Court Opinion

ID: 3001166
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:13:31.449043+00
Date Added: 2024-06-11T12:40:56.890448
License: Public Domain

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

No. 06-3157
UNITED STATES OF AMERICA,
                                            Plaintiff-Appellee,
                               v.

JIM WISZOWATY, doing business as
C.O.G. INCORPORATED,
                                         Defendant-Appellant.
                        ____________
           Appeal from the United States District Court
     for the Northern District of Indiana, Hammond Division.
              No. 05 CR 9—James T. Moody, Judge.
                        ____________
ARGUED SEPTEMBER 10, 2007—DECIDED OCTOBER 22, 2007
                  ____________

 Before EASTERBROOK, Chief Judge, and KANNE and
EVANS, Circuit Judges.
  EVANS, Circuit Judge. A jury convicted Jim Wiszowaty,
an orthopedic and prosthetic products salesman, of one
count of conspiracy to commit health care fraud and
64 counts of health care fraud. He was sentenced to a 41-
month prison term. Wiszowaty now appeals, claiming
that the district court should have admitted into evidence
a General Accounting Office report highlighting the poor
quality of information Medicare provides to doctors.
Second, he argues that the district court erred in refus-
ing to instruct the jury that if he reasonably relied on
2                                             No. 06-3157

the statement of a public official when he acted as he did,
he should be found not guilty.
  Wiszowaty was a self-made man. Starting out low on the
totem pole as a nursing assistant, he soon sought out
greater responsibility and rewards. He eventually took a
job with L’Nard and Associates, a manufacturer of med-
ical supplies, as a sales consultant and, later, a regional
product manager. At L’Nard, Wiszowaty sold medical
equipment to nursing homes.
  When L’Nard did away with its in-house sales team,
Wiszowaty found himself in the unemployment line.
Opportunity soon knocked, however, when a former L’Nard
owner suggested that Wiszowaty open his own durable
medical supply business, which would stock the former
L’Nard owner’s products.
  Wiszowaty was intrigued by the idea but knew that a
five-year noncompete agreement he had signed with a
previous employer prevented him from hanging out his
own shingle. He soon discovered a way around the prob-
lem: his wife, Debra, up until then a stay-at-home mother,
could be the nominal leader of the company, and he could
handle everything else, including actual sales. Debra
accepted the title of “President and Chief Executive Offi-
cer” of the new company, C.O.G., Inc., and agreed to have
a Medicare provider number for C.O.G. issued in her
name.
  Wiszowaty served as C.O.G.’s Chief Operating Officer.
He handled everything from approaching nursing homes
with sales pitches to instructing C.O.G.’s employees how
to submit Medicare claims. C.O.G., unfortunately, had
a glass ceiling, and “President/CEO Debra,” who owned
100 percent of the company, took care of bookkeeping,
purchasing office supplies, answering the phones, and
making coffee.
No. 06-3157                                              3

  C.O.G.’s big seller was a particular orthosis—a knee
brace with a removable cover that helped nursing home
patients walk. Wiszowaty sold each orthosis with a meager
“accessory kit,” which consisted of an extra cover for the
device. The extra cover might be useful in a somewhat
paradoxical situation: where an incontinent nursing
home patient soiled the original cover and sought to
continue walking with the help of the device before the
dirty cover came back from the laundry.
   One would think situations like this might be limited,
especially since Wiszowaty’s own “care plan” for the
orthosis indicated that the device could be used for as
little as four hours per week. Indeed, one doctor testified
that a nursing home closet contained six large trash bags
full of lonely, unused orthotics.
  C.O.G.’s services and invoices reflected a specific pat-
tern: the invoice C.O.G. submitted to Medicare indicated
that the company delivered the brand new orthotic (with
its original cover) to a nursing home patient on one day
and dropped off the extra cover two days later. Nursing
home employees testified, however, that Wiszowaty
invariably dropped off both the original orthotic (and
cover) and the replacement cover on the same day.
  This situation spelled trouble for C.O.G. because, while
tacking on extra accessory kits might be healthy salesman-
ship, Medicare will only pay for “medically necessary”
durable equipment. The orthosis itself was covered; the
“accessory kit” was not.
  Medicare eventually smelled something fishy about the
“accessory kits.” After an initial investigation, it sus-
pended C.O.G. During this “time out” period, the com-
pany could continue to provide services to Medicare
patients and bill Medicare for those services, but Medicare
would not actually pay those invoices until its investiga-
tion cleared C.O.G. of any wrongdoing. The suspension hit
4                                               No. 06-3157

the company hard, since the bulk of its revenue came from
Medicare.
  Once again, though, a resourceful Wiszowaty found
opportunity in misfortune. A former L’Nard co-worker
referred him to Mary Ann Habeeb, another L’Nard alum
who had opened up her own durable medical equipment
business, OrthoCare Concepts, in Pennsylvania.
  Ever the salesman, Wiszowaty invited Habeeb and her
employee, Marvin Jayman, to participate in a joint venture
of sorts. Wiszowaty sought to use OrthoCare as a conduit
for the sale of his supply of durable medical equipment,
including the rather useless “accessory kits.”
  The details of the plan were fairly simple. C.O.G. sent its
Medicare claims information to OrthoCare, which in turn
submitted C.O.G.’s invoices to Medicare for payment
using OrthoCare’s provider number. Because Medicare
provider numbers are nontransferable, Medicare would
assume that OrthoCare—certainly not a suspended
C.O.G.—was requesting compensation for services
OrthoCare provided to Medicare recipients. When
OrthoCare received payment from Medicare, OrthoCare
remitted 80 percent of the payment to C.O.G. and kept
the rest for its trouble.
  Even though Habeeb and Jayman knew that C.O.G. was
suspended and that Medicare supplier numbers are
nontransferable, both agreed to participate in the venture.
By using OrthoCare’s Medicare supplier number to bill
Medicare for services C.O.G. actually provided, Wiszowaty
successfully circumvented the suspension and cheated
Medicare out of over $139,000. This figure grew so large
in part because Wiszowaty, amazingly, continued the
same billing practice that originally attracted the
scrutiny of Medicare investigators: tacking on “accessory
kits” to orthosis orders.
No. 06-3157                                              5

  By March 2002, Wiszowaty found himself alone. He
and Debra had separated, and he ended his relationship
with OrthoCare when he received a Medicare supplier
number in his own name. This new number in hand,
Wiszowaty opened his own durable medical equipment
business, Illiana Orthotics. At Illiana, Wiszowaty stuck
with his old bag of tricks and continued to bill Medicare
for replacement knee orthosis covers. Wiszowaty’s opera-
tion was cut short, however, when investigators ex-
ecuted a search warrant at OrthoCare and learned of its
relationship with C.O.G.
  Eventually, ex-spouse Debra cooperated in the investiga-
tion and entered a guilty plea to conspiring with her ex-
husband to defraud Medicare. Wiszowaty rolled the dice
at trial and testified that the fraudulent billing scheme
was entirely Debra’s idea. On the stand, Wiszowaty
also claimed that he never saw or relied on any Medicare
bulletins, rules, or regulations. Only on cross-examination
did he contend that, after he opened Illiana Orthotics, he
called AdminaStar Federal, a Medicare contractor that
processes durable medical equipment claims, to ask
whether he could properly bill Medicare for the extra
covers. Wiszowaty testified that, at some time he could
not recall, he spoke to “a Judith, a Frank, and an Erin,”
who all informed him that his billing practices were
appropriate.
  The jury obviously rejected Wiszowaty’s attempt to
shift the blame onto Debra. Its verdict was a complete
rejection of any claim that he was an innocent bystander
to the billing scheme that bilked Medicare out of over
$350,000.
  On appeal, Wiszowaty argues that the district court
(Judge James T. Moody) erred when it kept a GAO report,
entitled “Communications with Physicians Can Be Im-
proved,” from the jury. The report concluded, among other
6                                                 No. 06-3157

things, that the information carriers1 provide to physicians
is often difficult to use, inaccurate, and incomplete.
  We review district court evidentiary rulings for an abuse
of discretion. United States v. Seals, 419 F.3d 600, 606 (7th
Cir. 2005). That standard of review, of course, is quite
deferential.
  The GAO report discussed the accuracy and complete-
ness of information doctors received from three sources
of information: carrier bulletins, telephone call centers,
and Web sites. Wiszowaty argues that the report was
relevant and admissible because it would have helped
the jury sort out whether or not AdminaStar representa-
tives gave him accurate information about billing Medicare
for his replacement orthosis covers.
  Judge Moody did not abuse his discretion in excluding
the report. The government proffered that its author
was prepared to testify that the study focused narrowly
on doctors’—not Medicare service providers’—communica-
tions with Medicare carriers. Introducing a study of
controlled test calls to five call centers by GAO employees
posing as doctors would not have helped the jury deter-
mine whether, in fact, Wiszowaty got a green light from “a
Judith, a Frank, and an Erin” (he could not recall any last
names) at AdminaStar to bill Medicare for a specific
orthosis cover. Judge Moody properly concluded that
this evidence was confusing and irrelevant.
  We are also unpersuaded by Wiszowaty’s second argu-
ment: that the district court erred in refusing to give a
“reliance on public authority” theory of defense instruc-
tion to the jury. We review a district court’s decision not
to give a particular instruction with deference because a

1
  The report describes “carriers” as contractors, usually insur-
ance companies, that process certain Medicare claims.
No. 06-3157                                               7

trial judge has “substantial discretion” with respect to the
“specific wording” of the instructions that are given.
United States v. Rice, 995 F.2d 719, 724 (7th Cir. 1993).
Our concern is that the essential bones of contention be
covered, and in this case they were.
  Wiszowaty requested Seventh Circuit Pattern Jury
Instruction 6.07, which provides that a defendant who
reasonably relies on public authority does not act know-
ingly and should be found not guilty.
   The Committee Comment to Instruction 6.07 clarifies
it as “a species of good faith.” In a separate instruction,
the district court here told the jury that if Wiszowaty
acted in good faith, he did not act willfully, and, as a
result, did not meet a necessary element of the conspiracy
and health care fraud charges. Thus, if the jury believed
Wiszowaty’s story—that he reasonably relied on the
instructions of “Judith, Frank, and Erin” at AdminaStar—
it could conclude that Wiszowaty was not guilty because
he acted in “good faith.” In sum, the district court’s
instructions covered the “essential points” of the instruc-
tion Wiszowaty requested. See United States v. Howell,
37 F.3d 1197, 1203-04 (7th Cir. 1994). The district court’s
failure to include the “reliance on public authority”
instruction did not deprive Wiszowaty of a fair trial.
  For these reasons, the judgment of the district court
is AFFIRMED.

A true Copy:
      Teste:

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

                  USCA-02-C-0072—10-22-07