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From Health Law Daily, August 4, 2015

District court erred in fraud case; appeals court vacates one doctor’s sentence

By Kayla R. Bryant, J.D.

The evidence against a doctor in a Medicare fraud scheme was not enough to show that she willingly joined a conspiracy to submit false claims to the government, and a district court erred in denying her motion for acquittal. The U.S. Court of Appeals for the Eleventh Circuit overturned Dr. Vanja Abreu’s conviction, but upheld the convictions of several other doctors in conjunction with the same conspiracy involving American Therapeutic Corporation and American Sleep Institute. The appeals court consolidated two cases stemming from the same indictment and charges (U.S. v. Willner and U.S. v. Ward, August 3, 2015, Cox, E.).

Background. The charges alleged that Hilario Morris (aka Larry Morris), Drs. Mark Willner, Alberto Ayala, Vanja Abreu, and Lydia Ward conspired to submit false claims during their employment with American Therapeutic for both American Therapeutic and its corporate sister, American Sleep, in violation of 18 U.S.C. §1347. An additional count charged Morris with violations of 42 U.S.C. §1320a-7b(b)(1)(A) and (2)(A) for paying for referrals to American Therapeutic. The indictment alleges that the false claims submitted between December 2002 and October 2010 exceeded $200 million. The jury found Abreu, Ayala, and Willner guilty of the first conspiracy charge, but could not agree as to Morris or Ward. Morris was convicted of the second conspiracy charge. Morris and Ward were retried as to the first conspiracy charge. Ward was found guilty, and the government dismissed this charge against Morris. Dr. Abreu moved for a judgment of acquittal challenging the sufficiency of the evidence against her.

Scheme. Medicare provides for partial hospitalization "items and services" delivered by community mental health centers. These services provide less than 24-hour-daily care outside of a home, inpatient, or residential setting. To meet coverage requirements, these services must be prescribed by a physician and delivered under physician supervision. They must follow a written, individualized treatment plan. In the American Therapeutic/American Sleep fraud scheme, Medicare beneficiaries were paid either directly or through referral sources to come to American Therapeutic for partial hospitalization services even though they were not eligible. The patients were provided with therapies that did not qualify as partial hospitalization services, and unnecessary American Sleep diagnostic studies were occasionally provided for ineligible patients. The patients were discharged and scheduled for readmission as soon as allowed. Patient files stating that beneficiaries were eligible for and received partial hospitalization services were created and held in the event of Medicare audits. The clinical side of the fraud was run by psychiatrists, including Ayala and Willner. They worked two to three hours per week per assigned facility, signing patient charts indicating that they had performed particular services that were not provided. Willner was responsible for over $70 million in American Therapeutic’s Medicare billings in about three years, and Ayala for $38.5 million in over four years. They each received over half a million dollars for a few hours of work per week.

A third company created by the owners of both American Therapeutic and American Sleep, Medlink Professional Services Group, Inc. (Medlink) was considered the "hub" of the kickback operation. The other two companies paid Medlink $20,000 per month, per facility, which was used to fund the kickbacks. Morris and other promoters delivered cash to referral sources, including halfway houses and assisted living facilities. Medlink also paid patient brokers to directly approach prospects, who were paid to participate in partial hospitalization services.

Dr. Abreu. The appeals court considered the evidence against Dr. Abreau, who was hired as a salaried program director at American Therapeutic. She was responsible for clinical and operational aspects of a community mental health center, including meeting Medicare protocols. She was promoted to a corporate director and supervised all program directors. She was never paid anything beyond a $66,400 annual salary. Abreu was indicted for violating sec.1347, which forbids the execution of a scheme to defraud a health care program. The indictment alleged that Abreu caused patient files and therapist notes to be altered to make it appear that American Therapeutic patients qualified for partial hospitalization treatments.

Abreu’s motion for judgment of acquittal was denied by the district court. Abreu contended that this denial was made in error, as the evidence was insufficient to allow a reasonable jury to conclude beyond a reasonable doubt that Abreu was guilty of knowing that a conspiracy existed and that she willfully joined it. The Court of Appeals noted that there was no direct evidence to support the government’s contentions that she knew of or joined in the conspiracy. The record contained no documents that she allegedly falsified, and no witnesses testified that they saw Abreu further the conspiracy in any way. The court found the government’s evidence and arguments circumstantial and weak, and held that the district court erred in denying the motion for acquittal. Her conviction was reversed and sentence vacated.

Potential errors relating to other defendants. Ayala and Willner contended that the district court erred in admitting and excluding certain evidence and in giving or refusing to give particular jury instructions. The appeals court reviewed the rejected jury instructions and found that the district court did not abuse its discretion in refusing to give them, as this refusal did not impair the doctors’ ability to present their defense. The district court also did not err in allowing certain government instruction. Although the district court abused its discretion in allowing a witness, Stephen Quindoza, that had not been disclosed as an expert to give expert testimony on direct examination, and in not allowing the doctors to cross examine Quindoza on the basis for this testimony and potential for bias, these errors were not found to be a basis for reversal. Morris also adopted these contentions (which the court found irrelevant to the kickback conspiracy), and also contended that the government called attention to his decision to exercise his Fifth Amendment right to remain silent. The court found that there was no error in the admission of the relevant testimony. In the second case, Dr. Ward also objected to Quindoza’s testimony and contended that the court erred in refusing to allow her to call another witness as an expert to rebut Quindoza. The appeals court found that the district court’s error in allowing Quindoza to testify as an expert did not affect Ward’s substantial rights and that the district court did not err in disallowing Ward to call a particular fact witness as an expert to rebut Quindoza.

The cases are Nos. 12-15322 and 13-10533.

Attorneys: Amit Agarwal, U.S. Attorney's Office, for United States of America. Guy Richard Strafer (G. Richard Strafer, PA) for Mark Willner, MD. Scott Alan Srebnick (Scott A. Srebnick, PA) for Alberto Ayala. Robin E. Kaplan (Markus & Markus, PLLC) for Vanja Abreu. Joseph A. Chambrot (Chambrot Law Office) for Hilario Morris.

Companies: American Therapeutic Corporation; American Sleep; Medlink Professional Services Group, Inc.

MainStory: TopStory CaseDecisions FraudNews CMSNews PartBNews BillingNews AntikickbackNews AlabamaNews FloridaNews GeorgiaNews

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