U.S. v. Gold

• Decision Date: 03 October 1984
• Docket Number: No. 83-3230,83-3230
• Citation: 743 F.2d 800
• Parties: Medicare&Medicaid Gu 34,160, 17 Fed. R. Evid. Serv. 669 UNITED STATES of America, Plaintiff-Appellee, v. Dr. Donald L. GOLD, Opti-Center, Inc., Patricia M. Warren, and Gary N. Highsmith, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 800

743 F.2d 800

Medicare&Medicaid Gu 34,160, 17 Fed. R. Evid. Serv. 669

UNITED STATES of America, Plaintiff-Appellee, v. Dr. Donald L. GOLD, Opti-Center, Inc., Patricia M. Warren, and Gary N. Highsmith, Defendants-Appellants.

No. 83-3230.

United States Court of Appeals,

Eleventh Circuit.

Oct. 3, 1984.

J. Michael Hayes, Tampa, Fla., for Gold and Opti-Center.

Charles R. Wilson, Tampa, Fla., for Warren.

Mark A. Pizzo, Asst. Federal Public Defender, Tampa, Fla., for Highsmith.

Joseph D. Magri, Asst. U.S. Atty., Tampa, Fla., for plaintiff-appellee.

Appeals from the United States District Court for the Middle District of Florida.

Before RONEY and VANCE, Circuit Judges, and SIMPSON, Senior Circuit Judge.

VANCE, Circuit Judge:

The appellants in this case, Dr. Donald Gold, Patricia Warren, Gary Highsmith, and Opti-Center, Inc., were convicted in the United States District Court for the Middle District of Florida on charges of conspiracy and defrauding the government through the filing of false Medicare claims in violation of 18 U.S.C. Secs. 371, 287, and 1001. ¹ The appellants challenge their convictions on a variety of grounds, but we find no merit to any of their contentions and therefore affirm the judgment of the district court.

I. STATEMENT OF FACTS

A. The Medicare--Part B Program

The Medicare--Part B program was established by Congress in 1965 to provide supplementary medical insurance benefits for Social Security recipients. Under this program, beneficiaries who pay a $60 annual deductible are entitled to reimbursement for eighty percent of the reasonable cost of covered medical services and supplies. Routine eyewear is specifically excluded from Medicare coverage, but new and replacement prosthetic devices are covered if a physician certifies that the item is a medical necessity. Post-operative cataract eyewear is covered by Medicare, although cataract sunglasses are not.

Medicare is administered by the Health Care Financing Agency (HCFA), but HCFA does not handle claims submissions and reimbursements directly. In Florida, HCFA has a contract with Blue Cross/Blue Shield of Florida, Inc. (Blue Cross), whereby Blue Cross serves as a fiscal intermediary to receive, adjudicate and pay Medicare--Part B claims submitted to it by Medicare beneficiaries and health care providers. Blue Cross processes these claims in accordance with the instructions supplied by HCFA through its Carrier's Manual, which explains the mechanics of the Medicare--Part B program and delineates which types of expenses are and are not covered. ²

Claims for reimbursement from Medicare can be made in two ways. When the claim is unassigned, the Medicare beneficiary submits the request for reimbursement himself. The beneficiary also has the option of assigning the claim to the provider of the item or service, who then submits the claim on behalf of the beneficiary and receives reimbursement directly from Blue Cross. In either case, the same claim form is used: standard form 1490. Form 1490 contains such information as the Medicare beneficiary's name, address, type of illness or injury, date of service, type of service, and the cost of the item or service provided. After the claim is submitted to Blue Cross, it determines whether to make or refuse payment. If an approved claim has been assigned to the health care provider, the reimbursement check is sent directly to the provider.

B. The Activities of the Defendants

Opti-Center, Inc. was a Georgia corporation engaged in selling retail eyewear that began doing business in Florida's Tampa Bay area in 1976. Opti-Center had a lease arrangement with Montgomery Ward and operated as the "Montgomery Ward Optical Department" in eight of its stores in and around Tampa. Except for a brief interval in 1980, Columbus optometrist Dr. Donald Gold was the President and majority shareholder of Opti-Center from its inception until its sale to the U.S. Vision Company in 1981. Patricia Warren was Regional Manager for the eight Tampa Bay area stores, with responsibilities that included hiring and firing of personnel, training, coordination, scheduling, and monitoring of inventory. Sue Conway was an optician who started out as the manager of the Opti-Center unit at the East Lake Square Mall in 1978; she was later promoted to the position of district manager in charge of the Dale Mabry unit and two other stores. Gary Highsmith was another optician who joined Opti-Center in April 1980 and became the manager of Opti-Center's Lakeland store.

The evidence presented at the trial established that Dr. Gold was a hard-driving businessman who carefully supervised almost every detail of Opti-Center's operations. When optician Howard Gilbert applied for a position with Opti-Center in the fall of 1977, for example, Dr. Gold was present at his interview and instructed him in the use of a sales tract that was employed in all of Opti-Center's stores. Dr. Gold told Gilbert that he should memorize the tract--which was essentially a structured sales presentation designed to overcome any objections a potential customer might have to purchasing eyewear--before reporting to work. Gilbert also testified that Dr. Gold told him that he would expect Gilbert's store to produce at least $600 a day in sales.

Dr. Gold followed through on these initial instructions by making occasional inspection tours of his individual stores. Gilbert recalled that Dr. Gold would usually stop by four or five times a year. He was often accompanied by Patricia Warren, who in her capacity as regional manager made frequent inspection visits. On these occasions, Gilbert reported, they would quiz the opticians and other salespersons on the use of the sales tract and observe their handling of potential customers. If an employee's knowledge of the sales tract appeared defective, he would be sent home with orders not to return until he had committed it to memory. Dr. Gold and Warren also instructed their salespersons not to wait for potential customers to enter the optical department, but to aggressively seek them out by approaching shoppers as they were passing through the store aisles nearby. Gilbert estimated that "nine out of ten people we sold glasses to were people that were not thinking about buying glasses when they walked into Montgomery Wards'." Dr. Gold's obsessive concern for the bottom line was also reflected by his practice of calling the stores at the end of each day to inquire about the sales figures. Gilbert testified that Warren usually called each of the stores three or four times a day as well, and the store manager would be harshly reprimanded and told to do better if sales were down.

The pressure that Dr. Gold put upon Opti-Center employees to generate ever-increasing sales figures gradually led the company and its personnel into illegal activity. Opti-Center's slide into criminality began in the summer of 1979. Gilbert had been transferred to the Opti-Center unit at Clearwater, where he found that it was often difficult to make sales because the senior citizens who made up most of the store's clientele were usually unable to pay the full purchase price in cash. Gilbert discussed this problem with Warren and suggested that it would be easier to make sales if the company changed its policy against accepting claims on assignment. Dr. Gold approved the change, and the sales figures of the Clearwater store improved dramatically.

One of the principal growth areas at the Clearwater unit was cataract glasses. At some point in the autumn of 1979, Gilbert sold a pair of cataract sunglasses on assignment to a customer who had purchased a pair of regular cataract glasses from him shortly before. When Blue Cross subsequently paid on the assignment, Gilbert realized that he could boost his sales figures by urging customers who came into the store to purchase regular cataract glasses to acquire a pair of cataract sunglasses at the same time. There was a slight hitch, however: Blue Cross proved unwilling to pay for more than one pair of glasses when two pairs were submitted on the same claim form. Warren and Gilbert conferred about this problem, concluded that the computer at Blue Cross was misreading the claim form, and decided to start submitting two separate forms with different dates for the two pairs of glasses. This practice of falsifying one of the dates seemed to take care of the problem, and Opti-Center had no further difficulties collecting from Blue Cross on each pair of glasses. ³

Because these simultaneous sales of both regular and dark-tinted cataract glasses--known as "double-cataract" sales by company employees--could bring in as much as $450 from a single sale, they soon became a major focus of Gilbert's business. He redesigned the sales tract to accomodate the special concerns of cataract customers, and business at the Clearwater store boomed. Dr. Gold and Warren were delighted, and they began urging Opti-Center employees at other stores to emulate Gilbert's techniques. Gilbert testified that Dr. Gold was fully aware of what was involved in the new sales procedure, since he often examined the sales files on his inspection visits and frequently inquired about the high levels of accounts receivable that were generated by accepting so many double cataract sales on assignment. At no time did Dr. Gold raise any objection to this procedure, despite the fact that he had signed a pleading in 1975 acknowledging that he had received and read a communication from the State of Georgia explaining that its state health insurance program was identical to Medicare and including as an attachment section 2130 of the Carrier's Manual, which explicitly stated that payment could not be made for cataract sunglasses. In addition, at least one Opti-Center employee with prior experience elsewhere had told Gilbert and Warren in early 1980 that they were wrong about Medicare paying for cataract sunglasses.

Nevertheless, Gilbert continued making...