comment in the Panos case also may reflect an unusual constitutional issue, one that does not sit well with malpractice plaintiffs such as the Nenni family.

Under the Fifth Amendment of the US constitution, defendants cannot be forced to testify against themselves in court. In criminal cases, juries are instructed not to infer something negative — namely guilt — from a defendant's decision to "take the Fifth," said Nancy McGee. However, when a defendant pleads the Fifth Amendment in a civil case, juries are free to make negative inferences.

Dr. Panos and the other defendants in the malpractice litigation have argued that this difference in Fifth Amendment consequences between civil and criminal cases leaves them in a quandary. If they answer questions from plaintiffs' attorneys in pretrial depositions, they may reveal information that federal prosecutors could hold against them in the criminal case. Even though Dr. Panos has pleaded guilty to the criminal charge of healthcare fraud, it is in his best legal interest not to further incriminate himself before his sentencing in March. However, if defendants in the malpractice cases take the Fifth Amendment to protect themselves in the federal realm, they risk a civil jury holding their silence against them.

As a consequence, the malpractice defendants asked a state judge to temporarily delay any pretrial depositions by plaintiffs' attorneys, and the judge obliged. That decision has put the litigation on ice because plaintiffs' attorneys are not free to ask Dr. Panos or his medical coworkers any questions in a deposition. However, the judge ruled last month that this restriction will no longer be in force once Dr. Panos is sentenced in federal court.

Brian Brown complains that the Fifth Amendment rights of Dr. Panos and others are "trumping the rights of patients." That's how Debra Nenni feels, too.

"It will be 4 years in March since my mother died," she said. "We've had no closure. Why not move forward? I just want to know what Dr. Panos did, and why he did it."

She hopes that someone at Mid-Hudson Medical Group or the surgery center where Dr. Panos operated on her mother will come forward with information.

"There had to be anesthesiologists and nurses who knew what he was doing," she said. "And the billing people. They're involved. They had to know."

There is a legal obligation to step forward in such cases, said Sam Unterricht, MD, president of the Medical Society of the State of New York and an ophthalmologist.

"If any healthcare professional has knowledge of fraud or improper activities, they're required by law to report it to the state," Dr. Unterricht told Medscape Medical News. "If a hospital has any knowledge or suspicion of medical misconduct, they're required to report it."

He is not sure how fraudulent physicians carry on for years without being exposed, "but eventually they get caught," he said. In the process, their deeds tarnish the reputations of other physicians.

Said Dr. Unterricht: "Medicine pays a big price for it."

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Cite this: Rogue-Surgeon Case Raises Question of Who Knew What - Medscape - Dec 12, 2013.