United States v. Precision Medical Laboratories, Inc.

593 F.2d 434
CourtCourt of Appeals for the Second Circuit
DecidedDecember 21, 1978
DocketNo. 1186, Docket 78-1126
StatusPublished
Cited by11 cases

This text of 593 F.2d 434 (United States v. Precision Medical Laboratories, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Precision Medical Laboratories, Inc., 593 F.2d 434 (2d Cir. 1978).

Opinion

PORT, District Judge:

Appellants, Precision Medical Laboratories, Inc. (Precision) and Elemer Gall (Gall) were found guilty1 after a four day jury trial in the Southern District of New York, Bonsai, Judge, of 77 counts charging the filing of false claims with the United States between July 2, 1976 and October 29, 1976 in connection with laboratory services performed for patients covered by the Medicare or Medicaid programs. The filing of such false claims violated 18 U.S.C. §§ 287 and 2.2 Appellants were also found guilty of 30 counts charging the receipt of checks in the mail in payment of such services in violation of 18 U.S.C. §§ 13413 and 2.

Sixty-three of the false-claim counts relate to claims made for Medicare payments on form SSA1490. The remaining 14 false-claim counts are based on claims under the Medicaid program.

Twenty-seven of the mail-fraud counts relate to the acknowledged receipt in the mail by Precision of checks in payment of [437]*437the alleged false and fraudulent Medicare claims, and three relate to the acknowledged receipt from the mails of checks in payment of the alleged Medicaid fraudulent claims.

Appellants Precision and Gall, who owned and controlled Precision, claim entitlement to a reversal of the resulting judgments of convictions on the grounds of insufficiency of the evidence and errors in the charge. A careful examination of the record on appeal convinces us that there is sufficient evidence to sustain the convictions and that Judge Bonsai’s charge is free of reversible error. Accordingly, we affirm.

I. SUFFICIENCY OF THE EVIDENCE

The parties stipulated a large part of the proof relating to the modus operandi of Medicare and Medicaid and the payment by the Department of Health, Education and Welfare (HEW) of the claims upon which the indictment was based. Viewing the facts and inferences to be drawn from all the evidence in the light most favorable to the Government, Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942), the jury might have found the following:

Congress created the Medicare and Medicaid programs pursuant to which the United States provides funds for medical services to eligible recipients.

Medicare

Under the Medicare program, HEW pays the entire cost of the services through reimbursement to Blue Cross and Blue Shield of Greater New York (Blue Cross), with whom HEW has contracted to administer the program. Blue Cross receives and pays claims on behalf of HEW.

As a provider of services, appellant Precision received payment for services by submitting to HEW one of the latter’s official forms designated “form SSA 1490, Request for Medicare Payment.” See, e. g., Appendix, Exhibit 57. The form has two parts. The upper part, identifying the patient and signed by him, requests that payment of the benefits be made to him or “to the party who accepts assignment below.” The lower part is completed and signed by the physician or supplier and provides information concerning the nature of the services sufficient to permit a correct charge to be established for them. It also contains an acceptance or refusal of the acceptance of an assignment of the claim. Precision accepted assignments on all Medicare claims. As a result, payment of benefits was made directly to it rather than to the patient.

Medicaid

The Medicaid Act deals with health services for the medically indigent under state promulgated plans supported in part by federal, state and local funds. The Westchester County Department of Social Services administers the plan for Westchester County. That department receives, processes and pays claims to the providers of services upon claims submitted by the providers. The claim form contains a certification stating in part “that the vendor understands that payment and satisfaction of this claim will be from Federal, State and local public funds and that he may be prosecuted under applicable Federal and State laws for any false claims, statements, or documents or concealment of a material fact.” See, e. g., Appendix, Exhibit 67. Upon certification by the New York State Department of Social Services, HEW reimburses the state for claims paid under the Medicaid program on the basis of fifty cents on the dollar.

The Claims

All the claims submitted by Precision for payment under the Medicare or Medicaid programs were paid in accordance with the information disclosed on the claim: in due course reimbursement was made by HEW to New York State and Blue Cross.

Equipment

The equipment used to analyze the blood specimens was essentially of two types. Precision used a relatively simple device [438]*438known as an Auto Analyzer II. This was capable of performing two tests simultaneously. St. Agnes Hospital in White Plains and Dianetics Medical Laboratory, Inc. in Syosset, New York employed more sophisticated equipment capable of performing as many as twenty tests on a single specimen at very high speeds. The equipment at St. Agnes was known as SMA or SMAC, Sequential Multiple Analysis Computer. Dianetics had similar equipment of a different manufacturer. The equipment at Precision is referred to as “manual”, that at St. Agnes and Dianetics as “automated”.

Fee Determination

The gist of the false claims and alleged fraud charged against appellants was that they submitted claims to Medicare and Medicaid for blood tests at rates payable for tests performed on manual equipment when in fact the tests were done on automated equipment. Blue Cross and Social Services maintained updated lists of hospitals, laboratories and other providers having the automated equipment. Both Medicare and Medicaid provided higher rates for tests performed on the manual equipment than on the automated equipment. In some instances the difference could be very substantial. For instance, a flat fee for a given series of tests performed on the automated equipment was reimbursed at from $12.50 to $20.00 while the same tests performed on the manual equipment and billed at the permissible individual rates per test could cumulate to $90 or $100.

To understand the method by which the allowable fees for services were determined by Blue Cross and Social Services in the case of Medicare and Medicaid respectively, it is necessary to detail some of the information required to be supplied by the provider to Blue Cross or Social Services. Question 7(b) of the Medicare claim form requires that the provider indicate where the services were rendered by a code given on the form indicating doctor’s office, nursing home, out-patient hospital or other location. Question 7(c) requires that the service furnished be described. In the case of separate blood analyses, each one would be described separately, or, if done on automated equipment, that would be indicated. In addition, Question 13 requires the supplier to “[s]how name and address of person or' facility which furnished service

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Bluebook (online)
593 F.2d 434, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-precision-medical-laboratories-inc-ca2-1978.