Appeal from the United States District Court for the Eastern District of Pennsylvania, (D.C. Criminal No. 83-00414).
Weis, Becker and Wisdom,*fn* Circuit Judges.
In this appeal, defendant argues that payments made to a physician for professional services in connection with tests performed by a laboratory cannot be the basis of medicare fraud. We do not agree and hold that if one purpose of the payment was to induce future referrals, the medicare statute has been violated. We also hold that the materiality of utterances charged to be within the false statement statute is an essential element of the crime to be decided by the trial judge as a matter of law. We find the district court's rulings consistent with our determinations and accordingly will affirm.
After a jury trial, defendant was convicted on 20 of 23 counts in an indictment charging violations of the mail fraud, Medicare fraud, and false statement statutes. Post-trial motions were denied, and defendant has appealed.
Defendant is an osteopathic physician who is board certified in cardiology. In addition to hospital staff and teaching positions, he was the president of Cardio-Med, Inc., an organization which he formed. The company provides physicians with diagnostic services, one of which uses a Holter-monitor. This device, worn for approximately 24 hours, records the patient's cardiac activity on a tape. A computer operated by a cardiac technician scans the tape, and the data is later correlated with an activity diary the patient maintains while wearing the monitor.
Cardio-Med billed Medicare for the monitor service and, when payment was received, forwarded a portion to the referring physician. The government charged that the referral fee was 40 percent of the Medicare payment, not to exceed $65 per patient.
Based on Cardio-Med's billing practices, counts 18-23 of the indictment charged defendant with having tendered remuneration or kickbacks to the referring physicians in violation of 42 U.S.C. § 1395nn(b)(2)(B) (1982).
Counts 12 through 17 alleged that defendant made false statements to Medicare in violation of 18 U.S.C. § 1001 (1982). Defendant submitted claim forms representing that the Holter-monitors had been operated for eight hours or more when in fact the devices had been used for a much shorter time. Medicare required at least eight hours of operation to qualify for payment.
Counts 5 to 11 charged mail fraud. According to the indictment, defendant caused Cardio-Med to bill Medicare for monitorings which were medically unnecessary.
Mail fraud was also charged in counts 1 to 4. Defendant allegedly used the mail to bill for hospital visits he never made.
The proof as to the Medicare fraud counts (18-23) was that defendant had paid a Dr. Avallone and other physicians "interpretation fees" for the doctors' initial consultation services, as well as for explaining the test results to the patients. There was evidence that physicians received "interpretation fees" even though defendant had actually evaluated the monitoring data. Moreover, the fixed percentage paid to the referring physician was more than Medicare allowed for such services.
The government also introduced testimony defendant had given in an earlier civil proceeding. In that case, he had testified that ". . . if the doctor didn't get his consulting fee, he wouldn't be using our service. So the doctor got a consulting fee." In addition, defendant told physicians at a hospital that the Board of Censors of the Philadelphia County Medical Society had said the referral fee was legitimate if the physician shared the responsibility for the report. Actually, the Society had stated that there should be separate bills because "for the monitor company to offer payment to the physicians . . . is not considered to be the method of choice."
The evidence as to mail fraud was that defendant repeatedly ordered monitors for his own patients even though use of the device was not medically indicated. As a prerequisite for payment, ...