U.S. v. Seibert
| Decision Date | 08 December 2005 |
| Docket Number | No. 4:04 CR 00251 JEG.,4:04 CR 00251 JEG. |
| Citation | 403 F.Supp.2d 904 |
| Parties | UNITED STATES of America, Plaintiff, v. Floyd W. SEIBERT, a/k/a Martin Mesquite, and James E. Golden, Jr., Defendant. |
| Court | U.S. District Court — Southern District of Iowa |
Mary C. Luxa, US Attorney's Office, Des Moines, IA, for Plaintiff.
Mack K. Martin, Martin Law Office, J. David Ogle, Ogle & Welch, P.C., Oklahoma, OK, Lawrence F. Scalise, Sullivan & Ward PC, Des Moines, IA, for Defendant.
This matter comes before the Court on Defendant Floyd W. Seibert's Motion to Dismiss Counts 1 through 9 and 12 of the Superseding Indictment (Clerk's No. 41). The is represented by Mary Luxa. Defendant Seibert is represented by Mack K. Martin.1 Defendant James E. Golden, Jr., who does not join this motion, is represented by J. David Ogle and Lawrence F. Scalise. Neither party has requested a hearing, and the Court finds no hearing is necessary to resolve the pending motion. The matter is fully submitted and is ready for disposition.
Defendants Floyd W. Seibert and James E. Golden, Jr., have been indicted on charges of health care fraud under title 18 U.S.C. § 1347, criminal conspiracy under title 18 U.S.C. § 371, and making false statements under title 18 U.S.C. § 1001(a)(1) for acts allegedly taken in connection with Medicare-funded health care organizations with which they have been affiliated since 1984. The Government intends to seek the forfeiture of certain properties owned by Seibert if he is convicted. Seibert has moved to dismiss the conspiracy, health care fraud, and forfeiture counts of the Superceding Indictment (Indictment).
Medicare is a federally funded health insurance program for the aged and disabled. Relevant here are procedures utilized under Part A of the Medicare program. Part A is administered by the Center for Medicare and Medicare Services (CMS), a federal agency under the United States Department of Health and Human Services (HHS).2 Part A provides medical insurance benefits for certain individuals age sixty-five and over and for some individuals under age sixty-five who are entitled to Social Security benefits. See 42 U.S.C. § 1395c (2000). Part A helps pay for doctor services, outpatient hospital services, certain home health services, and hospice care. See id. To participate in this program, health care providers must enter into a specific type of agreement with the Secretary of HHS (Secretary). Id. § 1395cc(a). Thereafter, a provider is eligible to be directly reimbursed for the reasonable cost of services provided to Medicare-eligible patients. See id.
A "home health agency" is an organization meeting a number of requirements promulgated by CMS. See CMS, Health Agency Manual § 200 (2004), available at http://www.cms.hhs.gov/manuals/11_hha/hh200.asp. These requirements are not pertinent here, as it is undisputed that the Defendants were affiliated with organizations qualifying as home health agencies during the indictment period.
CMS fulfills many administrative duties by contracting with third parties. These parties are usually large private insurance companies who serve as fiscal intermediaries. See 42 U.S.C. § 1395h; 42 C.F.R. §§ 421.3, .100 (1995).3 Fiscal intermediaries reimburse providers for the cost of services incurred on behalf of Medicare beneficiaries. 42 C.F.R. § 421.100(a). In carrying out this function, fiscal intermediaries audit providers' records "as necessary" to ensure proper payments are made. 42 C.F.R. § 421.100(c); see also 42 U.S.C. § 1395h(a).
To better understand the context of the Government's allegations, it is necessary to describe how providers were reimbursed by Medicare during the indictment period. Throughout the year, intermediaries made pre-audit "interim payments" to the provider. 42 C.F.R. § 413.64(a), (f)(1). These payments occurred at least monthly. Id. § 413.64(a), (f)(1). The amount of the payments were estimates calculated from projections of services the provider was likely to provide.4 Id. § 413.64(e). For home health agencies, payments were based on the number of Medicare-eligible visits billed by the provider multiplied by the cost per visit rate determined from the agency's claims from the previous year. Id. § 413.53(a)(3).5 These payments allowed providers to avoid cash-flow shortages that could follow from delays between the time a service was provided and reimbursement.
A reconciliation process began at the end of a provider's fiscal year to determine whether the provider was overpaid or underpaid for its actual costs. The provider submitted a year-end cost report detailing costs incurred for services provided to Medicare-eligible beneficiaries. Id. §§ 413.20(b), 413.24. Unless "obvious errors or inconsistencies" were present, the intermediary assumed the report's accuracy and made an "initial retroactive adjustment." Id. § 413.64(f)(2).
After reviewing the cost report and requesting additional information, if needed, the intermediary issued a Notice of Program Reimbursement (NPR), indicating the reimbursement due to the provider. See id. § 405.1803(a). If the provider was underpaid, the intermediary paid the difference. If the provider was overpaid, the provider either returned that amount or the intermediary adjusted downward (or suspended) the provider's periodic payments for the next year to recover the difference. See id. § 405.1803(c). The goal of the process was to "bring the interim payments made to the provider during the [fiscal year] into agreement with the reimbursable amount payable to the provider for the services furnished to program beneficiaries during [the same] period." Id. § 413.64(f)(1).
Intermediary decisions were "final and binding" unless an intermediary hearing was requested, the intermediary determination was revised, or a hearing was requested before a Provider Reimbursement Review Board (PRRB). Id. § 405.1807; see also 42 U.S.C. § 1395oo(a); 42 C.F.R. §§ 405.1811 (), .1835 ( how to seek a PRRB hearing), .1885 (describing how an intermediary determination is reopened and revised). Medicare regulations specifically permitted judicial review of PRRB decisions in federal court. See 42 U.S.C. § 1395oo(f)(1); 42 C.F.R. § 405.1877(a).
Under this scheme, a provider was permitted to do business with individuals or entities under common ownership or control with the provider, known as "related organizations." See 42 C.F.R. § 413.17(a). A provider could bill Medicare for goods and services purchased from related organizations but only at the actual cost to the related organizations, so long as "such cost [did] not exceed the price of comparable services, facilities, or supplies that could be purchased elsewhere." Id. Providers were required to disclose related organizations with which they did business on their yearly cost reports. Id. § 413.20(d)(1)(i). No statutory or regulatory provisions put the capability to determine whether organizations were "related" with an intermediary, a PRRB, or CMS.
If a provider's cost report contained false or inflated costs that were not corrected as a result of an audit, a provider could receive interim payments the following year to which it was not entitled. Additionally, if nonallowable expenses were claimed on a cost report, or if a provider failed to disclose the existence of related organizations, a provider's cost of doing business could be artificially inflated. This, in turn, could increase the cost of providing services, increasing interim payments made to the provider the following year.
The Government alleges Seibert and Golden conspired to conceal the "related organization" status of certain businesses from the fiscal intermediaries of home health agencies owned by Seibert. According to the Government, Seibert did not disclose in cost reports the related organizations with which his home health agencies did business. The Government also contends Seibert included expenses for related organizations not covered by Medicare on cost reports for some of his home health agencies.
The Government accuses Seibert and Golden of conspiring to create and manage related organizations which supplied goods and services to Seibert's home health agencies at inflated prices. The Government claims Seibert and Golden also conspired to transfer funds from home health agencies and other businesses to an entity unaffiliated with Medicare (operated by Seibert under an alias), which would then "loan" funds back to the home health agencies. The Government contends Seibert would claim "interest payments" for these loans as expenses on his home health agencies' cost reports.
The Government argues that Seibert's submission of cost reports knowing they contained false information and omissions concerning related organizations is health care fraud. Because Golden aided Seibert in key areas, the Government posits the presence of a conspiracy. If Seibert is convicted, the Government intends to seek forfeiture of property and assets Seibert realized through his allegedly fraudulent practices.6
Seibert seeks dismissal of Counts 1 through 9 and Count 12 of the Indictment. In Count 1, the Government contends Seibert and Golden conspired from 1996 through 2001 to commit a fraud against the federal government by obtaining money and property by means of materially false and fraudulent misrepresentations in connection with the delivery of and payment for health care benefits, items, and services. In Counts 2 through 9, the Government identifies specific cost reports it claims contained false information and omissions concerning related organizations, amounting to health care fraud.
Seibert points out that for the cost reports referenced in Counts 2 and 3 of the Indictment,...
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