The medical necessity of durable medical equipment (“DME”) billed to the Medicare Program may have no relevance to a court’s determination of whether a DME supplier submitted claims based on fraudulent Certificates of Medical Necessity (“CMN”).   The Sixth Circuit Court of Appeal recently upheld a conviction of aiding and abetting Medicare fraud when a DME supplier submitted apparent fraudulent CMNs, even though the DME supplier might have been able to prove the medical necessity of the DME.

In United States v. Davis, Nos. 06-5073/5074, decided June 22, 2007, the Sixth Circuit affirmed a conviction on twelve (12) counts of aiding and abetting Medicare fraud. The convictions of an owner and an employee of the DME supplier stemmed from the supplier’s submitting claims to the Medicare Program for oxygen equipment that had been provided to miners with black lung disease.

Acting on information apparently discovered by a federal Health & Human Services (“HHS”) investigator, it was determined that the DME supplier, through the employee, was submitting documents to the Medicare fiscal intermediary that had been fraudulently completed and signed. Several people testified at trial that they had witnessed the employee openly completing CMNs in an inappropriate fashion in the office.

A CMN is a form that has various sections, one of which contains medical information that must be provided by the physician who is prescribing the DME. This information creates the medical necessity of the DME. The form also must be signed by the prescribing physician. Several witnesses testified that the employee filled out the medical necessity information on numerous forms and signed the forms with the physician’s name. All of the forms at issue were generated for patients of a single physician, for whom the employee did volunteer work.  She had access to patient information but was seen filling out CMNs in the DME supplier’s office without access to the patient charts at the time.

The statute at issue in the case is 18 USC §1347, which provides in pertinent part:

§1347 Health care fraud

Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice—

(1)   to defraud any health care benefit program; or

(2)   to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program,

in connection with the delivery of or payment for health care benefits, items, or services, shall be fined…or imprisoned not more than 10 years, or both.

As the result of the conviction, the defendants were sentenced to imprisonment—36 months and 60 months, respectively— and to three (3) years of supervised released, as well as to pay $171,933 in restitution. Both convictions were affirmed by the Sixth Circuit.

The employee argued on appeal that she should have been permitted to introduce evidence of the medical necessity of the oxygen equipment at issue, thereby negating any material misrepresentation associated with submission of the CMNs and the claims. The Sixth Circuit disagreed, reasoning that acceptance of her materiality argument would negate the part of the statute, subsection (2), that exists to ensure the reliability of the claim system under the Medicare Program and to make criminal the interference with system procedure.  The court believed that whether or not the miners needed the oxygen equipment would not aid the jury in determining innocence or guilt under the facts of the case. The court stated: “Though the case as bar is not a paradigm health care fraud case, consisting of claims … in the obvious absence of medical need, the statute is broad enough to encompass Medicare claims submitted with fraudulent data, irrespective of real patient need.” The court also stated that the government does not have to prove that a health care program suffered any financial loss to obtain a conviction.

It is important to note that the statute under which the government proceeded in the Davis case does not contain the phrase “federal health care program”. Rather, it contains “health care benefit program”. The word “federal” is present in statutes that limit recovery to Medicare, Medicaid and other government-funded programs. Providers need to consider the difference when a statute does not include the word “federal”, as such a statute may be used to attempt to reach private program fraud and abuse.