Not Guilty on All Counts | Health Care Fraud (Pt. III)

Not Guilty on All Counts – Health Care Fraud (Pt. III)

Healthcare Fraud Attorney

This post is the third in a series discussing a recent trial victory by the health care fraud attorneys at Odom, Davis & Hobson. In the prior posts, we discussed an overview of the charges, the history of chelation therapy, and the main issues under count one of the indictment.  This post will look at Counts 2-25 with a focus on the confusing nature of the Medicare Guidelines and the mens rea for wire fraud.

Counts 2-12 – The Direct Supervision Counts

In counts 2-12, the government alleged the defendant billed for services under his NPI number when he was not present.  These counts dealt with the confusing requirements of direct and general supervision under the Code of Federal Regulations (CFR) and the Medicare Guidelines Manual.  Under federal guidelines, certain procedures require different levels of supervision before a physician can bill under his NPI number.  Some procedures require the physician to be physically available to assist while his staff performs the procedure (direct supervision).  Others merely require the physician to maintain overall control of the medical procedure (general supervision).  If the appropriate supervision requirements are not met, the medical staff performing the procedure must bill Medicare under their own NPI number.  The medical staff (nurse practitioner, physician assistant, or licensed vocational nurse) is normally reimbursed by Medicare at 80% of the physician rate.

The CFR defines the requisite supervision requirements as follows:

Direct supervision does not require the physician be present in the same room with the rendering personnel, but the physician must be present in the same building and immediately available to provide assistance and direction through the time the rendering personnel performs services. 42 C.F.R 410.32(b)(3)(ii)General supervision, as defined in 42 C.F.R 410.26(a)(3), means the procedure or service must be furnished under the physician’s overall direction and control, but the physician’s presence is not required during the performance of the procedure.  The physician may bill under his NPI number for services performed by his staff as long as the correct supervision requirements are met.

The overarching rule is that a physician must provide direct supervision of staff to bill procedures under his NPI number.  However, that rule has numerous exceptions.  The relevant exception here dealt with servicing homebound patients.  If a patient is homebound, and lives in a medically underserved community with no available home health care agencies, the treating physician may bill under his NPI number under general supervision.  In addition, a physician may provide general supervision if the patient is homebound, the service is intermittent and integral to the physician’s treatment of the patient, and the procedure is in the laundry list of services found in Section 60.4 of the Medicare Guideline Manual.

These requirements and exceptions are confusing and misleading for multiple reasons.  One, there is no guidance from CMS, or any other federal agency, on what is required under general supervision.  Does the doctor need to be available by phone?  Email?  Can the physician be overseas and still maintain overall control? That definition is important, and the government has failed to provide guidance to physicians.

The second major issue is that the two exceptions above are outlined differently depending on the source.  The Fifth Circuit and CMS agree with the language cited above – viewing two distinct exceptions for homebound patients.  United States v. Jones, 664 F.3d 966 (5th Cir. 2011). However, the regulation in the Medicare Guideline Manual cannot easily be read as allowing two distinct exceptions.  The Manual can be best interpreted as having one exception that requires all of the elements to be met: 1) homebound patient, 2) underserved community, 3) no home health care agencies available, and 4) the service is on the laundry list of Section 60.4.

The issues above consumed much of the argument in trial.  Counsels spent a large amount of time educating the Court on what the law actually required. And I am not sure any party is 100% sure how the regulation should be read even now.  Yet again, the attorneys were not arguing about the mens rea for fraud.  They were arguing over whether the defendant’s actions were in line with federal regulations.

The issue was not solely whether the service fell under the homebound exception.  The indictment placed these counts under the wire fraud statute.  That statute requires the defendant to act with the specific intent to defraud the United States.  Specific intent is almost impossible to find when the requirements of the regulation are this unclear.  The government cannot prove the defendant knew the claim was false when the government cannot clearly articulate what the regulation requires.

The lack of clarity in the law was the foundation for the defense.  It was questionable whether the defendant followed the rule or should have billed under the medical staff’s NPI number.  With that backdrop, the government could not prove the defendant knew the claim was false when it was submitted to Medicare.

Counts 13-18 – Too Many Services in a 24-hour Day

The government alleged certain days produced 25-30 hours of services billed to Medicare.  They argued it was impossible for the defendant to provide all the services.  This position had three weaknesses: 1) it failed to accept Medicare’s coding structure, 2) it failed to account for staff services billed under the defendant’s NPI number and 3) it failed to provide a clear indication of which claim was fraudulent through other evidence.

Coding Issue

The Medicare Guidelines provide codes that must be submitted for a service.  These codes are often identical to the codes submitted by private insurance companies.  The codes relate to medicines provided and services performed.  For example, a chelation treatment will bill J0600 for the calcium EDTA and a service CPT code for the infusion.

Some of the service codes come with a time period for the expected length of the procedure.  For instance, the code for a physical examination may be 30 minutes.  The code for physical therapy could be 2 hours or 4 hours.  These time frames have been in place for decades.  However, there is a difference between a physical examination and physical therapy.  If a physician bills Medicare for 4 hours of physical therapy, the physician must actually perform 4 hours of physical therapy.  If that same physician billed for 40 hours of physical therapy in a day, the physician is either not performing the full service or there is a mistake during the electronic submission of the claim.

The time allotted for a physical examination is different.  The codes provide an expected duration for the examination; however, Medicare does not mandate the physician use all the allotted time to perform the task.  If a physician performs 5 complete physical examinations in an hour, he can bill Medicare for those procedures.  There is nothing unlawful or incorrect about that course of conduct. This is true even if the code suggests those 5 examinations should take 2.5 hours.

Understanding the coding system is important under these counts.  This fact alone cuts against the government’s impossibility theory of prosecution.  The government needs more evidence to suggest a specific procedure was not performed.

Healthcare Fraud Lawyer

Services Billed Under General Supervision

If a service is billed under general supervision (see the homebound exception above), the physician may bill for services performed by his staff under his NPI number.  A clinic may have 4-5 nurse practitioners meeting with patients in a workday.  If these mid-levels perform 5 examinations each in a one-hour period, we are looking at a total of 20-25 physical examinations billed under the physician’s NPI number in a single hour.  Under the coding time estimate, the physician would be performing 10 hours of work in a one-hour period.

Under this example, it is not difficult to see how a physician can bill for more than 24 hours of services in a day.  25-30 hours of services is far from impossible.

Nexus Between Service and False Claim

Medicare fraud is uniquely tied to each claim submitted.  Each claim submitted to Medicare is its own distinct unit of prosecution.  In order to meet the elements of Health Care Fraud, the government needs to delineate which services are false.  Showing that one of the services was likely not performed should not get the government over their tall burden in a criminal case.

The government should have gone to the individual patient charts and looked for proof the services were not performed.  There was zero evidence to suggest the defendant had not performed any of the listed services.  The entire theory of prosecution was based on an assumption.

It is not known what factor the trial court viewed as dispositive in counts 13-18.  Or if all three played a part in the not guilty ruling. Arguments were made by counsel under all three issues listed above.

Money Laundering (Counts 19-25)

The money laundering counts required the government to show the defendant moved assets obtained through illegal activity.  This count was only viable if the other counts resulted in guilty verdicts.  The not guilty verdict on these counts was a product of the analysis and facts previously discussed in this blog.


This health care fraud case was a huge win for our firm.  Getting a clean sweep on 25 Counts in federal court is a rare occurrence.  This case highlights many of the pitfalls seen in health care fraud prosecutions.  The statute was never meant to allow the government to convict doctors for a disagreement in medical judgment.  The government’s disagreement alone is not enough.  Further, billing irregularities happen in physician clinics every single day.  Evidence of actual fraud is needed before a physician should be subjected to criminal charges.

Fraud requires deceit or deception.  Without facts to support the mens rea for fraud, the trial court correctly ruled in our clients’ favor.  This case will have a lasting impact on many doctors around the country.  Notably, the doctors that are performing chelation therapy to treat various ailments.  The government may very well choose to stop reimbursing claims for chelation treatments going forward, and that is their prerogative.  But these doctors do not deserve to lose their license and spend the next 20 years behind bars.

You can find the other parts of this blog below:

Part I

Part II