United States v. Paulus

No. 19-5532, 2020 WL 1057394 (6th Cir. 2020)

Decided March 5, 2020


The long saga of the government’s prosecution of Dr. Richard Paulus ended last month, when the Sixth Circuit vacated Defendant Dr. Paulus’s conviction for healthcare fraud and making false statements relating to healthcare matters because of the government’s violation of Brady v. Maryland before Dr. Paulus’s trial.  See United States v. Paulus, 2020 WL 1057394 (6th Cir. 2020).

Dr. Paulus was a successful cardiologist at King’s Daughter’s Medical Center.  After some complaints of the number of medical procedures he was performing, the government began investigating whether he was falsely reporting the degree of blockages in his patients’ arteries found in an angiogram, and conducting other procedures based on those false readings.  The government indicted Dr. Paulus for healthcare fraud and other violations, and experts for both the government and the defense testified in a 23-day trial.  After four days of deliberation, the jury convicted Dr. Paulus on eleven counts and acquitted on five others.  United States v. Paulus, 894 F.3d 267, 273 (6th Cir. 2018).

District Court Judge David Bunning granted a judgment of acquittal, however, after trial.  He ruled that the degree of blockage on an angiogram is a matter of medical opinion, not a fact which can be judged right or wrong.  He noted that even the government’s experts had disagreed on the extent of blockage for many of the same patients.  United States v. Paulus, No. CR 15-15-DLB-EBA, 2017 WL 908409, at *4 (E.D. Ky. Mar. 7, 2017), rev’d in part, vacated in part, 894 F.3d 267 (6th Cir. 2018).

The government appealed the judgment of acquittal, and the Sixth Circuit Court of Appeals reversed.  It disagreed with Judge Bunning, holding that the extent of blockage is an ascertainable fact, not just a matter of opinion, and making a false statement about it could constitute fraud.  It reinstated the verdict and remanded for sentencing.  United States v. Paulus, 894 F.3d 267, 279 (6th Cir. 2018) (“Paulus I”).  On remand, Judge Bunning sentenced Dr. Paulus to five years’ imprisonment and ordered him to pay $1,156,102.23 in restitution.  United States v. Paulus, No. 19-5532, 2020 WL 1057394, at *3 (6th Cir. Mar. 5, 2020) (“Paulus II”).

Ten months later, the Sixth Circuit considered whether the government had committed a Brady violation.  King’s Daughter’s Hospital had told the government that its internal review had found that Dr. Paulus had reported higher blockages on 75 cases, a fact the government shared with the defense.  The government did not disclose, however, that these 75 problem cases came from a review set of 1,046 cases, only a 7% error rate.  Paulus II, at *2.  The Sixth Circuit held that information about the error rate was material and helpful to the defense, because if he had had the letter he would have been able to show that these procedures were in fact the product of occasional mistakes or a difference in opinion.  Id. at *7.  It vacated the conviction, and Dr. Paulus was released from prison the next day.

The Sixth Circuit noted that the government had presented the Brady material to the district court in an ex parte hearing, but the lower court ruled erroneously both in deciding the material was not exculpatory and in conducting the hearing without the defense.  Id. at 5.  Practitioners should be mindful of ex parte hearings between the government and the judge, and seek explanations for the hearings without delay.