Doctor Gets 16 Months in Medicare Bill Fraud : Courts: The North Hollywood ophthalmologist is free on bail, pending an appeal.

A North Hollywood ophthalmologist convicted of massively defrauding the federal Medicare program was sentenced Tuesday to 16 months in prison and fined $686,000, but was allowed to go free pending an appeal.

In setting bail for Dr. Alan R. Schankman, defense attorneys said Van Nuys Superior Court Judge Stephen D. Petersen appeared to agree with them that misconduct by a juror in the case might provide grounds for a new trial.

Schankman, 45, is accused by federal authorities of submitting 687 false eye-surgery bills totaling about $1.1 million between 1985 and 1990.

A Van Nuys Superior Court jury last month convicted the Hidden Hills resident of 36 counts of fraud in the complex scheme.

Deputy Dist. Atty. Robert Schuitt called him a “thief in a white coat” and urged that he be imprisoned for six years and denied bail while his appeal is pending.

But defense attorney Harland W. Braun argued that Schankman’s transgressions were no more than sloppy billing procedures, and that the doctor had suffered enough by the collapse of his practice.

Braun also contended that because a juror had failed to disclose a connection to a prosecution witness, Schankman had a good chance to get his conviction overturned and therefore should be granted bail while his appeal is considered.

In imposing the prison sentence, Petersen said that Schankman had violated the special trust that society gives to doctors.

But the judge gave no reason for permitting Schankman, who has been out on $55,000 bail since he was charged in August, 1990, to remain free pending appeal.

He gave the doctor until Friday to post an additional $195,000 bail and to surrender his passport.

During the six-week trial, witnesses testified that the bulk of Schankman’s practice was the conventional removal of cataracts from patients whose bills were paid by Medicare.

But prosecution witnesses said that in addition to those in-hospital surgeries, Schankman also claimed to have performed hundreds of follow-up operations in his office.

On the stand, Schankman said the follow-up surgeries were to relieve pressure on the eye, but Schuitt dismissed them as fictitious.

The prosecutor said the doctor got patients to sign a surgical consent form at his office and then “cut a few stitches” left over from the cataract surgery.

Schankman then billed the government for a cornea transplant, receiving about $1,600 per procedure, the prosecutor said.

Prosecution ophthalmologists said there was no such operation as the ones Schankman claimed to have performed and that they could find no evidence of follow-up surgery on the 30 patients whose cases were selected for prosecution.

In a letter to the judge, Schankman wrote: “I honestly still feel, as I testified, that I am not guilty . . . I had friends in New York who billed and were paid for the exact same” surgical procedure.

Before sentencing, Petersen rejected a defense motion for a new trial based on an affidavit by juror Veronica Machado that fellow juror Patricia Santamaria failed to disclose that her sister had once worked for Dr. Ira S. Latto, an ophthalmologist who testified for the prosecution. But the judge acknowledged that the issue was complex and that he could find no clear precedent.

Machado, who acknowledged being the lone holdout on the jury for the last two days of deliberation, said that Santamaria tried to persuade her on the second day of the trial that Latto was credible.

Santamaria, a legal secretary, acknowledged on the stand at the sentencing hearing Tuesday that her sister was linked to Latto but denied trying to influence Machado.

Petersen ruled that Santamaria’s failure to disclose her link was misconduct but was not serious enough to throw out the verdict because Latto’s testimony was not critical to the prosecution.

Janie Cordray, a spokeswoman for the Medical Board of California, said Tuesday that the state agency is seeking to revoke Schankman’s medical license.

If his license is lifted, Cordray said, Schankman can apply for reinstatement in three years.