United States v. Moran

• Decision Date: 17 February 2015
• Docket Number: No. 12–16056.,12–16056.
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Jacqueline MORAN, Defendant, Anthony Roberts, Derek Alexander, Rafael Alalu, Gary Kushner, Sandra Huarte, Jorge Macli, Antonio Macli, Biscayne Milieu Health Center, Inc., Defendants–Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

778 F.3d 942

UNITED STATES of America, Plaintiff–Appellee,

v. Jacqueline MORAN, Defendant,Anthony Roberts, Derek Alexander, Rafael Alalu, Gary Kushner, Sandra Huarte, Jorge Macli, Antonio Macli, Biscayne Milieu Health Center, Inc., Defendants–Appellants.

No. 12–16056.

United States Court of Appeals, Eleventh Circuit.

Feb. 17, 2015.

Laura Thomas Rivero, Anne Ruth Schultz, Evelyn Baltodano–Sheehan, Michael Scott Davis, Wifredo A. Ferrer, James Vincent Hayes, Marlene Rodriguez, Kathleen Mary Salyer, Alicia E. Shick, Emily M. Smachetti, U.S. Attorney's Office, Miami, FL, for Plaintiff–Appellee.

Derek Alexander, Anthony, TX, pro se.

Jennifer Daley, Amlong & Amlong, PA, J. David Bogenschutz, Bogenschutz Dutko & Kroll, PA, Fort Lauderdale, FL, Mark Clifford Katzef, Mark C. Katzef, PA, Humberto Dominguez, Humberto R. Dominguez, PA, Philip Robert Horowitz, Law Office of Philip R. Horowitz, Esq., Richard Carroll Klugh, Jr., Law Offices of Richard C. Klugh, John E. Bergendahl, Law Offices of John E. Bergendahl, Miami, FL, Steven Hunter Kassner, I, Law Office of Steven H. Kassner, Coral Gables, FL, for Defendants–Appellants.

Appeals from the United States District Court for the Southern District of Florida. D.C. Docket No. 1:11–cr–20587–RNS–15.

Before HULL and JULIE CARNES, Circuit Judges, and ROTHSTEIN,^* District Judge.

HULL, Circuit Judge:

After a jury trial, eight defendants—seven individuals and one corporation—appeal various aspects of their convictions and sentences in connection with the operation of a complex and sustained scheme of Medicare fraud. To begin, we recount certain evidence regarding the fraud scheme and outline the proceedings before the district court. We then review, with relevant factual background, the appellants' challenges to their convictions and sentences.

I. THE FRAUD SCHEME

A. Biscayne Milieu Health Center

In 1996, Biscayne Milieu Health Center, Inc. (“Biscayne Milieu”), located in North Miami, was incorporated in Florida. It offered a partial hospitalization program (“PHP”) for patients with mental illness. In 1997, Biscayne Milieu was certified as a Community Mental Health Center; it received a provider number allowing it to bill Medicare for PHP treatment. A PHP provides intensive outpatient treatment for patients with acute mental illness who are sufficiently ill that they would otherwise require inpatient hospitalization. Medicare covers partial hospitalization programs providing treatment for mental illness, but only does so subject to a variety of conditions.

These Medicare rules and regulations are set forth in the Local Coverage Determination (“LCD”). Medicare requires that, to qualify for the PHP benefit, the services must be reasonable and necessary for the diagnosis and active treatment of the patient's condition. The LCD makes clear that PHPs are structured to “provide patients with profound or disabling mental health conditions an individualized, coordinated, intensive, comprehensive, and multidisciplinary treatment program not provided in a regular outpatient setting.” A given patient must be experiencing “ an acute onset or decompensation of a covered Axis I mental disorder,” severe enough to prevent the patient from functioning in normal daily activities outside of a hospital setting.¹ And there must also be a reasonable expectation that active treatment in the PHP will improve the patient's condition. Patients should not remain in PHPs indefinitely.

Further, dual diagnosis patients are those suffering from both substance abuse and acute mental disorders. Under Medicare's regulations, dual diagnosis patients may be eligible for PHP treatment. But PHP treatment is not authorized for “individuals with persistent substance abuse” who “cannot or refuse to participate with active treatment of their mental disorder.” An addicted individual may be admitted as long as the individual is not actively using the substance at the time of admission and has an acute mental health crisis.

For a patient to be admitted to a PHP, a “psychiatrist or physician trained in the diagnosis and treatment of psychiatric illness” must certify that the patient would require in-patient psychiatric hospitalization if the PHP services were not provided, and must attest that the services will be furnished while the patient is under the care of a physician and pursuant to an individualized plan of care.² Once a patient is enrolled in a PHP, Medicare requires documentation supporting the medical necessity of the claims made by the PHP provider. This documentation includes progress notes detailing the patient's participation in and response to the intensive treatment.

Partial hospitalization in a PHP is a very intensive and expensive form of treatment for patients experiencing an acute mental health crisis. The evidence showed that Biscayne Milieu was paid $165 per patient per day for outpatient treatment or approximately $5000 per month per patient.

The owners and operators of Biscayne Milieu—the appellants here—agreed to be bound by these rules and regulations and to refrain from filing false claims. Because of the volume of claims processed by Medicare, the candor and truthfulness of the appellants, as health care providers making claims into the system, are absolute necessities.

As is too often the case, the appellants here concocted and engaged in a pernicious scheme to defraud Medicare and preyed upon vulnerable victims. To carry out the scheme, the owners and operators of Biscayne Milieu: (a) submitted false and fraudulent claims to Medicare for PHP services for patients who were not eligible for PHP treatment, for PHP services that were not medically necessary, for PHP services that were not eligible for Medicare reimbursement, and for PHP services that were not actually provided by Biscayne Milieu; (b) offered, paid, or received kickbacks and bribes for recruiting Medicare beneficiaries to attend Biscayne Milieu; (c) paid kickbacks and bribes to patients to ensure the attendance of ineligible Medicare beneficiaries at Biscayne Milieu; (d) concealed the submission of false and fraudulent claims to Medicare, the receipt and transfer of the proceeds from the fraud, and the payment of kickbacks and bribes to patient recruiters and Medicare beneficiaries; and (e) diverted proceeds of the fraud for personal use.

Further, Biscayne Milieu employees and agents, including a doctor, therapists, nurses, and social workers, implemented the fraud by admitting ineligible patients to Biscayne Milieu, holding therapy sessions for patients who did not qualify for PHP treatment, falsifying group therapy notes to justify fraudulent claims to Medicare, and recruiting Haitian patients who did not qualify for PHP treatment by promising to assist such patients with applications for United States citizenship. At trial, numerous former employees of Biscayne Milieu, many of whom were separately indicted and had previously pled guilty to their participation in the fraud scheme, offered substantial evidence of the scheme's scope and design.

From 2007 to 2011, Biscayne Milieu submitted $57,689,700 in Medicare claims for PHP care of mentally ill patients, and Medicare paid $11,481,593 on those claims. This billing was largely fraudulent for the simplest of reasons. Virtually all of the patients treated at Biscayne Milieu's PHP were not suffering an acute onset of a covered Axis I mental disorder; did not have a reasonable expectation of improvement as a result of PHP treatment; or were not cognitively able to participate in PHP treatment. As the district court found, even the few patients who might have had such an acute mental disorder did not receive the medical care that was required under the PHP rules. ³

Rather than eligible PHP patients, the patient population principally fell into four categories: (1) chronic substance abusers; (2) elderly patients with dementia; (3) Haitian patients seeking immigration benefits; and (4) paid patients. Chronic substance abusers constituted an enormous percentage of the patient population at Biscayne Milieu. Trial witnesses testified that between 70 percent and 96 percent of Biscayne Milieu patients were chronic substance abusers. By virtue of their chronic substance abuse and lack of an acute mental disorder, the patients at Biscayne Milieu were, for the most part, not eligible for PHP treatment at all. Even though it was regularly admitting substance abusers, Biscayne Milieu also failed to provide meaningful treatment for substance abuse. In short, during the relevant period, Biscayne Milieu operated a patient mill supported by a kickback scheme that ensured an ongoing supply of patients.

The kickback scheme itself was highlighted by the use of what the parties often referred to as the “money sheet.” The money sheet included columns for: the patient's name; the physician responsible for admitting the patient into the PHP; the initials of the person who referred the patient; and a box for each day of the month. Biscayne Milieu billed Medicare, and paid the recruiter, for each day that had an “X” in the box, which showed that the patient attended therapy that day. Recruiters were paid only for days the patient attended therapy, and they were not paid for any days that the patient was absent.

B. The Seven Individual Defendants

In addition to the corporate defendant Biscayne Milieu, the seven individual defendants appealing here played various roles in the operation of the fraud scheme.

Defendant Antonio Macli was Biscayne Milieu's chief executive officer (“CEO”). He also served as Biscayne Milieu's primary contact with Medicare for purposes of provider certification. Defendant Antonio Macli certified compliance with Medicare rules and regulations despite clear knowledge that Biscayne Milieu's patient inventory had been stocked through the payment of illegal recruiter kickbacks. He also directed these recruiters to expand their efforts, including by recruiting patients from...