EXCERPTS FROM THE TRANSCRIPT OF THE TRIAL OF DR. ALLEN BELDEN

Beginning at page 1109

Dr. Belden testified that his practice was to thoroughly review the patient's life history, to determine the diagnosis after going through a differential diagnosis, then to set up a treatment program. Sometimes the treatment follow-up was done by therapists. He would see these patients as required or discuss them with the therapist or the nurse.

As to the administrative aspects, Dr. Belden testified: "The administrative aspects I would turn over - I would turn over to what I called my front office staff, the people who worked in the business office. For a time we called these people office managers, and then it got so confusing that - and so we just eliminated titles. As of now I don't think anybody has a title."

Page 1139 refers to questions raised about his billing in 1994 or late 1993 by Blue Cross. "And you received a call - or you were told by Mary that a gentleman from Blue Cross had called and wanted to - and wanted to talk to you?"

"That's correct."

The tapes of that conversation were played before the court. And also of the conversation with Mary alone. "And in that phone call, one of the first things you said to the man from Blue Cross is didn't Mary explain to you how we work with the nurses?" The doctor said "well I always explain that to insurance companies."

Question: "And as she [Mary Ducat] said, you recall at least in late 94 after conversations with Carrie, she said bill at 90843 and we will pay at 90862?" The doctor said yes.

Question: "And you had a conversation with her and you said fine?"

Answer: "That's correct, I thought that 90862 was the dirty code. It had been in the literature for - referred to as medication mills primarily in large cities, two million, huge amounts of monies in an inappropriate manner."

On page 1141, the doctor denied telling patients not to tell anybody that they were seeing nurses. He also testified that the use of nurses as physicians extenders was very common in many physicians' offices. He also testified concerning a search warrant being executed in April of 1996, during which the doctor was asked to explain how his clinic worked and told the agent in great detail about how the nurses performed services in connection with his work. On page 1142, he explained that the agents were in the clinic with him for 12 hours from 3:00 p.m. to 3:00 a.m.

Question: "And in addition to taking the records, they took - they also asked you to take some additional computer information and you consented to it and they took it?"

Answer: "That's right. What I didn't consent to was for them to go through all of my entire private files in my back office." The doctor also stated: "We kept asking what are we doing wrong? What is your concern here? The only answer we got was from Dennis Maskin is that - keep on doing what you're doing. We aren't saying you are doing anything wrong. Just keep on doing what you are doing."

Question, p. 1143: "Then sometime later, about three years later, you were indicted on the Indictment that's pending before this court, correct?"

Then there was concern about the AODA codes. These pertain to a drug and alcohol treatment clinic, which is governed by other regulations. On page 1144, Dr. Belden testified "The confidentiality laws are so inviolate that it blows my mind that George DeShazor, having worked in the mental health and AODA facility, was not aware of them. Because everyone that I have ever worked with had their knees shaking."

On page 1145, Dr. Belden was asked whether it was proper for him to be billing for the nurses under his name. The doctor said yes and that he believed that because "We were always told by insurance companies not to put the physician's name in conjunction with the nurse's name on the HCFA form, because that was too confusing."

Question: "And that was a conversation you had had maybe three or four years earlier with one particular company?

Employers Health in 1992 had told me that.

Question: "You don't know who that was you talked to?"

"No. Medicare and Medicaid had always told us that, and they told it after I had called them after the April 3, 1996 visit."

Questioner: "Forget that.

Dr. Belden: "They told me the same way."

Question: "Doctor, I don't want to know what you know now. I want to know what you knew at the time you got the phone conversation from Mr. Streur." The questioner acknowledged that five years have passed and "you have spent your life dealing with this."

There was a meeting in the late 1980's with Medicare and Medicaid people in Madison, and the doctor said he had notes of those meetings, which had come about at his request to get clarification of the coding. Two of his staff went with him at that time.

On page 1147, the doctor testified that "Joe Trupena (phonetic) told me it was okay for the nurses to be seeing the patient as long as I was in the immediate area and the nurse was under my direct supervision. Clarified with him that in the mornings I was over at five east where I would be 100 or 125' from the nurse's office, immediately available to her. And then he said there is no problem with that, in terms of the way in terms of seeing Medicare patients."

The attorney clarified that that is consistent with the government instructions on the back of the HCFA 1500 form. Also on page 1147, there was testimony concerning Mary, who had said she was concerned that the doctor did not tell her to list the names of the nurses. The doctor testified "I don't recall ever telling her to ... to list them or not to list them. I do know that, I would expect that she had dialogued with the companies enough to know that they - that she would have got the same impression as I got."

The lawyer continued that apparently Mary did not get the same impression because she testified to the contrary.

On page 1148, there was testimony to the effect that the doctor believed that any problem with the way he was billing Blue Cross had been corrected in about 1994. "I assumed that we had corrected the problem."

Question: "Did Blue Cross ever contact you again saying that there was a problem with how you were billing?"

Answer: "If they did, I wasn't aware of it, or made aware of it."

On page 1149, Question: "The next thing you heard concerning Blue Cross was when your records were seized in April of '96, correct?" "That's correct."

Question: "At the end of '94 did you believe there was any difficulty in the manner in which your office was billing to EHI?"

Answer: "I thought we'd straightened out the problem."

Question: "Now, you know medically that nurses cannot provide psychotherapy, correct?"

Answer: "Correct"

Question: "Why did you believe it was appropriate to bill using codes that were denominated psychotherapy?"

Answer: "I wasn't aware of codes going out of our office as 90844 for nurses."

On page 1150, the doctor testified he believed that they were using code 90843 and that he didn't know that that denoted psychotherapy but rather though it was more like 30 minutes of medical management. He testified again that he did not want to use code 90862. He reminded the court that on the 1994 fee schedule, that code was not listed because it was the dirty code.

The doctor testified on page 1152 that between 1994 until the search warrant he did not have any concerns with how his office was running. Bills were going out, and the insurance companies were paying claims.

He was asked on page 1153: "And is it fair to say that for the last year or two you have almost become fixated on trying to read up on CPT codes and the law and CFR codes and things of that nature?" The doctor testified he had been staying up till 2:00 or 3:00 in the morning trying to catch up on what's going on. At the present time, he testified, he was spending three days a week in his practice but he was on call 24 hours a day, 365 days per year.

On page 1154, Question: "Did you at any time or do you today believe that you were obtaining money that - from insurance companies or from patients by attempting to defraud them?" Answer: "No way."

Question: "Now you have heard testimony from various companies that they all handle things a little differently depending on the contracts they have with insurers, correct?"

Question: "And you also heard testimony that some of the insurance companies would pay more for services if you billed more?" And the doctor answered that's correct.

On 1155, there is what the judge apparently considered to be a key admission. The question was "Now, you know now, do you not, that wrong codes were being used?"

Answer: "Yes. I realize now that - it seems like from 19 - somewhere around 1987 to 1989 codes were changed and things got really confused in the front office, and codes were going out that I had no awareness of, of 90844 being used totally inappropriately." The doctor testified that services were actually provided even though the technically from a medical point of view were not psychotherapy. All the patients were seen. There was testimony that some patients were seen when the doctor was out of the country and that the doctor first learned that in the last two weeks. Someone showed him that "there were three times I was on vacation that there were bills issued for patients."

Question: "And the first time you heard that was in the last month?"

Answer: "Yes"

Question: "What was your understanding of what would go on in the office when you were on vacation or at a seminar program?"

Answer: "Patients would be seen on an emergency basis and not charged, and I was to be called. I always left my phone numbers to where I could be reached, or the psychiatrist on call was to be called if it looked like there was a change in treatment direction, or the patient needed to be hospitalized."

Also on page 1156, the doctor testified that when he returned from Margarita, it did not dawn on him to check to see if patients had been seen, or to check whether patients had been billed: "There would be no reason for me to do that." The reason for that was that the doctor did not believe they had been billed.

The doctor testified then that during his trip to Margarita, which was for the purpose of writing a paper, he was robbed by masked gunmen, and that after that time he had a fear of travel and of things like going into men's rooms. Also, he testified about his background.

Cross examination begins on page 1159. The doctor's background included medical school, a one year internship, three year residency, and then a two year fellowship with the National Institutes of Health. He testified to having six to seven times the amount of required CME credits. He had been on the American Board of Psychiatry and Neurology for 20 years, serving as senior examiner.

Around page 1175 he testified concerning the eligibility of persons to be insurance eligible as psychotherapists, which comes only after 3000 hours of experience. It refers to doctor's testimony that he would refer a patient to nurses or therapists after the initial evaluation. He testified that he never thought his nurses were providing psychotherapy. Patients were referred to a psychotherapist for that service.

Question: "You never thought they were providing psychotherapy, is that correct?"

Beginning at the top of page 1183 Mr. Cannon (defense attorney) stated "Your honor, that's about the eighth time. Getting a little repetitious."

On page 1185, Mr. Jacobs (prosecutor) asked again whether it had been the doctor's understanding that he should not bill the services provided by his nurses as psychotherapy.

"I never even thought of ever billing my nurses for psychotherapy. I wasn't aware of any - billing nurses for psychotherapy."

Mr. Jacobs continued: "So your testimony is you didn't know that bills were being submitted to insurance companies for psychotherapy based on your nurses' services, is that right?"

Answer "Not psychotherapy, no."

On page 1186, Dr. Belden testified "I had no idea what was going on the in the billing office that - sent the front office staff to any bulletins that we received on any workshops regarding coding. I would put that on this desk and put a little FYI for your information, interest. Would you like to attend? And encouraged - we would pay for any attendance at any of those seminars."

There is more questioning about codes 90844: these were inaccurate because they were submitted for the nurses services.

Answer: "They were not only inaccurate, but I cannot understand why the insurance companies and the patients and somebody - if this is what was going on for ten years, why would insurance companies think that they were getting services for 90844 for $100.00? That would be - I would have been the lowest provider in the State of Wisconsin. Is that why they let me do that? I mean, it makes no sense. Usual charge was $180.00 to $200.00. And the charge here was - 90844 for $100.00. I mean, it blows my mind that that could go on for all those years. And not only I didn't notice, but nobody else noticed it. That's amazing."

Furthermore, the doctor testified on page 1188 "we are in an office that does not concern ourselves with the amount of insurance dollars that are available for covering a patient's services. I don't want to be made aware of that. It there is a limit of $1000.00, $2000.00 or what they would have $100,000.00 - say some insurance companies give unlimited for treatment of an illness. We are not interested in that. We are interested in the clinical issues and treating the patients."

Question: "So it is correct to say that no, the insurance companies rules did not effect how you billed them?"

Answer: "Absolutely not."

On page 1189, there is a question from the court" "Generally one witness can't testify as to the truthfulness of another witness." But then there are differences between character and reputation and when you can attack the credibility of a witness. On page 1190, Dr. Belden said "I have had a lot of revelations in the past year about - I don't know. I am confused as to her true character, so I have no basis for judging. There has been 180 shifts in terms of 180ø shifts in what I have heard in the last six, eight months, that I don't know who the true Mary Resch is at this point. I thought I did."

On page 1191, there is some testimony that somebody made up fee schedules based on the old fee schedules and there was some inaccuracies on it.

On page 1193, a Ms. Warwick testified "The government has learned that counsel was served subpoenas upon the U.S. Attorney's Office records custodian, and the records custodian at the Federal Bureau of Investigation, seeking testimony commencing at 1:30 p.m. today from both of those individuals. And also demanding that they bring documents - that is, to the U.S. Attorney's office, copies of all subpoenas issued in this criminal matter; and to the FBI, all documents and materials which indicate dates on which all subpoenas were issued."

"At this time, your honor, the United States moves to quash both these subpoenas pretty much for the same reasons that were postured yesterday to the court. That is, these are matters that were akin to the two - or one motion in limine that the court has already ruled upon based on timeliness, and also based on the government's further responses that this is - these matters are that, if anything, go only to the motions to suppress. Do not go to the issues at this trial. That is, intent to defraud.

"And for all of these reasons - that this is again extraneous matters to this proceeding and the testimony is irrelevant, as are these documents, to what is left in the trial and what has occurred in this trial, the government moves to quash the subpoenas."

The court granted the motion to suppress.

More testimony on page 1202 concerning the fee schedule being "all screwed up."

On page 1207 more testimony that the doctor thought his staff was billing under code 90843, "which still would have been an incorrect code."

"I know now that's wrong. Again there is a problem with the 90862 coding. Where my impression was - and was validated by a psychiatric meeting - that 90862 was basically, in my mind, an unethical code."

Question: "I don't understand, why is 90843 for the nurses service somehow correct, regardless of whether 98062 is ethical or not?"

Answer: "That was a half hour service. What the medical director, Blue Cross/Blue Shield was telling us, is that as a group of psychiatrists we should be billing patients at 90862. And that we weren't good psychiatrists if we couldn't see patients for five minutes and generate - what would that be? Twelve visits in an hour? That's one of the few times in a professional meeting where the hair stood up on the back of my neck." Questions about how the doctor could tell whether a person was being deceptive.

The prosecutor said on page 1209: "I just mean is one of the things that when you ask people direct questions, they don't give you direct answers? For example, they avoid the questions?" And the doctor acknowledge that was correct. The prosecutor asked again do you believe the nurses were being billed under 98043. Then his attorney interposed, "Well, your honor, this has been asked about 15 times today." And the prosecutor said, "I think it's fair to say at least this is the crux of the defense in the case."

The court: "And he just gave the answer."

The witness "I don't really know what the code was. I knew it would be billed under some kind of half hour visit. And if I were to choose from all of the codes, I might of put in 90843, but I didn't choose the codes. That was the front office that put in the codes."

On page 1211, the doctor testified "I am not sure it was pointed out to me. I remember that somebody pointed out that there was a batch of insurance forms that was sent back, and I talked with Russ Streur and told Mary to make all the proper corrections as he suggested and mail them back."

Furthermore, the doctor testified on page 1211: "I asked the front office to inquire to find out how we are do to things right. They always - basically we've had good relationships with insurance companies and with Medicare and Medicaid. We've always asked them to take the lead and to tell us what to do. What did they want? It's now what we want, it's what do you want? So they would have been asked to contact them ask what do you want?"

On page 1219, there is testimony regarding a set of inquiries being introduced from American Medical Security about who was providing services to a variety of patients.

Answer: "Yes. I see these. I don't remember, except that I did - I had seen these as an insurance front office problem, and just would have told the front office fill them out accurately and return them." Then the doctor asked "There are so many insurance companies requesting so much information about patients. Are you aware of that?"

The prosecutor responded: "Do you remember the part of the questions earlier - when I asked when people are trying to be deceptive, was one of the things there `did not answer your questions?' Do you remember those questions I asked you?" Then he went on to say "Dr. Belden, I am asking you questions. Could you listen to my questions and answer them, please?"

Answer: "I have been trying to do that, I am not going to try to use this as an excuse, but I do have ADHD, and everybody tells me to listen."

More questions about a contact from WPS about information concerning services provided to some patients. More questions about routine types of requests from insurance companies, all of which were handled by the front office and the physician would not have been involved. Another reference to not recalling one of the specific contacts by the insurance company and another reference to his opinion that 90862 is the "dirty code."

"That's the one that the Medicaid - Medicare - the inner city billing mills where people were seeing people for very, very brief visits and making fantastic amounts of money. I didn't want to get involved to that kind of thing here where I, if that was what they were suggesting that we do a brief code and see a lot of people, as Blue Cross/Blue Shield was suggesting, that's something I didn't want to be a part of."

On page 1228, the doctor said: "The nurses - I didn't see that this was basically a - that the central issue was the billing of the nurses. It was basically a statement that they wanted us to bill in a certain way, certain codes. We took our leadership from the insurance companies. Whatever they wanted, we would do."

On page 1230, there is a reference to being really under the gun in '88, '89 and '90, "During the HMO years." At that time "we'd have emergency patients being squeezed in right and left, family doctors calling and saying the patient needs to be seen today, and there was not time available for myself, the nurse would start the evaluation."

On page 1233, the physician wanted to add something about how the nurses would see patients that were an emergency and that they were not to be billed for this service. "I want to add something here that I think you and the court should know."

Question: "I know this may sound strange to you, but the structure of testimony doesn't allow you to gratuitously add things."

Answer: "Doesn't allow me to add one paragraph to explain what's going on?"

"Right...."

"Okay, but I feel you are missing a vital piece of data."

The prosecutor said well the attorney could elicit that information.

On page 1236, the doctor spoke about his specialty of treating what's called a dual diagnosis, where people who have problems with mental disorders and substance abuse. "Those individuals we developed a local reputation for treating, and they are the kind of people that nobody wants to treat."

On page 1245, the doctor explained that he did not require everybody to sign each and every progress notes because "Generally their writing would be legible enough that I could tell who had made the note."

On page 1250, he also explained how there would be flowing types of clinical notes and that sometimes he asked the nurse to make a note about something that he had said. So that documentation might not clearly show whether or not the doctor had participated in a particular encounter.

On page 1255: "The nurses and myself provide services jointly in a team effort to meet clinical service demands as discussed." Then there is testimony beginning on page 1278 of the witness of Dr. Chester Schmidt, Jr. employed by the Johns Hopkins Bay View Medical Center, where he has been employed for 26 years. He is the chairman of the Department of Psychiatry which includes 40 faculty physicians and PhD psychologists. Some of the many positions he has held include the chair of the work group on codes and reimbursements with the American Psychiatric Association. He has written a couple of books on coding issues. "The goal or the purpose of the manual is to help psychiatrists deal with the tangle, if you will, of coding."

With regard to the second edition, he notes that "There is a rather dramatic change in the section on psychiatry. - There were relatively few codes for psychotherapy in the years prior to 1998. And since '98 they are now much expanded series of code for the psychotherapy services.

There are remarks that any book is hearsay. And that we don't admit books. The court did admit the book.

Dr. Schmidt testified that "there is a common utilization of non- physicians in the practice of psychiatry."

On page 1288, he testified that "The use of the codes, though, vary substantially from carrier to carrier or from insurance company to insurance company. Because the way in which the codes are used is often dependent on the payment policies of the individual insurance companies, and the insurance companies have complete authority to set their own payment policies. And in that sense, the codes as a convention has no real legal or regulatory authority. They are merely, as I said, a convention that has been adopted by the various parties that use them."

He also testified that the charges of Dr. Belden were well within the ballpark for the services provided.

On page 1303, Dr. Schmidt testified that he was the representative from the APA on the AMA Relative Value Update Committee, which is the group that sets the RVU's for the Medicare program.

On page 1305, Dr. Schmidt states that "There is no legal mandate, if you will, and there is no regulatory authority associated with it.... The insurance companies are perfectly free to - and they do - interpret the use of those codes as they see fit. And that goes for the Medicare program as well."

On page 1307, Dr. Schmidt says that "They have very idiosyncratic approaches to the use of these codes."

On pages 1315 to 1316, Dr. Schmidt testifies that "Practically what has happened through the RVU system is - was to set into concrete the prevailing fee schedules that existed prior to the RVU's.... The study did nothing more than found a way to convert the existing fee schedules into something mathematic that could be very much controlled by the Medicare system. It gave it a means to essentially ratchet down fees for physicians and legitimize the whole thing."

On page 1322, Dr. Schmidt says that "As you can see from the codes that are provided for psychiatry in 1994, there are a very limited number of codes. The range of activities that - services that can be provided by a psychiatrist particularly in the use - when they use extenders is absolutely not addressed by this coding system. There is no provision for that here whatsoever...." Nevertheless, "In 1994 and since 1994, all insurance companies had paid for services that were not provided by physicians ... accepted the use of these codes by non-physicians. So it just - it underlines the fact that - the point that I made earlier that the way these codes are written, the very existence of the codes does not create a mandate for the payers. The payers are absolutely free to do whatever they want with these codes and to make any kind of variation in terms of their payment agreements with the providers. So that the use of a nurse in the provision of the service is not addressed here, but in fact the insurers have been paying nurses for years who have used these codes."

He goes on to say on page 1325 "The fact is that the services provided and there are no codes - there simply are no codes to capture that service."

On page 1329, the witness said "I think Dr. Belden is wrong. I think it's - he's wrong about psychotherapy. I think most psychiatrists would say that the nurses were providing supportive type kind of psychotherapy, and in my opinion that is - it's properly coded by the 90843."

In speaking to Dr. Belden, I learned that he was surprised by Dr. Schmidt's testimony that actually he had been using 90843 correctly.

On page 1332, Dr. Schmidt testified that the CPT manual "is owned and copyrighted by the AMA - they have control and sole authority over those manuals."

There is substantial argument within the American Psychiatric Association and between the APA and the payers about code 90862.

On page 1333, Dr. Schmidt testifies that despite the fact that the medical profession "headed up by the AMA has agreed on this use of the language that we call the CPT codes" there is substantial variation in the payment policy of the various insurers.

He also notes on page 1336 that the medical directors "For the Medicare program have decided on their own that they want that service to represent at least 20 minutes of face-to-face service by the physician provider." This is part of a discussion about the code 90862 and the level of sophistication involved in it and that there is no time element in that code so that theoretically you could see a patient for five or ten minutes and legitimately bill 90862, for which the average fee in the Medicare system is about $45.00. There is currently a battle going on because of the huge increase in the use of the 90862 and an attempt to define the amount of time that needs to be spent to legitimately bill under that code.

On page 1339 Dr. Schmidt says that it is fair to say that a physician does not have to participate at all in the rendering of 90843 and that "The Medicare system will pay physicians, nurses, social workers, and psychologists."

On page 1342, Dr. Schmidt said that "there are no national standards at this moment" for the evaluation and management codes.

Question: "And I think you mentioned there is no requirement that a physician be present for the providing of services described as 90843 or 90844, is that right?"

Answer: "Your choice of words is interesting. My testimony is that my understanding of the Medicare program is that other providers can be paid under the program for the provision of those services."

He also comments on pages 1353 and 1354 that various payment policies depend upon the doctor's mode of practice and that there are various acceptable modes of practice. "There is no legal barrier for a physician from doing that for as many nurses as the physician feels comfortable in being able to supervise."

Dr. Schmidt testified that there was no specific requirement for the physician to inform the insurance company about the mode of practice.

On page 1356 and 1357:

Question: "and there is a reason why you'd indicate that the nurse is providing the service in that scenario?"

Answer: "Yes. I would do that because I would not want to be here in this court...."

Question: "Is there another reason other than to avoid criminal prosecution?"

Answer: "That's the prime reason for being sharp in one's billing and coding practices today, is to avoid being involved in either a civil or criminal procedure. The basic - so far as I am concerned, the basic contract is not between me and the insurance company. It's between me and my patient. If the patient knows what service I am providing and how I am providing them and I have fulfilled that contract, that's really what counts for me. The paperwork is really a pain in the tail and something that we have to deal with, and we deal with it in order to keep out of trouble, basically."

Dr. Schmidt agreed that Dr. Belden could supervise his nurses even if he wasn't in the office.

This concludes the review of testimony up through pages 1369.