United States v. Mahmood

Citation820 F.3d 177
Decision Date14 April 2016
Docket NumberNo. 15–40521.,15–40521.
PartiesUNITED STATES of America, Plaintiff–Appellee v. Tariq MAHMOOD, M.D., Defendant–Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Nathaniel Christopher Kummerfeld, Asst. U.S. Atty. (argued), Kenneth Charles McGurk, U.S. Attorney's Office, Tyler, TX, Alma Z. Hernandez, Special Assistant U.S. attorney, U.S. Attorney's Office, Tyler, TX, for PlaintiffAppellee.

Franklyn Ray Mickelsen, Jr. (argued), Broden, Mickelsen, Helms & Snipes, L.L.P., Dallas, TX, Amy M. Adelson, Esq., Law Offices of Amy Adelson, L.L.C., New York, NY, for DefendantAppellant.

Appeal from the United States District Court for the Eastern District of Texas.

Before STEWART, Chief Judge, and OWEN and COSTA, Circuit Judges.

CARL E. STEWART

, Chief Judge:

Following an investigation into billing practices at several of his hospitals, a jury convicted DefendantAppellant Tariq Mahmood (Mahmood) of one count of conspiracy to commit health care fraud, seven counts of health care fraud, and seven counts of aggravated identity theft. After denying his motion for new trial, the court sentenced Mahmood to 135 months' imprisonment and ordered him to pay $599,128.02 in restitution. Mahmood now appeals, challenging the sufficiency of the evidence supporting most of his convictions, the denial of his motion for new trial, and the district court's calculation of his sentence and restitution. We AFFIRM Mahmood's convictions and the new trial ruling. However, we VACATE Mahmood's sentence and the restitution order, and REMAND for resentencing.

I.

All relevant facts produced at trial and discussed here are taken in the light most favorable to the jury's verdict. See, e.g., United States v. Haines, 803 F.3d 713, 734–35 (5th Cir.2015).

A. Background

Mahmood was a licensed physician who owned a number of Texas hospitals, each of which was an authorized Medicare and Medicaid provider. The events leading to Mahmood's run-in with the law focus on Medicare and Medicaid's billing procedures1 and Mahmood's efforts to persuade employees at his hospitals to manipulate those procedures to increase insurance reimbursements.

A key part of Medicare's reimbursement process involves the manner in which hospitals communicate to Medicare what services the hospital has rendered to patients. Part of this process involves hospital employees known as “coders.” Coders cull through a patient's medical record and document the condition that treating physicians have labeled as a patient's principal diagnosis, i.e., the condition established after study of the medical record to be the primary reason that the patient was admitted to the hospital for treatment, and any secondary diagnoses, i.e., conditions that render a patient's stay longer or more difficult, such as those requiring increased diagnostic procedures, testing, or medication. Coders translate these diagnoses into what are essentially standardized billing codes, which the hospital then sends to Medicare on a reimbursement claim form. Crucial here, the sequencing or order of the codes submitted on a hospital's claim form—particularly the designation of which diagnosis code is primary as opposed to which diagnosis codes are secondary—often affects the payment that Medicare will make as reimbursement for the claim. As one might expect, more complex primary diagnosis codes often trigger increased reimbursements from Medicare.

Mahmood's efforts to manipulate Medicare-billing procedures at his hospitals began in 2005, when he instructed Ruth Ann Crow (“Crow”), former Medical Records Director at Lake Whitney Medical Center (“Lake Whitney”), to fax him the “diagnosis code sheet”2 for all of Lake Whitney's inpatient Medicare patients. Without treating these patients or reviewing their medical records, Mahmood would then fax back the code sheets with handwritten changes or telephone Crow and advise her how he wanted the diagnosis codes resequenced. Most commonly, Mahmood instructed Crow to switch a patient's primary diagnosis with a secondary diagnosis—e.g., recoding a urinary tract infection

with a coinciding bacterial infection to a bacterial infection with a coinciding urinary tract infection —or to add complications to a patient's primary diagnosis—e.g., recoding chronic renal failure to acute renal failure with necrosis. In either case, Crow would access the hospital's billing system, switch the codes the way Mahmood wanted, and then submit the resequenced codes as reimbursement claims to Medicare.

Eventually Mahmood sought to extend the same ploy to some of his other hospitals, but employees at those hospitals were not as willing as Crow to participate. After two employees were unable or unwilling to assist Mahmood, he targeted Norma Longley (“Longley”), former inpatient coder for Renaissance Hospital Terrell (RH Terrell) and Cozby Germany Hospital (Cozby Germany), and began asking her to make many of the same coding changes that he had requested of Crow. Longley refused to make Mahmood's requested changes because patients' medical records did not support them.

Once snubbed by Longley, Mahmood's plan spiraled. From early 2010 through early 2012, Mahmood instructed Longley to fax him the diagnosis code sheets for Medicare patients at RH Terrell and at Cozby Germany. Mahmood did not request the medical records that accompanied these coding sheets, nor did he respond to Longley's faxes with further instructions. Before sending Mahmood the codes, Longley documented them on a separate sheet for her records and entered them into the hospital's billing system using her username, RHNORMA.

At some point, Longley began receiving audit letters indicating that Medicare had reviewed and denied many of the claims that she had coded and entered into the hospital's billing system. Each time she received such a letter, Longley compared her original code sheets to the audit letters and determined that her original coding matched what the Medicare auditor said should have been coded. Longley would then pull the medical records for the audited claims, at which time she learned that Charlotte Wyatt (“Wyatt”), former Health Information Management Supervisor at Cameron Hospital, Inc. (“Cameron”), had accessed the system and changed the codes using the usernames RHCHARLOTTE or CAMERON.

At trial, Wyatt testified that Mahmood tasked her with not only resequencing her own coding for patients at Cameron, but also surreptitiously accessing and resequencing claim forms entered by other coders on behalf of patients at other hospitals. Specifically, Wyatt testified that, at times, she received faxed code sheets from Longley. Per Mahmood's instructions, Wyatt would fax these code sheets on to Mahmood. Mahmood would then telephone Wyatt and tell her which sheets needed to be changed or resequenced to increase Medicare reimbursements. To pad an expected Medicare reimbursement, Wyatt would either add complications to a patient's primary diagnosis, switch a patient's primary diagnosis with one of their secondary diagnoses, or change a patient's primary diagnosis completely by adding a new diagnosis that was not documented in the patient's medical record.

In January 2011, the United States Department of Health and Human Services (“HHS”) joined an ongoing state investigation into billing practices at Mahmood's hospitals. At trial, HHS Special Agent Jack Geren (“Geren”) explained the methodology of the Government's investigation. Based on Longley's original coding sheets and a federal search warrant executed on computer servers at Mahmood's hospitals, the Government was able to identify eighty-five claims that had been accessed by multiple users, i.e., claims that Longley had originally coded and that Wyatt had thereafter secretly accessed and resequenced at Mahmood's direction. The Government also obtained faxes that corresponded with fifty of the eighty-five identified claims.

Geren explained how the evidence extracted from the hospital's billing system and the faxes demonstrated Wyatt's resequencing of Medicare claims at Mahmood's direction. For example, on one occasion, the hospital's billing system reflected that username RHNORMA (Longley) entered diagnosis codes for a patient at 7:45 am. At 8:43 am the same morning, Longley faxed the patient's diagnosis code sheet—without the rest of the patient's medical record—to Mahmood. At 12:02 pm the next day, username RHCHARLOTTE (Wyatt) accessed the hospital's billing system and resequenced Longley's original coding by switching the patient's primary diagnosis with her secondary diagnosis. This particular change resulted in Mahmood's hospital receiving a $3,503.81 overpayment from Medicare.

During the Government's investigation, expert witness and HHS auditor Paul Porrier (“Porrier”) “repriced” the eighty-five claims where Wyatt had resequenced Longley's codes to determine what Medicare would have reimbursed Mahmood's hospitals had the claims been submitted to Medicare as originally coded by Longley. Geren then subtracted this repriced figure from the amount that Medicare actually reimbursed based on the claims as resequenced and submitted by Wyatt. Based on this methodology, Geren testified that, with respect to the eighty-five identified claims, Medicare had collectively overpaid Mahmood's hospitals $143,608. Specifically, Mahmood's hospitals billed $1,926,307.80 to Medicare in connection with the eighty-five claims, Medicare actually reimbursed Mahmood's hospitals $574,247.67, and Medicare would have reimbursed Mahmood's hospitals only $430,639 if the claims had been billed as originally coded by Longley.

B. Proceedings Below

Following the Government's investigation, a federal grand jury returned a fifteen-count superseding indictment, charging Mahmood with one count of conspiracy to commit health care fraud in violation of 18 U.S.C. § 1349

; seven counts of health care fraud, all in violation of 18 U.S.C. §§ 1347 and 2; and seven counts of aggravated identity theft, all in violation of...

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