Neurosurgeon John Schneider was arrested in the San Diego area on Sept. 17, then released on his own recognizance the following day. Schneider made his first court appearance in Billings’ U.S. District Court in October, where he pleaded not guilty to the charges against him.
Up through last week, Schneider was working as a surgeon for the U.S. Department of Veterans Affairs in Iowa City, Iowa, while out on bond.
Schneider remains barred from practicing medicine in Wyoming — having been stripped of his medical license in connection with a patient’s death — but has an active medical license in Montana, whose medical board did not discipline him.
Iowa City VA spokesman Bryan Clark told the Tribune that Schneider went through a credentialing process before joining the facility’s staff at the end of April. The surgeon was working fulltime for the VA, though he was on a temporary appointment while he sought a medical license from the Iowa Board of Medicine, Clark said.
“In terms of anything that Dr. Schneider has going on in his home state, or where he came from before, you would have to talk to him about that,” Clark told the Tribune on Nov. 3.
However, the Tribune wasn’t the only media outlet to inquire about how a doctor with a revoked license came to be hired by the VA.
On Sunday, USA Today published an in-depth investigation of Schneider’s hiring titled, “VA knowingly hires doctors with past malpractice claims, discipline for poor care.”
USA Today’s story focused on more than a dozen malpractice complaints that have been filed against Schneider over the years — including one relating to the death that led to his Wyoming license being revoked in 2014. The media outlet also quoted two Iowa City VA patients and their families who alleged that Schneider had provided poor care since starting there earlier this year. Schneider denied the allegations.
In the piece, journalist Donovan Slack wrote that, “As a result of USA TODAY’s investigation of Schneider, VA officials determined his hiring — and potentially that of an unknown number of other doctors — was illegal.” Although Schneider still holds his Montana license, “federal law bars the agency from hiring physicians whose license has been revoked by a state board,” Slack reported, adding, “VA spokesman Curt Cashour [in Washington, D.C.] said agency officials provided hospital officials in Iowa City with ‘incorrect guidance’ green-lighting Schneider’s hire.”
USA Today said the VA took action to fire Schneider on Wednesday, but he resigned instead.
Series of controversies
It was the latest in a series of controversies for Schneider in recent years.
The surgeon had reported a net worth of around $17 million in 2011 — and he was on the verge of opening a new surgical center in Billings in partnership with other local doctors late that year. But things changed quickly.
In late November 2011, Schneider performed back surgery on 47-year-old Russell Monaco — the husband of one of his employees — at West Park Hospital in Cody. Monaco was discharged a couple days later, but died at home that night from a mixture of numerous painkillers prescribed by Schneider and his physician assistant. That mixture included fentanyl, a powerful opioid that wasn’t supposed to be used to treat postoperative pain. Schneider has attributed the death to the actions of his PA, West Park staff and others.
Just days after Monaco’s death, Cody orthopedic surgeon Jimmie Biles filed a civil lawsuit alleging Schneider had been behind a flier — that was mailed to thousands of local homes in 2010 — that spread false accusations about Biles.
Schneider claimed he’d had no involvement with the flier, but his own attorneys denounced him after damning emails surfaced; they include messages in which Schneider appeared to discuss destroying evidence and pledged a $250,000 “payoff” to a witness. The judge presiding over the defamation case suggested that Schneider’s actions warranted an investigation by the U.S. Attorney’s Office in Wyoming, but nothing came of it. Schneider has said that he was joking about destroying evidence and that his reference to a payoff was about a countersuit he expected to win.
Biles’ suit ended in a “multi-million” dollar settlement Schneider paid out of the same entity that provided his medical malpractice insurance, according to court filings and testimony from the trustee in the bankruptcy case.
Schneider’s actions led at least some of Schneider’s partners on The Surgical Center at OMNI in Billings to decide they no longer wanted to partner with him. Despite efforts to continue the project, the OMNI center never opened to the public.
In February 2014, the Wyoming Board of Medicine revoked Schneider’s license over the care he provided to Monaco. Schneider has appealed the board’s decision, arguing in part that he was denied due process.
Meanwhile, several patients — including Monaco’s family — sued Schneider for alleged medical malpractice.
He declared bankruptcy on Dec. 4, 2014 — five days before one of the cases was set to go to trial in Park County’s District Court.
It’s a series of statements that Schneider made (or failed to make) in the initial months of his bankruptcy case that resulted in criminal charges this past summer.
Indicted in Billings
In late July, a grand jury convened in Billings indicted Schneider on allegations of fraud in the bankruptcy: two counts of making a false statement under oath, one of concealing assets and one of fraudulent transfer of assets. Under standard federal court procedures, the case brought by the U.S. Attorney’s Office in Montana remained sealed from public view until Schneider’s first court appearance in San Diego on Sept. 18.
Schneider is alleged to have failed to disclose $309,000 in a U.S. Bank account, transferred hundreds of thousands of dollars to his sister to get around the bankruptcy court’s rules and fraudulently concealed a 2001 Harley Davidson motorcycle valued at around $15,500.
Schneider testified at a January 2015 proceeding that he’d given the Harley to his sister’s husband. However, that sister, Kathleen Burrows of California, later testified they never had the vehicle. Burrows said her husband “has not ridden a motorcycle since his motorcycle accident in the late ‘90s.”
Schneider also testified he’d given his sister a property in Molt, Montana, which was then sold for $325,000.
“The money from that transaction went to Kathleen Burrows, and I believe she has the gift tax returns to demonstrate that,” Schneider told the bankruptcy trustee in January 2015, according to a transcript included in court records.
However, Burrows said Schneider actually kept close to half of the proceeds for himself. Burrows said she received $150,000 while the other $146,000 of the proceeds were used to open an account at U.S. Bank. Combined with a few other checks, more than $539,700 was put into the account in the span of about a week.
Although it was Burrows’ name on the account, “This is John’s [Schneider’s] money when I opened it up, and I believed, I mean, it was John’s money,” Burrows testified in July 2015, saying Schneider had control of the ATM card and used it. She also said Schneider had not wanted his name on the account, according to a transcript filed in the bankruptcy case.
In the years leading up to his bankruptcy, Schneider shuffled his assets around multiple trusts and LLCs. Schneider has said the transfers were part of estate planning efforts he’d begun years earlier.
However, Joe Womack, a Billings lawyer who served as the trustee in the bankruptcy case, alleged Schneider’s transactions were part of a “complex scheme” intended to “hide his personal assets from creditors.”
Womack charged that, although Burrows was listed as managing some of the LLCs and trusts, Schneider was actually the one in control. For example, Burrows was technically the owner of an entity called MedPort LLC, which she said she thought was going to be a family business.
However, “I think in general I didn’t have any control over what in the world was going on,” Burrows testified.
“And whatever was going on — like the using MedPort money to purchase a big home in southern California — I was not in agreement with at all,” Burrows said. MedPort finalized the purchase of that roughly $1.8 million home for the Schneider family a couple months after Schneider declared bankruptcy.
A settlement approved by the U.S. Bankruptcy Court in Montana last year resulted in Schneider giving up millions of dollars of assets, including half of the proceeds from the sale of his home in Billings and his Whispering Winds Ranch, located between Powell and Cody. The home in Encinitas remained with MedPort and the Schneider family.
Working as a consultant
At the time he filed for bankruptcy, Schneider said he was working as an expert witness in medical malpractice and worker’s compensation cases for MedPort, receiving a monthly salary of $2,500 against more than $14,000 worth of expenses. Later, Schneider worked as a consultant for a spinal implants company, training foreign surgeons in a California lab with cadavers and on live patients overseas.
Womack said Schneider’s lack of significant income was one of the factors that led him to strike a deal in the bankruptcy case.
“I don’t think he’s got the ability to earn any more money, and I think people, if he doesn’t get his discharge, and they go after him, they’re not going to have anything to get,” Womack, the trustee, testified in March 2016. “They’re going to be chasing somebody that’s going to be hiding assets for the rest of his life, like [bankrupt billionaire real estate developer] Tim Blixseth and O.J. Simpson, and they’re not going to get anything.”
“Both of whom are in jail, I want to point out,” interjected Andy Patton, a Billings attorney who represented the Monaco family and other former patients of Schneider.
“Yeah. And who knows what will happen with Dr. Schneider; I have no idea in that regard,” Womack said. “But that’s a criminal matter, and that’s not for me to say.”
A trial in the case being brought by federal prosecutors in Billings is currently set to start on Feb. 12.
Before resigning at the Iowa City VA last week, Schneider was earning an annual salary of $385,000.