U.S. v. Abdallah

• Citation: 629 F.Supp.2d 699
• Decision Date: 29 April 2009
• Docket Number: Criminal Action No. H-07-155.
• Parties: UNITED STATES of America v. Mazen ABDALLAH, Wesam Abdallah.
• Court: U.S. District Court — Southern District of Texas

629 F.Supp.2d 699

UNITED STATES of America v. Mazen ABDALLAH, Wesam Abdallah.

Criminal Action No. H-07-155.

United States District Court, S.D. Texas, Houston Division.

April 29, 2009.

Suzanne Bradley, Financial Litigation, Albert A. Balboni, Ryan D. Mcconnell, United States Attorneys Office, US Marshal, US Pretrial Svcs., US Probation, Houston, TX, for Plaintiff.

Philip Harlan Hilder, James Gregory Rytting, Hilder & Associates P.C., Michael Emory Clark, Hamel Bowers et al., Houston, TX, for Defendants.

MEMORANDUM AND OPINION

LEE H. ROSENTHAL, District Judge.

This Medicare and Medicaid fraud case arises out of ambulance transportation of individuals to and from regularly scheduled, nonemergency dialysis treatments. The individuals transported all suffered from renal disease. The government alleged that Mazen and Wesam Abdallah, brothers who purchased and operated an ambulance service from the codefendants, committed fraud and conspiracy to defraud by submitting claims for payment by Medicare and Medicaid for regularly scheduled nonemergency ambulance transports to and from dialysis of patients whose medical conditions did not make them medically eligible for the service. The government also alleged that Wesam Abdallah violated the statutory "antikickback" provisions prohibiting soliciting ambulance riders by paying them or someone else to obtain the business, and that Mazen Abdallah committed money laundering using the proceeds of the healthcare fraud.

Two codefendants, Ayad Fallah and Murad Almasri, pleaded guilty to conspiracy to commit health care fraud. After a five-week trial in which the codefendants were among over forty witnesses, the jury convicted Mazen and Wesam Abdallah of conspiracy to defraud Medicare and Medicaid programs and to obtain money from Medicare and Medicaid by false billing, in violation of 18 U.S.C. § 1347. The jury acquitted Mazen Abdallah of the substantive healthcare fraud counts and acquitted him of the money laundering charge. The jury convicted Wesam Abdallah of four substantive counts of healthcare fraud and one count of violating the antikickback statute. Both defendants moved for a judgment of acquittal or in the alternative for a new trial. They argue that the evidence was insufficient and that prosecutorial misconduct, Brady violations, and the court's erroneous legal rulings infected the trial.

Based on a careful review of the motions, response, and replies; the record; the evidence presented at trial; and the applicable law, this court denies the Abdallahs' motions for acquittal and new trial. The reasons for these and related rulings are explained in detail below.

I. Background

A. The Medicare Statute and Regulations

The Medicare Act, 42 U.S.C. § 1395 et seq., established a federally subsidized health insurance program. Part A of the Act provides insurance for the cost of hospital and related postdischarge services. 42 U.S.C. § 1395c et seq. Part B establishes a program of "supplemental medical insurance" covering physicians' charges and other medical services, including ambulance service. 42 U.S.C. §§ 1395k, 1395(1), and 1395x(s); 42 C.F.R. § 410.40(a)(2). The Medicare program is run by the United States Department of Health and Human Services (HHS). HHS delegated the operation of Medicare to its component entity, the Centers for Medicare and Medicaid Services (CMS). CMS contracts with insurers in various regions of the country to act for HHS in reviewing, processing, and paying Medicare claims. These insurers act as HHS's agents for the purposes of auditing claims for reimbursement by, and administering payments to, Medicare contractors. CMS is responsible for issuing guidance and instructions about the rules for beneficiaries' eligibility for coverage and the criteria for payment. CMS issues such instructions through newsletters, bulletins, manuals, and other contractor publications. Both Medicare regulations and CMS instructions address the payment of claims submitted by ambulance transport companies for providing nonemergency, regularly scheduled ambulance service for beneficiaries traveling to and from dialysis treatments.

Medicare regulations provide for payment of part of the reimbursement claims submitted by ambulance transport companies for taking dialysis patients to and from treatment, under certain conditions. The ambulance transport service provider must be an approved supplier of ambulance services with a unique Medicare provider number. The transport must be medically necessary. The general rule is that Medicare will pay for ambulance transports "only if they are furnished to a beneficiary whose medical condition is such that other means are contraindicated. The beneficiary's condition must require both the ambulance transportation itself and the level of service provided in order for the billed service to be considered medically necessary." 42 C.F.R. § 410.40(d)(1). For nonemergency ambulance transportation to be "appropriate," the beneficiary must be either "bed-confined, and it is documented that the beneficiary's condition is such that other methods of transportation are contraindicated," or have a medical condition "regardless of bed confinement" "such that transportation by ambulance is medically required." Id. Bed-confinement is one factor in determining medical necessity, but not the "sole criterion." Id. The regulation states that "[f]or a beneficiary to be considered bed-confined, the following criteria must be met: (1) The beneficiary is unable to get up from the bed without assistance. (2) The beneficiary is unable to ambulate. (3) The beneficiary is unable to sit in a chair or wheelchair." Id.

A special rule for nonemergency, scheduled, repetitive ambulance services, such as the dialysis transports at issue in this case, states: "Medicare covers medically necessary nonemergency, scheduled, repetitive ambulance services if the ambulance provider or supplier, before furnishing the service to the beneficiary, obtains a written order from the beneficiary's attending physician certifying that the medical necessity requirements of paragraph (d) (1) of this section are met." 42 C.F.R. § 410.40(d)(2). These physician orders, known as Certificates of Medical Necessity (CMN), must be dated "no earlier than 60 days before the date the service is furnished." Id. A separate special rule, § 410.40(d)(3), covers nonemergency ambulance services that are either unscheduled or scheduled on a nonrepetitive basis. Subsection 410.40(d)(3)(v) states: "In all cases, the provider or supplier must keep appropriate documentation on file and upon request, present it to the contractor. The presence of the signed certification statement . . . does not alone demonstrate that the ambulance transport was medically necessary. All other program criteria must be met in order for payment to be made."¹

For administrative efficiency, carriers typically authorize payment for a provider's claims on receipt, absent glaring irregularities. Carriers may conduct postpayment audits to verify that the payments were proper. See 42 U.S.C. § 1395u; 42 C.F.R. § 421.200(a)(2).

B. The Evidence at Trial

In 2002, Ayad Fallah, Murad Almasri, and Raed Elmasri became the owners and operators of Unico International, Inc., dba Americare Medical Service ("Americare"). Americare provided ambulance transportation in Houston, Texas, primarily for Medicare beneficiaries who needed dialysis treatment on a regularly scheduled, nonemergency basis. Raed Elmasri, Americare's president, was responsible for complying with the licensing and paperwork requirements imposed by Medicare and the Texas Department of Health. Murad Almasri, Raed's younger brother, was the vice-president. He handled marketing and advertising. Ayad Fallah, who had trained as a doctor in Lebanon and Russia and was a licensed EMT, directed Americare's day-to-day operations. Americare had a City of Houston Ambulance Service Permit, a Texas Emergency Medical Service Provider license, and a Medicare provider number.

Each Americare EMT filled out a run sheet for each trip, documenting the EMT's information about each patient's medical condition at the time of the transport. A run sheet included a brief statement of medical history and identified the patient's condition using descriptions such as diabetes, end-stage renal disease, shortness of breath, or general weakness. A run sheet also indicated by using specified codes whether each patient was bed-confined and required movement by stretcher between the home or the dialysis center and the ambulance. Americare EMTs turned the run sheets in to the Americare office, which in turn submitted the sheets to a billing office. The billing office prepared the claims for submission to Medicare for payment to Americare. The billing office used the run-sheet information and codes to bill Medicare for the ambulance transport.

Americare initially used a company called Express Billing to perform billing services. After roughly one year, Americare switched to Structure Billing, which it used from 2003 to 2005. Evelyne Almasri, Murad's wife, began doing Americare's billing in 2005. Evelyne Almasri used a computer software program called Medisoft that was set up to bill Medicare based on the diagnosis codes entered on the run sheet for each ambulance transport. During the relevant period, Medicare would pay healthcare providers such as Americare approximately $225 for each trip, or $450 for each round-trip transport, for ambulance transport services.

When Fallah and Murad Almasri owned Americare, Almasri was in charge of obtaining patients to use Americare's ambulance transport service. When Americare began operating in 2002, Murad Almasri looked for potential patients at dialysis centers, nursing homes, and hospitals. Dialysis patients typically have three appointments per week that require some form of transportation. Many of the dialysis patients that Murad Almasri recruited to ride...