U.S.A. v. Freitag

• Decision Date: 31 October 2000
• Docket Number: No. 00-1013,00-1013
• Citation: 230 F.3d 1019
• Parties: (7th Cir. 2000) United States of America, Plaintiff-Appellee, v. Georgia R. Freitag, Defendant-Appellant
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1019

230 F.3d 1019 (7th Cir. 2000)

United States of America, Plaintiff-Appellee, v. Georgia R. Freitag, Defendant-Appellant.

No. 00-1013

In the United States Court of Appeals For the Seventh Circuit

Argued May 18, 2000

Decided October 31, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 CR 218--Rebecca R. Pallmeyer, Judge.

Before Posner, Diane P. Wood, and Williams, Circuit Judges.

Williams, Circuit Judge.

A jury convicted Defendant Georgia R. Freitag of several crimes relating to her alleged scheme to defraud the federal government by submitting false Medicare reimbursement claims on behalf of an ambulance company she operated. Based in part on findings regarding the amount of money involved in her fraud and Freitag's truthfulness at trial, the district court sentenced Freitag to 41 months' imprisonment. On appeal, Freitag challenges her convictions and sentence. Concerning her convictions, Freitag contends that the district court committed reversible error by refusing to excuse a sleeping juror and by allowing the government to elicit comments on her credibility and the credibility of other witnesses during her cross-examination. As to her sentence, Freitag asserts that the district court erred in making its fraud loss calculation and by imposing an obstruction of justice enhancement under the Sentencing Guidelines. For the reasons stated below, we affirm Freitag's convictions and sentence.

I

In 1979, Freitag began operating a small ambulance service out of a funeral home that she and her husband had purchased in Wilmington, Illinois. Over the years, her ambulance service grew, and in 1995, she incorporated the business as Freitag Ambulance Corporation (FAC) and opened offices in Joliet, Illinois, and Wilmington. The vast majority of FAC's business involved pre-arranged, non- emergency ambulance transportation for elderly individuals. Freitag's alleged fraudulent activity arose out of her efforts to obtain Medicare reimbursement for ambulance transportation to Medicare beneficiaries. At trial, the government attempted to show that Freitag engaged in a scheme to defraud the Medicare program by submitting false reimbursement claims.¹

Under the Medicare program, which provides federally-funded health insurance benefits to individuals age 65 and older, ambulance service providers, like FAC, are entitled to Medicare reimbursement if the ambulance transportation is "medically necessary." Ambulance transportation is deemed medically necessary when other means of transportation would jeopardize a patient's health. To obtain a reimbursement, an ambulance service provider must submit a claim to the insurance carrier that processes Medicare claims in the state in which the provider does business. During the relevant time period in this case, the insurance carrier that processed Medicare claims in Illinois was Blue Cross/Blue Shield of Illinois ("Blue Cross").

FAC office employees Lisa Watson and Janet McLaughlin testified that Freitag instructed them to bill Blue Cross for any ambulance transportation involving Medicare beneficiaries.² Watson testified that she submitted Medicare claims electronically, using the "WA" medical necessity modifier (or billing code),³ as instructed by Freitag. According to Watson, Freitag was present during conversations in which FAC emergency medical technicians indicated that certain Medicare beneficiaries did not need ambulance transportation. Watson testified that she spoke to Freitag about Medicare bulletins that pertained to ambulance billing, but Freitag never made any changes to FAC's billing practices. Watson further stated that she told Freitag that FAC's billing practices "had to stop" after they attended a seminar dealing with Medicare fraud.

In May 1996, Blue Cross received two anonymous calls indicating that FAC may have been submitting false Medicare reimbursement claims. Blue Cross initiated a fraud investigation by sending FAC a document request seeking ambulance "run sheets" for certain Medicare beneficiaries.⁴ Upon receiving the document request, Freitag instructed Watson and McLaughlin to retrieve and alter approximately 300 run sheets. In accordance with her instructions, Watson and McLaughlin blotted out "WC" or "wheelchair" from the run sheets and indicated that the patients could be moved by stretcher only.

McLauglin subsequently called a fraud hotline at Blue Cross to report that the run sheets had been falsified. Blue Cross referred the case to the U.S. Department of Health and Human Services ("HHS"), Office of Inspector General, to initiate a criminal investigation. After a HHS agent obtained duplicates of the run sheets from the Riverside Medical Center in Kankakee, Illinois, the agent discovered alterations in the set that FAC had sent to Blue Cross. Two federal agents then went to FAC to interview Freitag.

During the interview, the agents advised Freitag that they believed that alterations were made to the run sheets. Freitag initially stated that she had no knowledge of how the alterations were made. According to the testimony of one agent, however, Freitag later indicated that she did not want Watson or McLaughlin to get in trouble and she inquired whether the agents could "assume" that she had instructed Watson and McLaughlin to make changes to the run sheets.

Nearly a year after the interview, but while the criminal investigation was pending against FAC, Freitag contacted Brenda Lalumendre, an office manager for a doctor's office, and asked her to prepare letters on behalf of one of the doctors (Dr. Gant) for whom she worked stating that it was medically necessary for FAC to transport certain Medicare patients to the office by ambulance. Freitag then faxed Lalumendre a list of transportation dates and patients for which she wished the letters to cover. Over the next four months, Freitag called Lalumendre repeatedly requesting the letters. Lalumendre eventually contacted Medicare to obtain a copy of the guidelines pertaining to ambulance billing. After she realized that Medicare did not cover ambulance transportation for the patients for whom Frietag was seeking letters, Lalumendre testified that she did not provide Freitag with any letters.

In further support of its case, the government called former FAC emergency medical technicians to testify against Freitag. They testified that in most instances they did not perform medical services when transporting certain Medicare beneficiaries to and from doctors' offices, dialysis centers, or rehabilitation centers. They also testified about occasions when certain Medicare beneficiaries walked to and from the ambulance without assistance. The government further admitted into evidence the falsified ambulance run sheets, seven Medicare checks payable to FAC, and a chart showing that FAC billed over $500,000 in Medicare reimbursement claims for seven Medicare beneficiaries, which the government believed were medically unnecessary.

In her defense, Freitag called Dr. Katherine Katsoyannis to testify as an expert witness. Dr. Katsoyannis testified that certain patients required ambulance transportation based on their medical records. On cross-examination, however, Dr. Katsoyannis admitted that she had never seen or examined any of the patients she was testifying about, or reviewed any interview reports of the FAC emergency medical technicians who transported them.

Freitag also testified in her own defense. She testified that she never intended to defraud Medicare. She stated that every claim she submitted to Medicare was medically necessary. According to Freitag, she instructed Watson and McLauglin to alter the ambulance run sheets only because she was "petrified" by the prospect of an audit. She testified that she was "scared as hell" when the federal agents interviewed her because they allegedly screamed, yelled, and accused her of altering run sheets. She stated that she told the agents that she only transported Medicare beneficiaries when medically necessary. She also testified that she did not request letters from Lalumendre in response to the criminal investigation into FAC's billing practices.

On the basis of the evidence introduced at trial, a jury found Freitag guilty of all charges brought in the indictment, including eight counts of mail fraud, in violation of 18 U.S.C. sec. 1341, seven counts of submitting false claims to the government, in violation of 18 U.S.C. sec. 287, and one count of health care fraud, in violation of 18 U.S.C. sec. 3231. The district court sentenced Freitag to 41 months' imprisonment followed by two years' supervised release with a special condition of 150 hours community service, a $1,250 special assessment, and $506,713 in restitution. On appeal, Freitag challenges her convictions and sentence.

II

A. Freitag's Challenges to Her Convictions

1. The Sleeping Juror

Freitag contends that the district court committed reversible error by refusing to excuse a sleeping juror. At trial, one of the jurors apparently fell asleep, though the parties dispute the extent of the juror's slumber. Late in the trial, when a question regarding another juror was raised, defense counsel asked the court to remove the juror that had been sleeping. The district judge declined, noting that she had only twice noticed his inattentiveness and she did not think it was necessary to excuse the juror. The judge then instructed counsel for both sides to alert her if they noticed the juror sleeping again.

If sleep by a juror makes it impossible for that juror to perform his or her duties or would otherwise deny the defendant a fair trial, the sleeping juror should be removed from the jury. See United States v. Kimberlin, 805 F.2d 210, 244 (7th Cir. 1986); United States v. Bradley, 173 F.3d 225, 230 (3d Cir. 1999); United States v. Springfield, 829 F.2d 860, 864 (9th Cir. 1987). However, a court is not invariably required to...