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From Health Law Daily, May 12, 2015

Appeal cuts open trial court’s evidentiary suture in dermatology fraud case

By Bryant Storm, J.D.

The Fourth Circuit reversed and remanded a district court’s decision to exclude evidence of a dermatologist’s alleged fraud prior to the dermatologist’s trial. The Fourth Circuit reasoned that evidence related to the dermatologist’s financial gain, intent, consciousness of guilt, and acts subsequent to the start of a law enforcement investigation were all admissible and relevant to allow the government to prove its case. Accordingly, the appellate court held that the trial court abused its discretion to exclude the evidence and the case was remanded (U.S. v. Bajoghli, May 11, 2015, Niemeyer, P.).

Fraud. Amir Bajoghli, a dermatologist and owner of a skin and laser surgery center, was indicted under 18 U.S.C. § 1347 on 53 counts related to the fraudulent billing of public and private health care programs. Bajoghli was also indicted on 6 counts of aggravated identity theft and a single count of obstruction of justice. The indictment alleged that, on seventeen occasions, Bajoghli diagnosed patients with skin cancer, even though they did not have skin cancer, and performed costly surgeries on benign tissues. The indictment also alleged that Bajoghli directed unlicensed and unqualified medical assistance to perform wound closures following surgeries despite the fact that he then billed health care programs as though he performed the closures. Bajoghli also allegedly submitted bills for other services he did not perform himself, including the preparation and analysis of skin pathology slides.

Appeal. Prior to his trial, Bajoghli made three motions to exclude or strike evidence related to the financial details of the fraud, his consciousness of his own guilt, and information not related to specifically alleged executions of fraud. The district court granted each of the motions. The government filed an interlocutory appeal challenging the district court’s decision.

Financial information. The trial court agreed with Bajoghli that it would be prejudicial to allow the government to introduce evidence that Bajoghli “regularly billed the health care benefit programs $300 to $450 per slide” because the amount billed and the amount received would differ due to the fact that health care programs often reimburse physicians at a predetermined rate. For the same reason, the court held that the government could not admit evidence that Bajoghli paid $15 per slide to an outside contractor who actually rendered the slides. The trial court held that the government could produce evidence that Bajoghli would have been paid less if the claims had not been materially false, however, the trial court held that the specific dollar amounts were impermissible. On appeal, the Fourth Circuit reversed that decision and agreed with the government that evidence of Bajoghli’s financial gain was critical in a fraud case to show his intent. The appellate court reasoned that the district court’s ruling unduly restricted the government’s ability to write its narrative in detail.

Consciousness of guilt. Regarding the evidence showing Bajoghli’s awareness of his guilt, the trial court held that the government could not admit evidence showing that after Bajoghli was interviewed by law enforcement he stopped sending slides to an outside contractor, stopped performing surgeries without supporting biopsies, and deleted data about past wound repairs. The trial court held that the admission of that evidence would constitute a past remedial measure, inadmissible under the federal evidentiary rules. Additionally, the trial court held that the evidence would be unduly prejudicial to Bajoghli. On appeal, the government asserted that the evidence was relevant because it related directly to Bajoghli’s intent and knowledge regarding the fraud. The Fourth Circuit agreed and held that because Bajoghli’s knowledge and intent were elements of the crime, evidence suggestive of his intent would be relevant to the government’s case and therefore admissible.

Uncharged conduct. The trial court also granted Bajoghli’s motion to exclude volumes of records related to uncharged conduct because it was improper propensity evidence offered only to show Bajoghli’s bad character and not the violation for which he was charged. On appeal, the government asserted that the evidence was necessary to show Bajoghli’s criminal intent and the “entire scheme.” The Fourth Circuit held Bajoghli’s position that the evidence was not relevant, was premised on a narrow reading of the indictment. Because the statute he was being charged under prohibited a scheme of fraud, the court held that evidence of the entire scheme was admissible to show an element of the offense. The court reasoned that “evidence of transactions and conduct not charged is relevant to proving the existence of and the boundaries of the conspiracy or scheme.” The court held that such latitude was necessary to offer the government an opportunity to prove its case.

The case is No. 14-4798.

Attorneys: Dana James Boente, Acting U. S. Attorney Office of the United States Attorney, for United States of America. Joe R. Caldwell, Jr. (Baker Botts, LLP) for Amir A. Bajoghli.

Companies: U.S. Department of Health and Human Services

MainStory: TopStory FraudNews BillingNews MarylandNews NorthCarolinaNews SouthCarolinaNews VirginiaNews WestVirginiaNews SafetyNews

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