Opinion ID: 790692
Heading Depth: 3
Heading Rank: 2

Heading: The Conspiracy to Defraud Medicare

Text: 5
6 At times relevant to the indictment, Raytel performed transtelephonic pacemaker testing for Medicare patients at government expense. Transtelephonic monitoring allows a technician at a remote location to test the operation of a pacemaker by having a patient use a portable device to transmit telephonic signals that can then be converted into a conventional electrocardiogram (ECG) report for review by a supervising cardiologist. 7 For Medicare to cover the expense of its transtelephonic testing, Raytel was obliged to comply with Section 50-1 of the Medicare Coverage Issues Manual, which required that a pacemaker be monitored in three functioning modes for thirty seconds each, with the results recorded on strips of magnetic tape (the 30-30-30 test). See Medicare Program; National Coverage Decisions, 54 Fed.Reg. 34,555-03, 34,580 (Aug. 21, 1989). 2 At the first-step of the 30-30-30 test, a technician records on a magnetic strip the pacemaker's operation for thirty seconds in a free-running or demand mode, during which the pacemaker supplies an electric charge to the heart only when it senses that the organ is falling behind the programmed heart rate. At the second step, a technician records a strip of the pacemaker's operation for thirty seconds in a magnetic mode, during which the patient uses a magnet to close a switch inside the pacemaker, causing the device to fire an electric charge to the heart at regular intervals regardless of the patient's pulse. This exercise typically reveals whether the pacemaker's battery needs to be replaced and whether the heart is properly responding to the charge firing. At the third step, a technician records a strip of the pacemaker's operation for a final thirty seconds in the demand-after-magnet mode, during which the magnet is removed and the pacemaker is allowed to return to free-running functioning. This segment of the test permits a technician to verify that a pacemaker's internal switch has reopened and that the patient has suffered no ill effects from the constant firing of the pacemaker during the magnetic-mode phase of the test. 8 Because a cardiologist would typically need to review only representative segments of the first two phases of the test, a technician would generally attach only strip excerpts to the report submitted to the doctor, providing the full test results upon specific request. Before 1995, when Raytel switched to computerized testing, its technicians were able to prepare strip excerpts from the first two test modes as the third was concluding. Because the computer only displayed information as it was being recorded, however, it took longer for technicians employing this technology to identify and prepare representative strips. This delay in processing assumed significance in the aggregate because of the number of tests each Raytel technician was expected to perform—rising in 1999 from thirty-two to thirty-five to forty tests per day. 3 This, in turn, led some Raytel technicians to depart from Medicare specifications and to record only an abbreviated strip—or no strip at all—of the last test phase. At trial, the government offered evidence indicating that, in the period December 1999 to March 2000, technicians at Raytel's Connecticut facility complied with Medicare's pacemaker testing specifications only 22 to 34.7 percent of the time. 9
10 At trial, Canova did not seriously dispute Raytel's non-compliance with Medicare testing requirements. Rather, he challenged the government's ability to prove his knowing participation in any scheme to defraud the government in connection with these tests or to obstruct a Medicare audit. 11 To carry its burden on the issue of Canova's guilty knowledge, the government relied on both circumstantial and direct evidence. As background, it sought to demonstrate that it was Canova's heightened performance quotas that led Raytel technicians to abbreviate the 30-30-30 test. Ronald Vincent, a former manager of Raytel's Connecticut facility who pleaded guilty to obstruction pursuant to a plea agreement, testified: 12 John [Canova] would call ... and want to know why, what are we going to do to get to that target, depending on, you know, if we were fairly close, you know, it wouldn't be that bad, but if we were far behind on target, John would be pretty animated as to why we were not on target, and want to find out why we weren't on target, and what we were going to do to get close to being on target. 13 Trial Tr. at 604. 14 Various employees of the Connecticut facility, including Vincent, his predecessor Alexander Puziak, and technician Dawn Amaro, testified that, under pressure to meet the higher quotas, technicians began to cut short the demand-after-magnet phase of the 30-30-30 test. Amaro explained that, instead of recording a full 30-second strip for this phase, some technicians would run 10 or 15 seconds of strip, thereby converting the required 30-30-30 test into a 30-30-10 test. Id. at 278. 15 Sometime before leaving Raytel's employ in October 1998, Puziak brought this fact to Canova's attention, reporting that there were some individuals not in compliance with the 30-30-30 test requirements. Id. at 376. When Canova replied [t]hat everyone had to be in compliance, that nothing could suffer, Puziak told him that such a demand was unreasonable ... in the allotted time. Id. 16 By the spring of 1999, Connecticut managers and technicians were so frustrated with Canova's performance quotas that non-compliance with the last phase of the 30-30-30 test had become routine. Vincent bluntly reported this situation to Canova: Look, it's not an option of not doing the demand after magnet in the computer anymore. We're not doing it, period. There's no demand after magnet being done, period, in the computer, no one's doing it .... Id. at 605. Raytel manager Glenn Pelletier, also testifying pursuant to a cooperation agreement, stated that in March 2000, he too told Canova that technicians were not performing the entire 30-30-30 test all the time. Id. at 733. 17 Sometime in 1999, a notice was posted at the Connecticut facility instructing technicians that they were not required to run any strip for the demand-after-magnet phase of pacemaker testing; they could simply listen to the transmitted signal to satisfy themselves that the pacemaker had returned to its free-running functions. Steven Boecklin, another Connecticut manager, testified that this action had its origins in a 1999 conversation in which Canova suggested that the Medicare manual's requirement of [a] minimum 30 seconds of readable ECG [strip] might be construed not to require a technician to create a contemporaneous strip of the demand-after-magnet phase of the test because such a strip, if needed, could be generated later from the archived recording of the telephone call. Id. at 535. Boecklin stated that when he attempted to confirm this interpretation with Medicare, the persons with whom he spoke could not answer his questions. Nevertheless, he and Vincent decided that there was, in fact, a loophole in the Medicare requirements that did not require a thirty-second tape of the demand-after-magnet test. 4 18
19 The Health Care Financing Administration (HCFA), part of the Department of Health and Human Services, 5 administers and supervises the Medicare program by contracting with private carriers, who, among other things, receive, disburse, and account for Medicare funds paid to the providers of covered services. See 42 U.S.C. § 1395u. During the times relevant to this case, Medicare's Connecticut carrier, United HealthCare Insurance Company (United HealthCare), received an anonymous complaint suggesting that Raytel was not in compliance with Medicare's specifications for transtelephonic pacemaker monitoring. After reviewing medical records, United HealthCare informed Raytel by letters dated October 11, 1999, October 18, 1999, and December 2, 1999, that it refused to pay or was seeking reimbursement for having paid Medicare claims for monitoring that failed to produce thirty-second test strips for each of the three required test modes. The December 2, 1999 letter explicitly warned Raytel that misrepresenting your services to Medicare is a fraudulent situation and that the Inspector General has the authority to exclude from coverage your services should you decide to continue to bill your services incorrectly to Medicare. Letter from United HealthCare to Raytel of Dec. 2, 1999, at 4. 20 In a December 6, 1999 letter that was the basis for the first § 1001 substantive charge, Canova appealed Medicare's reimbursement demands, falsely insisting that [Raytel] ha[s] complied with all relevant regulations. Letter from Canova to United HealthCare of Dec. 6, 1999. Indeed, Canova specifically stated that Raytel was complying with Medicare's requirements for the production of 30-second strips at each phase of the testing process: The guidelines require that a monitoring service obtain a 30-second strip in free-running mode, 30 seconds in magnet mode and 30 seconds after magnet. Raytel obtains these strips utilizing its PC based testing system. Id. 21 Canova's appeal prompted a Medicare audit of Raytel's Connecticut facility. The day before the auditors' January 24, 2000 on-site inspection, Canova sent an e-mail to Raytel's Connecticut managers that was the basis for the substantive § 1516 obstruction charge. Noting that the focus of the audit was Medicare's requirement that Raytel take 90 seconds of ECG, Canova instructed the managers to tell the auditors that Raytel do[es] follow the [required] procedures for the production of these strips, when, in fact, he knew that was not the case. E-Mail from Canova to Meroe of Jan. 23, 2000. 22 At the conclusion of its on-site tour, the audit team asked Raytel to produce monitoring records from June through December 1999 for fifteen pacemaker patients. By the end of the day, Raytel could supply testing records only for September and October 1999, showing six seconds of data. Nevertheless, in a January 27, 2000 letter to the head of the audit team that was the basis for the second substantive § 1001 charge, Canova falsely asserted that Raytel's standard operating procedure [was] to obtain the full 90 seconds of ECG required by [Medicare] as outlined in Publication 06, Section 50-1, Part B, Definition of Transtelephonic Monitoring. Letter from Canova to Toor of Jan. 27, 2000, at 2. Canova further represented that Raytel would promptly retrieve and forward to the auditors a complete printout of the entire 90-second recording for the tests of the fifteen patients you asked to see. Id. at 1. 23 By March 2000, it was apparent that Raytel could not supply the requested records. The audit team nevertheless decided to treat its review of Raytel's operation as educational and to require the company to reimburse Medicare only for those fees referenced in United HealthCare's December 2, 1999 letter or paid on behalf of the fifteen patients whose records could not be produced during the audit. Otherwise, Raytel was afforded thirty days to correct deficiencies in its archive system and to certify[ ] that Raytel is in compliance with Medicare's regulations and [that] the data in [its] records meet[ ] all the requirements for pacemaker testing as listed in Publication 06, Section 50-1 of the MCM. Letter from Toor to Canova of Mar. 5, 2000. 24 On March 7, 2000, Canova ordered Vincent to prepare a chart identifying the fifteen patients whose records had been sought by the auditors as well as the months when Raytel had tested their pacemakers. Vincent transmitted the information to Canova by telefax, only to have the chart returned to him the same day, also by telefax, with certain dates blacked out. Canova instructed Vincent to retrieve copies of Raytel's summary reports for the remaining dates and to delete from those reports certain signatures to make it appear that they had been printed directly from archive records. Pelletier, whom Vincent recruited to help with this task, testified that Vincent told him that Canova wanted the records cleaned up, because he represented to Medicare that [Raytel's computer system] could produce these, and it can't. Trial Tr. at 753. Both Vincent and Pelletier testified that they transmitted the altered reports to Canova in New York. 6 25 Pelletier further testified that, in March 2000, at Canova's request, he attempted to retrieve Raytel's full computer records for certain pacemaker patients. Of thirty retrieved reports, only one demonstrated compliance with Medicare's 30-30-30 test specifications. When, in a March 20, 2000 telephone conversation, Pelletier so advised Canova, Canova directed that the records be sent to him. 26 Testifying contrary to Puziak, Vincent, Pelletier, and Boecklin, Canova stated that it was not until March 22, 2000, when he reviewed the documents forwarded by Pelletier, that he learned that Connecticut technicians had not been complying with Medicare's 30-30-30 test requirements. See id. at 996. 7 Canova instructed his New York and Connecticut supervisors to issue memoranda to Raytel's technicians emphasizing the need to obtain a total 90 seconds of strip to satisfy Medicare's testing specifications. 8 27 A few days later, on March 28, 2000, Canova wrote to the chief Medicare auditor. Without any mention that Raytel had now located some of the test records formerly requested, much less that those tests demonstrated the company's noncompliance with the 30-30-30 test, Canova reported simply that the company had established a new archive system ... populated with tests starting with December 6th, 1999, and that he was certifying Raytel's compliance with Medicare's regulations for tests conducted after that date. Letter from Canova to Toor of Mar. 28, 2000.