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AAPS Legal Supplement - AAPS News, January 2002

by Andrew Schlafly, AAPS General Counsel


Autopsy of a Prosecution

On September 12, 2001, a 12-person federal jury rendered the brutal verdict against a physician: guilty on 13 felony counts related to fraud. United States v. Mitrione. The physician's wife, who had helped in the office, was found guilty on 11 of those same counts.

But an exhaustive review of the filings in the case fails to uncover the heinous criminality suggested by the verdict. This was not high-volume billing, or a pervasive pattern of fraud. Nor do extensive interviews with the defendants suggest even a hint of any criminality.

The indictment does not identify any specific loss to the government, or to anyone else. Dr. Mitrione was, in fact, billing only relatively small amounts through Medicaid. The minor issues at stake could have been handled more efficiently through a civil administrative proceeding.

What caused this catastrophic result? Psychiatrist Robert Mitrione, M.D., the defendant, had provided much-needed Medicaid services to the poor in Springfield, Illinois. The Illinois Department of Public Aid administers this program. Through use of the all-encompassing federal mail fraud statute, a low-dollar state issue was transformed into a multi-million dollar federal prosecution. Post-conviction, Dr. Mitrione's services to a government facility were then replaced by those of a more expensive caregiver.

Federal Mail Fraud Statute

Section 1341 of Title 18 of the United States Code, the federal mail fraud statute, was the legal basis for most of the conviction. This statute allows prosecution of any alleged scheme to defraud, even purely private disputes, if it entails at least one use of the mails or overnight delivery service.

Originally enacted to combat mail-order scams, Section 1341 has been increasingly used to prosecute innocuous billing disputes. Amid great media fanfare, Senator D'Amato's attorney brother was convicted under Section 1341 for a mere legal billing dispute; the verdict was later overturned on appeal. In United States v. Gailey, a prosecutor converted a completely private contractual dispute between Dr. Keith Gailey and his private hospital into a federal crime based on the mail fraud statute. Evidently the hospital had once mailed a small check to him pursuant to an employment contract, and that triggered application of Section 1341.

In Dr. Mitrione's case, the primary charge was "substitute billing," defined as "submitting claims under Mitrione's provider number for services performed by others." But the government claim forms for the services at issue allowed certification that they had been personally furnished by the physician or by an employee who was under his personal direction. That expressly includes substitute billing.

Defendants' counsel moved for dismissal of the substitute billing counts. The court held that "[t]he forms cannot change the requirements of law, however. Defendants may point to the forms and argue that they were confusing or misleading, if that is their position. Such a contention would go to the Defen-dants' intent and be relevant. This argument is not a basis for dismissing or striking parts of the indictment, however."

So what are the requirements of Illinois law here? The applicable statute, Section 140.413 of the Illinois Administrative Code, states that Medicaid shall reimburse psychiatric services "when the services are provided by a physician who has been enrolled as an approved provider with the Department." A handbook interprets that provision as limiting reimbursement to services provided by the physician himself, rather than someone working under his direction.

Recent precedent in the Seventh Circuit, the jurisdiction of this case, disallows prosecutions for ambiguous legal rules. Specifically, the Court of Appeals emphasized that criminal penalties require a "high level of clarity." Gresham v. Peterson, 225 F.3d 899, 908 (7th Cir. 2000).

Physicians have not yet benefited from this rule of clarity. Federal prosecutions of medical practitioners in Springfield, Illinois, are galloping at an alarming rate, with tragic results. In addition, the infamous Kassebaum-Kennedy bill, HIPAA or the Health Insurance Portability and Accountability Act of 1996, -has a criminal provision that is even vaguer than the mail fraud statute. 18 U.S.C. 1347. It does not even require use of the mails or overnight carriers, and makes it possible to indict any physician for alleged defrauding of "any health care benefit program." Even alleged attempted fraud, such as rejected claims, could become targets for prosecution under HIPAA.

Similar Prosecutions

Many have been targeted by federal prosecutors in Springfield, Illinois, in connection with the state Medicaid program. Before indicting Dr. Mitrione, the so-called Central Illinois Health Care Fraud Task Force prosecuted a manager of a small-town pharmacy. His heinous crime? John A. Brackney provided medications to nursing homes under the Medicaid program, and when the homes returned unused drugs he resold them to "private pay" patients without refunding Medicaid. It is unclear which, if any, specific law he supposedly violated, because he was convicted of seven counts under broad mail fraud and false claims statutes, with each count carrying penalties of five years in jail and a $250,000 fine.

Dr. Sergius A. Rinaldi may be the next victim. He's a 66-year-old dentist in Springfield, Illinois, recently imprisoned for months by the federal prosecutor for failure to provide some patient sign-in sheets. Under a citation for contempt of court, he was incarcerated in state jails, known to be more abusive than the federal penitentiaries.

On August 31st, his wife Rosemary stated that he was sent to a Chicago jail because he could not find his sign-in sheets for investigators. She declared that he was truthful when he told the judge that he did not know where the sheets were. "He's just very forgetful," she said. "This is all a big mistake." But the FBI pulled out all stops in a hunt for Dr. Rinaldi's records. It even sent a dragnet to Parker, Colorado, where his son was located.

The Springfield State Journal-Register reported that the FBI agents went there because they thought his son may have hidden records for his father. That newspaper quoted a Parker Police Department coordinator as saying that she met FBI agents in the department's parking lot in July. The agents were looking for Dr. Rinaldi's son.

Dr. Rinaldi's attorneys have been prevented from commenting on the case due to a court-imposed gag order. The United States Attorney's office in Springfield indicated that he would be released if and when he produces the sign-in sheets. His trial is scheduled for February 2002.

More on Dr. Mitrione's Case

Let's return to Dr. Mitrione's case. His indictment identified fewer than ten disputed claims, and the court had initially limited the trial to those cases. But near the end of trial, as prosecutors were rebutting the defense of negligent record-keeping, they introduced a highly inflammatory and false chart concerning thousands of defendant's billings.

Labeled Government Exhibit 20B, this misleading chart virtually guaranteed conviction. It consisted of a bar graph attaching the description "CLAIM, NO SERVICE" to claims that merely lacked documentation in the physician's files. It encouraged jurors to believe incorrectly that defendants had submitted 1,178 claims for services never provided. In fact, the records are likely located elsewhere, as at the hospital or another clinic, or simply misplaced. No direct, affirmative evidence, as by credible testimony by patients, was offered to prove that they did not receive these services. Lack of documentation in a physician's files for a subset of records does not prove lack of services rendered, as the prosecution misled the jury to believe.

The untrue graph, presented near the end of trial, epitomizes the "ambush" harshly criticized by the Second Circuit in reversing an analogous conviction of a physician. See United States v. Siddiqi, 959 F.2d 1167 (2d Cir. 1992). In Siddiqi, as in the Mitrione case, the government presented a "last-gasp argument" at closing that the substitute used for billing had not been "sufficiently communicated to the hospital staff" to qualify for Medicare coverage. Id. at 1173. After the Court of Appeals reversed his conviction and remanded, the government continued to prosecute him. Four years later, in a new decision, the Court of Appeals had to end the prosecution with these words: "the trial was an ambush We are firmly convinced, moreover, that the conviction would not have occurred but for the government's shifting of theories that impaired both Siddiqi's defense and our consideration and disposition of this matter." Siddiqi v. United States, 98 F.3d 1427, 1437, 1440 (2d Cir. 1996).

The 11th hour graph in Dr. Mitrione's case depicted 1,178 claims that were not in the indictment or the prosecutor's main case, and the defense was ambushed by it. Moreover, the bar graph flatly misrepresented the government's own numbers. It falsely inflated the ratio of [billed services lacking documentation] to [unbilled services having documentation] by more than a factor of two, as later recognized by the court itself.

Redefining Billing Disputes as Mistreatment of Patients

Most prosecutions of physicians are based on alleged billing improprieties that have nothing to do with the quality of the care provided to the patients. But most people, such as those who serve on juries, like and trust their own doctors. The public knows that doctors are not accountants or bookkeepers, and does not want them to be bureaucrats. To overcome this, convictions of physicians often rely on a transformation of an unemotional billing dispute into a highly prejudicial alleged abuse of patients.

Dr. Mitrione's case was no exception. The government wanted to call to the witness stand patients who received counseling from one of his therapists. The therapist lacked a college degree, which the government claimed rendered him unqualified to provide the counseling. But no statute or rule was cited for this charge.

Based on the therapist's alleged lack of qualifications, the government put highly emotional psychiatric patients on the stand to testify about inadequate treatment. Jurors were led to think the case was about mistreatment of patients, when in fact only a minor billing dispute was at issue.

Redefining Physicians as Terrorists?

Closing arguments in Dr. Mitrione's case were on 9/12, and the prosecutor used the 9/11 terrorist attack as a highly prejudicial introduction. Over vehement objections by the defense attorneys, he argued that the system of justice is an institution that "these people" seek to undermine, and that the fiscal integrity of the Medicare and Medicaid programs is important to the system of justice. (His reference to "these people" lacks an antecedent identifying whom he meant.) Billing disputes may be relevant to the "fiscal integrity" of Medicare and Medicaid, but they are typically not felonies and should not be introduced with ambiguous references to terrorism.

Specifically, the prosecutor's closing argument began with this: "Good morning. Our job just got harder in the last 24 hours. We're already facing an incredibly difficult task, and we've done [sic] for the last three and a half weeks trying to sort this out. It's now made more difficult by the events of yesterday, the devastation that terrorism has brought to our country. But that's why we need to do this today. That's why we got out of bed today and came here. The very institutions that these people seek to undermine must continue."

On a motion for a new trial, the court held that this was not improper, and even if it were, "the record viewed as a whole supports the conclusion that the Defendants were given a fair trial."

Empty Assurances by HHS and OIG

The government has repeatedly promised that negligence in billing would not be prosecuted. As declared by Inspector General June Gibbs Brown of the Department of Health and Human Services, "A physician is not personally liable for erroneous claims due to mistakes, inadvertence, or simple negligence" ( quoted 1/7/99). Chief Counsel for the Office of Inspector General, D. McCarty Thornton, "emphasized that laws the agency uses to prosecute physicians for fraud do not apply to billing errors or negligence"quoted in AM News, 6/26/00.

Increasingly, physicians with low-volume practices face imprisonment for carelessness and application of ambiguous legal rules-these assertions and promises notwithstanding. Private physicians are being sought as scapegoats for the growing financial problems inherent in the Medicare and Medicaid systems.

[AAPS assists wrongfully prosecuted physicians through its Limited Legal Consultation Service, with help from the American Health Legal Foundation.]