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United States v. McLean, No. 11-5130

 Decided April 23, 2013

The Fourth Circuit Court of Appeals affirms the district court’s convictions of an interventional cardiologist for health care fraud and making false statements in connection with the delivery of or payment for health services.

This case involved an interventional cardiologist, John McLean  (“McLean”), practiced privately at Peninsula Regional Medical Center (“PRMC”), where he performed cardiac catheterizations and coronary stent procedures. PRMC began investigating McLean in 2006 after a quality control review revealed McLean had performed inappropriate stent procedures in 13 cases. PRMC then conducted its own review, which confirmed that McLean had performed inappropriate stents in approximately half of 25 randomly selected cases, after which McLean resigned on account of an alleged eye condition.  In 2007 the United States subpoenaed patient files from McLean’s practice, but when FBI agents arrived at his office, they found the files stacked on McLean’s desk and a shred bin nearby.

At trial, two expert cardiologists for the government testified that coronary stents were not medically necessary until a certain threshold. One of the experts testified that McLean had grossly overstated the level of blockage in the patient files he reviewed, often over-recording stenosis for patients. In addition, testimony from PRMC staff revealed that McLean overstated the stenosis shown in angiograms. Patients testified that McLean had recorded symptoms in medical records that the patients had never experienced. The government also offered peer comparison data which showed that the patients McLean chose to stent received nearly twice as many stents on average as the patients of his peers and these stent reimbursement claims increased dramatically in the same year that McLean purchased a 1.7 million dollar condominium.

On appeal, McLean challenged his convictions on the basis that (1) the health care fraud statute was unconstitutionally vague as applied to him; (2) that the evidence was insufficient to support his convictions on all counts; (3) and that his trial was prejudiced by the government’s failure to disclose impeachment evidence and certain erroneous evidentiary rulings committed by the district court.  First, the court analyzed whether the statute was unconstitutionally vague on the basis of whether an ordinary person would understand that the health care fraud statute prohibited McLean’s charged conduct. The court did not find it unconstitutionally vague, recognizing that it is a simple fraud statute and not a medical malpractice statute. Therefore, although the statute does not enumerate every possible fraud scheme, an average person would understand that this kind of conduct is prohibited.  Second, the court analyzed whether the jury’s verdict was supported by “substantial evidence” on the basis of whether evidence existed that a reasonable finder of fact could accept as adequate and sufficient to support a conclusion of a defendant’s guilt beyond a reasonable doubt. The court evaluated the evidence supporting the health care fraud charge and then the evidence supporting the false statement charge. For both charges, the specific intent to defraud could be inferred from the totality of the circumstances and did not need to be proven by direct evidence. In addition, sufficient evidence existed to rule out non-criminal explanations for the overstatements such as McLean’s expertise, the fact that his eye condition did not affect his central vision, and the fact that the cases at issue were not borderline cases.  In rebutting this evidence, McLean argued that the government’s pattern evidence was not probative of fraud because a study existed where the average error rate was not much lower than his own. However, the court found that the import of the pattern evidence was not simply that McLean repeatedly performed medically unnecessary stents, but rather that he repeatedly overstated blockage by a wide margin. For the false statement charge, the court again found that sufficient evidence existed on account of the sheer disparity between the stenosis McLean recorded and what the angiograms showed, as well as the other evidence of fraud previously discussed.  Third, the court analyzed whether the trial was prejudiced by failure to produce impeachment evidence to McLean on the basis of whether such evidence was favorable to the accused, suppressed by the government, or material. The court found that PRMC’s settlement with the government had little impeachment value, no witnesses in McLean’s case were parties to the settlement, and that disclosure of such settlement would not likely have altered the jury’s verdict. Although McLean also challenged the government’s permission to conduct voir dire on his expert, the court found it was proper on account of the fact that McLean did not respond with an appropriate written summary under Rule 16 for any expert testimony that will be used at trial. McLean also challenged the government’s objections to several aspects of his expert testimony; however, the court again finds no abuse of discretion because McLean did not provide appropriate notice and the expert’s personal observations were not admissible under Federal Rule of Evidence 702. Finally, the court analyzed McLean’s challenge of the procedural reasonableness of his sentence and how the amount of loss was established. In calculating the loss, the district court considered factors such as the reimbursement received not only for the unnecessary stent procedures, but also the follow up tests, as well as how much the hospital repaid to federal programs in connection with the settlement. The Fourth Circuit found that both were properly included as losses from relevant conduct, because neither the follow-up tests nor the hospital’s losses would have occurred but for the medically unnecessary stents McLean performed.

Full Opinion

– Sarah Bishop