United States v. Semrau

693 F.3d 510 (6th Cir. 2012)

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Nature of the Case

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Facts

(D), a Ph.D. in clinical psychology, was president, owner, and CEO of companies that provided follow-up psychiatric care to nursing home patients in Tennessee and Mississippi. At D's direction, Superior and Foundation billed these services to Medicare and/or Medicaid through private health insurance carriers CIGNA in Tennessee and CAHABA in Mississippi. Submission of Medicare claims through a carrier requires providers to submit a '1500 Form' that includes information regarding the patient, the provider, and the services rendered, including the CPT code. The 1500 Form includes a notice stating: 'Anyone who misrepresents or falsifies essential information to receive payment from federal funds requested by this form may upon conviction be subject to fine and imprisonment under applicable federal laws.' CIGNA began an audit of D's billing practices in Tennessee and concluded that D had been billing at a higher rate than could be justified by the services actually performed, a practice known as 'upcoding.' CIGNA demanded reimbursement of the overpayment upon finding D to be 'not 'without fault' in causing the over-payments because articles were published. that explained the requirements for Medicare coverage and the documentation needed to support services billed.' In February 2002, D added a '311' code to its Tennessee log sheets and soon began billing under 99311 for its patient evaluations in that state. However, claims in Mississippi-which were not subject to the CIGNA audit-continued to be billed at the higher code 90862 even though the services were identical. In January 2003, D began billing a new, higher code in Tennessee: 99312. The Tennessee log sheets were updated in March 2003 to replace the '311' code with '312.' On July 1, 2003, Medicare reduced its Mississippi payment for code 90862 from $37 per claim to $23 per claim. Twenty days later, D began billing the higher code 99312 for the first time for its Mississippi claims. Because 99312 paid $45 per claim in Mississippi, D's change to this code resulted in an increased payment of $8 per claim from the previous 90862 rate instead of a reduced payment of $14 per claim at the new 90862 rate, for a net gain of $22 per claim. For the next year and a half, nearly every service indicated as 90862 on the log sheets completed by the physician performing the service was billed at the higher 99312 rate in both Tennessee and Mississippi. This practice continued until four days after a grand jury subpoena was served on D and his companies on December 17, 2004, after which time code 90862 was billed when indicated on the log sheets. D’s defenses at trial were that (1) the codes were sufficiently equivalent that submitting code 99312 was objectively reasonable, (2) any improper billing was unintentional and despite his good faith attempts to be compliant because of the complicated and confusing nature of the codes, and (3) CPT codes do not have the force of law and cannot result in criminal penalties from misuse. D unsuccessfully attempted to introduce three pieces of evidence: CIGNA telephone records that would purportedly prove he had called the support number, two reports that showed carrier support telephone lines sometimes gave inaccurate information, and results of a fMRI lie detector test that found he was generally truthful when, during the test, he said his billing decisions were made in good faith and without an intent to defraud. D was found guilty and appealed.