This article was originally published on GoErie.com by Madeleine O’Neill on Jan. 1, 2018
A new ruling in a complex health care fraud case could split the charges against an Erie oral surgeon accused of overbilling insurance companies.
The charges filed in an indictment against the surgeon, David E. Palo, are logically inconsistent, Senior U.S. District Judge David S. Cercone ruled Tuesday. He ordered that the government may try the charges in two separate groupings to remedy the issue.
Cercone agreed with the defense that the wording of counts in the indictment is contradictory. Count one, Cercone found, charges that Palo billed insurance companies for surgical tooth extractions he performed in cases where a surgical extraction was not necessary. Counts two through 27, however, charge that Palo billed insurance companies for services that were never performed.
“As currently drafted, the indictment is inconsistent and therefore defective because it charges defendant with fraud and false statements based on performance and non-performance of the same procedures,” Cercone wrote in the opinion. The inconsistency would be confusing both to the defendant and to a jury, he wrote.
But while Cercone agreed with the arguments put forth by Palo’s lawyer, David Ridge, he denied Ridge’s request to dismiss counts two through 27 of the indictment. Instead, Cercone ruled that the government could choose to proceed with two separate trials — one for count one of the indictment, which accuses Palo of health care fraud, and another for counts two through 27, which charge he made false statements relating to health care matters.
Cercone wrote that the government could also seek a superseding indictment to fix the flaws with the first indictment.
Ridge filed his motion to dismiss the charges, which are all felonies, in February. He and Palo have said they intend to take the case to trial.
Assistant U.S. Attorney Christian Trabold on Friday requested an extension of time to respond to Cercone’s order and decide how to proceed. He asked Cercone to grant the government until Jan. 19.
In May, in his response to Ridge’s dismissal motion, Trabold wrote that the counts against Palo were not inconsistent and that count one did not charge that Palo actually performed the surgical extractions for which he billed insurance companies.
“The obvious thrust of the allegations in count one is that Palo billed for surgical extractions that were not performed,” he wrote.
The government charges that Palo, who was 49 when the indictment was filed in July 2016, submitted $232,674 in fraudulent bills related to the extractions of 26 teeth between January 2008 and June 2014.
Also indicted on similar charges was John F. Lehrian, another oral surgeon, who was charged with one count of health care fraud and 20 counts of making false statements relating to health care matters. The government charged he overbilled insurance companies by $90,734 for 20 extracted teeth between January 2008 and June 2014.
The men each practiced at Lehrian & Palo Oral Surgery, in Erie, until Lehrian retired in 2014. The business is now called Presque Isle Oral Surgery, where Palo continues to practice.
Lehrian in October agreed to enter a pretrial diversion program, which would allow the indictment against him to be discharged if he successfully completes a one-year probationary program. He also agreed to pay more than $21,000 in restitution.