United States v. Russo

• Decision Date: 06 July 1973
• Docket Number: No. 72-1846.,72-1846.
• Citation: 480 F.2d 1228
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Joseph RUSSO, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

480 F.2d 1228 (1973)

UNITED STATES of America, Plaintiff-Appellee, v. Joseph RUSSO, Defendant-Appellant.

No. 72-1846.

United States Court of Appeals, Sixth Circuit.

Argued April 10, 1973.

Decided July 6, 1973.

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John D. O'Connell, Detroit, Mich., Arthur R. Miller, Cambridge, Mass., for defendant-appellant; Phillip Hoffiz, Detroit, Mich., on brief.

Richard L. Delonis, Asst. U. S. Atty., for plaintiff-appellee; Ralph B. Guy, Jr., U. S. Atty., Detroit, Mich., on brief.

Before PHILLIPS, Chief Judge, and KENT^* and LIVELY, Circuit Judges.

LIVELY, Circuit Judge.

Appellant, Joseph Russo, is an osteopathic physician licensed to practice in Michigan. He and an associate were charged in a single indictment containing 51 counts of violating the mail fraud statute, 18 U.S.C. § 1341. Count one of the indictment was divided into paragraphs I and II. Paragraph I charged that the two physicians "devised and intended to devise a scheme and artifice to defraud Blue Shield of Michigan, . . . by filing claims for services not performed on patients on dates specified and for obtaining money from such organization by false and fraudulent pretenses and representations well knowing at the time that the pretenses and representations would be and were false when made." Subparagraphs A through G set forth in detail the manner in which the alleged scheme and artifice to defraud was carried out. Paragraph II of Count one then recited that on July 14, 1966 at Detroit in the Eastern District of Michigan the defendant, Joseph Russo, did knowingly and willfully cause Blue Shield of Michigan to mail a check, identified by number, to him in violation of the mail fraud statute. Each of the subsequent 50 counts realleged and adopted the allegations of paragraph I of Count one and in its paragraph II charged one or the other of the named defendants with willfully causing a check to be placed in the mail by Blue Shield of Michigan for delivery to that defendant. No conspiracy was charged in the indictment.

The evidence reveals that during the period covered by the indictment which was part of the year 1966, all of 1967 and part of 1968 Dr. Russo leased a group of offices in the basement of a building in a "blue-collar" neighborhood in Detroit. These offices, referred to in the testimony as Dr. Russo's clinic, consisted of four examination rooms, an office and a long hallway where patients waited. Although Dr. Russo was associated with several other doctors in a partnership known as The Midwest Clinical Group, only one of the other members of that partnership practiced in the same building with Dr. Russo and there was no sharing of facilities or personnel by them. The Midwest Clinical Group was a loose sort of arrangement in which each of the partners contributed income for the purpose of maintaining one or more osteopathic hospitals in Detroit. It appears from the testimony that the doctors who belonged to the Midwest Clinical Group had problems obtaining hospital beds for their patients and that it was necessary for them to operate, through the partnership, hospitals known as Palmer East and Palmer West for the treatment of their patients. Although the testimony indicates that the Midwest Clinical Group received a portion of its funds from Dr. Russo, presumably including payments from Blue Shield of Michigan which the indictment charges were procured by fraud, there is no evidence that any other member of the Midwest Clinical group was involved in, or had any knowledge of, the scheme charged in the indictment. The co-defendant, Dr. Lieberwitz, was not a member of the Midwest Clinical Group, but was an employee of Dr. Russo.

The Russo office or clinic was kept open throughout the day until late at night and hundreds of patients were seen in a single day. Most of the time Dr. Russo had at least two other doctors working for him in the clinic and each worked on certain days during the week. The other doctors who worked for Dr. Russo gave him a portion of their gross receipts and paid none of the overhead expenses of the offices. The co-defendant who was indicted and tried with Dr. Russo was a younger osteopathic physician who testified to treating an average of 150 patients per day while working at Dr. Russo's office and who stated that he often stayed until 1:00 or 2:00 o'clock in the morning since the office was never closed as long as there were any patients waiting to be seen. Several of the doctors who had worked at the clinic testified that it was Dr. Russo's office and that when they came to work, all of the patients were Dr. Russo's patients, although after they had been there a while some of the patients became theirs. Several witnesses attributed the large number of daily patients at the Russo clinic to the fact that it was located in a densely populated section of Detroit where few doctors' offices were situated.

It was testified that Blue Shield of Michigan furnishes to the doctors who practice in that state printed forms known as "Doctor Service Reports" (hereafter DSR). In order to be paid by Blue Shield it is necessary for a doctor to complete a DSR for each treatment and submit it for payment. Each doctor is assigned a provider's code number and this and his name are both imprinted on the DSR's furnished to him by Blue Shield. The DSR is completed by filling in the name of the patient, the name of the subscriber, which might be different from that of the patient, and the address, identification number and certain other statistical data of the subscriber. Often the subscriber is the employer of the patient. In addition, the treating physician must indicate the date of the service and a description of the service rendered together with a diagnosis. Each physician is supplied with a manual containing approximately 8,000 different procedures with a four-digit code number for each such procedure. There is an established fee which Blue Shield agrees to pay for each particular type of medical service under its various contracts, and the amount of its liability is determined by the procedure code number and description of services performed as indicated on the DSR. Not all medical services are covered by Blue Shield and the coverage can vary between contracts of various subscribers.

The prosecution did not contend that the appellant submitted DSR's to Blue Shield for patients that he had not seen on the dates indicated. What was contended was that in many cases the treatment received by the patients was of such a nature that it was not covered by Blue Shield and was not compensable under the particular subscriber contract involved and that if the services actually performed had been disclosed on the DSR, no payment would have been due from Blue Shield. Instead of making a charge to the patient for the actual services which were not compensable under the patient's Blue Shield coverage, it was the contention of the prosecution that the defendants caused a DSR to be prepared showing that some procedure had been followed with the patient which would have been compensable.

The prosecution produced 12 former patients of Dr. Russo and Dr. Lieberwitz who testified concerning their visits to the clinic and the treatment which they received. Some of the testimony related to acts referred to in particular counts of the indictment and some related to similar acts not charged in the indictment. Each of these patients was asked to identify a number of DSR's submitted by Dr. Russo or his co-defendant upon which payment had been received. Each of the witnesses identified his or her signature on the DSR and was then asked about the treatment or services received at the clinic. In each case the treating doctor had reported administering a treatment involving either aspiration of a hematoma or bursa, or arthrocentesis. The aspiration of the bursa was usually described in the DSR's as being applied to one of the shoulders or one of the hips. This procedure involves withdrawal of a fluid from the bursa or hematoma by means of either one or two needles. Arthrocentesis, which is the injection of a steroid or other substance into a joint, was described in the reports as being applied variously to either shoulder, as well as both hips and ankles.

These twelve witnesses testified that they went to the clinic because of colds, bronchitis, low blood pressure, weight loss, a broken finger, backache, hurting in the right side, asthma, kidney infection, and arthritis. Without exception, they testified that the only injections they received from Drs. Russo and Lieberwitz were cold shots and ordinary inoculations in the fleshy part of the hip and arm and that they never received any injections into the shoulder or hip joints. A number of the witnesses testified that they were asked by the doctor before receiving the first treatment whether they were allergic to penicillin. Likewise those patients who actually observed the treatment stated that no fluid of any kind was withdrawn by the doctors. Each of them who was asked estimated that his treatment took a very brief time and except for one witness who had arthritis, the testimony was that none had complaints concerning limbs or joints. Floyd Newkirk, the witness who had arthritis, stated that he received no shots in his shoulder and that no fluid was ever withdrawn during any of his treatment. These witnesses agreed on cross-examination that they felt better after being treated at Dr. Russo's clinic. Ordinary injections of medicines made in a doctor's office are not compensable by Blue Shield. However, both arthrocentesis and aspiration of the bursa and hematoma are considered to be surgical procedures and are covered. The defense produced 101 patient witnesses who described the treatment they received at Dr. Russo's clinic and in many cases they were victims of arthritis and bursitis who were treated by aspiration and arthrocentesis. On cross-examination,...