Grand jury indicts Dr. Dipak Desai in hepatitis outbreak

By Kyle B. Hansen

Published Friday, June 4, 2010 | 12:52 p.m.

Updated Friday, June 4, 2010 | 4:23 p.m.

A Clark County grand jury has indicted Dr. Dipak Desai -- a high-profile subject of investigations related to the 2008 hepatitis C outbreak -- and two others in connection with the outbreak.

The 28-count criminal indictment unsealed today against the three includes charges of racketeering, performance of an act in reckless disregard of persons or property, criminal neglect of patients, insurance fraud, theft and obtaining money under false pretenses. All are felonies.

Judge Elissa Cadish ordered that Desai surrender himself today and be placed on house arrest until he can arrange to post $1 million bail. If he is unable to arrange bail by the close of business Monday, he will be taken to the Clark County Detention Center.

The other two people charged were Desai’s employees, identified in the indictment as Ronald Ernest Lakeman and Keith H. Mathahs. Cadish set bail for them at $500,000 each.

Deputy District Attorney Michael Staudaher requested Desai be held in jail without bail until next week, when the court could determine what his assets are and how much bail would be appropriate. Desai was also ordered to appear at an arraignment Wednesday at 9 a.m.

But Desai’s attorney, Richard Wright, said Desai and his businesses are in bankruptcy proceedings, and he doesn't have access to his assets. Wright said he would need time to request bail from the bankruptcy court or from his relatives.

The Southern Nevada Health District has linked nine hepatitis C cases to Desai’s Las Vegas Valley endoscopy clinics, but said more than 100 other patients could have been infected. The outbreak prompted health officials to recommend testing for hepatitis B, hepatitis C and HIV to about 50,000 patients.

The Health District in 2008 notified all patients who had undergone procedures at the Endoscopy Center of Southern Nevada between March 2004 and January 2008 that they were at risk for possible exposure. The Health District said patients may have been infected when nurses and other staff reused syringes on patients.

Desai faces a host of medical malpractice suits from patients who say they contracted hepatitis C at his Las Vegas clinics.

Attorneys for the former patients filed motions in district court, saying they did not want Desai and his wife to liquidate or hide assets. Insurance "will be grossly and totally inadequate to satisfy the damage claims of plaintiffs," they said. They also cited Desai's sale of a Mercedes CL63 AMG to a third party in Texas.

Desai had interests in several medical centers in Clark County and he and his wife, Kusum, had purchased a $3.4 million home in the Red Rock County Club.

Desai has filed for Chapter 11 bankruptcy. In February, Desai, who has practiced medicine in Nevada since 1980, surrendered his state medical license after having a series of health problems, including several strokes.

Last month a jury found two companies, Teva Parenteral Medicines Inc. and Baxter Healthcare Corp., liable for failure to warn and for breach of warranty and awarded more than $500 million in damages. Henry and Lorraine Chanin sued the companies after Henry Chanin contracted hepatitis C at Desert Shadow Endoscopy Center.

Jurors awarded more than $5 million in compensatory damages. They also agreed that punitive damages were warranted, ultimately deciding that Teva Parenteral Medicines should pay $356 million and Baxter Healthcare Corp. should pay $144 million.

The $500 million is the largest amount for punitive damages ever to be awarded in Nevada.