Najarian verdict passes one-year mark

Jodi Compton

One year ago today, surgeon John Najarian was acquitted of all criminal charges against him — charges that had included both medical fraud and financial wrongdoing. When Najarian stepped out of a federal courthouse in St. Paul and into a sea of media representatives, for a moment it seemed the entire story was at an end.
But a massive civil suit facing the University is a reminder that this case was never about one man, but is instead a continuing story involving an alphabet soup of government agencies — the FDA, the FBI, the NIH, the IRS — platoons of lawyers, and one of the University’s most renowned research achievements, the Anti-Lymphocyte Globulin program. Although the trial is fading from public memory, the fallout continues.
A success story gone wrong
Najarian was recruited to the University’s Medical School in 1967. When he came to the school, he brought along his ideas for a drug to prevent the rejection of transplanted organs.
The central barrier to successful transplant surgery was the body’s natural impulse to destroy foreign bodies introduced to it — including the transplanted organs that were crucial to a patient’s survival. Najarian and immunologist Richard Condie injected horses with human lymphocytes, the cells that destroyed the organs. From the horses’ blood, which developed antibodies to the lymphocytes, came the serum called anti-lymphocyte globulin, or ALG.
The idea was not original to Najarian. “There was a man in 1890 who thought you could make a substance against lymphocytes by taking lymphocytes into animals,” Najarian said. “I guess you could call that ALG. It was never used.” And in the late 1960s, other researchers were pursuing the idea and developed products that are still used today.
But Najarian and the Minnesota program seemed to get a faster start off the blocks than competitors, if the program’s results were any measure. During the 1970s, one of Najarian’s lawyers said at trial, the transplantation program at Minnesota had about 15 percent better results than the rest of the nation.
ALG had been approved for use by the Food and Drug Administration in 1971 as an Investigational New Drug, meaning that there were requirements for its use. Among them: that records be kept of adverse reactions to the serum and that patients sign consent forms specific to the drug. Over the next two decades, as ALG was used in 280 transplant centers, attention to these details faded.
In 1992, the FDA intervened. Among the findings from a 1992 site visit: that while the ALG program had been given permission to charge for cost recovery in 1989, the drug study was not collecting adequate patient records, and that the University Hospital was no longer using special consent forms for ALG that stated it was investigational.
On the heels of these findings, FBI and Internal Revenue Service agents arrived and turned up evidence that the ALG program had made profits and stockpiled money for years, and also that individuals in the surgery department were misusing federal grant monies.
In addition, federal agents found evidence that Najarian was not only involved in the ALG violations, but was double-billing the University for his travel expenses and cheating on his taxes.
Alarmed, the University also launched investigations, and during this time, Najarian stepped down first from his chairmanship, then from his position as a tenured professor.
Najarian became the focus of the increasingly public controversy. No one following the case was surprised when, on April 6, 1995, U.S. Attorney David Lillehaug announced that a grand jury had indicted him on 18 counts of medical fraud, embezzlement and tax evasion. Later, additional charges of obstruction of justice raised the total counts to 21.
The defense table at which Najarian eventually sat could have been a good deal more crowded than it was. James Coggins, the surgery department’s chief financial officer, figured prominently in the investigation. Bernard Ley, a financial administrator, was indicted two months before Najarian on charges that he had defrauded the government. And Richard Condie, who ran the ALG program’s day-to-day affairs, was indicted the same day as his supervisor on four counts related to Najarian’s.
But Coggins had died in 1994, before any indictments came down. Ley pleaded guilty. Condie, who had initially claimed innocence along with Najarian, changed his plea several months later.
In the end, only one person remained to stand trial.
United States vs. Najarian
“It was incredibly complex,” recalls Peter Thompson, one of two attorneys for Najarian, “both in terms of the concepts and the mass of papers both sides had prepared.”
While assistant U.S. Attorneys Hank Shea and Mark Larsen led an IRS agent and other witnesses through an examination of Najarian’s receipts and financial records, assistant U.S. Attorney Janet Newberg called doctors and nurses to the witness stand to testify about the deaths of patients who had received ALG. Although the stories of patient deaths could be harrowing, what was at issue was that the deaths were never reported to the FDA.
On cross-examination, Najarian’s attorney, John Lundquist, made a point of asking all witnesses if their institutions continued to use ALG. The answer was always ‘yes.’ Lundquist also drew from some admissions that a colleague or superior might not have agreed that the death was caused by a reaction to ALG, undermining the idea that the death was an adverse reaction.
After the prosecution rested, at what should have been the trial’s midway point, Najarian’s legal team asked U.S. District Judge Richard Kyle to dismiss seven of the counts, including the four medical fraud charges, saying the government had failed to make its case sufficiently for a jury to decide them. Kyle agreed, dismissing all the ALG charges and two others.
Lundquist’s partner, Peter Thompson, had the task of convincing the jurors that Najarian’s $76,000 of double-billing was his way of making up for legitimate travel expenses he was paying out-of-pocket.
Najarian echoed that theme when he explained his double-billing on the witness stand. “Looking back on it, I’m sorry I used that technique,” he said. But he insisted that he had always generally kept track of what he was spending on travel and what he needed to make up, despite Shea’s incredulous cross-examination.
“You were just keeping a running tab of expenses in your head … is that what you’re saying?” Shea asked.
“I knew whether I was running ahead or running behind,” Najarian responded.
On Feb. 19, lawyers made their final arguments before the jury. Shea stressed the same theme Newberg had in her opening argument six weeks earlier: No one is above the law. “No one gets a free pass to break the law … It would be wrong for anyone to vote `not guilty’ because of a life he’s saved,” Shea said.
Thompson, meanwhile, delivered both closing defense arguments and laid as much blame on the University for not standing by Najarian as he did the government for bringing the charges.
“The University of Minnesota has turned on a great man,” Thompson told jurors. And then, with his client still facing 15 counts, he warned the jury, “One bullet to the heart is as deadly as four, five or 15.”
Two days later, the jury returned its verdict: not guilty on all counts.
That day, U.S. Attorney Lillehaug laid some blame on U.S. District Judge Kyle. The judge had sometimes expressed impatience with the work of prosecutors. “Let’s move on, counsel,” he would say. Lillehaug called Kyle’s behavior “unusual.”
“Anyone whose ever served on a jury knows the dynamics. You look for the cues. The cues certainly weren’t going our way,” Lillehaug said.
At the University, administrators held their own postmortem on the case and their decision to cooperate with the government’s investigation rather than back Najarian. “Would we do it all again? Absolutely … We would have to do it all again,” said University President Nils Hasselmo.
Lillehaug, reflecting on the case a year later, now says that his office’s relationship with Judge Kyle is “fine. Our attorneys continue to appear before him regularly, and we have what I feel is a good relationship.”
Neither, he says, would he have done anything differently. “I feel that federal investigative agencies and the prosecutors in our office acted appropriately in pursuing the case and dealt with the situation honorably.”
United States v. Regents of the University of Minnesota
On the day of the Najarian verdict, Judge Kyle made a few closing remarks. “In some ways, it’s a sad chapter for the University of Minnesota,” he said. That chapter was not closed, and the University’s woes were to get worse, not better.
That same day, Lillehaug told reporters that the federal government and the University were discussing “repayment options” for misspent federal grant money. The negotiations, overshadowed by Najarian’s criminal trial, were vaulted to prominence in December when the Justice Department filed a suit to recoup money it claimed the school fraudulently obtained, misspent or earned.
By far, the largest amount the government is claiming is $85 million in revenue and interest from the ALG program and $19.6 million it says the National Institutes of Health gave as “seed money” for ALG.
A pre-emptive University suit dealing with sanctions imposed by the NIH on University research has complicated settlement of the government’s ALG claims and has ensured that the ALG controversy will continue. Efforts to settle this legal impasse will continue, but no end is in sight.
On Wednesday, Mark Brenner, vice president of research and dean of the graduate school, said that “things are at a sensitive stage. (But) there is no settlement today; there will be no settlement tomorrow.”
Private practice
Najarian spoke Tuesday from his office on the 11th floor of the Phillips-Wangensteen Building. His current office is not as large as the one he occupied during his days as the surgery department head, and appears smaller because the walls are cluttered with pictures.
Mostly, they are photos of the surgeon with patients or with his family. One reminder of the trial hangs in his inner office: a courtroom illustration by Jim Freitag of the Star Tribune. The man on the stand resembles Bernard Ley; Najarian thinks it is Richard Condie. “I thought I recognized the Condie eyebrows; they’re quite distinctive.”
Today, Najarian practices medicine through the Fairview-University Medical Center. His title is that of clinical professor. In July, Gov. Arne Carlson requested the University reinstate Najarian as a full professor, but nothing came of it. Although the University is getting new leadership in the form of President-elect Mark Yudof — “Thank God,” Najarian says — he does not think this increases his chances of reinstatement. In fact, he now maintains he never wanted official reinstatement.
“What I’m doing right now is fine, just fine. I’m doing what I love,” Najarian says. Practicing medicine among students is enough teaching for him.
Ninth-year surgery resident Darla Granger, agrees that Najarian’s as a physician is also that of a teacher “in the operating room, in the hospital, the surgery department conferences. He does it because he loves it. He doesn’t know how else to act.”
Although Najarian’s life has returned to normal, he faces the prospect of more time in court if a civil suit brought by the parents of a former patient should go to court. Najarian and the University are co-defendants in the case.
The parents of a two-year-old son who had two unsuccessful kidney transplants at the University Hospital, say Najarian is liable for his death, because they did not sign a consent form specifically for ALG or know it was investigational, and because the drug was not meant to be used on children under six.
University and Najarian representatives in the civil suit say that under Minnesota statutes, claims against physicians must be brought within two years. The Hoeffners’ attorney said that this case is an exception to the statute of limitations, because the Hoeffners said they did not know about the violations of FDA rules until recently when the case was investigated.
A Hennepin County judge will rule on this point next month.
The surgeon is reluctant to comment on the legal tangle between the University and the federal government. “I’ve learned enough about the law that you shouldn’t comment on pending litigation.” But he supports the University’s claim, put forth in its countersuit, that the NIH did not give the school $19.6 million in “seed money” to the ALG program. Money from the NIH “had nothing to do with ALG. It had to do with animal and clinical investigation in transplantation.”
Despite his acquittal, Najarian says that he does not feel like the victor in his case. “How can you be a winner if you go through what I went through? You’re not a winner,” he said.
Despite this hint of hard feelings, Najarian indicated that he has moved on. When asked what he would say to U.S. Attorney David Lillehaug if they ran into each other at a Gophers basketball game, he responded, “I don’t think that I would say anything to him. I don’t even think that I’d recognize him anymore.”