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Showalter, Stuart. The Law of Healthcare Administration, Ninth Edition, Health Administration Press, 2020.

Chapter 15: Fraud Laws and Corporate Compliance

After reading Ch. 15, readUnited States v. Greber 760 F.2d 68 (3^rd Cir. 1985) summarized on pp. 592 or Google Scholar. Address the following, in a maximum of two pages: Give a summary of the facts and issues in the case; Do you agree or disagree with the holding in this case? Why? (100 points)

See Handout for suggested case analysis framework.

https://scholar.google.com/scholar_case?case=3948498629869723506&q=united+states+v+greber&hl=en&as_sdt=6,39

United States v. Greber 760 F.2d 68 (3rd Cir. 1985) WEIS, Circuit Judge

[The defendant was convicted of fraud related to his durable medical equipment company's billing practices. The company supplied Holter monitorsportable devices worn by patients to record their heartbeats for later interpretation. For this service, Dr. Greber's company, Cardio-Med, billed Medicare and remitted a portion of each payment to the referring physician. For this practice, he was found guilty of having violated the AKS even though the payments were made for consultative services rendered. Dr. Greber was also convicted of submitting false statements concerning the length of time the monitors were operated (Medicare requires at least eight hours of operation to qualify for payment) and mail fraud (by using the mail to bill for services that were medically unnecessary or were never provided). Only the kickback issue is addressed in the following excerpt.] On appeal, defendant raises several alleged trial errors. He presses more strongly, however, his contentions that the evidence was insufficient to support the guilty verdict on the Medicare fraud counts, and that the charge to the jury on that issue was not correct. . . .

I. Medicare Fraud The Medicare fraud statute was amended [in 1977]. Congress, concerned with the growing problem of fraud and abuse in the system, wished to strengthen the penalties to enhance the deterrent effect of the statute. To achieve this purpose, the crime was upgraded from a misdemeanor to a felony. Another aim of the amendments was to address the complaints of the United States Attorneys who were responsible for prosecuting fraud cases. They informed Congress that the language of the predecessor statute was "unclear and needed clarification." A particular concern was the practice of giving "kickbacks" to encourage the referral of work. Testimony before the Congressional committee was that "physicians often determine which laboratories would do the test work for their Medicaid patients by the amount of the kickbacks and rebates offered by the laboratory. . . . Kickbacks take a number of forms including cash, long-term credit arrangements, gifts, supplies and equipment, and the furnishing of business machines." To remedy the deficiencies in the statute and achieve more certainty, the present version of 42 U.S.C. 1395nn(b)(2) was enacted. It provides: whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly in cash or in kind to induce such person . . . (B) to purchase, lease, order, or arrange for or recommend purchasing . . . or ordering any . . . service or item for which payment may be made . . . under this title, shall be guilty of a felony. [The evidence showed that the defendant had paid physicians "interpretation fees" for the doctors' consultation services and for explaining the test results to the patients. Some evidence existed that physicians received interpretation fees even though Dr. Greber had actually evaluated the monitoring data. Moreover, the fixed percentage paid to the referring physician was more than Medicare allowed for such services.]

The district judge instructed the jury that the government was required to prove that Cardio-Med paid . . . some part of the amount received from Medicare; that defendant caused Cardio-Med to make the payment; and did so knowingly and willfully as well as with the intent to induce Dr. Avallone to use CardioMed's services for patients covered by Medicare. The judge further charged that even if the physician interpreting the test did so as a consultant to Cardio-Med, that fact was immaterial if a purpose of the fee was to induce the ordering of services from Cardio-Med. Defendant contends that the [instruction to the jury] was erroneous. He insists that absent a showing that the only purpose behind the fee was to improperly induce future services, compensating a physician for services actually rendered could not be a violation of the statute. The government argues that Congress intended to combat financial incentives to physicians for ordering particular services patients did not require. The language and purpose of the statute support the government's view. Even if the physician performs some service for the money received, the potential for unnecessary drain on the Medicare system remains. The statute is aimed at the inducement factor. The text refers to "any remuneration." That includes not only sums for which no actual service was performed but also those amounts for which some professional time was expended. "Remunerates" is defined as "to pay an equivalent for service." Webster Third New International Dictionary (1966). By including such items as kickbacks and bribes, the statute expands "remuneration" to cover situations where no service is performed. That a particular payment was a remuneration (which implies that a service was rendered) rather than a kickback, does not foreclose the possibility that a violation nevertheless could exist. n United States v. Hancock the court applied the term "kickback" found in the predecessor statute to payments made to chiropractors by laboratories which performed blood tests. The chiropractors contended that the amounts they received were legitimate handling fees for their services in obtaining, packaging, and delivering the specimens to the laboratories and then interpreting the results. The court rejected that contention and noted, "The potential for increased costs to the Medicare- Medicaid system and misapplication of federal funds is plain, where payments for the exercise of such judgments are added to the legitimate cost of the transaction. . . . [T]hese are among the evils Congress sought to prevent by enacting the kick-back statutes. . . ." Hancock strongly supports the government's position here, because the statute in that case did not contain the word "remuneration." The court nevertheless held that "kickback" sufficiently described the defendants' criminal activity. By adding "remuneration" to the statute in the 1977 amendment, Congress sought to make it clear that even if the transaction was not considered to be a "kickback" for which no service had been rendered, payment nevertheless violated the Act. We are aware that in United States v. Porter the Court of Appeals for the Fifth Circuit took a more narrow view of "kickback" than did the court in Hancock. Porter's interpretation of the predecessor statute[,] which did not include "remuneration[,]" is neither binding nor persuasive. . . . We conclude that the more expansive reading is consistent with the impetus for the 1977 amendments and therefore hold that the district court correctly instructed the jury. If the payments were intended to induce the physician to use Cardio-Med's services, the statute was violated, even if the payments were also intended to compensate for professional services.