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From Health Law Daily, February 18, 2015

Appellate Court affirms convictions and sentences in mental health Medicare fraud case

By Bryant Storm, J.D.

The Eleventh Circuit affirmed the convictions and sentences of seven individuals and one corporation who were convicted for their involvement in a Medicare fraud scheme. On appeal from the trial court, the Eleventh Circuit rejected several challenges to evidentiary admissions, prosecutorial conduct, and the jury’s findings. The court reasoned that the convictions were factually supported and the sentences complied with sentencing guidelines (United States v. Moran, February 17, 2015, Hull, F.).

PHP. The fraud centered around the Biscayne Milieu Health Center, Inc., a Medicare provider that offered a partial hospitalization program (PHP) for patients with mental illness. PHPs treat patients with serious mental illness on an outpatient basis when the patients would otherwise require inpatient treatment. Under the Medicare local coverage determination (LCD), PHP services must be “reasonable and necessary for the diagnosis and active treatment of the patient’s condition.” The required condition for PHP purposes is the acute onset of a covered Axis I mental disorder. Additionally, admission to a PHP requires a psychiatrist certification of the medical necessity of the services and certifications must be documented.

Scheme. To carry out the scheme, the owners of the health center billed Medicare for PHP services that were not necessary or were not provided, paid kickbacks to recruit Medicare beneficiaries, concealed the false submissions, and diverted the proceeds of the fraud for personal use. Biscayne Milieu employees perpetuated the fraud by admitting ineligible beneficiaries, holding therapy sessions for patients that did not qualify for PHP services, falsifying group therapy notes, and recruiting non-qualifying Haitian participants by promising to help them obtain U.S. citizenship. Between 2007 and 2011, the health center submitted $57,689,700 in claims for PHP care of mentally ill patients, and Medicare paid $11,481,593 of those claims. For the majority of the false claims, the patients were not suffering an acute onset of a covered Axis I mental disorder as required by the LCD. At trial, it was determined that the majority of the patients who wrongly received PHP treatment fell into one of four ineligible groups: “(1) chronic substance abusers; (2) elderly patients with dementia; (3) Haitian patients seeking immigration benefits; and (4) paid patients.”

Management. Antonio Macli, the health center’s CEO, certified compliance with the false Medicare submissions despite having full knowledge of the illegality of the kickback arrangement by which physicians recruited patients for therapy. Macli also directed the recruitment effort and the fraud more broadly. Jorge Macli, the CEO’s son, had ultimate control over the recruiters, directly managing and paying them for their efforts. He directed the submission of false invoices and orchestrated some of the payment arrangements. Rufus Cargile, a former Biscayne Milieu patient, was hired as a mental health worker to recruit substance abuse patients for the fraud. The CEO’s daughter, Sandra Huarte, was in charge of Medicare billing and payroll and made the physical kickback payments to recruiters. Huarte also instructed patient recruiters to recruit Haitians that were not mentally ill. Additionally, Huarte operated North Biscayne Investment, Inc., an investment vehicle used to transfer proceeds of the fraud to participants.

Physicians and recruiters. One of the health center’s psychiatrists, Dr. Gary Kushner, authorized PHP treatment for patients who were not eligible. Kushner had only brief interaction with the patients he admitted—five to 10 minutes. Rafael Alalu, a licensed mental health counselor, oversaw the work of therapists and was aware of a variety of patients improperly admitted to Biscayne Milieu. Alalu also falsified group therapy notes, created false notes for patients who were not ill, and copied and pasted notes from one patient file to another. Derek Alexander and Anthony Roberts were paid $30 per patient per day to function as patient recruiters for the fraud scheme. Alexander received $47,500 in illegal kickbacks and Roberts received $199,239.48 in illegal kickbacks.

Trial and appeal. Following a 44 count indictment, charging eight defendants and three co-defendants, for their involvement in the false submission of Medicare claims, each of the defendants was convicted on some of the charges, related to their participation. The participants were sentenced to one or more punishments, including imprisonment, probation, and restitution. On appeal before the Eleventh Circuit, the eight defendants challenged their convictions and sentences arguing: there was insufficient evidence to support the convictions; some of the counts were duplicative, the trial court erred by not removing a juror after the defense attorney made an offensive comment, and several alleged errors related to the admission of evidence and jury instructions.

Sufficiency of evidence. Regarding the sufficiency of the evidence, the court held that there was sufficient evidence to convict Antonio Macli, Jorge Macli, Huarte, Biscayne Milieu, and Kushner of conspiracy to commit health care fraud and substantive health care fraud. The court relied on the substantial evidence of the defendants’ awareness of the scheme and participation in it to support the convictions. The Eleventh Circuit upheld the kickback convictions on the same grounds, reasoning that the government presented sufficient evidence that recruiters were hired and paid in such a manner to allow the jury to “reasonably infer a kickback scheme fully in operation.” The court held that the government also met its burden of proof regarding the money laundering counts which Antonio Macli, Jorge Macli, and Huarte were convicted of. Additionally, the court rejected Huarte’s argument that two of her conspiracy convictions were multiplicitous because the court reasoned the two convictions related to two distinct conspiracies with different objectives.

Admission of evidence. Several of the defendants opposed the admission of various pieces of evidence and testimony. However, the Eleventh Circuit concluded that the trial court adequately separated admissible evidence from inadmissible evidence and did not err by allowing the jury to hear things like the testimony of health center therapists who testified in their lay opinion, based on personal knowledge, as to patient eligibility.

Sentencing. Antonio Macli, Jorge Macli, Huarte, Dr. Kushner, Alalu, Roberts, and Alexander all appealed their sentences. The Eleventh Circuit concluded that the trial court did not err in calculating the sentencing ranges for each of the defendants. The court held that the trial court properly calculated the monetary loss caused by the defendants and the resulting guideline adjustments. Additionally, the Eleventh Circuit upheld the imposition of a mass-marketing increase because of the mass targeting of Medicare beneficiaries for fraudulent PHP services. The Eleventh Circuit rejected arguments that the trial court improperly imposed sophisticated means, conscious or reckless risk of death or serious bodily injury, vulnerable victim, aggravated or minor role, obstruction of justice, downward departure, and upward variance adjustments to the defendants’ sentences. The court also rejected Kushner’s challenge to his restitution order, reasoning that he failed to provide evidence that the value of his legitimate psychiatric services offset the amount of restitution he was ordered to pay.

The case number is No. 12-16056.

Attorneys: Laura Thomas Rivero, U.S. Attorney's Office, for United States of America. Michael B. Cohen (Michael B. Cohen, PA) for Anthony Roberts. Richard Carroll Klugh, Jr. (Law Offices of Richard C. Klugh) Biscayne Milieu Health Center, Inc.

Companies: Biscayne Milieu Health Center, Inc.; North Biscayne Investment, Inc.

MainStory: TopStory FraudNews AntikickbackNews PaymentNews AlabamaNews FloridaNews GeorgiaNews

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