UNITED STATES of America, Plaintiff-Appellee, v. Angela Dee ISLEY, Defendant-Appellant.
No. 08-14534.
United States Court of Appeals, Eleventh Circuit.
March 10, 2010.
603 F.3d 80
AFFIRMED.
UNITED STATES of America, Plaintiff-Appellee, v. Angela Dee ISLEY, Defendant-Appellant.
No. 08-14534.
United States Court of Appeals, Eleventh Circuit.
March 10, 2010.
603 F.3d 81
Tracy S. Carlin, Brannock & Humphries, Tampa, FL, Robert F. Schroeder, Malcolm & Schroeder, LLP, Atlanta, GA, for Defendant-Appellant.
Before DUBINA and TJOFLAT, Circuit Judges, and BOWEN,* District Judge.
PER CURIAM:
A jury convicted Angela Dee Isley on fourteen counts relating to a scheme to defraud the Medicare program, in violation of
I. BACKGROUND
A. Facts and Pre-Trial Proceedings
Angela Denise Isley was hired by Orthoscript, Inc., a durable medical equipment (“DME“) supply company1 located in Alpharetta, Georgia, to manage its billing operations, which included the supervision and instruction of other employees who prepared and submitted claims for payment to insurance companies and Medicare.2 Under thе Medicare program, Orthoscript submitted its claims for reimbursement to a Medicare contractor known as a DME Regional Carrier (“DMERC“). In the southeast region (Region C),3 the DMERC was Palmetto Gov-
The Medicare program used a coding system called the Healthcare Common Procedure Coding System (“HCPCS“), under which the DME items were assigned product codes. When Orthoscript submitted a claim form to request Medicare payment, it was required to accurately identify the actual products dispensed to the patient by using the proper product code. To help the suppliers, Palmetto published a Supplier Manual and other advisories, setting forth Medicare‘s rules for submitting claims, and it employed nurse educators to answer coding questions. Additionally, another Medicare contractor, the Statistical Analysis DME Regional Carrier (“SADMERC“), operated a coding help line and website to assist suppliers to correctly code their products on Medicare claim forms.
Isley was first indicted on December 29, 2005, along with the owner and CEO of Orthoscript, James Arch Nelson, on thirty-one counts of Medicare fraud; specifically, they were charged with knowingly and willfully assigning incorrect product codes to certain orthopedic supplies in order to generate higher payments from Medicare than were authorized.4 In other words, the Government charged that Isley and Nelson executed a scheme to file Medicare claims and receive payment for DME products that were not equivalent to the products actually supplied to the patients. This alleged scheme to defraud Medicare took place from January 1, 1999 to November 30, 2003.
On February 9, 2006, Isley filed a Brady motion5 requesting that the Government produce, for the relevant time period, all medical necessity reviews of claims submitted to Palmetto by Orthoscript and other Region C DME suppliers for the DME product codes at issue in the indictment. Palmetto, as the DMERC, would at times subject a benefits claim to a medical necessity review, asking the DME supplier for detailed information about its claim, including the manufacturer‘s picture and description of the item, the manufacturer‘s invoice, and the physician‘s medical necessity letter and treatment notes. After this review, the DMERC would approve or deny payment. The DMERC‘s approval of a claim after a medical necessity review is called an “MNA” (for Medical Necessity Aрproval).6 According to Isley, the MNAs for the product codes at issue in the indictment would show that the DMERC‘s use of the codes was ambiguous, confusing, and misleading. This, in turn, would show Isley‘s use of the codes to be reasonable and indeed expressly sanctioned by the DMERC. According to Isley, the MNAs were necessary to show that she lacked the requisite mens rea to commit fraud and that she was entitled to the defense of entrapment-by-estoppel.
After the issuance of this ruling, Isley filed a Freedom of Information Act request to Palmetto, seeking its MNAs of all DME suppliers for all product codes in the indictment. Isley sent this same request to the DMERCs in the other three regions as well. When months passed without response, Isley filed an ex parte motion for the issuance of subpoenas duces tecum, through which she requested subpoenas issued to the four DMERCs for the production of MNA information as it related to the claims of all DME suppliers from January 1, 1999 to November 30, 2003 for the product codes at issue in the indictment.
While this motion was pending, the Government filed a superseding indictment on February 20, 2007. Nelson was not named in the superseding indictment; he had pled guilty on a lesser charge and agreed to testify against Isley. The superseding indictment charged Isley with 14 counts of health care fraud against Medicare and did not contain some of the product codes at issue in the original indiсtment.7 These charges involved a time period from January 2001 to December 2003. The superseding indictment added 36 counts of honest services mail fraud,8 in which Isley was charged with using her position of control over the finances of Orthoscript to misappropriate Orthoscript funds. Specifically, Isley wrote checks drawn upon Orthoscript‘s bank account to pay her personal expenses charged on her personal credit card.9 Finally, the superseding indictment added three counts of money laundering related to the funds she criminally derived from the healthcare fraud.
With respect to Isley‘s motion for the issuance of subpoenas duces tecum, the Government argued that Isley had not shown that she had personal knowledge during the relevant time period of how other DME suppliers were billing their products or that she reasonably relied upon the other companies’ MNAs. Further, Isley had not presented any evidence that she herself was confused about the coding standards.10 Despite these protestations and an earlier ruling that such information was not exculpatory, the district court allowed the issuance of the subpoenas on March 6, 2007. The return date for the production of documents responsive to the subpoenas was April 30, 2007. On that date, the Government filed motions to quash the subpoenas. The matter came before the district court for oral argument on June 25, 2007.
B. Trial of the Case
The ten-day trial of the case began with jury selection on April 14, 2008. The Government explained Isley‘s Medicare fraud as a scheme to seek reimbursement for expensive, custom-fabricated medical equipment (specifically, wrist braces and walking boots) when the cheaper, pre-fabricated items had actually been provided to patients. Pre-fabricated items are manufactured in bulk for off-the-shelf distribution without a specific patient in mind. Pre-fabricated items could be trimmed, molded, bent or otherwise modified for use by a specific patient; however, this makes the item custom-fitted not custom-fabricated. Custom-fabricated items are molded or created specifically for an individual patient. The indictment charges that on ten occasions (Counts One through Ten), Isley billed Medicare for wrist braces using the custom-fabricated code of either L3800 or L3907. It further charges that on four occasions (Counts Eleven through Fourteen), Isley billed Medicare for walking boots using the custom-fabricated code of L1960. With respect to all fourteen counts, the Government charged that Isley‘s use of these codes was fraudulent because the actual products dispensed were pre-fabricated.
At trial, Isley had at her disposal all of the documents relating to the MNAs from Region C for the product codes at issue in the indictment (L3800, L3907, and L 1960) as well as the other product codes that were no longer at issue in the case. She did not, however, have any MNAs from the other three regions. Isley believed that, as evidenced by the MNAs, Medicare erroneously approved the use of custom-
Sandra Sosebee, who worked in the billing department at Orthoscript, testified that she informed Isley on numerous occasions that the use of product code L3907 for pre-fabricated wrist braces was incorrect. Isley explained that she believed this custom-fabricated code could be used if a pre-fabricated wrist brace was bent or molded to fit the patient. This matter was often discussed at manager meetings, wherein Isley persisted with her belief that a bent or molded prefabricated item could be billed using a custom-fabricated code. When Sosebee expressed her concern that Medicare would not agree with this coding, Isley responded: “Well, Medicare is stupid. I will deal with them when they come in here.” Sosebee testified that Isley never told her that she could rely on a prior paid claim in making a coding decision.
On April 12, 2004, Sosebee wrote to Isley, via e-mail, again questioning the use of certain wrist brace codes. Sosebee suggested that prior paid claims could inform the decision of what code should be used. In response, Isley wrote:
I would be hesitant to make any assumptions as to what Medicare is telling us. We have concluded in the past that Medicare is not consistent with regards to what they try to relay to us. I would not make the leap that if Medicare made a payment that means it‘s correct and if they didn‘t make a payment it is incorrect.
Another billing department employee of Orthoscript, Victoria Meguiar, similarly testified that Isley looked at the fee schedule and the rate of reimbursement in determining what code should be used. Further, while Meguiar showed Isley letters indicating that Orthoscript‘s billing codes were incorrect, Isley, in turn, never showed Meguiar MNAs indicating that the billing codes were correct. Meguiar was convinced that Orthoscript was coding certain products incorrectly, and she set about trying to prove to Isley, through phone calls to the DMERC, that Isley‘s understanding of pre-fabricated versus custom-fabricated product codes was incorrect.12 In fact, on one ocсasion, Meguiar changed the billing codes for wrist splints to a pre-fabricated code, which lowered the reimbursement rate. Isley confronted Meguiar and instructed her not to change the codes again.
Melissa Carnes, who also worked in the billing department of Orthoscript, testified that she was present during the meeting about custom-fabricated versus pre-fabricated billing codes when Isley stated that Medicare is “stupid.” Carnes further testified that no one else at Orthoscript shared Isley‘s viewpoint on the use of a custom-fabricated code for pre-fabricated items that were simply bent or molded to fit a patient.13
Additionally, Sosebee, Meguiar, and Carnes all testified that the only document to which Isley referred in their discussions of using the proper product code was the Medicare fee schedule, which gave thе rate of reimbursement for each product code.
Finally, James Arch Nelson testified that Orthoscript employees came to him when they became frustrated with Isley‘s use of incorrect billing codes. He attended a meeting between Isley and the employees, during which Isley explained her position on the billing codes; Isley did not, however, refer to any MNAs to support her position. Nevertheless, Nelson “sided with” Isley on the coding issue even though it appeared to him that the other employees were right and that Orthoscript was coding pre-fabricated products incorrectly.
During the course of the trial, Isley used the DMERC‘s treatment of product codes not chаrged in the superseding indictment to demonstrate confusion in the industry. For instance, Orthoscript had coded certain walking boots with L2114 and L2116 codes.14 Orthoscript had received several MNAs for its claims that used the L2114 and L2116 product codes; thus, Isley relied upon the MNAs in using these codes. Subsequently, however, Orthoscript received both approvals and denials for the same products coded with the L2114 and L2116 codes. The confusion in the use of these codes led to an industry-wide review by the DMERC of the L2114 and L2116 codes.
Despite the confusion over the use of the L2114 and L2116 codes, witnesses aside from Isley testified that there was no industry confusion regarding Medicare‘s definitions for custom-fabricated versus pre-fabricated products. Cathy Plunkett, an experienced health care consultant, testified that the definitions were “clear.” Missy Carnes, Vicky Meguiar, аnd Sandra Sosebee testified that they were not confused by the definitions. Further, Isley herself testified that a DME supplier could not use a custom-fabricated code if the doctor provided a prefabricated item to a patient; Orthoscript supplied only pre-fabricated wrist splints and walking boots to doctors’ offices.
Nevertheless, Isley maintained at trial that she relied upon the MNAs from Region C as well as the other regions in the country to inform her decision on how to code the products. The district court permitted Isley to testify about her futile efforts to obtain the MNAs from Regions A, B, and D; moreover, Isley testified that even though she did not get physical possession of the MNAs, Region A had reported the existence of approximately 2000 MNAs, Region B had reported 812 MNAs, and Region D had reported between 1500 and 2500 MNAs.15
On cross-exаmination, however, Isley admitted that, with respect to seven of the ten charges related to wrist braces, she could not have relied upon any MNAs when filing Orthoscript‘s claims because there were no MNAs for the relevant product codes during the time that she had submitted the claims. With respect to the
In short, Isley attempted, through MNAs from Region C, to paint a picture of confusion and ambiguity on behalf оf the DMERC in the way that it processed claims involving the subject DME product codes. Yet, the only confusion shown related to uncharged product codes. Moreover, Isley presented no evidence, other than her own testimony, that she relied upon any MNA in determining what codes to utilize. Rather, the evidence presented at trial, as outlined above, directly refuted her assertion of reliance.
C. Post-Trial Motion
On May 2, 2008, Isley filed a motion for a new trial based upon an alleged Brady violation in that the Government failed to produce the MNAs from Regions A, B, and D. In this motion, Isley again argues that these MNAs were material to her defense that she relied upon the DMERC‘s regular approval of using the same DME product code for the same product as those criminalized in the indictment. The district court denied the motion, ruling as follows:
Now, having the benefit of the evidence at trial, the court concludes that the only use the defendant could have made of the additional medical necessity approvals would be impeachment. This is so because the evidence established that the defendant did not rely on these medical necessity approvals to make her own coding decisions.
(Order of August 8, 2008, at 2, R. on App. 280.) In considering whether the other regions’ MNAs should have been produced for impeachment purposes, the district court ruled that failure to produce cumulative impeachment evidence does not constitute a Brady violation.
D. Isley‘s Appeal
On August 8, 2008, Isley filed a timely notice of appeal, in which she asserts the following errors. First, she argues the district court abused its discretion in denying her motion for new trial based upon the alleged Brady violation. She next argues that the district court erred in failing to give an “entrapment-by-estoppel” instruction and in failing to give an “interpretive rules” instruction to the jury. Finally, Isley argues that the district court erred by admitting evidence that Isley made contributions to the Atlanta Lesbian Center and that she had an affair.
II. DISCUSSION
A. The Claimed Brady Violation
In this case, Isley argues that the Government violated Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10 L. Ed. 2d 215 (1963), by failing to provide the MNAs from Region A, B, and D. We review the district court‘s denial of a motion for new trial based on a Brady violation for abuse of discretion. United States v. Vallejo, 297 F.3d 1154, 1163 (11th Cir. 2002). Under
(1) the government possessed favorable evidence to the defendant; (2) the defendant does not possess the evidence and could not obtain the evidence with any reasonable diligence; (3) the prosecution suppressed the favorable evidence; and (4) had the evidence been disclosed to the defendant, there is a reasonable probability that the outcome would have been different.
We cannot say that the district court abused its discretion here because Isley cannot show that had she obtained the MNAs from other regions, the outcome of her trial would have been different. This is because the evidence failed to establish that she relied upon any MNA in making the coding decisions charged in the indictment. While she testified at trial that she told Orthoscript employees that the MNAs were her “trump card” with Medicare, the employees testified that she never mentioned MNAs in explaining her coding decisions. Further, the evidence showed that she could not have relied upon MNAs for most of the chаrged coding decisions because no pertinent MNAs existed at the time Medicare was billed. Isley also testified that she did not see the other relevant MNAs until she reviewed the discovery material years after she made the coding decision. Thus, even assuming that there exists MNAs relevant to the subject codes in the other regions at the time Isley made her coding decisions, the jury rejected the notion that she relied upon them.
To the extent that Isley sought a new trial based upon the impeachment value of the MNAs from other regions, her argument similarly fails. Isley believed that the other MNAs would impeach the Government witnesses by demonstrating confusion and ambiguity in the application of the billing codes to the subject products. Even if she could show confusion in the industry, Isley did not demonstrate that any such confusion affected her decisions beсause she did not rely upon the coding decisions in the industry.
Moreover, the district court determination that this impeachment evidence was cumulative was not erroneous. At trial, Isley was able to show that some errors had occurred in the medical necessity review process. Indeed, a large portion of her defense focused on the confusing and misleading application of the L2114 and L2116 codes for walking boots. Isley was therefore able to show that the DMERC was not always consistent. However, evidence of this nature from other regions would be merely cumulative.
In short, the MNAs from other regions are not material, i.e., if the MNAs had been admitted at trial in Isley‘s favor, there is not a reasonable probability of a different outcome in this case. The district court therefore did not abuse its discretion in denying Isley‘s motion for a new trial.17
We review the district court‘s refusal to give a requested jury instruction for an abuse of discretion. United States v. Moore, 525 F.3d 1033, 1046 (11th Cir. 2008). The denial of a requested instruction is reversible error if (1) the requested instruction correctly stated the law; (2) the actual charge to the jury did not substantially cover the proposed instruction; and (3) the failure to give the instruction substantially impaired the defendant‘s ability to present an effective defense. United States v. Richardson, 532 F.3d 1279, 1289 (11th Cir. 2008).
Isley requested an entrapment-by-estoppel instruction. “Entrapment-by-estoppel is an affirmative defense that provides a narrow exception to the general rule that ignorance of the law is no defense.” United States v. Funches, 135 F.3d 1405, 1407 (11th Cir. 1998), quoted in United States v. Eaton, 179 F.3d 1328, 1332 (11th Cir. 1999). Entrapment-by-estoppel applies “when a government official erroneously tells a defendant that conduct is legal and the defendant, believing the official, acts on the advice.” United States v. Billue, 994 F.2d 1562, 1568 (11th Cir. 1993). This defense is not available unless a defendant can show that she relied upon an official government communication before acting in a manner proscribed by law. United States v. Johnson, 139 F.3d 1359, 1365 (11th Cir. 1998).
Isley contends that an entrapment-by-estoppel defense is supported by her reliance upon the MNAs Palmetto sent to Orthoscript. That is, through the MNAs, Palmetto advised her that her coding choices were correct.
We first note that Isley cannot point to a single statement or communication to her personally upon which she relied to make her coding decisions.18 Rather, she suggests that approvals of prior claims equated to affirmative statements upon which she could rely in coding the fourteen subject claims of the indictment.19 To the extent that there were misstatements through the MNAs about which product codes were acceptable, unless these statements were made directly to Isley, her reliance upon them is misplaced. See Eaton, 179 F.3d at 1332 (“For a statement to trigger an entrapment-by-estoppel defense, it must be made directly to the defendant, not to others.“)
Moreover, the evidence at trial established that there was no confusion in the industry: pre-fabricated products could not be coded with custom-fabricated codes. Thus, even assuming Isley relied upon an erroneous MNA, such reliance would not be objectively reasonable.20 Thus, the district court did not abuse its discretion in
Isley also requested the following “Interpretative Rules” charge:
You have heard the testimony during the case of Palmetto‘s interpretations of various HCPCS (Healthcare Common Procedure Coding System) product codes for wrist splints and walking boots. The rules and regulations that have been mentioned during this trial are what is known as “interpretative” rules and regulations. They were not promulgated pursuant to the notice-and-comment requirements of the Administrative Procedure Act. You are hereby instructed that “interpretative” rules and regulations lack the force and effect of law. As such, they are non-binding, and do not foreclose alternative courses of action by durable medical equipment (DME) providers.
Isley refers to the supplier manual and advisories issued by the DMERC and SADMERC as the interpretative rules upon which the Government relied. Isley contends that she was prosecuted under definitions of custom-fabricated and pre-fabricated set forth in these documents; thus, the above charge was appropriate.
The district court did not abuse its discretion in refusing to give this charge because Isley was not indicted for violating an interpretative Medicare rule. Rather, she was charged with defrauding the Medicare program in violation of
C. Admission of Extrinsic Evidence
On January 25, 2007, prior to the superseding indictment, the Government filed a Rule 404(b) notice of its intent to introduce evidence that Islеy had used Orthoscript funds without permission to pay for unauthorized personal charges on her corporate American Express account, including a $20,000 charitable donation to the Atlanta Lesbian Center. The Government also included notice of its intent to introduce evidence that Isley used Orthoscript funds without permission to pay for charges on her personal Capital One credit
In the superseding indictment, the Government charged Isley with 36 counts of honest services mail fraud relating to her use of Orthoscript funds for the payment of charges on the personal Capital One accounts of Isley and her significant other, Tracy Hollis. The рersonal credit card charges against her corporate American Express card, such as the charitable contribution, were not charged in the superseding indictment. In denying Isley‘s motion to suppress the unindicted credit card transactions, the district court ruled that the charitable donation evidence was admissible either as inextricably intertwined with the mail fraud counts or relevant 404(b) evidence.
At trial, the Government called Hollis to testify about the two Capital One credit cards that were the subject of the mail fraud charges. During direct examination, the Government asked Hollis questions about her relationship with Isley:
Q: Approximately how long were you involved in a relationship with Ms. Isley?
A: About nine and a half years.....
Q: And when did the relationship end?
A: In June of 2004.
Q: All right. I‘m not going to go into it in great detail, just briefly, can you tell the jury the nature of how the relationship ended?
A: [Isley] was having an affair.
....
Q: Would you describe [your subsequent contaсts with Isley] to be hostile, or amicable, or how would you describe it?
A: It was painful, difficult, but civil.
Isley did not object to this testimony.
On appeal, Isley objects to Hollis‘s testimony that Isley had an affair and to the admission of evidence that she made a $20,000 donation to the Atlanta Lesbian Center.23
1. Hollis Testimony
Because Isley did not contemporaneously object to this testimony, we review its admission for plain error only. United States v. Munoz, 430 F.3d 1357, 1375 (11th Cir. 2005). Under the plain error review standard, a defendant must show (1) error, (2) that is plain and (3) that affects a defendant‘s substantial rights. United States v. Williams, 527 F.3d 1235, 1240 (11th Cir. 2008). To affect her substantial rights, Isley must show the admission of this evidence affected the outcome of the proceedings. United States v. Parker, 277 Fed. Appx. 952, 957 (11th Cir. 2008).
First, Isley claims that Hollis‘s testimony was not needed because Special Agent Erica Wilker had already testified that the charges to the Capital One cards were personal in nature; thus, Hollis was called solely to emphasize Isley‘s sexual orienta-
Second, the Government properly impeached Hollis under
2. Charitable Donation Evidence
As an initial matter, we will review the admission of the evidence that Isley donated $20,000 to the Atlanta Lesbian Center for an abuse of discretion. United States v. Ramirez, 426 F.3d 1344, 1354 (11th Cir. 2005). While the Government points out that Isley did not contemporaneously object to the donation evidence when it was admitted,
In short, the probative value of the charitable donation evidence was not substantially outweighed by the danger of unfair prejudicial. See Edouard, 485 F.3d at 1344 n. 8 (”
III. CONCLUSION
For all of the foregoing reasons, Isley‘s convictions are AFFIRMED.
UNITED STATES of America, Plaintiff-Appellee, v. Marshell COOPER, Defendant-Appellant.
No. 09-11052
United States Court of Appeals, Eleventh Circuit.
March 11, 2010.
Non-Argument Calendar.
Notes
(Tr. of Hrg. on June 25, 2007, at 105, R. on App. 212.)I‘ll be frank with you. It‘s absolutely inconceivable to me that the government‘s allowing these Medicare provider contractors, whatever they are, to run without keeping any better records that can be searched than there are. Now, I‘m not going to try to sort out whether the people here today are telling the truth, or the people behind them are giving them false information or not. It‘s real simple for me. I can turn the thing right back on its head and say I think it‘s Brady material, and the government can start sоrting through the boxes, and get it here, and you can sort out who‘s who, and who‘s got what, and when they did it, and whether they turned over the boxes and not the electronic data or whatever.
A statement or claim is not knowingly and willfully false if it is the subject of a disputed legal question or if it represents a reasonable interpretation of applicable rules or regulations. In this regard, the government has the burden of proof beyond a reasonable doubt that Ms. Isley‘s statements or claims were not a reasonable interpretation of any applicable codes, rules or regulations.