Hatch's attorney, Michael Minns, argued that a judge improperly prevented the reality TV star from describing that deal, allegedly struck with show producer Mark Burnett.
But the Boston-based 1st U.S. Circuit Court of Appeals said that Hatch was given several opportunities to testify about the alleged deal, but he never took the opportunity.
"The failure of Hatch to present any evidence of such conversations when invited by the court strongly suggested that no actual promises were made, and no such 'deal' actually existed," the court wrote in its 52-page decision. "It was not the court's right, much less duty, to put words in Hatch's mouth."
Minns raised the cheating allegations with U.S. District Judge Ernest Torres outside the jury's presence. He said the issue was critical to his defense because it would establish why Hatch believed he did not need to pay taxes on his "Survivor" prize.
Torres told Minns that Hatch couldn't get into details about how the show was being run, but he said Hatch could testify about any promises or deals that led him to believe the producers would pay his taxes.
But Hatch never did, and Burnett was never asked about the purported quid pro quo when he took the stand. The appeals court said Minns presented no other evidence to support Hatch's claim of a deal.
Minns said Friday the judge's instructions tied his hands and didn't allow Hatch to adequately explain to the jury why he thought his taxes would be paid.
Hatch, 46, is serving a federal prison sentence of four years and three months in West Virginia. The judge initially planned a shorter sentence, but tacked on several additional months because he said he believed the reality TV star had lied on the stand.
He is scheduled to be released in October 2009.
On Friday, Minns said the appeals court's decision was disappointing. He said Hatch would decide whether to appeal it to the U.S. Supreme Court.
Minns said Hatch was doing better in prison "than many people would." But he complained about the prison health care system, saying Hatch couldn't get proper medical attention for a tooth problem he was having.
"Right now, his greatest suffering is not being able to interact with his family members," Minns said. "He's really a decent human being."