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United States v. Awad

January 12, 2009

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
AZIZ F. AWAD, DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Central District of California, James V. Selna, District Judge, Presiding, D.C. No. CR-04-00237-JVS-1.

The opinion of the court was delivered by: Graber, Circuit Judge

FOR PUBLICATION

OPINION

Argued and Submitted November 18, 2008 -- Pasadena, California

Before: Susan P. Graber and Richard R. Clifton, Circuit Judges, and Edward C. Reed, Jr.,*fn1 District Judge.

Defendant Dr. Aziz F. Awad stands convicted of 24 counts of participating in a scheme to defraud Medicare under 18 U.S.C. § 1347 and four counts of money laundering involving the proceeds of health care fraud under 18 U.S.C. § 1956(a)(1)(A). He alleges four errors that we address here:

(1) omission of the word "willfully" from the portion of the indictment alleging violations of 18 U.S.C. § 1347; (2) a multiplicitous indictment; (3) jury instructions stating that the jury need not find that Defendant knew his conduct was unlawful; and (4) application of a sentencing enhancement under U.S.S.G. § 2B1.1(b)(12)(A) (2005) for creating a risk of serious bodily injury or death.*fn2 For the reasons explained below, we affirm.

FACTUAL AND PROCEDURAL HISTORY

A. Medicare Reimbursement

Testimony at trial explained the procedures through which physicians are reimbursed for services rendered to Medicare-insured patients. Medicare provides insurance coverage for persons over age 65 and for certain disabled persons. Physicians must apply to provide services to Medicare beneficiaries. In order to be accepted, physicians must follow Medicare's rules and regulations, submit accurate claims, and accept Medicare's payment for services rendered. The Medicare Carriers Manual is a compilation of Medicare's interpretation of its rules and regulations for payment of claims. Medicare also sends physicians newsletters that contain billing information, guidelines, rules, and regulations.

To obtain payment from Medicare for services rendered to a beneficiary, a provider submits a claim form. The claim form requires the provider to list a provider number, a procedure code, and a place-of-service ("POS") code. The physician must certify on the claim form that "the services shown on this form were medically indicated and necessary for the health of the patient and were personally furnished by me or were furnished incident to my professional service by my employee under my immediate personal supervision, except as otherwise expressly permitted by Medicare or [applicable] regulations." Each claim form also provides that "[a]ny person who knowingly files a statement of claim containing any misrepresentation or any false, incomplete or misleading information may be guilty of a criminal act punishable under the law and may be subject to civil penalties."

When someone other than a physician performs the service for which Medicare is billed, certain supervision requirements must be satisfied. The requisite level of supervision depends on the place where the medical visit occurs. If the services are performed outside the physician's office setting, nonphysician's services are covered as "incident to" the physician's service only if there is "direct personal supervision" by the physician. When services are provided in an institution such as a convalescent home, the availability of the physician by telephone, or even the presence of the physician somewhere else in the building, does not constitute direct personal supervision.

Medicare regulations provide POS codes that show the type of location where a service is performed. The physician is responsible for choosing the POS code that is most appropriate. A service provided in the physician's office is coded "11," while a service provided in a "board-and-care facility" is coded "33." Medicare does not pay physicians for respiratory treatments given in board-and-care facilities-that is, respiratory treatments denoted with POS code 33-even if they are directly supervised by the doctor.

B. The Fraudulent Scheme

Defendant owned Active Care Medical Group and became a Medicare provider in 1996. In early 2000, Defendant met with co-defendant Herman Thomas, who owned a billing company and a respiratory therapy company, to discuss providing respiratory services to board-and-care facilities.*fn3

Defendant's medical practice was struggling financially at the time. Thomas told Defendant that Defendant's role in the respiratory treatment program would be to evaluate patients and supervise therapists. Thomas, who is not a physician, said that he would take primary responsibility for providing the therapists and for doing the billing.

Defendant and Thomas hired marketers to find board-and-care facilities where Defendant could evaluate patients for respiratory problems. Most of the facilities that participated housed mentally ill patients who had Medicare or Medi-Cal insurance. Defendant began seeing Medicare and Medi-Cal patients at various board-and-care facilities in March 2000. Defendant performed initial assessments on those patients to determine whether they needed respiratory treatment. One of Defendant's therapists testified that Defendant ordered respiratory therapy for "about 100%" of the patients he saw.

In late 2000, the California Department of Health Services conducted an audit of Defendant's Medi-Cal billings. The audit showed that some services that were billed were not actually rendered; that the documentation provided did not establish medical necessity for the services billed; that documentation on patients was "predetermined and preprinted," and therefore not "patient-specific"; and that respiratory treatments were not being rendered in accordance with Medi-Cal policy. Defendant received a letter cataloguing these deficiencies dated July 3, 2001. The letter notified Defendant that he had been placed on "special claims review," meaning that he had to submit billing forms in hard copy so that a claims examiner could review them personally before any payment was issued. After receiving that letter, Defendant stopped submitting claims to Medi-Cal.

Medicare also began an audit of Defendant's billings after receiving a patient complaint that services billed had not been rendered. The investigative report showed that Defendant was seeing up to 114 patients per date of service, based on the number of claims submitted. There were numerous occasions on which 90 or more patients were seen on one day, according to billing records. In a sample of 35 patient files, Defendant billed for six patients whom he allegedly treated at board-and-care facilities, when the patients were hospitalized elsewhere on the dates claimed. Defendant also consistently used POS code 11, which is reserved for office visits, for treatments provided at board-and-care facilities. Defendant's billing for a certain respiratory treatment was 14 times the number, and 18,000 times the amount, than that of the next highest biller in Southern California for that same type of treatment. For another treatment, Defendant billed 28 times the number and 42,000 times the amount of the next highest biller. A follow-up investigation revealed that Defendant billed Medicare for more than $460,000 for treatments performed by his therapists while he was out of the country.

From 2000 to 2003, Defendant billed Medicare approximately $7.4 million for respiratory treatments. Medicare allowed $2,561,819 of those billings and, from January 2000 to September 2003, Medicare paid claims of $2,035,968. Medi-Cal suffered a loss attributable to Defendant of $589,754.

As a result of these activities, Defendant was charged with 24 counts of participating in a scheme to defraud Medicare under 18 U.S.C. § 1347 and with four counts of conducting monetary transactions involving the proceeds of health care fraud under 18 U.S.C. § 1956(a)(1)(A). The case proceeded to trial. At the close of evidence, Defendant moved for a judgment of acquittal, asserting, among other arguments, that the indictment against him was insufficient because it did not use the word "willfully" with respect to the health care fraud allegations. The district court took the motion under submission. The jury found Defendant guilty of all 24 counts of health care fraud and all four counts of conducting monetary transactions involving the proceeds of health care fraud. After the verdict, Defendant renewed his motion, ...


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