U.S. v. Raithatha

• Decision Date: 29 September 2004
• Docket Number: No. 02-6013.,02-6013.
• Citation: 385 F.3d 1013
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. P.G. RAITHATHA, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

385 F.3d 1013

UNITED STATES of America, Plaintiff-Appellee, v. P.G. RAITHATHA, Defendant-Appellant.

No. 02-6013.

United States Court of Appeals, Sixth Circuit.

Argued January 29, 2004.

Decided and Filed September 29, 2004.

Rehearing Denied September 29, 2004.

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Appeal from the United States District Court for the Eastern District of Kentucky, Karl S. Forester, Chief Judge.

Charles P. Wisdom (briefed), Jr., Asst. U.S. Attorney, David P. Grise (argued and briefed), Asst. U.S. Attorney, John Patrick Grant, Asst. U.S. Attorney, Lexington, KY, for Plaintiff-Appellee.

Glenn V. Whitaker (argued and briefed), Eric W. Richardson (briefed), Vorys, Sater, Seymour & Pease, Cincinnati, OH, for Defendant-Appellant.

Before: MERRITT and SUTTON, Circuit Judges; FEIKENS, District Judge.^*

AMENDED OPINION

FEIKENS, District Judge.

I. INTRODUCTION

Defendant, Dr. P.G. Raithatha, was convicted by a jury of scheming to defraud private health insurance companies and Medicare/Medicaid, in violation of 18 U.S.C. § 1347, and of making false statements to the Department of Labor (DOL) and to the Immigration and Naturalization Service (INS), in violation of 18 U.S.C. § 1001. Defendant was sentenced to 27 months of imprisonment. Defendant appeals his conviction and sentence.

On appeal, Defendant argues: (1) the jury's conviction as to all counts should be reversed because Defendant alleges there is insufficient evidence to sustain his conviction, or alternatively, that Defendant should be granted a new trial; and (2) the district court erred in attributing any loss figure to Defendant as to Counts 1 through 20, and that therefore the district court's loss calculations for sentencing purposes should be reversed.¹

II. FACTUAL BACKGROUND

A. Defendant's Medical Practice

Defendant is a physician who owned and operated two clinics in 1997, the McKee Medical Center in McKee, Kentucky, and the Richmond Medical Center in Richmond, Kentucky. In 1997, defendant sold the clinics to Mountain After Hours Clinic Corporation ("MAHC"). As part of the sale, defendant became an employee of MAHC and was issued one-sixth of the shares of stock in MAHC. By 1998, MAHC owned four other clinics in Hazard, Nicholson, London, and Somerset, Kentucky.

During 1997, when defendant owned the McKee and Richmond clinics, the billing for both clinics was done at the McKee clinic. Tammy Spurlock, defendant's office manager, testified that she, Beverly Lainhart, and Renee Hudson did billing work. Between January and December of 1998, all billing for the six MAHC clinics was performed by an outside billing service, Office Management Services ("OMS"). In April of 1999, OMS stopped providing billing services for MAHC, and the McKee clinic began doing billing for all of the clinics.

To bill its services, a medical clinic issues an invoice to the patient's insurer that contains a current procedure terminology ("CPT") code. The CPT code indicates to the insurer the level of service rendered by the clinic and the amount of reimbursement owed to the clinic. When a medical practitioner sees a patient, the practitioner records a CPT code on an "encounter form" to record the services performed. The CPT codes for established patients range from the least expensive, 99211, to the most expensive, 99215. The CPT codes for new patients range from the least expensive, 99201, to the most expensive, 99205. (Cost. Tr. 53.) One type of "up-coding" scheme occurs where the CPT numbers are changed on the encounter forms and/or billing sheets sent to the insurance companies so that it appears as if the clinic performed more expensive services than were actually provided.

In 1998, defendant helped recruit seven foreign physicians for MAHC. Defendant recruited them under a program that allows foreign doctors to stay in the United States if they secure employment in medically under-served areas. Under this program, MAHC had to meet several requirements including submitting a Labor Condition Application ("LCA") to the DOL, and a Petition for Nonimmigrant Worker (an "I-129 form") to the INS, setting forth information such as the physician's wage, for each physician hired. MAHC was required to pay each foreign doctor no less than the prevailing wage for the area — the average wage paid to physicians in the area for comparable work.

The McKee clinic was designated a "rural health clinic" by Medicare. As a rural health clinic, the McKee clinic was reimbursed a flat rate for each Medicare/Medicaid patient it saw, regardless of the treatment rendered. The McKee clinic was required to submit to Medicare a yearly "cost report" — a summation of the costs incurred by the clinic in treating patients. Once a clinic reached the maximum reimbursement rate set by Medicare/Medicaid, additional expenses on the cost report were not reimbursed during that year. However, reported costs were used to calculate future Medicare/Medicaid reimbursement rates per patient. (Shreve, Tr. 100.)

In May 1998, a cost report was prepared for the McKee clinic for the period of October 1, 1996 through September 30, 1997, which included $50,393.53 of defendant's personal expenses. Defendant alleges that when defendant operated as a sole proprietor of the Richmond and McKee clinics, prior to their purchase by MAHC, defendant "often used business checks to pay personal expenses and would, at the end of the year, separate the personal and business expenses in order to prepare the corporation's tax returns." (Def.Br.113.) Defendant contends that his personal expenses were inadvertently included on the cost report.

B. Prosecution of Defendant

On July 24, 2000, a twenty-count indictment was filed against Defendant. Counts 1 and 4 charged Defendant with defrauding private insurance companies in 1997 (Count 1) and 1998 and 1999 (Count 4), in violation of 18 U.S.C. § 1347. Counts 1 and 4 charged Defendant with instructing billing staff to: (a) raise the CPT codes on invoices when the physician had reported a lower level of service; (b) submit invoices to insurance companies for services performed by other physicians, as if Defendant had performed them; and (c) submit claims with a diagnosis listing an illness, when the patient did not have an illness. (Indictment, 2-3, 8-10.)

Counts 2 and 5 charged Defendant with scheming to defraud Medicare/Medicaid in 1997 (Count 2) and 1998 and 1999 (Count 5), in violation of 18 U.S.C. § 1347. (Indictment, 4-6, 10-12.) Counts 2 and 5 charged Defendant with causing patients to present themselves for medically-unnecessary visits by: (a) refusing to authorize refills on prescriptions and preventing employees from authorizing refills of prescriptions; (b) making unannounced and unrequested home visits to patients; (c) approaching people on the street and ushering them into the clinic for unscheduled examinations; (d) examining people who had come into the clinic for non-medical reasons, such as to pay debts owed to Defendant; (e) ordering medical tests not related to patients' conditions; (f) falsely representing that other physician employees had specialties so that patients would be examined an additional time by a "specialist"; and (g) refusing to give test results until an additional appointment was kept. (Indictment, 4-6, 10-12.)

Count 3 charged Defendant with defrauding Medicare/Medicaid, in violation of 18 U.S.C. § 1347, by submitting a cost report for 1997 that included personal expenses unrelated to patient care. Included in those expenses was money which was actually spent to furnish and complete Defendant's home. (Indictment, 6-7.)

Counts 6 through 13 charged Defendant with submitting false statements to the DOL, in violation of 18 U.S.C. § 1001, by submitting LCAs that misstated the salaries of seven foreign physicians employed by MAHC. The indictment charged defendant as "the person in charge of recruiting physicians for the Corporation." (Indictment, 12.) The indictment alleged that the "forms falsely overstated the salary to be paid to the physicians, in order to disguise the fact that the physicians were being paid less than the required amount." (Indictment, 13.)

Counts 14 through 20 charged Defendant with submitting false statements to the INS, in violation of 18 U.S.C. § 1001, by submitting I-129 forms that misstated the salaries of the seven foreign physicians identified in Counts 6 through 13. (Indictment, 15-16.)

Defendant pleaded not guilty to all counts.

Trial began on July 2, 2001, before Chief Judge Karl S. Forester. Defendant moved for a judgment of acquittal. The district court denied the motion. On July 19, 2001, the jury returned a guilty verdict as to all counts (Counts 1 through 20). Defendant timely moved for a new trial. On September 12, 2001, the district court denied the motion for a new trial. This appeal followed, both as to Defendant's conviction and sentence as to all counts.

C. Presentence Investigation Report (PSR) Loss Calculation

The probation office determined that it would be difficult to discern an actual loss figure for Counts 1 and 4, but that an intended loss figure could be calculated "for the up-coding conduct which occurred in 1999." Therefore, the PSR calculated an intended loss figure of $206,461.43 for Counts 1 and 4, based on evidence of defendant's up-coding scheme. The PSR calculated an intended loss figure of $50,393.53 for Count 3, equal to the amount of defendant's personal expenses which were included in the cost report submitted to Medicare/Medicaid. The probation office determined that an intended loss amount for Counts 2 and 5, related to defrauding Medicare/Medicaid, could not be quantified. Thus, the PSR recommended that a total intended loss figure of $256,854.96 ($206,461.43 + $50,393.53) should be attributed to defendant as to Counts 1 through 5.

The PSR arrived at the intended loss figure of $206,461.43 for Counts 1 and 4 through a complex series of ten steps....