People v. American Medical Centers of Michigan, Ltd., Docket Nos. 55368

• Decision Date: 07 October 1982
• Docket Number: Docket Nos. 55368,56058 and 56349
• Citation: 324 N.W.2d 782,118 Mich.App. 135
• Parties: PEOPLE of the State of Michigan, Plaintiff-Appellee, v. AMERICAN MEDICAL CENTERS OF MICHIGAN, LIMITED, a Michigan corporation, Eugene Kraus, Leo Fuentes, M.D., and Anton Zadurowycz, M.D., Defendants-Appellants, and Felma Fuentes, M.D., Defendant.
• Court: Court of Appeal of Michigan — District of US

Page 782

324 N.W.2d 782

118 Mich.App. 135

PEOPLE of the State of Michigan, Plaintiff-Appellee, v. AMERICAN MEDICAL CENTERS OF MICHIGAN, LIMITED, a Michigan corporation, Eugene Kraus, Leo Fuentes, M.D., and Anton Zadurowycz, M.D., Defendants-Appellants and Felma Fuentes, M.D., Defendant.

Docket Nos. 55368, 56058 and 56349.

Court of Appeals of Michigan.

Submitted April 21, 1982.

Decided July 19, 1982.

Released for Publication Oct. 7, 1982.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., and Edwin M. Bladen, J. Ronald Kaplansky and Donald E. Erickson, Asst. Attys. Gen., for the People.

Dean, Dean, Segar, Hart & Shulman, P. C., Flint, for defendants-appellants American Medical Centers of Michigan, Ltd. and Eugene Krause.

P. Kelly O'Dea, Bloomfield Hills, for defendant Fuentes.

James Leonard Elsman and Patricia A. Streeter, Birmingham, for defendant-appellant Zadurowycz.

Before KELLY, P. J., and CYNAR and COOK ^*, JJ.

KELLY, Presiding Judge.

Defendants-appellants were convicted by a jury of numerous counts of Medical fraud, M.C.L. Sec. 400.607; M.S.A. Sec. 16.614(7). Defendants Leo Fuentes, Anton Zadurowycz and Eugene Kraus were sentenced to five years probation with the last six months to be spent in the county jail. Additionally, they were ordered to pay restitution in the amounts of $40,000, $60,000 and $200,000 respectively. Defendant American Medical Centers of Michigan, Limited, (American) was ordered to pay restitution of $44,000. Defendants appeal as of right, GCR 1963, 806.1.

American operated two clinics, the Pasadena Street Clinic and the American Medical Center Clinic, in Flint, Michigan. Mr. Kraus, who is not a physician, was president of the corporation. Dr. Zadurowycz supervised the operation of the American Medical Center Clinic while Dr. Leo Fuentes and his wife, Dr. Felma Fuentes, supervised the Pasadena Street Clinic.

Dr. Zadurowycz and Drs. Fuentes provided services for Medicaid patients. To receive compensation for these services, American would submit claim forms furnished by the Department of Social Services (DSS). The forms, which were processed by computers, used code numbers to identify patients, diagnoses, and treatments. DSS provided a manual containing code numbers for different services including "Laryngoscopy, direct, diagnostic" which was listed under the respiratory subsection of surgery.

During 1978 and 1979, the Attorney General conducted an investigation of defendants after receiving a complaint alleging Medicaid fraud. This investigation resulted in a 35-count complaint and warrant in Ingham County Circuit Court against the defendants. The complaint alleged that the defendants had submitted claims for direct diagnostic laryngoscopies which were never performed. Prior to the preliminary examination, defendants moved to change venue to Genesee County, but their motion was denied. Also, defendant Felma Fuentes had been confined to bed and had not been arraigned so the proceedings continued without her. Hereinafter references to defendant Fuentes shall apply to defendant Leo Fuentes only.

A preliminary examination was commenced on November 20, 1979. During the examination, the Attorney General produced evidence showing that the procedures for a direct laryngoscopy were different than those used for an indirect laryngoscopy. A laryngoscopy is the visual examination of the exterior and interior of the larynx. In an indirect laryngoscopy, an instrument containing a mirror is inserted into the patient's mouth and angled to reflect down the patient's throat. A light is then reflected off the mirror and an image of the vocal cords is reflected back to the mirror. A direct laryngoscopy, on the other hand, uses an instrument known as a laryngoscope which is inserted down the patient's throat while he is under anesthesia and in a supine position. The laryngoscope allows the doctor to get a direct view of the larynx. Medicaid would reimburse a doctor an additional $67 for a direct laryngoscopy while no provision was made for any additional reimbursement for an indirect laryngoscopy. Evidence was also presented demonstrating that between January 1, 1978, and June 6, 1979, 5,135 of the 7,941 direct laryngoscopies performed for Medicaid patients in this state were done at American's clinics. The Attorney General also produced evidence that patients at American Clinics were not given direct laryngoscopies but that American nevertheless submitted claims for direct laryngoscopies for those patients. On March 24, 1980, the examining magistrate bound defendants over for trial.

Prior to trial, all defendants moved for separate trials and defendants Fuentes and Zadurowycz moved in limine to prevent the prosecution from introducing at trial evidence of state-wide claims for laryngoscopies as compared to claims made by American. The defendants also moved to quash the information. Initially, the trial court granted severance but, on reconsideration, it ordered a joint trial of all defendants. The court further denied defendants' requests to quash the information and denied the motion in limine.

The trial began on October 27, 1980, and the prosecutor presented evidence similar to that presented during the preliminary examination. However, the trial court did not allow the prosecution to introduce evidence comparing claims for laryngoscopy by American Clinics as opposed to those made state-wide. After the prosecution's case in chief, all defendants moved for directed verdicts which were denied by the trial court. The defendants rested without presenting any evidence and the jury was instructed. The jury returned a verdict finding defendants Zadurowycz, Kraus and American guilty as charged and defendant Fuentes guilty of four of the eight counts charged against him.

The trial court sentenced the individual defendants to five years probation with the last six months to be spent in the county jail. All defendants were ordered to pay restitution. Defendants appeal raising a number of issues.

I

Defendant Leo Fuentes argues that the examining magistrate erred when he found probable cause to bind him over. The standard for reviewing an examining magistrate's decision to bind over a defendant was recently stated in People v. Goode, 106 Mich.App. 129, 136, 308 N.W.2d 448 (1981), where the Court wrote:

"An examining magistrate is to bind a defendant over for trial if it appears that a crime has been committed and that there is probable cause to believe that the defendant committed it. MCL 766.13; MSA 28.931, People v. Asta, 337 Mich. 590, 609-610; 60 N.W.2d 472 (1953). While positive proof of guilt is not required, there must be evidence on each element of the crime charged or evidence from which those elements may be inferred. People v. Oster, 67 Mich.App. 490, 495; 241 N.W.2d 260 (1976), lv. den. 397 Mich. 848 (1976). Probable cause is defined as a reasonable ground of suspicion, supported by circumstances sufficiently strong in themselves to warrant a cautious man in the belief that a person accused is guilty of the offense with which he is charged. People v. Dellabonda, 265 Mich. 486, 490; 251 N.W. 594 (1933). A magistrate's determination at the preliminary examination should not be disturbed unless a clear abuse of discretion is demonstrated. People v. Doss, 406 Mich. 90, 101; 276 N.W.2d 9 (1979)."

Fuentes was charged with eight counts of Medicaid fraud. M.C.L. Sec. 400.607; M.S.A. Sec. 16.614(7) reads in pertinent part as follows:

"(1) A person shall not make or present or cause to be made or presented to an employee or officer of the state a claim under Act No. 280 of the Public Acts of 1939, [MCL 400.1 et seq.; MSA 16.401 et seq. ] as amended, upon or against the state, knowing the claim to be false, fictitious, or fraudulent."

The elements of the offense under M.C.L. Sec. 400.607; M.S.A. Sec. 16.614(7) are 1) a person makes, presents or causes to be made or presented, 2) to an employee or officer of the state, 3) a claim under the Social Welfare Act, M.C.L. Sec. 400.1 et seq.; M.S.A. Sec. 16.401 et seq., 4) knowing the claim to be false, fictitious, or fraudulent.

During the preliminary examination, evidence was presented that Fuentes, along with his wife, supervised the operation of the Pasadena Street Clinic. His provider number on the billing form had been used to bill Medicaid for direct laryngoscopies. The patients' charts for those billings also contained a notation that laryngoscopies had been performed upon those patients. The prosecution also presented evidence that the patients were not given direct laryngoscopies but rather indirect laryngoscopies. Finally, the evidence showed that the average physician would know the difference between a direct and an indirect laryngoscopy. After reviewing the evidence presented during the preliminary examination, we cannot say that the examining magistrate abused his discretion when he bound over defendant Leo Fuentes.

II

Defendant Anton Zadurowycz argues that the trial court erred when it denied his motion for a severance of trial. According to Zadurowycz, he intended to present a defense which was antagonistic to the other defendants. He also argues that the joint trial restricted his right to cross-examine prosecution witnesses because of the different defenses presented by the defendants.

Defendants do not have an absolute right to separate trials; rather there is a strong policy favoring joint trials. People v. Carroll, 396 Mich. 408, 414, 240 N.W.2d 722 (1976). When moving for severance, the defendant must clearly, affirmatively and fully show that his "substantial rights" will be prejudiced by joint trial. Id., 414, 240 N.W.2d 722; People v. Kramer, 103 Mich.App. 747, 753, 303 N.W.2d 880 (1981). Where defendants' separate defenses are antagonistic, severance should be granted. People v. Hurst, 396 Mich. 1, 6, 238 N.W.2d 6 (1976); Kramer, supra, 103 Mich.App. 753, 303 N.W.2d 880. A conclusory statement of...