Opinion ID: 3063132
Heading Depth: 3
Heading Rank: 2

Heading: Trial of the Case

Text: The ten-day trial of the case began with jury selection on April 14, 2008. The Government explained Isley’s Medicare fraud as a scheme to seek reimbursement for expensive, custom-fabricated medical equipment (specifically, wrist braces and walking boots) when the cheaper, pre-fabricated items had actually been provided to patients. Pre-fabricated items are manufactured in bulk for off-the-shelf distribution without a specific patient in mind. Pre-fabricated items could be trimmed, molded, bent or otherwise modified for use by a specific patient; however, this makes the item custom-fitted not custom-fabricated. I’ll be frank with you. It’s absolutely inconceivable to me that the government’s allowing these Medicare provider contractors, whatever they are, to run without keeping any better records that can be searched than there are. Now, I’m not going to try to sort out whether the people here today are telling the truth, or the people behind them are giving them false information or not. It’s real simple for me. I can turn the thing right back on its head and say I think it’s Brady material, and the government can start sorting through the boxes, and get it here, and you can sort out who’s who, and who’s got what, and when they did it, and whether they turned over the boxes and not the electronic data or whatever. (Tr. of Hrg. on June 25, 2007, at 105, R. on App. 212.) 8 Custom-fabricated items are molded or created specifically for an individual patient. The indictment charges that on ten occasions (Counts One through Ten), Isley billed Medicare for wrist braces using the custom-fabricated code of either L3800 or L3907. It further charges that on four occasions (Counts Eleven through Fourteen), Isley billed Medicare for walking boots using the custom-fabricated code of L1960. With respect to all fourteen counts, the Government charged that Isley’s use of these codes was fraudulent because the actual products dispensed were pre-fabricated. At trial, Isley had at her disposal all of the documents relating to the MNAs from Region C for the product codes at issue in the indictment (L3800, L3907, and L1960) as well as the other product codes that were no longer at issue in the case. She did not, however, have any MNAs from the other three regions. Isley believed that, as evidenced by the MNAs, Medicare erroneously approved the use of custom-fabricated codes for pre-fabricated products. Isley had maintained throughout the pre-trial proceedings that the MNAs were relevant Brady material because she had relied upon them in making her own coding decisions. The evidence at trial, however, belied this assertion. Sandra Sosebee, who worked in the billing department at Orthoscript, testified that she informed Isley on numerous occasions that the use of product code L3907 for pre-fabricated wrist braces was incorrect. Isley explained that she 9 believed this custom-fabricated code could be used if a pre-fabricated wrist brace was bent or molded to fit the patient. This matter was often discussed at manager meetings, wherein Isley persisted with her belief that a bent or molded prefabricated item could be billed using a custom-fabricated code. When Sosebee expressed her concern that Medicare would not agree with this coding, Isley responded: “Well, Medicare is stupid. I will deal with them when they come in here.” Sosebee testified that Isley never told her that she could rely on a prior paid claim in making a coding decision. On April 12, 2004, Sosebee wrote to Isley, via e-mail, again questioning the use of certain wrist brace codes. Sosebee suggested that prior paid claims could inform the decision of what code should be used. In response, Isley wrote: I would be hesitant to make any assumptions as to what Medicare is telling us. We have concluded in the past that Medicare is not consistent with regards to what they try to relay to us. I would not make the leap that if Medicare made a payment that means it’s correct and if they didn’t make a payment it is incorrect. Another billing department employee of Orthoscript, Victoria Meguiar, similarly testified that Isley looked at the fee schedule and the rate of reimbursement in determining what code should be used. Further, while Meguiar showed Isley letters indicating that Orthoscript’s billing codes were incorrect, Isley, in turn, never showed Meguiar MNAs indicating that the billing codes were correct. Meguiar was convinced that Orthoscript was coding certain products 10 incorrectly, and she set about trying to prove to Isley, through phone calls to the DMERC, that Isley’s understanding of pre-fabricated versus custom-fabricated product codes was incorrect.12 In fact, on one occasion, Meguiar changed the billing codes for wrist splints to a pre-fabricated code, which lowered the reimbursement rate. Isley confronted Meguiar and instructed her not to change the codes again. Melissa Carnes, who also worked in the billing department of Orthoscript, testified that she was present during the meeting about custom-fabricated versus pre-fabricated billing codes when Isley stated that Medicare is “stupid.” Carnes further testified that no one else at Orthoscript shared Isley’s viewpoint on the use of a custom-fabricated code for pre-fabricated items that were simply bent or molded to fit a patient.13 Additionally, Sosebee, Meguiar, and Carnes all testified that the only document to which Isley referred in their discussions of using the proper product code was the Medicare fee schedule, which gave the rate of reimbursement for each product code. In fact, Carnes stated that Isley told her Orthoscript could not afford to use the pre-fabricated codes that Carnes wanted to use for certain items. 12 Meguiar testified that Isley wanted proof in “black and white” that Orthoscript was billing incorrectly. 13 Of note, Isley conceded on cross-examination that she had no way of knowing whether a doctor actually bent or molded a product to fit a patient once it is taken out of its box. 11 Finally, James Arch Nelson testified that Orthoscript employees came to him when they became frustrated with Isley’s use of incorrect billing codes. He attended a meeting between Isley and the employees, during which Isley explained her position on the billing codes; Isley did not, however, refer to any MNAs to support her position. Nevertheless, Nelson “sided with” Isley on the coding issue even though it appeared to him that the other employees were right and that Orthoscript was coding pre-fabricated products incorrectly. During the course of the trial, Isley used the DMERC’s treatment of product codes not charged in the superseding indictment to demonstrate confusion in the industry. For instance, Orthoscript had coded certain walking boots with L2114 and L2116 codes.14 Orthoscript had received several MNAs for its claims that used the L2114 and L2116 product codes; thus, Isley relied upon the MNAs in using these codes. Subsequently, however, Orthoscript received both approvals and denials for the same products coded with the L2114 and L2116 codes. The confusion in the use of these codes led to an industry-wide review by the DMERC of the L2114 and L2116 codes. Despite the confusion over the use of the L2114 and L2116 codes, witnesses aside from Isley testified that there was no industry confusion regarding 14 The use of the L2114 and L2116 product codes had been charged in the original indictment but were not included in the superseding indictment. 12 Medicare’s definitions for custom-fabricated versus pre-fabricated products. Cathy Plunkett, an experienced health care consultant, testified that the definitions were “clear.” Missy Carnes, Vicky Meguiar, and Sandra Sosebee testified that they were not confused by the definitions. Further, Isley herself testified that a DME supplier could not use a custom-fabricated code if the doctor provided a prefabricated item to a patient; Orthoscript supplied only pre-fabricated wrist splints and walking boots to doctors’ offices. Nevertheless, Isley maintained at trial that she relied upon the MNAs from Region C as well as the other regions in the country to inform her decision on how to code the products. The district court permitted Isley to testify about her futile efforts to obtain the MNAs from Regions A, B, and D; moreover, Isley testified that even though she did not get physical possession of the MNAs, Region A had reported the existence of approximately 2000 MNAs, Region B had reported 812 MNAs, and Region D had reported between 1500 and 2500 MNAs.15 On cross-examination, however, Isley admitted that, with respect to seven of the ten charges related to wrist braces, she could not have relied upon any MNAs 15 In considering the number of MNAs that existed in the other regions, it is important to note that Isley had requested six different DME product codes, only three of which were charged in the indictment. She requested and received the MNAs in Region C for the same six product codes. It became apparent at trial, however, that a great majority of the MNAs from Region C related to the uncharged product codes. Isley only speculates that the MNAs from the other regions would not have a proportionate share of irrelevant MNAs, that is, MNAs unrelated to the product codes charged in the indictment. 13 when filing Orthoscript’s claims because there were no MNAs for the relevant product codes during the time that she had submitted the claims. With respect to the later filed wrist brace claims, Isley admitted that she did not see any MNAs related to the same product code until she reviewed discovery material in the case in 2007. With respect to the walking boot code, L1960, Isley’s testimony of reliance was refuted by Special Agent Erica Wilker’s testimony on rebuttal that for the relevant time period, Region C did not perform a medical necessity review of Orthoscript’s claims using product code L1960.16 In short, Isley attempted, through MNAs from Region C, to paint a picture of confusion and ambiguity on behalf of the DMERC in the way that it processed claims involving the subject DME product codes. Yet, the only confusion shown related to uncharged product codes. Moreover, Isley presented no evidence, other than her own testimony, that she relied upon any MNA in determining what codes to utilize. Rather, the evidence presented at trial, as outlined above, directly refuted her assertion of reliance.