U.S. v. McGovern, 02-2064.

• Decision Date: 21 May 2003
• Docket Number: No. 02-2065.,No. 02-2064.,02-2064.,02-2065.
• Parties: UNITED STATES, Appellee, v. Dana Eugene McGOVERN; McGovern's Ambulance Service, Inc., Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

329 F.3d 247

UNITED STATES, Appellee, v. Dana Eugene McGOVERN; McGovern's Ambulance Service, Inc., Defendants, Appellants.

No. 02-2064.

No. 02-2065.

United States Court of Appeals, First Circuit.

Submitted April 7, 2003.

Decided May 21, 2003.

Appeal from the United States District Court for the District of Maine, George Z. Singal, J Leonard I. Sharon and Sharon, Leary & Detroy on brief for appellant.

F. Mark Terison, Senior Litigation Counsel, and Paula D. Silsby, United States Attorney, on brief for appellee.

Before TORRUELLA, Circuit Judge, BOWNES, Senior Circuit Judge, and LYNCH, Circuit Judge.

LYNCH, Circuit Judge.

Dana McGovern, the owner and operator of McGovern's Ambulance Service, Inc. (MAS), and his company pled guilty to Medicare and Medicaid fraud, 18 U.S.C. § 1347 (2000), as well as obstruction of a federal audit, 18 U.S.C. § 1516, and money laundering, 18 U.S.C. § 1956(a)(1). He admitted to more than $800,000 of fraud. McGovern's sentence was enhanced for obstruction of justice, arising out of his earlier submission of false information to federal auditors before that audit led to the criminal investigation and prosecution. McGovern appeals the enhancement, arguing that the attempted obstruction did not occur "during the course of the investigation... of the instant offense of conviction." U.S.S.G. § 3C1.1. We reject this argument on the grounds that the Medicare and Medicaid audits had an adequate link to the ensuing criminal proceedings and so were during the course of the investigation of the offense of conviction.

I.

Dana McGovern was the sole shareholder, Director and President of MAS. MAS was based in Calais, Maine, had business locations elsewhere in Maine, and owned a Canadian affiliate. MAS, which was licensed by the Maine Emergency Medical Services Office of the state's Department of Public Safety, provided transportation by ambulance and wheelchair van for Medicare and Medicaid beneficiaries.

Medicaid is a health care program jointly funded by federal and state sources that provides health insurance and nursing home coverage to low income individuals. It is administered by the Centers for Medicare and Medicaid Services (CMS) and by state agencies such as the Maine Department of Human Services. Medicare is a federally subsidized health insurance program for the elderly and for persons with certain disabilities that is administered by CMS and private contractors. See generally Fresenius Med. Care Cardiovascular Res., Inc. v. P.R. & Caribbean Cardiovascular Ctr. Corp., 322 F.3d 56, 74 n. 24 (1st Cir.2003) (contrasting Medicare and Medicaid programs). The Medicare and Medicaid programs are both health care benefit programs as defined in 18 U.S.C. § 24(b). See San Lazaro Ass'n v. Connell, 286 F.3d 1088, 1093 (9th Cir.2002); United States v. Herman, 172 F.3d 205, 206 (2d Cir.1999); United States v. Sriram, 147 F.Supp.2d 914, 942 (N.D.Ill.2001).

Medicaid and Medicare each have specific ambulance regulations and billing instructions, which McGovern had in his possession. Reimbursements can include a base rate, mileage for basic or advanced life support services, and separate payments for administration of oxygen and other incidentals. Providers can only bill for "loaded mileage," which is when the beneficiary is in the vehicle. Providers cannot charge for the distance traveled to a pick-up point or from a drop-off point. Further, an ambulance cannot be used if the patient is healthy enough to use any other method of transportation, such as a wheelchair van, regardless of whether a van is actually available. In addition, an ambulance cannot be used for routine transport to and from a doctor's office.

Each time it transported a patient, the MAS ambulance crew was required by regulations to fill out a "run sheet," which required the name of the patient, the place of departure, the destination, and the names of the MAS employees in the ambulance. Completed run sheets were placed in a locked box and retrieved by or delivered to McGovern. McGovern used the run sheets as a basis to bill Medicare and Medicaid for each ambulance run. He personally handled the submission of the ambulance billings to Medicare and Medicaid until early 1998. At that time, a part-time employee, Ruth Campbell, was hired to enter the billing information established by McGovern and then submit Medicare bills electronically. Campbell was not authorized to make changes in the pricing, and even after she was hired McGovern continued to input and submit some of the bills himself.

Defendants defrauded Medicare and Medicaid from August 1996 to November 1999 by billing for unnecessary services and for services they had not rendered. At McGovern's instruction, MAS employees used ambulances to transport patients who were able to take taxis and other alternative forms of transportation, and used run sheets for ambulances when transporting beneficiaries by wheelchair van. MAS employees, as instructed, also falsified parts of run sheets by, for example, inaccurately representing non-reimburseable destinations (such as a doctor's office) as reimburseable destinations (such as a hospital). McGovern prepared and submitted bills to Medicare and Medicaid based on these inaccurate run sheets, which had been falsified at his express instructions.

McGovern also falsified run sheets himself. When employees refused to misrepresent a destination, for example, he wrote the name of a hospital over the name of the doctor's office, which had been written by an employee. In addition, he told at least one MAS employee to leave blank the mileage traveled, presumably so he could fill in excess miles. MAS repeatedly charged Medicare and Medicaid for excess mileage. Furthermore, the box for administration of oxygen was checked on some run sheets after the run sheets were completed and placed in the lockbox. Finally, MAS repeatedly charged Medicare and Medicaid for advanced life support services in situations where employees accurately represented (on the run sheets they placed in the lockbox) that they had provided only basic life support services.

Complaints led to administrative audits by the U.S. Department of Health and Human Services in 1995 and 1998. In 1995, Medicare investigated a complaint that MAS transported a beneficiary 200 feet, but billed Medicare for 6 miles. By phone and letter, a Medicare fraud investigator explained to McGovern the correct Medicare billing practices regarding loaded mileage. As a result of this investigation, Medicare recouped $2,691.65 for inappropriate mileage charges in 1994 and 1995, but did not then instigate a criminal investigation.

In March 1998, Medicare received a complaint from a Medicare beneficiary about MAS. MAS had transported nursing home residents to shelters during a storm earlier that year. Investigators found that MAS falsely billed Medicare for a trip to the hospital (which, unlike a trip to a shelter, is reimburseable), exaggerated the loaded mileage, falsely billed for advanced life support services, and transported via ambulance a beneficiary whose medical condition apparently permitted her to travel by other means.

This finding led to progressively more expansive reviews by Medicare and Medicaid. These audits uncovered numerous suspicious claims. Medicaid, for example, discovered that MAS wheelchair vans had routinely (and improperly) billed for "unloaded" miles (when the patient was not in the vehicle). As a result, Medicaid administratively collected from MAS $158,254.22 in overpayments for wheelchair van reimbursements.

McGovern and MAS submitted false run sheets to investigators conducting these administrative audits. On or about September 25, 1998 and January 5, 1999, defendants submitted to the Medicare and Medicaid representatives a total of nineteen run sheets containing false information about the services rendered to beneficiary Judith Mahar between July 1997 and January 1998. The run sheets falsely indicated that oxygen was given to Mahar and that an ambulance, rather than a wheelchair van, was used to transport her. The boxes for administration of oxygen were checked after employees completed the run sheets and placed them in the lockbox. McGovern also sent a letter to Medicare investigators blaming excess or inappropriate charges on the "new girl" (Campbell) whom he said was doing MAS's billing.

The findings of the administrative audits led to the initiation of a federal criminal investigation. McGovern and MAS were indicted on November 16, 2000. That indictment was superseded by a 214-count indictment on May 15, 2001. Counts 210 and 211 of the superseding indictment charged the defendant with obstruction of a federal audit pursuant to 18 U.S.C. § 1516. They charged defendant with submission to auditors of the nineteen falsified run sheets pertaining to Mahar. The remaining counts alleged violations of 18 U.S.C. § 1347 (health care fraud) and 18 U.S.C. § 1956(a)(1) (money laundering) and sought forfeiture of cash and property pursuant to 18 U.S.C. § 982(a)(1), (7). The indictment covered the same wrongdoing during the same period as the Medicare and Medicaid audits. This is true of both the charges for obstruction of a federal audit and the underlying conduct that the obstruction sought to hide.

Both McGovern and MAS entered guilty pleas on January 9, 2002. McGovern and MAS each pled guilty to 40 counts, including both counts of obstructing a federal audit, 22 counts of fraud, 16 counts of money laundering, and 2 forfeiture counts. The remaining counts, for fraud and money laundering, were later dismissed.

At the sentencing hearing on July 30, 2002, the principal disputed issue was whether McGovern was subject to a two-level upward enhancement for obstructing or impeding the administration of justice pursuant to U.S.S.G. § 3C1.1, which states:

If (A) the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of...