Physician Found Guilty of Fraud : Medicare: The ophthalmologist was convicted of bilking the government out of $1.1 million for phony eye surgery. He faces sentencing Jan. 20.

A North Hollywood ophthalmologist was convicted Tuesday of bilking the federal Medicare program for the elderly out of more than $1 million through phony eye surgery bills.

A Van Nuys Superior Court jury found Dr. Alan R. Schankman, 44, guilty of all 36 fraud counts in the complex case. Federal authorities accused him of submitting 687 false surgery bills, totaling about $1.1 million, between 1985 and 1990.

Schankman rocked slowly in his chair as the verdicts were read but showed no emotion. He faces a sentence of up to seven years in prison.

Judge Stephen D. Petersen told Schankman, who remained free on $55,000 bail, to be “prepared to surrender” at sentencing, which is scheduled Jan. 28. Prosecutors interpreted the statement to mean that Petersen intended to impose a prison sentence.

Deputy Dist. Atty. Robert Schuit said he will urge a prison term because “you can’t expect to pull a fraud this big for this long and then, if you get caught, just pay the money back.”

Defense attorney Harland W. Braun argued that Schankman was being persecuted for experimenting with techniques that other doctors were afraid to try, but jurors said the evidence of fraud was overwhelming.

As do other ophthalmologists, Schankman routinely removed cataracts from elderly patients and filed legitimate bills with Medicare for those procedures, which were done in hospitals, according to testimony in the six-week trial. But the prosecutor said that unlike other surgeons, Schankman also claimed to have performed follow-up operations in his office.

In his testimony, Schankman called the follow-up surgeries “relaxing wedge resections,” but Schuit derided them as “fictitious” and “the infamous Schankman wedge.”

Schuit said Schankman got patients to sign a surgical consent form at his office and “then he cut a few stitches” left from the cataract surgery. Schankman then billed the government for a cornea transplant, getting about $1,600 per procedure, the prosecutor said.

Although cornea transplants are uncommon, they are considered conventional surgery, Schuit said, so Medicare investigators took no notice of the billings until they were checking Schankman’s files on another matter.

Prosecution ophthalmology experts said there was no such operation as Schankman claimed to have performed, and thus Medicare rules did not allow payment for it.

The experts also said they could find no evidence of any follow-up surgery in the 30 patients whose cases were selected for prosecution.

On the stand, Schankman said those experts found no traces of surgery because he did not use stitches and because he cut in the same area as the cataract surgery.

Defense attorneys acknowledged that Schankman’s billing practices were irregular, but they tried to persuade jurors that Schankman had actually performed a surgical procedure each time he billed the government.

After the verdict, jurors said they had focused on irregularities in billing in their decision.

“What seemed important to us is that he billed for surgery that wasn’t eligible for Medicare payment and he billed for it under the wrong category,” said jury forewoman Sory Hinton of Reseda, a supervisor with the state Employment Development Department.

Schankman’s contention that his office workers were responsible for incorrectly billing the government was “preposterous,” said juror Richard Morrison of Glendale. “There is no way he could have been unaware of what was going on in his office for so long.”