Andrew S. Feldman[i]
The health care fraud statute is not a medical malpractice statute nor is its civil corollary, the False Claims Act (FCA). Yet, recently, the Criminal Division of the Department of Justice has bulked up on its health care fraud indictments against physicians for performing medically unnecessary surgeries or procedures. Similarly, the Civil Division has filed several qui tam actions against physicians alleging that they violated FCA by submitting claims for payment to the government for medically unnecessary surgeries or procedures. Thus far, the list of defendants includes interventional cardiologists, dermatologists, and spinal surgeons and there is no reason to believe that “medical necessity” will stop trending as a theory of prosecution in U.S. Attorney’s offices nationwide.
Nonetheless, more doctors turned defendants will and are forcing the government to prove their guilt beyond a reasonable doubt at trial in these cases. First, as a practical matter, physicians are loathe to accept the government’s interpretation of what may or may not constitute a “medically unnecessary” procedure. Indeed, some of the recently indicted physicians are highly accomplished doctors with decades of experience and specialized knowledge. Second, if a physician enters a plea of guilty then, among other things, the physician will be barred from participating in any federal or state health care programs for a period of years and the physician will be required to surrender her license to practice medicine. Third, proving fraud based on the performance of medically unnecessary procedures is difficult. In fact, in an effort to allay some of the concerns with proving intent to defraud, the government may employ confidential informants and increase their use of surreptitious recordings. Fourth, judging the reasonableness of a particular medical procedure is normally reserved for professional committees and national medical associations, not federal prosecutors and juries, but courts frequently permit expert testimony concerning the propriety of a particular procedure. Fifth, even if a doctor were convicted at trial, calculating loss in these cases may present some significant hurdles for the government and defense counsel.
This article aims to first discuss some of the successful prosecutions of physicians for performing unnecessary heart stenting procedures,[ii] and some of the ongoing prosecutions, including at least one qui tam action. The article will then address some of the challenges that are likely to arise in future medical necessity investigations and prosecutions.
- Cardiologists and Coronary Stents
Notably, since 2012, at least two Circuit Courts of Appeals have upheld the convictions of cardiologists for health care fraud based on their repeated performance of unnecessary coronary stenting2 procedures to treat coronary artery disease (CAD).[iii]
John McLean
In Mclean, the criminal investigation first began after a quality control review revealed that defendant cardiologist had placed a stent in a coronary artery with no significant blockage or stenosis[iv] and after the medical center for which defendant worked identified several additional instances of possible inappropriate stent procedures. Later on, the FBI obtained a search warrant after attempts to subpoena medical records from defendant proved unsuccessful and discovered subpoenaed files stacked on defendant’s desk and a shred bin nearby. Eventually, Dr. McLean demanded a trial and was convicted on all counts. At trial the quality and quantity of the government’s evidence of guilt appeared overwhelming. Expert witnesses, patients, coworkers, nurses, and other hospital staff all testified against Dr. McLean. Significantly, both experts opined that Dr. McLean had “grossly overstated” the level of blockage in numerous patient files and one expert found that, among the 59 cases he reviewed, Dr. McLean recorded blockage of 80-90% when the level of blockage was no more than 10-30%. By comparison, Dr. McLean’s expert testified that elective stents were medically necessary as long as there was at least 50% stenosis, but also disagreed with the percentage of stenosis Dr. McLean recorded in his evaluation of patient angiograms.
Making matters worse, Dr. McLean’s nurse testified that he frequently disagreed with the percentages that he recorded and added that the hospital staff sarcastically referred to healthy lesions that did not require stenting as “McLean 90 percenters” and a dissatisfied patient testified that, when she directly confronted Dr. McLean about why she had received a coronary stent, he responded “because it was easy, why not?” And, finally, peer comparison data introduced at trial demonstrated that Dr. McLean performed nearly twice as many elective stenting procedures as his peers.
On appeal, Dr. McLean raised several arguments. First, McLean argued that the health care fraud statute was unconstitutionally vague as applied to him because no government standard or professional guideline defined the stenosis level needed to justify a coronary stent and the reading of angiograms is inherently subjective. McLean, at 136. The Court rejected this argument finding that the statute prohibited McLean from willfully defrauding insurers by falsely certifying that the stents he placed in patients with little to no blockage were medically necessary, which “necessarily entails proof that he knew the stent procedures were unnecessary.” McLean, at 1363.
Second, McLean claimed that the evidence at trial was insufficient. The Court, however, concluded that the specific intent to defraud private and government payors may be inferred by the totality of the circumstances which included, among other things: a pattern of overstating blockage by a wide margin and placing unnecessary stents in a large number of patients, the stark disparity between what Dr. McLean recorded and what the angiograms revealed, McLean’s admission that he placed a stent in one patient because it was “easy,” and McLean’s undeniable financial motive. Nonetheless, in so holding, the court also highlighted an important distinction between negligence and fraud:
[W]e do not believe that the pattern evidence showing that a physician placed more unnecessary stents than the national average necessarily would be probative of fraud, for such a pattern might only suggest negligence. The distinction here is that McLean repeatedly overstated blockage by a margin well beyond the normal variation between observers.
McLean, at 138-39.
Mehmoud Patel
Similar to the government’s prosecution of Dr. McLean, in Patel, the government introduced expert witnesses, peer review data, and other evidence probative of fraud to ultimately convince jurors that Dr. Patel, the former Chief Cardiologist at LSU Medical Center, defrauded Medicare and Medicaid when he repeatedly performed unnecessary coronary stent procedures. Dr. Patel, however, was acquitted of 41 of the 91 counts at trial and he testified on his own behalf, as an expert witness, for 19 days.
On appeal to the Fifth Circuit, Dr. Patel raised many of the same arguments as Dr. McLean did. Unlike Mclean, the Fifth Circuit in Patel at least recognized that a vagueness challenge to Section 1347 was not “insubstantial” noting that “medical necessity [of cardiac treatments] hinges on the judgment of physicians” and “judgments may be quite subjective.” Patel, at *5. Yet, the court also underscored that Dr. Patel testified that he knew that medical necessity was personally intelligible as applied to the procedures underlying his convictions. Id. at *5.
In response to Dr. Patel’s sufficiency challenge, the Court emphasized that in count after count the evidence illustrated that Dr. Patel falsified the level of blockage in patient records to justify unnecessary stenting procedures. Patient records also showed complaints relating to chest pain while those patients testified that no such complaints were ever made which was probative of fraud. Patel, at *9. And, once the investigation began, Dr. Patel “changed course” ordering fewer procedures which suggested “consciousness of guilt.” Id. at * 9.
Another critical issue raised on appeal was whether or not the district court erred in admitting the expert testimony of a cardiologist-medical ethicist regarding the standards to which the medical profession generally holds itself. Relying on cases from other circuits where the defendant physicians were convicted of pharmaceutical diversion in violation of Section 846, not health care fraud, see United States v. McIver, 470 F.3d 550, 559 (4th Cir. 2006) and United States v. Feingold, 454 F.3d 550, 559 (9th Cir. 2006), the Court found that such testimony was relevant evidence and observed that “evidence that a physician deviated drastically from accepted medical standards is probative of criminal liability.” Patel, at *24, quoting McIver, 470 F.3d at 559.
In sum, while the prosecution of any physician based on his or her medical judgment is a disturbing, amorphous concept deserving of the type of vagueness challenges raised in Patel and McLean, the government’s evidence against Patel and McLean at trial overwhelmingly demonstrated that the two physicians had done much more than simply perform unnecessary or ill-advised procedures that were inconsistent with the then existing generally accepted standards in the medical community. The evidence adduced at trial showed that they repeatedly and intentionally overstated arterial blockage percentages, falsified patient records, and performed an abnormally high volume of procedures in comparison to their peers. Further, neither trial involved what might be viewed as a “battle of the experts” normally reserved for civil trials involving medical malpractice claims. Patel never called an expert and, putting aside all of the expert testimony in McLean’s trial, McLean himself made damaging admissions that were introduced into evidence regarding his inclination to stent which was well-known amongst his nurses and other hospital staff.
- Ongoing Prosecutions John Mitchell and Harold Persaud
More recently, the United States indicted cardiologists John Mitchell for almost identical conduct, performing unnecessary stent procedures while falsifying the percentage of “stenosis” or blockage recorded in patient medical records. United States v. John Mitchell, 14-CR-00306-MEF-WC (M.D. Ala. May 21, 2014) (DE-1). By comparison to the Patel and McLean indictments, there are a mere two (2) health care fraud counts and the government has elected to focus more aggressively on Dr. Mitchell’s alleged false entries concerning the level percentage of stenosis for seven (7) different patients in violation of Section 1035. United States v. John Mitchell, 14-CR-00306-MEF-WC (M.D. Ala. May 21, 2014) (DE-1 at 13-14).
The U.S. Attorney’s Office for the Northern District of Ohio also recently indicted cardiologist Dr. Harold Persaud for health care fraud and violations of Section 1035. See United States v. Harold Persaud, 14-CR-00276-PAG (N.D. Ohio Aug. 20, 2014) (DE-1). The health care fraud allegations against Dr. Persaud relate to a pattern of false stenting and a wide array of other conduct, including unnecessary follow up tests and procedures (e.g. nuclear stress tests, echocardiograms, and electrocardiograms), unnecessary and invasive imaging procedures used to determine the level of blockage in the arteries (e.g. cardiac catheterization, intravascular ultra sound, and aortograms), and referrals for unnecessary coronary artery bypass surgeries. Id. at DE-1 at 8-10. Importantly, the additional Thirteen Section 1035 counts also describe how Dr. Persaud repeatedly falsified “Cardiac Catheterization” reports by lying about the percentage of blockage appearing in patient arteries and how Dr. Persaud falsely documented symptoms of chest pain in patient files. Id. at DE1 at 11-22.[v] Both men currently await trial in Alabama and Ohio respectively.
Indictment of Esteemed Dermatologist Dr. Amir Bajoghli
In addition to the uptick in health care fraud prosecutions involving cardiologists, the government has also indicted at least one dermatologist for the performance of unnecessary Mohs surgeries.[vi]United States v. Amir Bajoghli, 14-CR-00278-GBL (N.D. Va. Aug. 12, 2014) (DE-1). But, unlike the other prosecutions previously discussed, the government in Dr. Bojaghli’s did not allege any violations of 18 U.S.C. Section 1035 and instead alleged 53 separate counts of health care fraud relating to fraudulent billing for Mohs surgeries. Id. at DE1.[vii] Of importance, here, are the allegations (Counts 1-17) specifically related to Dr. Bajoghli’s intentional misdiagnoses of benign tissue as skin cancer in order to submit fraudulent claims to Medicare. Id. at DE-1 at 7-8, 10-11.
Perhaps the most telling development in the prosecution, however, was the government’s decision to send victim statement letters to Dr. Bajoghli’s patients whom the government might call as witnesses on the eve of trial. Indeed, as underscored by defense counsel in a motion in limine, the victims are the payors, Medicare and Tricare, not patients, and sending letters to putative government witnesses is tantamount to obstruction of justice and witness tampering.[viii] Equally as important, sending letters to patients starkly reveals a government position that is untenable– that patients, not federal health care programs, are the victims in health care fraud cases involving unnecessary medical procedures or surgeries.
Tracheotomies- “Biggest Money Maker”[ix]
The indictment of the CEO of Sacred Heart Hospital, Edward Novak, in Chicago and six physicians is also noteworthy for two reasons. First, the government alleged that the hospital generated substantial profits based, in part, on the performance of unnecessary patient intubation and tracheotomy procedures. United States v. Edward Novak, et al. 13-CR-00312 (N.D. Ill. March 18, 2014) (DE-231) (Superseding Indictment). Indeed, physicians unnecessarily performed a high number of intubations[x] and prolonged them by directing the heavy sedation of patients which resulted in tracheotomies being performed. A physician would heavily sedate a patient while the patient was breathing with the assistance of a ventilator in order to increase the likelihood that the patient would fail certain respiratory tests and would ultimately require a tracheotomy. Second, during the Novak investigation, the government used hospital personnel, physicians, and patient recruiters to secretly record Mr. Novak and the physician defendants.
Parallel Actions: Dr. Aria Sabit
The parallel civil and criminal actions against Dr. Aria Sabit, a spinal surgeon, a physician investor in a POD, and an avid weight lifter, also merit discussion. See United States v. Reliance Medical Systems, LLC, et al. 14-CV-06979-DDP-PJW (C.D. Cal. Sept. 8, 2014) (DE-1 at 53-54) (Complaint); United States v. Aria Sabit, 14-CR20779-PDB-RSW (E.D. Mich. December 9, 2014) (DE-19) (Indictment).
One thing which is unusual about the Dr. Sabit indictment is that the government first intervened in a qui tam action against Dr. Sabit (the lone defendant in the complaint) and several corporate entities, including Reliance Medical Systems and Apex Technologies, before indicting Dr. Sabit three months later in the Eastern District of Michigan.
Moreover, the complaint alleges a multi-year scheme to violate the Anti-Kickback Statute in order to reap as many profits as possible from the use of spinal implants on Medicare patients. See United States v. Reliance Medical Systems, LLC, et al. 14-CV-06979-DDP-PJW (C.D. Cal. Sept. 8, 2014) (DE-1) (Complaint). According to the Complaint, Dr. Sabit entered into a long standing joint venture agreement whereby Dr. Sabit was an investor in a medical technology company (Apex) distributing spinal implants.[xi] According to the government, under this arrangement, Apex targeted physicians, (e.g. Dr. Sabit) capable of performing a high volume of spinals surgeries involving their implants. Physicians were then compensated in part based on the profits they generated for Apex by performing spinal surgeries on Medicare patients. Thus, an integral part of the government’s theory of falsity is that payments to Dr. Sabit would cause him to perform spinal surgeries using implants that were not medically necessary. See United States v. Reliance Medical Systems, LLC, et al. 14-CV06979-DDP-PJW (C.D. Cal. Sept. 8, 2014) (DE-1 at 53-54) (Complaint).
The indictment returned in the Eastern District of Michigan against Dr. Sabit was more straightforward. Dr. Sabit was accused of violating the health care fraud statute on more than a dozen occasions when he performed unnecessary spinal surgeries and subsequently falsified the CPT codes corresponding to those surgeries. United States v. Aria Sabit, 14-CR20779-PDB-RSW (E.D. Mich. December 9, 2014) (DE-19 at 8-9) (Indictment). According to the indictment, on at least four occasions, Dr. Sabit performed spinal surgeries without implanting a spinal device into the patient and then authored reports containing false statements concerning the procedure performed, the device used, and the patients’ diagnoses which resulted in the submission of incorrect CPT codes to Medicaid for services that were medically unnecessary or never rendered. Id. at 9. Based on the aforementioned prosecutions of individual physicians for the performance of unnecessary surgeries or procedures, below are some of the critical issues that defense attorneys might anticipate in future prosecutions.
More Trials
As clients, physicians can be a hand full. And, a physician client accused of criminal charges based on a lapse in judgmen1t is much more likely to assert his constitutional right to a jury trial than a physician accused of phantom billing or pocketing kickbacks. In the physician’s view, a prosecution for performing the wrong procedure amounts to egregious government over-reaching. After all, isn’t a board certified physician is in a much better position than a federal prosecutor to evaluate when or how a particular procedure should or should not be performed? Furthermore, after a physician considers the likely consequences of a plea of guilty in this context, including mandatory exclusion, loss of licensure to practice medicine, medical malpractice law suits, and a jail sentence, attorneys should expect that the client will insist on a trial, and may also insist on testifying as a defense expert.
Effect of New Qui Tam Procedure
Assistant Attorney General Leslie Caldwell announced that, as a matter of policy, DOJ will begin aggressively investigating the allegations contained in all qui tam complaints to first determine whether the allegations form the basis for criminal health care fraud prosecutions.[xii]Mr. Caldwell recognized that such a policy might delay the prosecution of viable qui tam actions, but assured relators’ counsel that such steps were necessary to address the government’s current enforcement initiatives. In practice, this means that each and every qui tam alleging medical necessity as a theory of civil liability under the False Claims Act will be screened by the Criminal Division.[xiii] Undeniably, such an initiative presents new challenges one of which is deciding what guidelines, if any, the government should formulate to determine when a physician’s conduct in knowingly performing an unnecessary procedure crosses the grey line between civil and criminal. If Mclean and Patel are the starting points for this analysis, it might be when the physician persists in fraudulent conduct attendant to the medically unnecessary procedure.
Conversely, the policy may also complicate matters for defense counsel in parallel proceedings, for example, responding to a Civil Investigative Demand (CID). Under these circumstances, where there is any reason to believe that there is a parallel criminal investigation with respect to the physician’s conduct the new procedure might cause physicians to demand an informal meeting as a substitute to sworn testimony and may also compel more physicians to invoke their Fifth Amendment rights, after assessing the risks (e.g. an adverse inference instruction) and benefits associated with taking Five. And, similar obstacles may arise in other proceedings, including a state administrative proceeding concerning the physician’s license, a medical malpractice lawsuit during which depositions are requested, or a quality control review initiated at the behest of a QIO.
Defenses at Trial: Specific Intent to Defraud, “Materiality,” and the Good Faith Defense
In a medical necessity case, unlike a run of the mill health care fraud case involving false billing, upcoding, or kickbacks, proving the necessary elements of the health care fraud statute beyond a reasonable doubt may be a more difficult challenge when compared to. Importantly, the government must prove that, a physician intended to defraud a government health care program or a private insurance company, and did so by making “materially” false or fraudulent representations, pretenses, or promises, in connection with the delivery or payment of health care benefits, items, or services.[xiv] A statement, representation, or promise cannot be material unless it is capable of influencing a person’s decision.[xv]
And, despite Congress’ addition of subsection (b) to the healthcare fraud statute, 18 U.S.C. §1347, in an effort to relax the mensrea threshold for prosecutors, stating “[w]ith respect to violations of this section, a person need not have actual knowledge of this section or specific intent to commit a violation of this section,” physicians accused with health care fraud should be entitled to freely assert a good faith defense.[xvi] In so doing, a defendant might assert that, because he held an honest good faith belief, even if mistaken, that the procedures or surgeries that were performed were necessary.[xvii] Accordingly, a physician may also be entitled to assert that she honestly believed that the statements contained in the patient records (or other medical documentation) to support those surgeries were true and accurate.[xviii] If utilized properly, this defense has the potential to eviscerate a medical necessity prosecution at trial.
Surreptitious Recordings
When compared to ambiguous email threads, or difficult to digest financial and medical records, recordings may supply jurors with powerful evidence of the defendant’s guilt. In practice, because transcripts of each and every conversation that might be introduced at trial are provided during discovery, counsel should be prepared to attack the admissibility of these recordings and to effectively cross-examine the supervising agents responsible for obtaining and preserving the recordings.
This is significant in the context of a medical necessity prosecution where the majority of the evidence against the defendant boils down to recorded statements. For example, in the Sacred Heart Hospital investigation and prosecution administrative personnel and others recorded dozens of conversations between or amongst the defendants charged in the superseding indictment. Such evidence may be introduced into evidence as part of the government’s case in chief since surreptitious recordings and confidential informants have the potential to cure some of the identifiable evidentiary deficiencies in these cases and, as such, the benefits of using these investigative techniques is undeniable. On the other hand, counsel will likely have the opportunity to cross-examine some of the other parties to the recorded exchanges, including any of the unindicted co-conspirators, or, if the government refuses to call them as witnesses, counsel might impeach those persons during the cross-examination of the agent by eliciting testimony about their deceitful conduct
For these reasons, recordings will likely continue to be a valuable asset to medical necessity prosecutions and, if the Sacred Heart case is any indicator of the future, medical necessity trials might begin looking more like drug conspiracy cases (in which recordings are frequently a centerpiece of the government’s prosecution and evidence of an unlawful agreement) than health care fraud trials.
Experts
During any medical necessity prosecution, the government must do much more than introduce experts to testify that, based on their experience, the subject procedure or surgery was medically unnecessary. If all the experts do is sensationalize the impropriety of a particular medical procedure, then the bright line between criminal and civil was never transgressed and the government has proved negligence, not fraud.[xix] This raises some interesting questions concerning experts. One significant issue is whether the courts will rigorously apply Daubert to government experts. For example, under Daubert, what methodologies employed by an expert in reaching her conclusions should be considered unreliable or the product of unreliable principles[xx] so as to warrant exclusion? Should an expert be permitted to testify that, based on his or her experience and the application of certain reliable principles, the physician performed an unnecessary surgery, or worse, in doing so, substantially deviated from the acceptable standard of care?[xxi]
Another issue with respect to experts is whether, and to what extent, a government expert (or defense expert) may testify regarding the “ultimate issue” without directly contravening Federal Rule of Evidence 704(b).[xxii]The Tenth Circuit, for example, in United States v. Schneider, 704 F.3d 1287, 1294 (10th Cir. 2013) set up a nice roadmap for how government experts can circumvent 704(b) issues on appeal. In Schneider, the expert testified that the documents evidence “an intention to deceive and defraud the system,” and that “this is a dishonest practice.” Schneider, 704 F.3d at 1294. In response to defendant’s 704(b) challenge on appeal, the Tenth Circuit found that “the rules do not prevent an expert from drawing conclusions about intent, so long as the expert does not profess to know a defendant’s intent.” Schneider, at 1294. That is also precisely what the expert in Schneider did during the following exchange:
Q: Are you telling the jury what you know to be the Defendant’s intent or are you stating what the evidence indicates to you?
A: I’m stating what the evidence indicates to me . . . .
Id. at 1294.
Lastly, what happens when the physician desperately wants his expert to testify at trial, and the court excludes the defense expert? United States v. Reddy, No.11-16146 (11th Cir. Aug. 16, 2013) may provide some answers to this question. In Reddy, defendant, a board certified radiologist, was accused of submitting and fraudulently signing thousands of tele-radiology reports without viewing patient images, but was never permitted to introduce his defense expert because the district court, among other things, was concerned with the reliability of the methods used by the expert under Daubert. Id. The expert’s proffered testimony concerned his peer review, through statistical sampling of defendant images, and his finding that based on his review of defendant’s images, his evaluations were “spot on.”
On appeal, the Eleventh Circuit found that the exclusion of the defense expert was an abuse of discretion but also found that such an abuse amounted to harmless error warranting a reversal of defendant’s health care fraud conviction. Id. [xxiii]
Availability of Charge Bargaining
A physician accused of committing health care fraud may also be capable of convincing the government to agree to a reduced charge through “charge bargaining” depending on the egregiousness of the conduct. Some of the available reduced charges might include: 18 U.S.C. Section 1035, 18 U.S.C. Section 371, or 42 U.S.C. 1320a-7b(a). Indeed, several of the physicians discussed above, with the exceptions of Dr. Bajoghli and Dr. Sabit, were charged with 18 U.S.C. Section 1035. Each of these statutes, unlike the health care fraud statute, carry a maximum jail sentence of five years. Nonetheless, as a condition precedent to agreeing to the reduced charge, the government may require that the physician “proffer” all of the relevant facts and admit that the physician performed an unnecessary procedure in order to reap pecuniary benefits from private insurance companies and Medicare. Not surprisingly, a plea to a reduced charge might also trigger mandatory exclusion and lead to the revocation or suspension of the physician’s license to practice medicine.
Calculation of Loss at Sentencing
Convincing a judge or an AUSA to agree to a more lenient loss figure in a health care fraud case can be the difference between probation and five to ten years. Yet, in the context of a medical necessity prosecution, it might be more difficult for the government to gin up the loss figures at sentencing especially when the allegations in the indictment are limited to the physician’s performance of a few unnecessary surgeries.
But, what about statistical sampling?[xxiv] Can the government argue that, even though there were only 4 counts of health care fraud in the indictment concerning medically unnecessary surgeries, based on their expert’s review, there were 100 unnecessary surgeries?[xxv] If so, will the district court factor those surgeries into the computation of loss as relevant conduct?[xxvi] Additional questions might include: Should district courts credit the fair market value of a procedure, where services were actually rendered or provided, against the government’s loss figure?[xxvii] Do medical procedures even have an identifiable “fair market value” if the government is unwilling to pay for those procedures? Should the government agree to a loss figure that excludes certain procedures or surgeries from the calculation of loss?
Undoubtedly, in medical necessity health care fraud prosecutions, these issues, and others, will be the subject of future litigation at sentencing.
Final Thoughts
As the government increases the quantity and scope of medical necessity prosecutions, practitioners should anticipate that more physician defendants will want jurors, not judges, to decide their fate. After all, the notion of convicting a physician for conduct amounting to medical malpractice, or gross negligence might not sit well with jurors unless, as illustrated in Mclean and Patel, the government introduces clear-cut evidence of fraud and a pattern of deviating from the norms established and accepted by the medical community in order to reap significant profits from federal health care programs. Furthermore, based on the government’s new procedure concerning the investigation of qui tam actions, it is reasonable to expect that there will be enhanced coordination between the Criminal Division and Civil Division. And, it is also very likely that the government will test limits of Daubert in medical necessity trials and will continue to leverage the benefits of sophisticated investigative techniques, including surreptitious recordings, when evidence of intent is merely circumstancial. Finally, the uncertainties surrounding the proper estimation of “loss” in medical necessity cases might create opportunities for both physicians and the government to advance innovative arguments during pretrial negotiations and post-trial sentencing proceedings.
[i] Andrew S. Feldman is the managing member of Feldman Firm, PLLC in Miami, Florida. Mr. Feldman represents physicians, individuals, sales and marketing representatives in investigations and prosecutions of health care fraud and violations of the Anti-Kickback Statute. Mr. Feldman also focuses his practice on representing individuals in False Claims Act litigation.
[ii] A cardiac stent is a device placed in a coronary artery to treat CAD as part of a procedure called percutaneous coronary intervention (PCI). Generally, cardiac stents are used depending on certain characteristics of the artery including the size of the artery and the location of the blockage. When blockage is severe enough, cardiologists may also perform another procedure known as coronary bypass procedure.
[iii] Coronary artery disease (CAD) is the narrowing or blockage or the coronary arteries usually caused by the build-up of cholesterol and fatty deposits on the inner walls of the arteries which can restrict blood flow to the heart muscle by clogging the artery or by causing abnormal artery tone and function. According to the American College of Cardiology Foundation, significant CAD occurs when there is stenosis (blockage) equal to or greater than 70 percent of at least one major epicardial artery or when there is stenosis (blockage) equal to or greater than 50 percent of the left main coronary artery.
[iv] According to generally accepted standards in the medical community, a coronary stent is not medically necessary absent a diagnosis of at least 70% stenosis and symptoms of blockage such as chest pain or a positive stress test. See http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2665 982/
[v] King Daughters Medical Center entered into a 41 Million dollar settlement with the Department of Justice based on allegations that it submitted false claims to Medicare and Medicaid for medically unnecessary coronary stents. See http://www.justice.gov/opa/pr/king-s-daughtersmedical-center-pay-nearly-41-million-resolveallegations-false-billing
[vi] In Mohs surgery, the dermatologist performs the dual role of skin cancer surgeon and pathologist. The procedure involves surgical removal of the visible portion of the skin cancer, along with a layer of the surrounding skin. The tissue is then divided into sections and color-coded by the Mohs surgeon while corresponding reference marks are made on the patient to indicate the source from which each section was taken. The surgeon then draws a map on the surgical site and the tissue is processed to create microscope slides for examination and analysis by the physician. The physician then examines the undersides and edges of each section for evidence of remaining cancer cells. If cancer is still present, the involved areas are carefully marked on the map and the patient is prepared to undergo removal of another layer of tissue.
See www.mohssurgery.org/i4a/pages/index.cfm?pageid= 3293
[vii] The government also alleged that Dr. Bajoghli committed health care fraud when he entered into a side agreement wherein he paid an out of state dermapathologist a per slide fee to analyze slides of patient skin tissue and then billed for that work under his National Provider ID and when Dr. Bajoghli delegated wound closure and suturing responsibilities to “unlicensed” and “unqualified” medical assistants when such procedures were not performed under his “immediate personal supervision.” In a motion to dismiss filed by counsel for Dr. Bajoghli, defense counsel highlighted the fundamental flaws in the prosecution’s fraud theory as it relates to lack of supervision and the agreement with the dermapathologist. United States v. Amir Bajoghli, 14CR-00278-GBL (N.D. Va. Aug. 12, 2014) (DE-29 at 8-20 (Memorandum in Support of Defendant’s Motion to Dismiss Counts 18 Through 60 of the Indictment)
[viii] United States v. Amir Bajoghli, 14-CR-00278-GBL (N.D. Va. October 13, 2014) (DE-43) (Motion in Limine Seeking Corrective Instructions for Certain Patient Witness).
[ix] Mr. Novak was consensually recorded when he proclaimed that tracheotomies were the hospital’s “biggest money maker.
[x] Tracheal intubation is a procedure in which a tube is placed into the windpipe through the patient’s moutor nose often to facilitate ventilation and to prevent asphyxiation or airway obstruction. See www.nlm.nih.gov/medlineplus/ency. By comparison, a tracheotomy is a surgical procedure whereby a hole is created in the front of the patient’s neck and into their windpipe to allow the patient to breathe through a newly created airway passage. Tracheotomies are generally performed when a patient’s breathing is somehow obstructed or when the patient suffers from medical conditions that require the use of a breathing machine for more than two weeks. See www.mayoclinic.com/health/trachostomoy
[xi] Dr. Sabit was also an owner of what is commonly referred to as a physician owned distributorship or POD
[xii] See http://www.justice.gov/criminal/pr/speeches/201 4/crm-speech-140917.html (“We in the Criminal Division have recently implemented a procedure so that all new qui tam complaints are shared by the Civil Division with the Criminal Division as soon as the cases are filed. Experienced prosecutors in the Fraud Section are immediately reviewing the qui tam cases when we receive them to determine whether to open a parallel criminal investigation.”)
[xiii] Based on some of the past and present prosecutions, there are several other triggering events that might lead to an investigation, including: (i) the filing of a patient complaint; an unfavorable quality control review conducted internally; (iii) an unfavorable internal billing audit; (iv) a quality control review initiated by a Medicare Quality Improvement Organization (QIO); (v) an administrative licensure proceeding; or (vi) a jealous doctor or competitor.
[xiv] United States v. Abdallah, 629 F.Supp.2d 699, 720 (S.D.Tx. 2009); United States v. Choiniere, 517 F.3d 967 (7th Cir. 2008), cert. denied, 130 S.Ct. 193 (2009).
[xv] United States v. Cunningham, 554 F. App’x 126, 127 (4th Cir. 2014); United States v. Perry, No. 1:12-CR-173 (D. Md. 2012) (Dkt. No. 63).
[xvi] United States v. Poulin, No. 2:09-CR-049 (E.D. Va. 2009) (Dkt. No. 134), conviction aff’d, 461 F. App’x 272 (4th Cir. 2012) (not for publication); United States v. Perry, No. 1:12-CR-173 (D. Md. 2012) (Dkt. No. 63), conviction aff’d, 757 F.3d 166 (4th Cir. 2014).)
[xvii] Ibid. at note 15.
[xviii] Ibid.
[xix] Mclean, at 138-39.
[xx] The multi-part test is found in Federal Rule of Evidence 702.
[xxi] This is absolutely fair game in Section 846 cases because the government must prove that the licensed medical provider’s actions were not for legitimate medical purposes in the usual course of his professional medical practice or were beyond the bounds of medical practice. See United States v. Boccone, No. 12-4949 (4th Cir. Feb. 20, 2014) (permitting expert testimony from government’s pain management expert); United States v. McIver, 470 F.3d 550, 559 (4th Cir. 2006) (same); United States v. Feingold, 454 F.3d 1001, 1007 (9th Cir. 2006) (permitting government expert to testify about the standard of care with which medical professionals generally must comply, and that Dr. Feingold’s conduct fell far short of applicable professional standard); United States v. Schneider, No. 10-3281 (10th Cir. Jan. 16, 2013) (permitting experts to testify that defendant physician engaged in conduct outside the ordinary course of medical practice). Further, as discussed at supra in Patel, a health care fraud case where the government must prove an intent to defraud, the court permitted the expert to opine that Dr. Patel drastically deviated from the standard medical procedures in performing cardiac stents and further noted that such deviation should be “probative of criminal liability.” Patel, at *24, quoting McIver, 470 F.3d at 559.
[xxii] Federal Rule of Evidence 704(b) states than an “expert witness [in a criminal case] must not state an opinion about whether the defendant did or did not have a mental state or condition that constitutes an element of the crime charged or of a defense” but an opinion offered by an expert is not objectionable just because it “embraces an ultimate issues.” See Federal Rule of Evidence 704(a).
[xxiii] See also United States ex rel. et. al. v. Aseracare Inc., No. 2:12-CV-245-KOB (N.D. Ala. Dec. 4, 2014) (granting defendants’ motion to exclude the government’s marketing expert whose proffered testimony included explaining how defendant’s marketing practices show defendants’ knowledge of its false claims reasoning that such testimony does not satisfy Daubert reliability standards and it would not be helpful to the jury). Note also that another issue which is not the subject of this article is whether or not counsel should retain an expert for the purpose of a pre-indictment discussion with the government. At this juncture, an expert might convince the government that the physician’s methods of diagnosing a disease, or certifying the necessity of a procedure, are acceptable within the medical community and, in doing so, might convince the government to decline prosecution. Or, that meeting might be problematic, lead to a quick indictment, and force the client to perhaps hire another expert.
[xxiv] See, e.g., United States v. Conner, 262 Fed. App’x 515, 2008 WL 215399 (4th Cir. Jan. 25, 2008) (on appeal of health care fraud sentence, holding that extrapolation was “an acceptable method to use in making a reasonable estimate of the amount of loss under the sentencing guidelines.”); United States v. Freitag, 230 F.3d 1019, 1025 (7th Cir. 2000) (in reviewing criminal health care fraud sentence, use of sampling to determine loss amount appropriate); United States v. Jones, 641 F.3d 706 (6th Cir. 2011) (upholding the use of extrapolation to calculate loss and restitution in a health care fraud case).
[xxv] If an expert witness were permitted to testify about those surgeries at trial pursuant to Federal Rule of Evidence 702 and the testimony was deemed either as intrinsic evidence or extrinsic evidence pursuant to Federal Rule of Evidence 404(b), then the court may consider such evidence at sentencing in its estimation of loss. See U.S.S.G., Section 2B1.1, Comment 3(C) (“the estimate of loss shall be based on available information,..”).
[xxvi]
See U.S.S.G., Section 1B1.3
[xxvii] See U.S.S.G., Section 2B1.1, Comment 3(E)(i) (“Loss shall be reduced by the following…..the fair market value of the property returned and the services rendered, by the defendant or other persons acting jointly with defendant to the victim before the offense was detected..”). In United States v. Bane, 720 F.3d 818 (11th Cir. 2013), defendant owner of several durable medical equipment companies providing portable oxygen to Medicare patients, raised a somewhat different, but unsuccessful, argument to challenge his $20 million loss figure at sentencing. He argued that any oxygen that was provided to patients and was medically necessary should be credited against loss. In a noteworthy dissent, Honorable Judge Adalbeto Jordan noted that because the district court found that 90% of the oxygen provided to patients was “medically necessary” its fair market value should be credited against the total loss figure. In doing so, Judge Jordan also concluded that the “Special Rule,” found in 2B1.1 Comment 3(F)(v), which prohibits crediting for losses where “(i) services were fraudulently rendered to the victim by persons falsely posing as licensed professionals; (ii) goods were falsely represented as approved by a governmental regulatory agency; or (iii) goods for which regulatory approval by a government agency was required but not obtained, or was obtained by fraud…” should not apply to medically necessary portable oxygen. Bane, 720 F.3d at 832-33.
