Opinion ID: 3012591
Heading Depth: 1
Heading Rank: 2

Heading: Validity of the Pennsylvania Rate Theory

Text: The superseding indictment alleges that Syme and his companies fraudulently overcharged Medicare and Medicaid by submitting false bills that stated that the home _________________________________________________________________ Syme does not specifically document his claim that Leaser disagreed with Medicare's treatment guidelines, but he alludes to the following exchange from Leaser's cross-examination: Q. Do you agree with me that one of the hallmarks of medical necessity is if a person, a patient needs restraint? A. No, -- do you mean medical necessity for ambu lance transport? Q. Yes. A. No. I don't believe that you need to take a per son by ambulance if they require restraint. Q. We have had documents introduced here which say if there is a presumption of medical necessity and [sic] the patient needs restraint. But you would disagree with that? A. I would disagree with that, because you could t ake a patient in a geriatric chair or a person in a wheelchair and restrain them in a posey vest. This exchange may demonstrate that Leaser questioned the wisdom of one of Medicare's guidelines. However, it does not show, as Syme seems to suggest, that Leaser refused to evaluate the necessity of transporting patients by ambulance under Medicare's standards. The exchange seems especially weak evidence of Leaser's refusal to apply Medicare standards when considered in light of the fact that Leaser had been consulting for Xact or its predecessor company for around twenty-four years at the time he testified. Therefore, we think that the District Court did not violate Rule 702 by allowing Leaser's testimony. Syme also argues that Leaser's testimony was unfairly prejudicial when combined with the testimony of Craig Swartz, an Xact Medicare fraud examiner who testified as a prosecution witness. Syme contends that Swartz's testimony misled the jury into thinking that, if Leaser stated that a particular ambulance trip was not medically necessary, then the reimbursement form that Syme submitted should not have stated otherwise. We conclude that Swartz's testimony was not unduly confusing or prejudicial and that it was not error for the District Court to admit the testimony. 12 stations of the ambulance companies were located in Philadelphia rather than in Delaware or Maryland, thereby getting reimbursed at the higher Pennsylvania rate. The indictment states that: At all times material to this indictment, Medicare authorized reimbursement for ambulance services at pre-established rates based upon the home station of the ambulance. If an ambulance's home station was in Philadelphia, Pennsylvania, the ambulance company would be reimbursed at the rate for that part of Pennsylvania. If the ambulance's home station was in Delaware, the ambulance company would be reimbursed at the Delaware rate, which was lower than the rate for Philadelphia, Pennsylvania. The indictment then goes on to allege that Syme and all of his companies: submit[ted] bills to Medicare for ambulance services under a provider number which would be reimbursed at a Pennsylvania rate (which was substantially higher than the Maryland or Delaware rates) although the home station for the ambulances were [sic] either in Delaware or Maryland. Such bills should have been submitted under a Delaware or Maryland provider number, not under a Pennsylvania provider number. The District Court also used the term home station in its jury instructions. The Court instructed the jury that in order to convict on the mail or wire fraud counts, it had to find that the defendants knowingly submitted each claim for reimbursement at a higher Pennsylvania rate, although the ambulances' home station was in Delaware. 3 _________________________________________________________________ 3. In order to establish a violation of the mail or wire fraud statutes, a prosecutor must prove: (1) the existence of a scheme to defraud; (2) the participation by the defendant in the particular scheme with the specific intent to defraud; and (3) the use of the United States mail or of wire communications in furtherance of the fraudulent scheme. See 18 U.S.C. SS 1341, 1343; United States v. Hannigan , 27 F.3d 890, 892 (3d Cir. 1994). The elements for a False Claims Act violation are substantially similar. To establish a violation of the False Claims Act, the government must prove that: (1) the defendant presented a false or fraudulent claim 13 Syme bases his current challenge on the use of the term home station. He contends that defects in the government's use of the term render the Pennsylvania rate theory both legally invalid and insufficiently supported by the evidence presented at trial. Syme submits three arguments attacking the legal validity of the Pennsylvania rate theory based on the use of the term home station. First, he contends that neither the HCFA nor Xact had established a clear definition of the term home station during the period at issue in this case. Second, he asserts that even if home station had been defined, there was no official determination that an ambulance's home station would be the governing standard for determining reimbursement rates. Third, Syme argues that the application forms supplied by Xact, which he submitted in order to get Pennsylvania provider numbers for his ambulance companies, never asked for the companies' home stations, but rather asked for their addresses. Syme contends that he therefore cannot be convicted of a scheme to defraud based on the fact that he misrepresented his companies' home stations, because he never made any representations about their home stations at all. Finally, Syme asserts that for the same reasons that he claims the Pennsylvania rate theory of fraud is legally invalid, the evidence presented at trial is also insufficient factually to support his conviction based on the Pennsylvania rate theory. In addressing these arguments, we must of course first define our standard of review, which we set forth in the margin.4 _________________________________________________________________ against the United States; (2) the claim was presented to an agency or contractor of the United States; and (3) the defendant knew the claim was false or fraudulent. See 18 U.S.C. S 287; United States v. Thayer, 201 F.3d 214, 222-23 (3d Cir. 1999) (citing United States v. Okoronkwo, 46 F.3d 426, 430 (5th Cir. 1995)). In this case, the theory that Syme misrepresented the home stations of his ambulance companies goes to both the existence of a scheme to defraud (in the case of the mail and wire fraud counts) and the false or fraudulent claim against the United States (in the case of the False Claims Act counts); it also encompasses Syme's intent. 4. Syme contends that his trial counsel preserved his argument that the Pennsylvania rate theory is invalid as a matter of law, and that therefore 14 We agree with Syme that the evidence presented at trial _________________________________________________________________ we should review this claim under the harmless error standard of review rather than the plain error standard. The government urges us to apply the latter standard. For the reasons that follow, we agree with the government. At the close of the government's case, Syme moved generally to dismiss all the counts for failure to state a prima facie case. He later raised a more specific claim in his Motion for Judgment of Acquittal, arguing that Xact's policies could not serve as the basis for a conviction because they did not have the force of law. Syme noted that [t]he basis of the Government's claim nullifying the use of the Pennsylvania provider number was that the policy definitions offered by Xact, or its predecessor, Blue Shield, represented the de jure law of the land, and that [t]he foundation of the prosecution is that the defendants violated a policy statement of a private or public non-governmental corporation and not that the defendants violated federal law. Essentially, Syme argued: (1) that Xact's reimbursement guidelines did not have the force of federal laws or regulations; and (2) that the scheme to defraud that is predicate to a federal mail or wire fraud conviction must itself be a violation of federal law. The District Court addressed these issues in an opinion accompanying the order denying the defendant's Motion for Judgment of Acquittal and for New Trial. There, the Court concluded that it did not matter that Xact and Medicare did not have the authority to make policy statements with the force of law because the `scheme to defraud' itself need not violate federal law. United States v. Med. Serv. Corps, Inc., 43 F. Supp. 2d 499, 501 (D. Del. 1999). The arguments that Syme presented to the District Court were not sufficiently similar to the one that he now makes before this court to justify applying harmless error review. Syme contends on appeal not that the policies of Xact are insufficient to define Syme's scheme to defraud because they do not have the force of federal law, but rather that the fraud that the government identified -- falsifying the home station of the ambulances -- could not have occurred because home station was not authoritatively defined during the relevant period. Syme did not make this argument in the District Court. We will therefore review Syme's claim for plain error. See Fed. R. Crim. P. 52(b). Under the plain error standard, a reviewing court may reverse the district court only if [it] finds that (1) an error was committed; (2) the error was plain, that is, `clear' and `obvious;' and (3) the error `affected [the defendant's] substantial rights.'  United States v. Nappi, 243 F.3d 758, 762 (3d Cir. 2001) (quoting United States v. Olano, 507 U.S. 725, 734 (1993)). If a forfeited error is `plain' and `affects substantial rights,' a Court of Appeals `has the authority to order the correction, but is not 15 shows little beyond the fact that there was a general understanding in the ambulance community of the definition of the term home station. The earliest document that the prosecution presented that defines home station in the reimbursement context is a February 2, 1995 letter from Xact to an ambulance provider that defines a transporting vehicle's home station as itspoint of departure. Testimony presented at trial also shows that there was a debate within the ambulance community during the time relevant to this case as to whetherhome station was the correct reimbursement standard. Syme is also correct that none of the forms that he completed in order to get Pennsylvania provider numbers asked for the home stations of his ambulance companies. However, two of the provider number applications asked for both an address and a mailing address; another form asked for both a physical location and amailing address. Syme supplied Philadelphia addresses as the address and physical location as well as the mailing addresses on these forms. The government counters that home station was sufficiently defined and understood to be the governing reimbursement standard during the time relevant to the case. Alternatively, the government argues that Syme's behavior would constitute fraud under any of the meanings of home station or alternative reimbursement standards that may have been debated during the relevant period. The government also contends that it demonstrated a pattern of deception that is sufficient to demonstrate Syme's intent to defraud Medicare and Medicaid.
As we noted above, the prosecution has presented alternative theories of guilt to support each count in the _________________________________________________________________ required to do so.' The Court should exercise its discretion to order such a correction only if the error, `seriously affects the fairness, integrity, or public reputation of judicial proceedings.'  United States v. Stevens, 223 F.3d 239, 242 (3d Cir. 2000) (quoting Olano, 507 U.S. at 734) (internal citations omitted). The burden is on the defendant to demonstrate that plain error occurred. Olano, 507 U.S. at 734. 16 indictment. Each count rests on two or more of the four main theories that the government presented: the Pennsylvania rate theory, the medical necessity theory, the destination theory, and the treatment theory. See supra at 9. When a criminal defendant appeals a conviction in which the prosecution presented more than one theory of guilt and the jury returned a general verdict, we apply the holding of Griffin v. United States, 502 U.S. 46 (1991). Griffin restated the longstanding rule that if the evidence is insufficient to support a conviction on one alternative theory in a count but sufficient to convict on another alternative theory that was charged to the jury in the same count, then a reviewing court should assume that the jury convicted on the factually sufficient theory and should let the jury verdict stand. Id. at 49-50. However, under Griffin, if one of two or more alternative theories supporting a count of conviction is either (1) unconstitutional, or (2) legally invalid, then the reviewing court should vacate the jury verdict and remand for a new trial without the invalid or unconstitutional theory. Id. at 56 (citing Stromberg v. California, 283 U.S. 359, 367-68 (1930) (reversing a conviction where one of the alternative guilt theories was unconstitutional), and Yates v. United States , 354 U.S. 298, 312 (1957) (reversing a conviction where one of the possible grounds was legally invalid because it was time-barred)). The rationale for this distinction is that a jury is presumed to be able to distinguish factually sufficient evidence from factually insufficient evidence. That function is central to its role as fact finder. The jury is not presumed, however, to be able to distinguish accurate statements of law from inaccurate statements. Id. at 59; Tenner v. Gilmore, 184 F.3d 608, 611 (7th Cir. 1999). And Griffin made it clear that claims regarding the insufficiency of evidence do not fall into the categories of a legally invalid or an unconstitutional basis for conviction. The Court explained: In one sense legal error includes inadequacy of evidence -- namely, when the phrase is used as a term of art to designate those mistakes that it is the business of judges (in jury cases) and of appellate courts to identify and correct. In this sense legal error 17 occurs when a jury, properly instructed as to the law, convicts on the basis of evidence that no reasonable person could regard as sufficient. But in another sense -- a more natural and less artful sense -- the term legal error means a mistake about the law, as opposed to a mistake concerning the weight or the factual import of the evidence . . . . [W]e are using legal error in the latter sense. 502 U.S. at 58-59. The question of which side of Griffin's line the present challenge to the Pennsylvania rate theory falls -- whether it is a claim about the sufficiency of the evidence presented on this theory, or (as Syme contends) an argument that the theory is legally invalid (he does not argue that it is unconstitutional) -- is dispositive of Syme's challenge to the theory as a basis for conviction. If we find that the Pennsylvania rate theory was, at most, unsupported by the facts presented at trial, then we will let the challenged counts of conviction stand, because each one rests on at least one other fraud theory that Syme does not challenge. If we find that the Pennsylvania rate theory, as it was alleged in the indictment and charged to the jury, constituted an error of law, then we must reverse Syme's conviction on the counts in which the theory was alleged and remand these counts for a new trial. A theory upon which a criminal charge rests is legally invalid under Griffin if the indictment or the district court's jury instructions are based on an erroneous interpretation of law or contain a mistaken description of the law. This invalid legal theory exception to the longstanding rule that general verdicts will stand even if one of the possible grounds for conviction was unsupported by the evidence, comes from Griffin's attempt to rationalize Yates v. United States, 354 U.S. 298 (1957), with the bulk of the Court's precedents. Prior to Yates, the only exception that the Court had applied to the rule of presuming that general verdicts rest on permissible grounds was that, whenany of the [grounds] in question [was] invalid under the Federal Constitution, the conviction cannot be upheld. Stromberg, 283 U.S. at 368. The Court applied this exception in many cases involving general-verdict convictions that may have rested on an unconstitutional ground. Griffin, 502 U.S. at 18 55 (listing cases). In Yates, the Court extended the exception to cover grounds that were not unconstitutional, but rather were legally invalid. Yates held that the statute of limitations had already run on the charge that the defendants had cause[d] to be organized units of the [Communist] Party. 354 U.S. at 302. Thisorganizing offense was one of two theories that were the basis for a conspiracy charge. Id. The question whether the statute of limitations had run turned on the meaning of the statutory term to organize. Id. at 303-304. The lower courts had construed the term to organize to connote[ ] a continuing process which goes on throughout the life of an organization, but the Supreme Court rejected this definition, finding that to organize meantto enter[ ] into the creation of a new organization Id. at 310. Because the Supreme Court held that the term organize referred to the initial establishment of the Communist Party, and it was undisputed that the three-year statute of limitations had run between the time the Communist Party was initially organized and when the defendants were indicted, it held that the organizing charge was timebarred. Because it was impossible to tell which ground the jury selected, either the organizing charge, or the alternative charge, the Court set aside the jury verdict and remanded for a new trial. Id. at 312. It did so, however, based on a finding that the lower courts had erred on a purely legal question, i.e., the construction of a statutory term. There does not appear to have been any dispute in Yates over the factual issue of when the Communist Party was initially organized. It was not as if the prosecution in that case simply failed to present sufficient evidence that the establishment of the Communist Party took place within three years prior to the indictment. If that were the case, then the jury would have been capable of determining that the facts were insufficient to show that the statute of limitations had not run and the Court would have presumed that the jury rested its general verdict on one of the factually supported grounds. However, because the lower court misinterpreted the meaning of the statutory term to organize, erroneously permitting theorganizing 19 charge to go to the jury, the jury was faced with a potential ground for conviction that was based on an invalid interpretation of the statute. Because the jury is not assumed to be able to distinguish between correct and incorrect legal interpretations, the Yates Court reversed the jury's general-verdict conviction. Griffin, in addition to referencing a claim that was time barred as an example of a legally inadequate ground for conviction, also cited the example of a theory of conviction that fails to come within the statutory definition of a crime. 502 U.S. at 59. Again, this situation presents a strictly legal question -- the interpretation of whether the scope of a statutory definition of a crime extends to acts alleged in an indictment.
In the present case, neither the indictment nor the District Court's instructions to the jury relied on erroneous interpretations of the law or contained mistaken descriptions of the relevant legal standards regarding the Pennsylvania rate theory of fraud as an element of Syme's fraud and False Claims Act charges. The indictment alleges that Syme's misrepresentation of his companies' home stations was a scheme to defraud within the meaning of the mail and wire fraud statutes, and a false or fraudulent claim under the False Claims Act, and the prosecution undertook to demonstrate the existence of that scheme and Syme's specific intent to engage in the scheme. See supra note 3 (listing the elements of mail and wire fraud and False Claim Act violations). Concomitantly, the District Court instructed the jury that in order to convict Syme for mail or wire fraud, the prosecution had to demonstrate that Syme knowingly submitted each claim for reimbursement at a higher Pennsylvania rate, although the ambulances' home station was in Delaware. The home station theory of fraud on which the District Court instructed the jury certainly falls within the scope of the fraud statutes and the False Claims Act. To prove the existence of this scheme and Syme's intent to engage in the scheme, the government needed to demonstrate that a 20 definition of the term home station existed and that Syme was aware of the meaning of home station when he submitted his claims for reimbursement from Medicare and Medicaid using a Pennsylvania provider number. But even if there was no HCFA regulation or written instruction from Xact on the definition of home station, and no clear indication that home station was the appropriate standard for reimbursement, the prosecution could still have demonstrated that Syme knew that this was the standard that Xact wanted ambulance companies to apply and that he knowingly used a Pennsylvania provider number in order to get paid at a higher rate. The meaning of the term home station and Syme's intent with respect to falsifying the home station of his ambulance companies was an issue on which both sides focused at trial. The government presented witnesses to attempt to show both (1) that home station had a generally recognized meaning during the times relevant to this case; and (2) that Syme understood the meaning of the term home station. For example, the prosecution presented testimony from Jill Shaffer, a policy coordinator from Xact, that from 1990-95 the home station requirement was that [Xact] reimbursed an ambulance company based on where [its] ambulance vehicles were garaged or housed. On cross examination, however, Shaffer admitted that the definition that she provided for home station came from a section of the Medicare manual defining carrier jurisdiction, which referred to the insurance company with jurisdiction over processing a claim. Similarly, government witness Patrick Kennedy, the founder of the Ambulance Association of Pennsylvania, also testified that there was an understanding in the ambulance industry that home station meant where your major business center would be, i.e., where your major offices are . . . where your billing center is . . . [and] [m]ost importantly, where your communication center is. However, on cross-examination, Kennedy admitted that during the times relevant to this case, there was no written definition of home station as it relates to reimbursement rates. Prosecution witnesses also testified that Syme knew 21 of the different rates paid to Pennsylvania and Delaware providers and had complained that they were unfair, and that Xact officials had met with Syme to instruct him on the proper practices for submitting reimbursement claims. Thus, the questions whether home station had a meaning, and whether Syme knew that meaning, were highly disputed issues of fact in this trial, and were presented to the jury as such. Because the District Court correctly instructed the jury that it must find that Syme knowingly engaged in a scheme to defraud (in the case of the fraud counts) or made a false claim (in the case of the false claims counts), and because the jury was presented with conflicting testimony about whether the term home station had a meaning that Syme was aware of, we presume under Griffin that the jury focused on and was able to decide this disputed factual issue. There was a factual dispute regarding the term home station, which the jury was competent to resolve. Under Griffin, we will presume that the jury did resolve this factual dispute, and that it relied on the Pennsylvania rate theory only if it found that the government presented sufficient evidence that the term home station had a meaning that Syme knew.5 We conclude that, while the government simply may have failed to present sufficient evidence on the definition of the term home station to make out the elements of the fraud and False Claims Act charges, neither the indictment nor the District Court's instructions contained a mistake about the law regarding the Pennsylvania rate theory that, under Griffin, would require reversing the counts in question. 502 U.S. at 59. Whether the government succeeded in presenting sufficient evidence so that a jury could have convicted Syme beyond a reasonable doubt is a question we need not reach, because even assuming that the evidence _________________________________________________________________ 5. In contrast, the jury in Yates could not have been presumed to have focused on the legal issue of the proper interpretation of the statutory term to organize. This legal issue was not presented to the jury, and at all events was ultimately a question for the court instead of the jury. Similarly, a jury cannot be presumed to distinguish a constitutional ground for conviction from an unconstitutional one. 22 presented was insufficient to convict Syme on the Pennsylvania rate theory, Griffin instructs that we should presume that the jury relied on an alternative theory of guilt within the same count that is both legally valid and supported by sufficient evidence. Because Syme leaves unchallenged at least one of the fraud theories charged in each fraud and False Claims Act count for which he was convicted, we must uphold the jury verdict on each of these counts. Because we will not remand these counts for a new trial (except for count 25, which we will remand because the District Court constructively amended it, see infra Part III), we need not reach Syme's challenges to the factual sufficiency of the medical necessity, destination, and treatment theories of fraud, which he challenges for some of the counts for which he was convicted. If we were to vacate and remand any other counts for a new trial, then we would need to evaluate each challenged theory of guilt to determine whether the evidence presented at the first trial was sufficient. If we found that it was not sufficient, then we would be required to remove that theory from the scope of the new trial. See Burks v. United States, 437 U.S. 1, 17-18 (1978); see also infra Section III.D. However, because Syme leaves unchallenged at least one alternative theory of guilt on each count of conviction, we must affirm those counts and need not evaluate the evidentiary sufficiency on the alternative theories of guilt that Syme does challenge. We address below Syme's challenge to the evidentiary sufficiency of the medical necessity theory in count 25. See infra Section III.D.