Host Was Heart Surgeon Who Got Referrals : Probe Clears Navy Doctors in Mexico Outing

Two U.S. Navy heart specialists joined San Diego cardiac surgeon Pat O. Daily on Mexican fishing holidays aboard Daily’s private yacht, an official inquiry has found. But investigators ruled that there was no conflict of interest or impropriety in the outings.

The finding was made public Friday near the apparent conclusion of a Naval Investigative Service inquiry into allegations that Daily and the private heart surgery group he heads may have benefited from preferential treatment in referral of cases from the Navy Hospital in Balboa Park.

Although investigators said they had resolved questions surrounding the fishing trips, the Navy said at least one more witness would have to be interviewed before a formal report is delivered on the central issue in the probe: Whether Navy doctors steered hundreds of thousands of dollars worth of business to Daily to the exclusion of two other surgical groups.

A Navy spokesman added that although the inquiry had cleared the two doctors of any actual wrongdoing, commanders were concerned that acceptance of the fishing vacations had the appearance of a conflict of interest--whether one actually existed or not.

The Navy said Daily serves as an unpaid “consultant” to the Navy Hospital’s heart surgery department. In that role, Daily is said to have acquired some control over the Navy program within the last year.

In the last 12 months, UC San Diego Medical Center, where Daily does much of his open-heart surgery, has gotten 113 Navy referrals, a spokeswoman said--all of them to Daily’s group. (UC San Diego, which earlier said therewere 155 such referrals, said it had mistakenly included in the initial total 42 cases referred from the Veterans Administration.)

Sharp Hospital, where Daily is also active, got 50 such cases. By contrast, Dr. James H. Oury, who heads the second most active cardiac surgery group in the city, said his team received 20 to 30 Navy referrals in the same period.

The probe was ordered after Navy investigators received complaints of possible favoritism. There was initial speculation that the original complaints had come from one of the two surgery groups allegedly excluded from Navy referrals. But sources close to the investigation told The Times in the past week that the initial alert had come from within the Navy Hospital itself--possibly from the health center’s quality assurance department.

Daily has declined to discuss the controversy with reporters and did not return telephone calls Friday.

Lt. Gene Elliot, a Navy spokesman, said the investigative team, which has been looking into the charges for about four weeks, had confirmed that two Navy heart specialists accepted offers by Daily to join him for deep-sea fishing off the Mexican coast within the last few months.

No precise dates were released, but Elliot said it was believed that a Navy surgeon and a Navy cardiologist were involved, and that they accompanied Daily on fishing trips separately.

Daily is part owner of a luxury fishing craft that spends much of each year in Mexican waters. Daily is also a licensed pilot who is said to personally fly himself and his guests from San Diego to Cabo San Lucas in Baja California.

But Elliot said the Navy inquiry could find nothing improper in the travel, at least in part, Elliot said, because “there was no chartering of a boat (since the craft is owned by Daily), no parties, no fancy meals and no frills. They (Daily and the Navy doctors) are personal friends. They left together, went fishing and came back.”

Elliot noted that Daily is known to frequently issue similar invitations to civilian surgeon friends. “The guy loves to go fishing,” Elliot said. “He’s single and he has a boat, and he has friends and professional colleagues.”

Elliot said the Navy probe had officially concluded that there was neither a conflict of interest nor “anything else inappropriate” in the fishing trips. But he said commanders may issue instructions that Navy doctors avoid any relationship with Daily or other civilian physicians that may give the appearance of impropriety.

“The appearance can be very misconceiving,” Elliot said. “It (what occurred) is very detrimental in that respect.”

Elliot said that, when Navy patients are referred to civilian hospitals, they are not officially told to select any specific civilian health center. He said the Navy Hospital provides patients with a list prepared by the San Diego County Medical Society of hospitals or doctors offering the services they need.