Court Opinion

ID: 2999951
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:59:28.097271+00
Date Added: 2024-06-11T15:03:12.423263
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                         ____________

No. 05-3481
UNITED STATES OF AMERICA,
                                              Plaintiff-Appellee,
                                v.

THOMAS BRANDON DAVIS,
                                          Defendant-Appellant.
                         ____________
           Appeal from the United States District Court
    for the Southern District of Indiana, Indianapolis Division.
           No. 04 CR 67—Sarah Evans Barker, Judge.
                         ____________
ARGUED SEPTEMBER 7, 2006—DECIDED DECEMBER 15, 2006
                   ____________

  Before RIPPLE, KANNE, and WOOD, Circuit Judges.
  KANNE, Circuit Judge. The defendant was indicted for
defrauding Indiana Medicaid. The government’s case
centered on three independent methods that Davis used
to get Indiana Medicaid to pay for procedures that they
might not otherwise have paid: he billed for services that
were actually provided by other people (substitute-billing),
he billed for hours of work that nobody performed
(overbilling), and he billed for different procedures in
order to avoid pre-authorization requirements (miscod-
ing). A jury returned a general verdict of guilty. On appeal,
Davis raises four issues. He challenges two evidentiary
rulings, he challenges whether one of the three charged
methods of fraud—substitute billing—was actually pro-
2                                                       No. 05-3481

hibited, and he challenges the indictment as duplicitous.
Because we find no error, we affirm.

                            I. HISTORY
  Davis is a psychologist who operated two clinics in
Indiana. He was licensed as a “health service provider
in psychology” (HSPP) and enrolled as a provider under
Indiana’s Medicaid program. The relationship between
Davis and Indiana Medicaid was fruitful: Medicaid soon
accounted for the vast majority of his income, and (the
indictment alleged) by September 2002 he accounted
for more Medicaid spending than any other individual
HSPP in the entire state. After an undercover investiga-
tion into his billing practices, he was indicted for one
count of health care fraud in violation of 18 U.S.C. § 1347.1
  The indictment alleged that Davis used several methods
to entice Indiana Medicaid to pay claims that it would not
otherwise have paid. When the state instituted pre-
approval requirements for some of his procedures, he
would submit claims for different procedures—procedures
that required no such pre-authorization. When Davis
billed Indiana Medicaid for neuropsychological testing, he
would frequently (and contrary to Medicaid billing manu-
als) bill for a fixed number of hours for a battery of tests,
regardless of the number of hours actually consumed by
the process. And, central to the dispute between the

1
  The statute makes it a crime to “knowingly and willfully
execute[ ], or attempt[ ] to execute, a scheme or artifice: . . . (1) to
defraud any health care benefit program; or . . . (2) to obtain, by
means of false or fraudulent pretenses, representations, or
promises, any of the money or property owned by, or under the
custody or control of, any health care benefit program, in
connection with the delivery of or payment for health care
benefits, items, or services.” 18 U.S.C. § 1347.
No. 05-3481                                                    3

parties on appeal, Davis would leave much of the admin-
istration and perhaps even the interpretation of the
psychological tests to clinic staff members with less
training than he himself had received—employees who
were not licensed psychologists or HSPPs.2
  At trial, the government provided ample evidence of
all three methods of fraud, as well as evidence that could
allow a jury to infer willfulness. Among its other evidence,
the government introduced the testimony of an expert
from Indiana’s Office of Medicaid Policy and Planning
to the effect that the state of Indiana would not reimburse
for services that were actually conducted by unlicensed
staff members.
  Davis’s defense at trial relied almost exclusively on
denying that he had a specific intent to defraud. He
testified in his own defense that he had believed that
all three practices were legal and in keeping with how
he had been trained to conduct neuropsychological testing.
He called only one other witness, a former employee, to
testify about a Medicaid audit that had been conducted
in the late 1990s. He unsuccessfully sought to introduce
into evidence an unpublished manuscript on neuropsych-
ological testing in order to support his argument that
he believed it was good medical practice to use technicians
to perform some of the tests. Apparently, the jury did not
buy this good faith defense because it returned a general
verdict of guilty.
  On appeal, Davis raises four issues. He argues that the
testimony and jury instructions combined to allow the
jury to determine questions of law regarding which

2
  As might be expected, the parties differ in how they charac-
terize the extent of this substitute-billing; yet the parties are
in agreement that at least some parts of some procedures
were completed by unlicensed staff.
4                                              No. 05-3481

procedures were and were not compensable from Indiana
Medicaid. He argues that the “substitute-billing” scheme
was not contrary to the law. He argues that the indict-
ment was impermissibly duplicitous and that the duplicity
was not corrected by the trial court through adequate jury
instructions. Finally, he argues that the district court’s
decision to exclude his proffered manuscript was an abuse
of discretion.

                        II. ANALYSIS
    A. The Legality of Substitute-billing
  Because much of this appeal turns on the question of
whether substitute-billing is illegal under Indiana’s
Medicaid regulations, we address this question first.
Whether the Indiana statute allows substitute-billing is
a question of law that we consider de novo. United States
v. Jones, 372 F.3d 910, 911-12 (7th Cir. 2004) (citing Olson
v. Risk Mgmt. Alternatives, Inc., 366 F.3d 509, 511 (7th
Cir. 2004)). Whether a conviction should be reversed
when it is claimed for the first time on appeal that the
conviction rested on an impermissible ground is a ques-
tion we review for plain error. United States v. McKinney,
954 F.2d 471, 475 (7th Cir. 1995). Davis argues that his
substitute-billing scheme falls within a broad reading
of the word “provided.” The government argues that
“provided” must be read to require that the services be
“personally” provided by the HSPP.
  At the outset, we should note that Davis’s defense at
trial did not appear to rely in any way on a theory that
substitute-billing was actually allowed under Indiana’s
Medicaid rules. In the instances where the issue arose,
it was solely within the context of whether Davis might
have erroneously believed that the regulations allowed
him to do what he did. Tr. 117-19, May 9 (defense opening
No. 05-3481                                               5

statement); Tr. 187, May 9 (redirect of witness Bowen);
Tr. 686-88, May 11 (admission of other laws to show
whether defendant “believed” that substitute billing is
permitted); Tr. 900-01, May 12 (defense closing argu-
ment). Generally, issues raised for the first time on ap-
peal are reviewed for plain error. See United States v.
McClellan, 165 F.3d 535, 551-52 (7th Cir. 1999). “Neither
a general objection to the evidence nor a specific objection
on other grounds will preserve the issue for review.”
United States v. Wynn, 845 F.2d 1439, 1442 (7th Cir. 1988)
(citing United States v. Laughlin, 772 F.2d 1382, 1391-92
(7th Cir. 1985)).
  Indiana’s rules for Medicaid reimbursement for mental
health services are contained in Title 405, Indiana Ad-
ministrative Code, § 5-20-8. That section states that
“Medicaid reimbursement is available for outpatient
mental health services provided by psychologists en-
dorsed as a health service provider in psychology (HSPP).
Outpatient mental health services rendered by a[n] HSPP
are subject to the following limitations.” 405 Ind. Admin.
Code § 5-20-8 (2002). One of the limitations is: “Subject
to prior authorization by the office or its designee,
Medicaid will reimburse for neuropsychological and
psychological testing when provided by a physician or an
HSPP.” 405 Ind. Admin. Code § 5-20-8(5) (2002). Davis’s
claim on appeal is that he “provided” the substitute-
billed services that his staff conducted because—even
though the tests were administered by other people—he
paid the rent and utilities, trained the staff, and ac-
quired the various licenses under which the clinics oper-
ated. He urges us to read the word “provided” as synony-
mous with “furnished.” We decline to do so.
  Although Davis is accused of committing the federal
crime of health care fraud, the allegation turns on whether
he executed a “scheme to defraud a health care benefit
program.” Because the question of whether substitute-
6                                                No. 05-3481

billing is a method to execute a scheme to defraud a
health care benefit program depends on which procedures
Indiana Medicaid will reimburse, our analysis requires us
to interpret Indiana law. The court is unable to locate, and
the parties have not pointed us toward, any authority
that indicates how Indiana courts have interpreted this
statute. It appears to be a question of first impression
in this circuit and in the courts of Indiana.
  When interpreting statutes, “we give words their plain
meaning unless doing so would frustrate the overall
purpose of the statutory scheme, lead to absurd results, or
contravene clearly expressed legislative intent.” United
States v. Vallery, 437 F.3d 626, 630 (7th Cir. 2006). In this
case, the plain meaning of the words—that “Medicaid
will reimburse for . . . testing when provided by . . . an
HSPP”—is that the HSPP must be the person who is
actually engaged in the conduct of performing the tests.
Any other reading would “lead to absurd results.” Id. The
logic of the argument made on appeal would have al-
lowed Davis to pre-pay the rent, license the tests, staff
the clinics with minimum wage technicians, and then fly
to a tropical paradise3 and watch the money flow in. He
would, arguably, still be “providing” the services that
Medicaid was buying from him, if “providing” were simply
a synonym for “furnishing.” This cannot be the plain
meaning of the statute.
  Even if the plain meaning of the statute were not
clear, we are convinced that a thorough reading of the
requirement in the context of the rest of the Medicaid
reimbursement statute supports this conclusion. The

3
   Or, perhaps, less tropical Canada—his country of birth. The
indictment alleged that he billed Medicaid for at least $11,745
worth of services while he was in Vancouver in the Summer
of 2002.
No. 05-3481                                                      7

Indiana legislature has demonstrated that when it
chooses to allow so-called “mid-level practitioners” to
perform some of the tasks that are billed by a supervis-
ing provider it knows how to make this clear in the law.
In the context of outpatient psychotherapy, the state
specifies various types of mental health workers who
may render billable services under the direct supervi-
sion of a psychiatrist. See Ind. Admin. Code § 5-20-8(2)
(2002). This rule does not help Davis. Billing for the
services of mid-level practitioners in outpatient psycho-
therapy is subject to pre-approval by Medicaid, and the
range of allowable mid-level practitioners recognized in
§ 5-20-8(2) are all vastly more qualified than the employ-
ees that Davis had hired and trained to administer the
tests in his clinic.4 Id.
  Davis also asks this court to read the presence of the
word “directly” found in Medicaid regulations for physi-
cians at 405 Ind. Admin. Code § 5-25-1 (2006) and the
absence of such a modifier from the psychologists’ regula-
tions to imply a legislative intent to allow psychologists
the freedom to bill for psychological testing that was
conducted by unlicensed staff. This we are not willing to
do, because it would not only require that we equate
the words “directly” and “personally” but would also
require that we assume that the legislative intent be-
hind a portion of the statute governing Medicaid billing

4
   The mid-level practitioners who are specifically listed as being
allowed to practice in outpatient psychotherapy are: licensed
psychologists, licensed independent practice school psychologists,
licensed clinical social workers, licensed marital and family
therapists, licensed mental health counselors, and persons
holding a master’s degree in social work, marital and family
therapy, or mental health counseling. 405 Ind. Admin. Code § 5-
20-8(2) (2002).
8                                               No. 05-3481

by physicians must be the same as the legislative intent
behind the regulations for psychologists.
  In sum, in the face of plain language that allowed
Davis to bill for only those testing services that he, as an
HSPP, provided to the patients, we find nothing to sug-
gest that Indiana intended him to use college students to
do the lion’s share of his work while still billing Medicaid
as if he had performed the tests himself. In those few
instances where Indiana is willing to allow mental health
services to be administered by third-parties under the
direct supervision of the HSPP or physician, Indiana
made it clear that such billing was allowed, required
that such a billing procedure be approved ahead of time,
and restricted it to particular licensed mental health
professionals. 405 Ind. Admin. Code § 5-20-8(2) (2002).
  Because we find as a matter of law that the convic-
tion could not have rested on an impermissible ground,
there was no error to be examined under plain error
review. See United States v. Donaby, 349 F.3d 1046, 1049
(7th Cir. 2003).

    B. The Admission of the Expert Testimony
  We turn to the evidentiary errors that Davis ascribes to
the trial court. Davis argues that it was reversible error for
the trial court to allow, over defense counsel objection, the
admission into evidence of the testimony of Kathy Bowen,
who was an employee of Indiana Medicaid and an expert
in reimbursement for mental health services. We review
the trial court’s decision to admit expert testimony for
abuse of discretion. Kempner Mobile Elec., Inc. v. Sw. Bell
Mobile Sys., 428 F.3d 706, 712 (7th Cir. 2005). Legal
conclusions made by the trial court in reaching the deci-
sion to admit expert testimony are reviewed de novo. Id.
No. 05-3481                                                9

  In relevant part, the direct examination of Ms. Bowen
proceeded:
    Q: And how does the Indiana Medicaid program in-
    terpret whether the HSPP has to personally per-
    form this service?
    ...
    Q: Must the HSPP personally perform the service?
    A: Yes. And I say yes because it says—it lists services
    that are reimbursed when provided by a psychologist
    endorsed as an HSPP, and that is our intent, and it’s
    the policy that we have shared with the providers.
Tr. 188, May 9.
   The defense had objected to Ms. Bowen’s testimony.
After establishing that the expert had never had a conver-
sation with the defendant about this provision of the law
(apparently to support the defense argument that Dr.
Davis had a good faith belief that his activities were legal)
defense counsel entered “a continuing objection . . . to
witnesses, such as this one, interpreting laws. I think
it invades the province of the jury. That’s for the jury to
determine what the law says and whether or not this law
was broken.” Tr. 187, May 9. The court corrected defense
counsel:
    I understand your objection, but it’s got an erroneous
    premise because the witness is not going to testify
    to what the law means. I instruct on the meaning of
    the law, but she can testify to how it’s enforced, how
    it’s interpreted, how it’s distributed to people in the
    form of manuals and so forth.
Tr. 187, May 9.
  Experts are permitted to testify regarding how their
government agency applies rules as long as the testimony
does not incorrectly state the law or opine on certain
ultimate legal issues in the case. Fed. R. Evid. 704; United
10                                             No. 05-3481

States v. Turner, 400 F.3d 491, 499 (7th Cir. 2005). For
example, we have held that expert testimony is allowed to
the effect that financial transactions did not comply with
regulations and appeared to be fraudulent. United States
v. Owens, 301 F.3d 521, 526-27 (7th Cir. 2002) (noting
that Fed. R. Evid. 704 partially displaces the “old ultimate
issue rule” in a case such as this where the only major
issue at trial was the mental state of the defendant).
  There are cases where such expert witness testimony
would be an abuse of discretion under the Rules of Evi-
dence for being more prejudicial than probative. Fed R.
Evid. 401, 403. This is not such a case. Davis cites to
Bammerlin v. Navistar Int’l Transp. Corp., where we
held it an abuse of discretion to allow a “battle of the
experts” to opine about whether a seat belt assembly
passed federal safety standards when the experts were
unable to even agree on what the applicable laws were. 30
F.3d 898, 900-01 (7th Cir. 1994). True, when two compet-
ing experts offer differing opinions that are based on fact
and law, the jury should not be left adrift to consider the
credibility of the experts to come to a conclusion about
the law. But this is not the case here. We have held before,
and hold today, that experts are allowed to testify about
how they enforce regulations, whether transactions com-
ply with regulations, and how they ensure that the
public knows about regulations. Admission of this testi-
mony was not error, and therefore was not an abuse of
discretion.

  C. The Exclusion of the Unpublished Manuscript
  The defendant also challenges the district court’s deci-
sion to exclude an unpublished manuscript from the
evidence. As with the testimony above, we review for abuse
of discretion. United States v. Gant, 396 F.3d 906, 908 (7th
Cir. 2005). We find that the district court did not abuse
No. 05-3481                                               11

its discretion in excluding the evidence, although we
base that decision on reasons other than those cited by
the district court. See United States v. Fazzini, 871 F.2d
635, 639-40 (7th Cir. 1989).
   The proffered document appears to be a photocopied
course-pack from a psychology class during the Winter of
1987 to 1988 entitled “Manual for the Administration
of Neuropsychological Test Batteries for Adults and
Children, Norms.” The title page credits Dr. Ralph M.
Reitan as the author, and indicates that it was being used
in a course taught by somebody named “Fischer”. Dr. Davis
argues that the course-pack was vital to his defense,
because it supported that he did not have the requisite
mens rea—his ultimate defense. Specifically, he argued
at the time that he intended to use the manuscript to
show that he thought it was the best psychological prac-
tice to use other people to conduct his tests. The ques-
tion of whether “substitute-testing”—for lack of a better
term—is advisable for medical reasons is irrelevant to
the question of whether substitute-billing of Medicaid is
illegal. Fed. R. Evid. 701. Likewise, evidence that tends
to prove or disprove whether the defendant believed
that substitute-testing was advisable is irrelevant to
whether the defendant believed that he could bill Medi-
caid for the procedure. There are presumably plenty of
good ways to practice medicine that Indiana will choose
not to reimburse through the Medicaid program. This
appears to be one of them.
  The exclusion of the course-pack would also be within
the discretion of the district judge purely on the grounds of
reliability. A photocopied, unsigned, fifteen-year-old report
could have been misinterpreted by the jury to imply that
this was some sort of learned treatise or standard of care
within the field. The court allowed Davis to testify as to
his belief that he had been trained to use technicians for
the tests and this accomplished what he had hoped for by
12                                             No. 05-3481

offering the manuscript into evidence. This balancing of
the probative and prejudicial nature of the evidence does
not rise to the level of an abuse of discretion. We find no
error.

  D. The Duplicity of the Indictment
  Davis also argues that the indictment is impermissibly
duplicitous and that the duplicity was not adequately
corrected by the trial court. We review a challenge to an
indictment that was not preserved by objection before
trial for plain error. United States v. Hammen, 977 F.2d
379, 382 (7th Cir. 1992).
  An indictment that charges more than one offense in a
single count is duplicitous. Fed. R. Crim. P. 8(a); United
States v. Tanner, 471 F.2d 128, 138 (7th Cir. 1972). An
indictment is not duplicitous if it charges a single offense
carried out through many different means. United States
v. Berardi, 675 F.2d 894, 897-98 (7th Cir. 1982). The
dangers of a duplicitous indictment are that the defen-
dant may not understand the charges against him, might
be convicted by less than a unanimous jury, may be
prejudiced by evidentiary rulings at trial, or may be
subjected to double jeopardy. Id. at 899.
  The indictment alleged a single count of health care
fraud. It specified that the count was carried out through
three separate schemes, and that each of those schemes
was carried out on numerous occasions. Davis is cor-
rect that an indictment can be duplicitous if numerous
discrete instances of criminal conduct are lumped into a
single count. Such was the case in Tanner, where the
indictment alleged several instances of criminal conduct,
involving multiple defendants, multiple locations, and
multiple dates. Tanner, 471 F.2d at 138-39. But contrary
to Davis’s argument, this is not an absolute rule. Where
No. 05-3481                                                 13

the indictment “fairly interpreted” alleges a “continuing
course of conduct, during a discrete period of time,” the
indictment is not prejudicially duplicitous. Berardi, 675
F.2d at 898. “The line between multiple offenses and
multiple means to the commission of a single continuing
offense is often a difficult one to draw. The decision is
left, at least initially, to the discretion of the prosecution.”
Id. (citing Tanner, 471 F.2d at 138).
  We are convinced that this indictment, fairly interpreted,
is closer to Berardi than Tanner. The indictment sets out
an ongoing and continuous course of conduct, accomplished
through three different methods, that were repeated on
numerous (likely daily) occasions over several years. The
indictment alleges only one crime: health care fraud.
Unlike the indictment at issue in Tanner, the crime
charged here was fairly straightforward, involved only one
defendant, one victim, and one criminal statute. It seems
that the prosecution’s decision to charge only one count
falls well within its discretion as explained in Berardi, and
that the dangers otherwise inherent in duplicitous indict-
ments are not present here. If the indictment confused the
defendant, the proper time to raise that objection was
before trial, allowing the court an opportunity to correct
the error and allowing the government to seek a
superceding indictment. If the indictment raised the
specter of double jeopardy, the defendant has made no
such claim on appeal. Because, as we held above, the
challenged evidentiary decisions were correct, there is no
danger that the alleged duplicity led to prejudicial eviden-
tiary decisions.
   All that remains is the defendant’s argument that the
indictment, coupled with inadequate jury instructions,
allowed him to be convicted by less than a unanimous jury.
The defense would prefer that the instructions had speci-
fied that the jury needed to unanimously agree on
a specific execution of the scheme. This argument was
14                                              No. 05-3481

not made at trial. In fact, defense counsel affirmatively
endorsed the jury instructions. Tr. 970-72, May 12. We
review jury instructions as a whole and as long as they
fairly and adequately represent the issues we will not
interfere with them on appeal. See United States v.
Patrick, 542 F.2d 381, 389 (7th Cir. 1976). We review
forfeited arguments regarding jury instructions for plain
error. See United States v. Suggs, 374 F.3d 508, 517-18
(7th Cir. 2004).
  Taking the jury instructions as a whole, the instruc-
tions fairly and adequately represented the issues and
informed the jury that they must unanimously find at
least one scheme proved beyond a reasonable doubt. Jury
Instruction 8 clearly spelled out the elements of the alleged
crime and informed the jury that it must find
every element proved beyond a reasonable doubt. Jury
Instruction 31 informed the jury that it must be unani-
mous if it found the defendant guilty. Jury Instruction 13
informed the jury that the government need not prove
every scheme that it had alleged, but that it must prove
one of them beyond a reasonable doubt. Taken in con-
text, the jury was adequately informed of the need for
unanimity and that all elements—and at least one
scheme—be proved beyond a reasonable doubt. The jury
instructions and the inclusion of multiple schemes in a
single count did not deprive the defendant of a unanimous
jury.

                    III. CONCLUSION
  For the foregoing reasons, the conviction is AFFIRMED.
No. 05-3481                                         15

A true Copy:
      Teste:

                    ________________________________
                    Clerk of the United States Court of
                      Appeals for the Seventh Circuit

               USCA-02-C-0072—12-15-06