U.S. v. Hoffman-Vaile

Citation568 F.3d 1335
Decision Date27 May 2009
Docket NumberNo. 07-12629.,07-12629.
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Marsha Lynn HOFFMAN-VAILE, Defendant-Appellant.
CourtU.S. Court of Appeals — Eleventh Circuit

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

Before BLACK, PRYOR and COX, Circuit Judges.

PRYOR, Circuit Judge:

The main question presented by this appeal is whether a person who alters records that have been subpoenaed by a grand jury obstructs an investigation of Medicare fraud. See 18 U.S.C. § 1519. Dr. Marsha Lynn Hoffman-Vaile appeals her convictions and sentences on charges of health care fraud, filing false claims, and obstruction of justice. We conclude that section 1519 governs Dr. Hoffman-Vaile's alteration of the records subpoenaed by the grand jury because the proceedings of the grand jury were related to an investigation of Medicare fraud by the Department of Health and Human Services. We affirm Dr. Hoffman-Vaile's convictions and sentences, except that we vacate the forfeiture money judgment and remand to the district court for recalculation of the forfeiture amount.

I. BACKGROUND

Dr. Marsha Lynn Hoffman-Vaile is a dermatologist who practiced in Florida and regularly sought reimbursement from Medicare for surgical procedures she performed on her patients. Dr. Hoffman-Vaile submitted her Medicare claims to First Coast Service Options, a private contractor that administers the Medicare program in Florida. First Coast reviewed the claims prepared by Dr. Hoffman-Vaile and approved payments to her based on the Current Procedural Terminology Code that she identified on each claim. First Coast regularly reviewed claims submitted by physicians and code usage to detect unusual diagnosis patterns or statistical anomalies that might suggest fraudulent billing.

During a post-payment review in 1999, First Coast noticed that Florida dermatologists, including Dr. Hoffman-Vaile, were billing Medicare at an "aberrant" rate under billing code 14300, which is for a surgical procedure known as an adjacent tissue transfer or rearrangement that measures more than 30 square centimeters and is unusual or complicated. The procedure is performed after the removal of a lesion or other defect under the skin, where the surgeon uses more than one side of a wound to create a skin flap to close the wound. The procedure is used to preserve the function of a body part, avoid critical structures, and minimize scarring or disfigurement.

On August 10, 1999, First Coast notified Dr. Hoffman-Vaile by letter that it was conducting a focused medical review of the increased claims filed under billing code 14300 and requested that Dr. Hoffman-Vaile produce medical records. Dr. Hoffman-Vaile produced the records and copies of photographs from the patient files. Cynthia Dangerfield, the First Coast employee who conducted the review, was concerned that the individual patient records were too similar and that the anatomical sites appeared to be too small for surgical procedures under billing code 14300.

In October 1999, First Coast sent another letter to Dr. Hoffman-Vaile that mentioned the billing anomaly and requested medical records, photographs, and information about the size and cause of the original wounds. Dr. Hoffman-Vaile produced the records, but not the photographs. During the review, First Coast determined that from 1993 through 1999, Dr. Hoffman-Vaile billed Medicare under code 14300 more often and for greater amounts than under any other billing code. Dr. Hoffman-Vaile also submitted claims more often and for greater amounts under code 14300 than any other physician in Florida during the first halves of 1998 and 1999.

In December 1999, Dangerfield prepared a report about the focused medical review and recommended that First Coast conduct a comprehensive medical review of Dr. Hoffman-Vaile because "she [was] much higher in terms of allowed dollars and numbers of claims than all other providers reviewed" and appeared to have a "coding and/or billing issue." The report stated that Dr. Hoffman-Vaile "may potentially be referred to the Fraud Unit" but recommended no action. Dangerfield also recommended that First Coast publish an educational article in the Medicare newsletter in Florida and send educational letters to the providers with high rates of billing under code 14300. In response, First Coast published an article about the focused medical review and correct methodology for billing under code 14300 in the March/April issue of the Medicare newsletter in Florida.

On February 21, 2000, First Coast sent a letter to Dr. Hoffman-Vaile that informed her of the need for a comprehensive medical review. The letter stated that the review was based on a "significant variance" in her billing patterns compared with other physicians. In response to the letter, Dr. Hoffman-Vaile produced medical records.

In May 2000, Kathy Jones, an employee of First Coast, conducted the comprehensive medical review. Jones became concerned that Dr. Hoffman-Vaile had not actually performed the surgeries that she billed to Medicare because there were discrepancies between Dr. Hoffman-Vaile's records about the sizes of lesions and the sizes recorded in pathology reports. The lesion sizes recorded by Dr. Hoffman-Vaile appeared to be too large for the anatomical sites involved in the operations. Jones also observed that the operative reports submitted by Dr. Hoffman-Vaile appeared identical for all patients.

On June 20, 2000, Jones contacted Dr. Hoffman-Vaile by telephone to discuss her billing practices and asked Dr. Hoffman-Vaile to explain the methodology that she used to select the billing code for the surgeries she performed. Dr. Hoffman-Vaile stated that she measured the initial wound and adjacent skin flap and took photographs. Jones instructed her not to measure the skin flap and requested photographs for the files involved in the review. First Coast did not receive any photographs, and on June 23, 2000, Jones contacted Betty Hill, Dr. Hoffman-Vaile's office manager, to request copies of photographs for the files involved in the review. Jones also asked Hill if Dr. Hoffman-Vaile's surgical photographs included a centimeter rule, and Hill responded that they did not. Despite repeated requests for the photographs, First Coast did not receive them.

First Coast closed its comprehensive medical review and informed Dr. Hoffman-Vaile of the results. Jones called Dr. Hoffman-Vaile on June 30, 2000, and instructed her to use the correct methodology for billing code 14300, as outlined in the Medicare bulletin, and to include a centimeter rule in her surgical photographs. Dr. Hoffman-Vaile agreed to follow those instructions.

Brenda Redfern, the First Coast employee who closed the comprehensive medical review, stated in her report that First Coast suspected Dr. Hoffman-Vaile of "upcoding" her claims but decided to educate her about proper coding and billing because it had been "unable to scientifically determine [the] defect size" based on the records. On July 27, 2000, Jones sent a letter to Dr. Hoffman-Vaile that stated that Jones "found the majority [of Dr. Hoffman-Vaile's records] to have large discrepancies between the documented lesion size(s) in the operative reports and in the corresponding lesion size(s) in the pathology reports ... [that] was too great to be ignored." Jones reminded Dr. Hoffman-Vaile to measure and record the lesion sites to "ensure proper payment is being made and [to] reduce the possible recovery of any future inappropriately paid dollars." First Coast scheduled Dr. Hoffman-Vaile for reevaluation in January 2001.

In January 2001, Gloria Herring, an employee of First Coast, conducted a probe review of Dr. Hoffman-Vaile's billing practices based on continued billing anomalies. In a letter dated April 3, 2001, First Coast informed Dr. Hoffman-Vaile about this review and asked her to produce medical records. Dr. Hoffman-Vaile produced the records, but did not produce any photographs. Herring observed that all of Dr. Hoffman-Vaile's operative reports were identical, which was noteworthy because procedures billed under code 14300 were, by definition, unusual or complicated. Herring also determined that many of the documented surgical sites were too small for procedures billed under code 14300, and Herring adjusted the codes for several claims. On September 25, 2001, First Coast issued a summary report about the previous reviews of Dr. Hoffman-Vaile's billing practices and the results of the probe review. Based on the results of the probe review, First Coast requested Dr. Hoffman-Vaile repay overpayments on the adjusted claims in the amount of $716.48 and required her to obtain preapproval to use code 14300.

In May 2002, agents of the Office of Inspector General of the Department of Health and Human Services searched Dr. Hoffman-Vaile's office based on a federal search warrant for patient files associated with claims billed under code 14300. The agents seized over 3,000 files but could not locate about 300 files. The files that were seized that contained photographs formed the basis of the fraud and false claim charges against Dr. Hoffman-Vaile.

In January 2003, a federal grand jury issued a subpoena that directed Dr. Hoffman-Vaile to produce the missing files. Dr. Hoffman-Vaile produced 185 of the missing files, but the majority of the records produced lacked photographs. Dr. Hoffman-Vaile's attorneys later produced a box of loose photographs to the government.

In July 2005, the grand jury returned an indictment against Dr. Hoffman-Vaile on 44 counts of health care fraud, 18 U.S.C. § 1347, 44 counts of filing false claims, id. § 287, and one count of obstruction of justice, id. § 1519. The indictment alleged that Dr. Hoffman-Vaile defrauded Medicare by...

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