U.S. v. Herberman

• Decision Date: 06 November 1978
• Docket Number: No. 77-5454,77-5454
• Citation: 583 F.2d 222
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Harvey G. HERBERMAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 222

583 F.2d 222

UNITED STATES of America, Plaintiff-Appellee, v. Harvey G. HERBERMAN, Defendant-Appellant.

No. 77-5454.

United States Court of Appeals Fifth Circuit.

Nov. 6, 1978.

Raymond C. Caballero, El Paso, Tex., Charles Alan Wright, Austin, Tex., for defendant-appellant.

Jamie C. Boyd, U. S. Atty., LeRoy Morgan Jahn, Asst. U. S. Atty., San Antonio, Tex., Stanley Serwatka, Asst. U. S. Atty., El Paso, Tex., for plaintiff-appellee.

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

Before CLARK, FAY and VANCE, Circuit Judges.

FAY, Circuit Judge:

A grand jury indictment, filed in the United States District Court for the Western District of Texas on March 22, 1977, charged appellant, Dr. Harvey Herberman, with forty counts of making false, fictitious and fraudulent statements regarding material facts in a matter within the jurisdiction of the Department of Health, Education and Welfare (HEW) and the Social Security Administration in violation of 18 U.S.C. § 1001. ¹

Dr. Herberman allegedly submitted false Medicare and Medicaid statements to HEW requesting payment for certain office cystoscopies ² he allegedly had not performed. The Medicaid counts were subsequently dismissed by the district court as multiplicitous with the Medicare counts and we deal only with the Medicare counts on this appeal.

The jury convicted Dr. Herberman on twenty of the twenty-eight counts ultimately submitted for its determination. The trial judge sentenced him to a total of eight years in prison and assessed fines totalling $50,000. The sentence was as follows: five years imprisonment and a $10,000 fine on the first count; three years imprisonment and a $10,000 fine on the sixth count; $10,000 each on count 16, count 17 and count 23. The remaining sentences were set to run concurrently with those imposed under either count one or count six.

The provisions of 42 U.S.C. §§ 1395-1395gg establish a health insurance program to pay medical and hospital expenses for the aged and disabled. This Medicare program is federally funded and is administered by HEW through the Social Security Administration. In Texas, HEW has a contract with Group Medical and Surgical Services, Inc., a non-profit Texas corporation, to pay claims on Medicare. Group Medical Services is a different corporation than Group Hospital Services but the two services operate together in what is commonly known as Blue Cross and Blue Shield of Texas.

Under the Medicare program claims for reimbursement may be made by either providers or recipients. The provider is the person providing services. The recipient is the patient who receives the services. If the provider chooses to accept assignment and the patient agrees to assign the claim, then payment will be made directly to the provider; if not, payment goes directly to the patient (recipient). According to the testimony of Mr. Phillip Forrest, who testified as representative of Blue Cross and Blue Shield, a Medicare application for payment is divided into two parts: Part A covers hospital services charged by the hospital itself; Part B covers medical services in the office or any other place charged by a physician. Thus, Dr. Herberman, as a provider, would seek reimbursement under Part B and would send the Medicare forms to Dallas, Texas for processing. The method of reimbursement would involve a determination by Medicare of what the cost of a cystoscopy would be and Medicare would then pay 80% Of that cost.

In order to show that appellant had submitted false claims to Medicare for cystoscopies he had not performed, the government relied to a large extent on testimony concerning Dr. Herberman's general office procedures. This testimony was not tied directly to any specific count of the indictment.

For instance, some of Dr. Herberman's former employees gave unfavorable testimony about appellant. One former employee, Ms. Deidre White, testified that she knew Dr. Herberman billed for cystoscopies he had not performed because the instruments necessary for the procedure were not always in the office. Ms. White testified that on certain occasions she had seen bills for cystoscopies she felt had not been performed, had then asked the attending nurse if the cystoscopies had been performed, and the nurse had said they had not. Ms. White's testimony did not involve any of the questioned Medicare bills for cystoscopies all of which covered claims filed in 1976, two years after she had left appellant's employment.

Another ex-employee, Ms. Nancy Sanders, testified Dr. Herberman billed for services he had not performed. In one instance, a patient called to complain that the culture and sensitivity tests he was being billed for had not been performed and, according to Ms. Sanders, appellant gave instructions to "make up" a test result and file it in the patient's records. Ms. Sanders testified further that once she asked appellant why some Blue Cross patients were not charged for office visits but were instead charged for dilatations. She said appellant's answer was these patients were too old and too poor to pay for office visits not covered by Blue Cross. Ms. Sanders admitted, however, that she had no way of knowing whether the dilatations were ever performed. In September, 1976, Dr. Herberman fired Ms. Sanders for suspected embezzlement. When asked whether she was given immunity by the prosecution, Ms. Sanders said she had been given immunity. However, the prosecution had denied giving immunity to any of their witnesses. ³

Another ex-employee, Ms. Frances Yvette Leber, testified she knew appellant filed for cystoscopies he had not performed because these could not be done in the short time patients were in the room with Dr It was Ms. Sanders and Ms. Leber who originally called Blue Cross to complain about the alleged fraudulent claims. Ms. White, Ms. Sanders and Ms. Leber then met with Mr. James Brown from Blue Cross-Blue Shield before the government began its investigation of appellant.

Herberman. Ms. Leber was fired at the same time as Ms. Sanders for suspected embezzlement. A fourth ex-employee Ms. Deanna Carreon, testified that Ms. White had at one time asked Dr. Herberman for "a piece of the action" telling appellant that he made a great deal of money and should share it. When appellant refused, Ms. Carreon testified that Ms. White vowed "to get even with him."

In addition to the above testimony by Dr. Herberman's ex-employees, the government presented the testimony of each of the patients involved in the particular counts against appellant. Before interviewing the various patients who testified at trial, HEW investigators did not consult Dr. Herberman, another urologist or any other physician. During the interviews, investigators described a cystoscopy based on what the investigators believed it to be. As stated by Mr. George De Luna, an investigator from the Bureau of Health Insurance in charge of investigating Medicare fraud, his knowledge on the procedures necessary for a cystoscopy was acquired by talking to two nurses and by reading some library books and articles. The nurses from whom Mr. De Luna acquired his information worked with him and had never told Mr. De Luna whether they had ever actually seen a cystoscopy. Mr. De Luna obtained statements from 22 of appellant's patients during his interviewing. Ms. Olivia Martinez, a nurse who worked at the Texas Department of Public Welfare, accompanied two investigators, Mr. Jim Busby and Mr. Jim Johnson from the Department of Public Welfare Investigative Division out of Austin, visiting some of the patients. Mrs. Martinez and the two investigators took statements from about ten people. Mrs. Martinez described to the patients what she believed to be the procedure for a cystoscopy.

The record reflects that the procedure described as a cystoscopy to the interviewed patients was as follows: it would last 15-30 minutes; the patient would be prepped and scrubbed; either a saddle block general anesthetic or a local anesthetic would be administered; legs would always be placed in stirrups; clothing would be removed; water would be used; lights would be turned down and the procedure would often be painful. The procedure for an office cystoscopy described by Dr. Herberman differed from the above in almost all respects.

Many of the patients who testified at trial had documented cases of various diseases of the aged which appellant claimed could impair their memories. There was some evidence at trial that many of these patients testified inaccurately regarding the number of times they had been hospitalized in the past.

Dr. Herberman was not allowed to introduce general testimony by experts on the effect diseases of the aged might have had on the memory of older patients suffering from such ailments. There was, however, testimony by various doctors concerning the mental ability of some of the patients called as witnesses. All of these doctors provided some testimony that the particular patient they were speaking about had a type of ailment which could impair memory. A doctor brought in by the government, Dr. Leonard Maldonado, testified that patients with certain diseases common in the aged could forget having undergone a medical procedure such as a cystoscopy.

I. VENUE

Relying on the United States Supreme Court decision in Travis v. United States, 364 U.S. 631, 81 S.Ct. 358, 5 L.Ed.2d 340 (1961) appellant argues venue should have been in the Northern District of Texas, where the various Medicare forms were ultimately filed for payment, rather than in the Western District of Texas where the forms were filled out, executed and mailed. ⁴

We hold the general venue statute ⁵ is applicable, and venue was proper in the Western District of Texas.

Dr. Herberman was prosecuted under 18 U.S.C. § 1001 which makes it illegal to knowingly and willfully utter false, fictitious or fraudulent statements in a matter within the jurisdiction of any...