Medicare is a huge federal program. It's also a huge source of criminal liability for doctors and other health care providers, as they try to comply with the byzantine regulations for billing issued by the Centers for Medicare and Medicaid Services.
Take United States v. Jones as an example.
Statewide Physical Medical Group
Telandra Jones and Theddis Pearson started a health care company with a few other people. It was called Statewide Physical Medical Group. The state that it was wide was Mississippi.
Mr. Pearson was the CEO. Ms. Jones handled the billing remotely, from Dallas, Texas.
Statewide's patients were first evaluated by a doctor to see if they needed therapeutic exercise. If they did, and the doctor ordered it, Statewide would send a person to the patient's home.
The people who were sent were kinesiotherapists. These therapists provided care at the patient's home without a doctor present.
Medicare's Rules for Physician Supervision
The rub is that Medicare's billing regulations require that a doctor supervise a kinesiotherapists' work. And, for Medicare billing, while, "supervise" doesn't mean that the doctor is in the same room, it generally means that the doctor is in the same building and can come in and help if need be.
If that's the definition, then Statewide's kinesiotherapists were not supervised by physicians.
So, it looks like the therapeutic work that Statewide submitted bills for did not comply with the Medicare billing regulations. Which is a pleasant way of saying that Statewide's bills may have been fraudulent.
There was one saving possibility for Statewide's billing practices - there is an exception to the direct supervision rule for people in certain kinds of underserved areas and for home treatments with other kinds of home health benefits under Medicare had been exhausted. If this exception applied, then there was an exception to the physician supervision requirement. If there was an exception to the physician supervision requirement, then there was no Medicare fraud!
Ms. Jones and Mr. Pearson relied on this provision.
At trial, the government presented evidence that the Statewide's interpretation was untenable, in the form of an expert about Medicare billing.
It looked like maybe Statewide has an argument there. The trouble, however, was that Statewide billed more for the task than for the amount of time it spent.
The government's Medicare billing expert explained to the jury that Statewide's billing practices caused treatments that took an hour to be billed as taking ten hours.
That's never going to look good to a jury.
Who Knew What When
The question then, turned on whether Ms. Jones and Mr. Pearson knew that they were submitting fraudulent bills. The process for sending bills in was a little complicated. First a secretary in an office - there were seven - would collect the therapists' treatment records and enter that data into a billing sheet.
The therapists did not keep records of how much time they spent, just what treatments they performed.
These billing sheets were then sent to Ms. Jones in Dallas, who turned them into bills to Medicare, based on the part of the body that was treated, instead of the amount of time that the treatment took.
Mr. Pearson was the CEO and generally managed the day-to-day affairs of the company, including its billing systems.
The Medicare Fraud Indictment
Mr. Pearson and Ms. Jones were charged with conspiracy to commit Medicare Fraud, Medicare Fraud, theft of government funds, health care false statements, and money laundering.
The jury convicted Ms. Jones because she was the one who submitted these bills to Medicare. There was evidence that Mr. Pearson was in the weeds with the business - he was convicted for also having the requisite knowledge.
Mr. Pearson was convicted of making false statements relating to health care. Both Mr. Pearson and Ms. Jones were convicted of theft of government property and health care fraud.
The Jury Verdict Form
To make a false statement in violation of 18 U.S.C. § 1035, a person has to make the false statement knowingly and willfully." It isn't enough if the person makes a mistake and submits false information - the statement has to be a lie.
So, we don't send people who make math errors to prison. It's only if the math errors are made on purpose - so they aren't really math errors, as such - that the person makes the willfully false statement.
In Mr. Pearson's case, the jury verdict form did not use the legal standard for what the person charged with the crime had to know from section 1035. Rather, the jury was told that they could convict if they found that Mr. Pearson
"knew, or should have known, that the services billed by [Statewide], were not provided by a physician or under the direct supervision of a physician, as required by Medicare."
This jury instruction is much weaker than what the statute requires. If a person "should have known" that 2+2=4, but puts 5 when adding 2 twice, she meets this standard. And that's not what section 1035 allows.
As a result, Mr. Pearson's conviction was reversed and sent back for a new trial.