U.S. v. Weiss

• Decision Date: 19 September 1990
• Docket Number: D,782,Nos. 781,s. 781
• Citation: 914 F.2d 1514
• Parties: Medicare&Medicaid Gu 38,833 UNITED STATES of America, Appellee, v. Steven B. WEISS, Barry Gleicher, Patient Medical Systems Corp., a/k/a "Integrated Generics, Inc.," and Health-Med, Inc., Defendants, and Patient Medical Systems Corp., a/k/a "Integrated Generics, Inc.," Barry Gleicher, Defendants-Appellants. ocket 89-1434, 89-1444. Second Circuit
• Court: U.S. Court of Appeals — Second Circuit

Page 1514

914 F.2d 1514

Medicare&Medicaid Gu 38,833

UNITED STATES of America, Appellee, v. Steven B. WEISS, Barry Gleicher, Patient Medical Systems Corp., a/k/a "Integrated Generics, Inc.," and Health-Med, Inc., Defendants and Patient Medical Systems Corp., a/k/a "Integrated Generics Inc.," Barry Gleicher, Defendants-Appellants.

Nos. 781, 782, Docket 89-1434, 89-1444.

United States Court of Appeals,Second Circuit.

Argued April 11, 1990.

Decided Sept. 19, 1990.

Michael J. Horowitz, Washington, D.C. (Jonathan R. Moore, Windels, Marx, Davies & Ives), for defendant-appellant Barry Gleicher.

Martin B. Adelman, P.C., New York City, for defendant-appellant Patient Medical Systems Corp., a/k/a "Integrated Generics, Inc."

Jon M. Bevilacqua, Sp. Asst. U.S. Atty., Brooklyn, N.Y. (Andrew J. Maloney, U.S. Atty., and Kevan Cleary, Asst. U.S. Atty., Brooklyn, N.Y.), for appellee.

Before LUMBARD, WALKER, and FRIEDMAN, ^* Circuit Judges.

FRIEDMAN, Circuit Judge:

In this appeal the appellants Gleicher and Patient Medical Systems Corp., a/k/a "Integrated Generics, Inc." ("Patient Medical"), challenge on various grounds their criminal convictions after a jury trial in the United States District Court for the Eastern District of New York of mail fraud, mail fraud conspiracy, and making false representations of material facts on Medicare and Medicaid claims. The third convicted defendant, Weiss, had not been sentenced at the time this appeal was argued, and therefore did not join in the appeal.

The indictment, filed in July 1988, charged the three defendants named above and Health-Med, Inc. ("Health-Med"), a predecessor corporation of Patient Medical, with a conspiracy from February 1983 to December 1986, to defraud and to obtain money from the Health and Human Services Administration by means of false and fraudulent pretenses and representations. The indictment alleged that "[t]he object of the conspiracy was" "to obtain federal funds by and through the fraudulent submission of Medicare Claim Forms to Ohio, Illinois and New Jersey Medicare carriers for services with a 'point of sale' in New York, in order to receive the higher rate of Medicare reimbursement paid by these out-of-state carriers," and that pursuant to the conspiracy the defendants "submitted[ ] Medicare Claim Forms to the Ohio, Illinois, and New Jersey Medicare carriers, knowing that these Medicare Claim Forms should have been submitted to New York Medicare carriers."

Following the jury convictions, the district court sentenced Gleicher to three years' imprisonment, followed by five years' probation, and fines and a court assessment totaling $126,900. The court sentenced Patient Medical to fines, prosecution costs, and court assessments totaling $173,650.

I

A. The Statutory and Regulatory Scheme for the Payment of Medicare Claims.

Under Part B of Medicare, providers of "medical and other health services," which include providers of "durable medical equipment ... used in the patient's home ... whether furnished on a rental basis or purchased," 42 U.S.C. Sec. 1395x(s)(6), are entitled to reimbursement for the reasonable cost of providing such services. 42 U.S.C. Sec. 1395k(a)(2)(B). One example of such "durable medical equipment," for which reimbursement is available, is the "rental or purchase of a medically necessary seat lift when prescribed by a physician for a patient...." Medicare Carriers Manual, Sec. 60-8.

Within the Department of Health and Human Services (the "Department") the Health Care Financing Administration (the "Administration") is responsible for the administration of Part B of Medicare. Reorganization Order effective March 8, 1977. The Administration has promulgated the Medicare Carriers Manual (the "Manual"), which is the official explanation of the Medicare statute and the regulations.

Pursuant to statutory authority, 42 U.S.C. Sec. 1395u(a), the Secretary has entered into contracts with entities throughout the country to process and pay Medicare claims. There are 47 such entities, known as carriers, each of which is responsible for paying claims in a specified geographic area.

Each individual carrier sets the amount it will pay for a particular service. As a result, the amounts the different carriers will pay for the same service may vary from carrier to carrier. The Manual explains the basis upon which a provider of services is to determine to which carrier it should submit a claim:

Jurisdiction of payment requests for services of a supplier ... with branch offices or sales/rental outlets in more than one carrier's jurisdiction lies with the carrier for the location where the service is furnished to the beneficiary whether or not the supplier uses a central billing office. (This means the site where the company met with the beneficiary or received the beneficiary's call.) All claims for the services of suppliers from branch officers or sales/rental outlets outside the carrier's service area must be transferred to the appropriate carrier for processing.

Manual, Sec. 3102.B, at 3-63.2--3-64.1. The Manual provides "EXAMPLES OF MULTI-CARRIER JURISDICTION," which explain in detail how this rule works. Id. at 3-64.1--3-64.3.

The "location where the service is furnished to the beneficiary," i.e., the "site where the company met with the beneficiary or received the beneficiary's call," and which determines the carrier to which the claim should be submitted, is known in the Medicare field as the "point of sale."

In addition to being published in the Manual, the rules governing the carrier to which a claim should be submitted are also from time to time published by the carriers themselves, in publications they send to providers. See, e.g., Medicare Newsletter for Durable Medical Equipment Suppliers, at 8 (Nationwide Mut. Ins. Co., Ohio July 1981).

One of the carriers to whom Patient Medical submitted Medicare claims was Nationwide Insurance Company, the Medicare carrier for Ohio ("Ohio Nationwide"). In the regular course of business, Ohio Nationwide distributes bulletins to all durable medical equipment providers that are registered with it, including Patient Medical. One bulletin, dated July 1981, explained:

Processing jurisdiction for services of a supplier with branch offices or sales/rental outlets in more than one carrier's jurisdiction lies with the carrier for the location where the service is furnished to the beneficiary whether or not the supplier uses a central billing office--this means the site where the company met with the beneficiary or received the beneficiary's call. All claims for the services of suppliers from branch offices or sales/rental outlets outside the carrier's service area must be submitted to the appropriate carrier for processing.

Id. at 8. "[T]hat particular document [is] sent to all providers that bill [the] carrier" and "from time to time over the years ... similar documents [are sent] to the providers explaining how to bill the carrier." Moreover, Ohio Nationwide "send[s] out current and past newsletters that are pertinent to that particular practice." At the time Health-Med first joined the Medicare program, Ohio Nationwide sent it a similar bulletin stating that "[t]he revised policy [of the Administration] stipulates that, effective with dates of service of July 1, 1977, jurisdiction is based on the point of sale, regardless of where the billing is being done," Medicare Bulletin (Nationwide Mut. Ins. Co. undated) (emphasis in original). A similar notice was included in a December 1985 Blue Cross/Blue Shield of Illinois newsletter.

Form 1500 is the official form, prepared by the Administration and approved by the Office of Management and Budget, on which a provider submits a claim for reimbursement to a carrier. Each carrier has its own version of the Medicare form.

Box 31 of the form asks for the "PHYSICIAN'S OR SUPPLIER'S NAME ADDRESS ZIP CODE" and "TELEPHONE NUMBER." The Manual states that the "[n]ame and address information is furnished to help carriers determine whether the physician/supplier of services can qualify for benefit payments, and as an aid in determining jurisdiction and referring the claim to the servicing carrier where appropriate." Manual, Sec. 4011.8, at 4-15. The Commerce Clearing House ("CCH") reprints these instructions in one of its publications. See Medicare and Medicaid Guide (CCH), p 10,275.08.

B. The Facts of This Case.

Viewing the facts most favorably to the government, which is the standard on appeal from criminal convictions, see Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942), U.S. v. Vanwort, 887 F.2d 375, 385 (2d Cir.1989), there was evidence from which the jury could have found:

At least until 1984, Health-Med was in the business of providing durable medical equipment to individuals whom Part B of Medicare covered. Its corporate headquarters and primary place of business were at 222 Franklin Avenue, Franklin Square, New York. In August 1984, Health-Med ceased operations, but continued to submit bills to Medicare carriers through Patient Medical until January 1986. From 1983 to 1984, the defendant Weiss was the president of Health-Med.

The appellant Patient Medical was in the same business and had the same New York address as Health-Med. The appellant Gleicher, who had not been formally connected with Health-Med, was a vice president, treasurer, and director of Patient Medical. Weiss was a vice president of Patient Medical.

When Health-Med ceased operations in 1984, Patient Medical hired all of its employees and continued to serve all of its customers. In addition, Patient Medical continued to submit bills for equipment Health-Med had provided.

Weiss and Gleicher first met in August 1983. Initially, they had a number of conversations about submitting Medicare bills. They discussed the use of computers for such billing. They continued to discuss Medicare billings from 1983 through 1986.

1. Health-Med's Initial...