United States v. Robert T. Mitrione and Marla A. Devore
Docket: 02-4222, 02-4224
Court: Court of Appeals for the Seventh Circuit; March 25, 2004; Federal Appellate Court
Dr. Robert T. Mitrione, a psychiatrist, and Marla A. DeVore, his office manager, were indicted for Medicaid and Medicare fraud, including ghost billing, upcoding, and substitute billing. They faced multiple charges, including conspiracy to defraud the U.S., mail fraud, filing false claims, and health care fraud, under various U.S. codes. Following a three-week trial, Mitrione was convicted on all but two counts, while DeVore was found guilty on 10 of 14 counts. After discovering that a government witness had committed perjury, the district court ordered a new trial for all counts except those related to substitute billing. The government opted not to retry the case. Mitrione received a 23-month sentence, and DeVore was sentenced to 15 months, with both ordered to pay restitution of $11,255.65. They appealed, raising several issues related to the case, particularly regarding the substitute billing charges. The facts regarding their operations and billing practices are presented favorably to the initial verdict, highlighting Mitrione's experience and training in billing as he established his practice and complied with Medicaid regulations.
The physician handbook states that psychiatric services must be personally provided by the billing physician, with no reimbursement for services from psychologists or social workers. Mitrione, a Medicare Part B provider, can delegate certain psychological services under specific conditions, including medical necessity and direct supervision by the physician. Medicare regulations prohibit payment for services rendered by unlicensed providers, even if a physician is nearby. In 1992, Mitrione expanded his practice to the state-funded Mental Health Center of Central Illinois, where Medicaid allows billing for non-physician services. In September 1994, after falling behind in billing, Mitrione hired Marla DeVore as an office manager, with whom he later married. DeVore, along with a nurse from the clinic, helped establish a billing system and created a "super-bill" that documented services provided. Following inquiries into their billing practices, Mitrione and DeVore ordered the destruction of several years' worth of super-bills. They implemented a policy to bill IDPA for non-physician services by substituting Mitrione's name for that of the actual service provider on claims. DeVore reviewed claims prior to submission and addressed issues with billing codes, consulting Mitrione for unresolved problems.
In 1995, Mitrione employed nonphysicians, including social worker Dana Ingram and counselors Ron Havens and Cathy Walters, to serve M.A.'s clients. After these employees left, he hired Terry Kuethe Goff, an unlicensed intern, and Walter Woods, a drug and alcohol counselor previously associated with the failing Gibralter rehabilitation center. During this period, a moratorium in Sangamon County prevented new drug and alcohol certifications. Despite multiple failed attempts to acquire the necessary licenses and billing privileges from Gibralter, which ultimately lost its Medicaid certificate, M.A. could not bill Medicaid for nonphysician drug and alcohol services.
Woods, holding only an alcohol and drug counseling certificate, was not authorized to provide mental health services, which both Mitrione and DeVore were aware of. Nevertheless, they assigned him Medicaid clients and directed him to treat patients with diagnoses beyond drug and alcohol addiction, ignoring objections from Goff about Woods exceeding his certification. Additionally, Goff was assigned a full caseload of Medicaid and Medicare clients despite her lack of licensure and clinical experience.
The billing practices involved assigning Medicaid and Medicare patients to counselors while billing as if Mitrione provided or supervised the services. After inquiries about billing for non-licensed services, M.A. was informed it could not bill Medicaid because it was not a licensed nonprofit mental health clinic. A seminar in October 1996 reaffirmed that Medicaid would not cover psychiatric services from non-physicians. In spring 1996, M.A. formed a therapy group for sexual abuse survivors (SOSA), led by unlicensed individuals DeVore and Goff. As the sessions were emotionally sensitive, Woods was later assigned to co-facilitate the group, despite Goff's objections regarding Woods' qualifications, leading to a reminder of her status as an intern requiring Mitrione's supervision.
Goff consistently raised concerns to Mitrione about Woods' inappropriate conduct and capabilities within therapy sessions. Despite acknowledging his limitations, Woods continued to conduct both individual and group therapy sessions, with the defendants billing for these services as if Mitrione had provided them. They submitted claims to both IDPA and Medicare, falsely representing Woods' qualifications; Medicare would not have reimbursed these claims had they known Woods lacked the necessary licensing and supervision from Mitrione during emergencies.
In their defense against allegations of improper billing, Mitrione and DeVore contended ignorance of billing rules, claiming they were unaware of the physicians handbook, which they had received multiple times, including during training and seminars. Mitrione misrepresented his knowledge of the handbook to investigators and did not mention receiving approval for their billing practices from Gary Vaughn, an IDPA representative.
Mitryone contacted the IDPA Office of Inspector General in December 1999, attempting to deflect blame onto a former employee without citing Vaughn's supposed endorsement of their practices. During the trial, the prosecution presented testimony from Deanna Statler, an IDPA auditor, who suggested that the frequency of billing errors favored the defendants, raising doubts about their claims of mere mistakes. Statler's findings were challenged by the defendants, who argued that her testimony did not fully represent the truth, alleging inaccuracies in her audit methodology.
Judge Scott determined that perjury by a witness entitled the defendants to a new trial on most counts but not all. The review of the denial of a new trial motion on two counts is based on the abuse of discretion standard. The court applies the Larrison test for new trials when false testimony is presented by a government witness, which requires showing that the witness was material, the testimony was false, the jury might have reached a different verdict if aware of the falsehood, and the defense was surprised by the false testimony. The court, however, overrules Larrison and adopts a "reasonable probability" test for new trials based on perjury, requiring defendants to demonstrate that the false testimony was only discovered post-trial, could not have been discovered sooner, was material, and would likely have led to an acquittal.
The defendants contended that the false testimony of Statler was material and affected their convictions related to substitute billing; however, her testimony focused on ghost billing and upcoding, not on the legitimacy of substitute billing claims. The court found Statler's testimony was not material concerning the substitute billing counts. The evidence against the defendants was deemed strong enough to suggest that the jury would not likely have reached a different verdict without Statler's testimony. Additionally, the court found that the jury would still likely have convicted the defendants on the upcoding and ghost billing counts even without her testimony.
Furthermore, the defendants argued that the prosecutor's reference to the September 11 terrorist attacks during closing arguments was prejudicial. The prosecutor acknowledged the challenging circumstances due to the attacks, emphasizing the importance of upholding justice in light of the national crisis.
The district court overruled a defense objection to the prosecutor's remarks, stating that the defendants would have an opportunity to comment on prior events. The prosecutor emphasized the importance of the justice system and urged the jury to focus on the evidence despite recent tragic events, specifically referencing the September 11 attacks and their impact on the trial's significance, particularly concerning the integrity of Medicare and Medicaid programs. Mitrione's attorney countered the prosecutor's analogy, asserting that there was no connection between the previous day's events and the case at hand. DeVore's attorney highlighted that the jury's deliberations were the most crucial matter for DeVore.
The court evaluates claims of prosecutorial misconduct through a two-step process: first examining the remarks in isolation for impropriety, and then assessing their impact on the trial's fairness. The court found the prosecutor's comments appropriate given the context of September 11, determining they did not undermine the fairness of the trial.
The defendants also contended that Illinois statutes related to their Medicaid and Medicare fraud convictions conflicted with federal law, but Judge Scott rejected this argument, affirming Illinois' discretion in setting standards for medical assistance programs.
Regarding sentencing, Judge Scott imposed a 2-level obstruction of justice enhancement for both defendants, citing their false testimony. DeVore challenged the enhancement, claiming she did not testify falsely, while Mitrione supported her arguments without directly addressing his own enhancement, leading the court to find his argument waived or insufficiently developed.
Obstruction of justice enhancements are subject to limited review, where factual findings by the district court are upheld unless clearly erroneous. DeVore must demonstrate with certainty that the district court's findings were incorrect, which is challenging given the court's credibility assessments made over a three-week trial. DeVore testified she was not responsible for billing prior to 1997, asserting a minor role limited to administrative tasks. However, her claims were contradicted by multiple witnesses, leading the judge to conclude her testimony was false. DeVore's insistence on the truthfulness of her statements is unsupported by evidence, as the court found that she played a significant role in orchestrating billing processes, which was material to the case. The court also found that her misleading statements indicated intent to commit perjury, justifying a sentence enhancement. Additionally, DeVore's assertion that her testimony about not participating in decisions regarding the SOSA group was true was countered by witness testimony, affirming the court's decision to apply an obstruction enhancement. Lastly, the defendants failed to object during sentencing regarding the restitution order directed to Medicare, instead challenging the calculation of the amount owed, which resulted in forfeiture of their argument about Medicaid being the actual victim of the fraud. Their review is limited to plain error.
Mitrione and DeVore, convicted of fraud, are subject to restitution under the Mandatory Victim Restitution Act (MVRA), specifically outlined in 18 U.S.C. §§ 3663A and 3664. The MVRA mandates that courts order defendants to make restitution to victims harmed by their offenses. In this case, the term "victim" includes anyone directly harmed by the defendant's actions during a fraudulent scheme. Although restitution is limited to the counts of conviction, harm caused by the broader scheme can justify restitution to additional victims. Judge Scott determined that the defendants caused a total loss of $11,255, ordering them to pay this amount in restitution.
The judge found that both Medicaid and Medicare were victims of the defendants' fraud. The MVRA allows restitution to any victim directly harmed by the defendant's conduct, regardless of whether they were specifically named in the conviction counts. The defendants were convicted of mail fraud and filing false claims, which were part of a scheme to defraud both Medicaid and Medicare. Consequently, Judge Scott's decision to include Medicare as a victim for restitution purposes was justified, as the scheme directly harmed it. The district court's judgment is thus affirmed.
