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Wednesday, Jan. 17, 2007 | Now that all the day’s news is, at least briefed, online by the time I go to bed, very seldom do I get that invigorating jolt from a true breaking story when I sit down with the morning paper.
Friday morning was different. I was genuinely shocked by the report in The San Diego Union-Tribune — a huge scoop — that U.S. Attorney Carol Lam was getting the ax for poor performance.
At first, I was surprised anyone else shared my lack of enthusiasm toward Lam’s work as U.S. attorney. While Lam is clearly bright and totally dedicated to the good fight against corporate fraud, she seems to have incredibly poor judgment about what is a winnable case.
The Alvarado case, which I covered as a reporter for the Union-Tribune, was a perfect example of Lam’s tunnel vision. An expert on health care fraud, Lam assumed what she saw in the actions of Alvarado execs would be obvious to others.
It was far from a safe assumption.
In the Alvarado case, the feds alleged that the hospital’s then-CEO Barry Weinbaum oversaw a scheme to pay local doctors to refer patients to Alvarado Hospital. Under federal law, hospitals that receive Medicare patients can’t pay kickbacks for referrals.
Alvarado wasn’t making direct payments to doctors; instead, the case alleged, hospital execs couched the bribes in relocation agreements — legal payments that are used to recruit doctors into the hospital’s service area. Like lobbyists drumming up campaign cash for politicians, these relocation schemes are legal but ripe for abuse by unscrupulous players.
There was no question the agreements existed and that payments to doctors took place. The question was what the hospital expected in return for those payments. To prove this was truly a kickback scheme, Lam had to convince a jury that Weinbaum intended to bribe the doctors — which implies the doctors involved also had agreed to the scheme.
Lam knows health care fraud inside and out, and she was certain she saw fraud when she looked at the Alvarado files. But there’s a reason there had never been a criminal prosecution of hospitals for these agreements before: It’s tough to get 12 jurors to believe, beyond a reasonable doubt, that these arrangements had crossed the line into bribery.
When the first trial ended in a hung jury, Lam retried the case — at significant cost to taxpayers. That trial ended in a hung jury as well and — confirming my suspicions — several jurors told me later they weren’t even close to buying Lam’s case. The slightest inclination to give Alvarado execs or the doctors the benefit of the doubt just blew it.
You can’t fault Lam for taking a risk to do what she thought was right. So she didn’t bet the odds. That’s one way of doing things.
The problem was, she couldn’t walk away from the table when the chips were down. Like those miserable wretches you see betting the rent in Vegas, Lam seemed convinced she’d had a run of bad cards, and her big win was in the next hand.
Things might well have gone just as poorly in the Strippergate case had those trials not coincided with revelations of gross mismanagement of municipal finances by the San Diego City Council. Oh, and it didn’t hurt that it involved the sex industry, too.
Meanwhile, the biggest “takedown” of Lam’s administration — the Randy Cunningham bribery scandal — was really the work of a newspaper reporter.
Looking at just these high-profile cases, you could make a case that Lam’s record was mediocre.
But wait. First of all, since when has mediocrity put someone on the Bush Administration chopping block? Is this the same White House that thought Brownie was doing a heck of a job and stood behind Donald Rumsfeld until Americans all but showed up with torches demanding his head?
By most accounts, Lam was a person of great integrity who was tired of watching the nudge-nudge, wink-wink of politics and business carry on with impunity. She was appointed in the wake of the Enron scandal, and her agenda also made a lot of sense.
Lam’s efforts showed that she thought big, going after the organ-grinder instead of the monkeys. Lam saw a better use of the precious resources of her office than the fundamentally futile pursuit of gun smugglers and drug traffickers, and maybe that was a good call. After all, no matter how many smugglers and dealers you bring down, more will always spring up in their place. They are the starfish of the criminal world.
Finally, we should consider the ultimate results of Lam’s heavy focus on white-collar crime.
Alvarado is under new ownership by two doctors and finally out from under the legal dark cloud that its former corporate parent has lived under for years for dozens of alleged fraudulent schemes.
San Diego’s local government officials are more aware of the appearance of impropriety and more diligent in dealings with lobbyists.
Duke is in jail, and the whole power structure on Capitol Hill is on notice.
In the end, Lam accomplished much of what she set out to do, regardless of the particulars of the trials.
Maybe that’s the problem.
Rachel Laing works for the San Diego Regional Chamber of Commerce but writes separately on her own time. Her views do not necessarily reflect those of her employer.