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United States v. Erickson

filed: January 22, 1996.


Appeals from the United States District Court for the District of Montana. D.C. No. CR-93-00036-PGH. Paul G. Hatfield, District Judge, Presiding.

Before: Poole, Boochever, and Wiggins, Circuit Judges.

Author: Poole

POOLE, Circuit Judge:

The Great Falls Eye Surgery Center (the "Center") and ophthalmologist Bruce L. Erickson, a part-owner and the medical director of the Center, appeal their convictions for Medicare fraud in violation of 18 U.S.C. 287. They were convicted after jury trial of knowingly and willfully over-billing their patients and the Department of Health and Human Services ("DHHS") from July 23, 1992 through June 1993 for services provided by their certified registered nurse anesthetists ("CRNA's"). They now claim that the district court committed various errors which, separately and in combination, deprived them of a fair trial. The government cross-appeals their sentences. We have jurisdiction pursuant to 28 U.S.C. 1291. We affirm the convictions and remand for specific sentencing.


Bruce L. Erickson is a licensed ophthalmologist in Montana. Dr. Erickson practiced at and is a 50% shareholder and the medical director of the Great Falls Eye Surgery Center in Great Falls, Montana. The Center is an ambulatory surgery center incorporated in December 1988. The Center began performing operations in early 1989. The Center is an approved Medicare provider whose claims are processed through an intermediary, Blue Cross/Blue Shield of Montana ("BC/BS"). The vast majority of the Center's practice involves performing cataract surgery on senior citizens covered by Medicare. Medicare pays 80% of the patients' costs; the patients have a 20% co-payment.

The Center hires CRNA's to administer anesthesia to patients undergoing surgery and to monitor those patients. The Center has used three methods to bill for CRNA services.

Initially, the Center contracted with a CRNA named Gary Andregg. Mr. Andregg testified at trial that he handled the billing for anesthesia services until January 1990, when he asked the Center to take over the billing of anesthesia services. He billed patients for the concurrent services provided by CRNA's when patients were "staged in, with several patients blocked at the same time in preparation for surgery.

Dr. Erickson testified that he was not in any way involved in any determination of how the Center would bill for anesthesia services. In January 1990, Dr. Erickson asked bookkeeper Diane Boland to look into the procedure for the billing of anesthesia services. Ms. Boland testified at trial that she contacted BC/BS, but had difficulty obtaining the information she needed regarding anesthesia base units (the base amount of time Medicare allowed for anesthesia services). She had to file a Freedom of Information Act request to obtain that information. She commenced billing Medicare in the same manner as Mr. Andregg. In January 1992, bookkeeper Jeryl Robinson took over Ms. Boland's billing responsibilities. She testified at trial that she received training from Ms. Boland, who told her to take the starting and ending anesthesia times for a patient from the patient's billing chart. She never received instructions from Dr. Erickson, but followed the system then in place.

On January 9, 1991, the Health Care Financing Administration ("HCFA") assigned Agent Alfonso Gomez to investigate the Center's billing practices. Agent Gomez studied 25 randomly selected Medicare claims submitted by the Center, and found that the Center billed Medicare for overlapping CRNA services. The Center billed as many as 27 hours for the services of a single CRNA in a ten-hour workday. On July 22, 1992, Agent Gomez went to the Center and interviewed Dr. Erickson and other Center personnel. Agent Gomez informed Dr. Erickson that the Center's method of billing for concurrent CRNA services was not permissible under Medicare regulations. Agent Gomez testified that he was fairly certain that he told Jeryl Robinson the correct way to bill. Ms. Robinson testified that Agent Gomez could not tell her how to bill correctly. She claimed that he told her to contact a local carrier, but could not give her the name of a particular person there who could help her. When she called BC/BS, an agent informed her that the carrier was instructed by Agent Gomez not to speak to anyone at the Center.

Ms. Robinson and Agent Gomez offered two different accounts at trial of the Center's billing practices after July 1992. Ms. Robinson testified that at Dr. Erickson's request, she called the Eye Institute of Utah ("EIU") for billing advice. She testified that she then altered the Center's billing procedure to conform to EIU procedure. She began billing patients for anesthesia time in two blocks -- one for anesthesia and one for surgery. She said that she added the total number of minutes in each block to arrive at a single anesthesia time for which she submitted a Medicare claim. Ms. Robinson testified that the total time billed by the Center went down as a result of this change.

Agent Gomez offered a different explanation of the Center's anesthesia billing practices after July 1992. According to Agent Gomez, the Center ceased billing patients for overlapping CRNA services, but continued to bill patients for periods that exceeded the actual time a CRNA spent with a single patient. The Center began billing for CRNA services in continuous back-to-back blocks, with the anesthesia time for one patient beginning immediately after the anesthesia time for another patient had ended. Agent Gomez indicated that the inflated anesthesia billing periods probably included periods when the patient was away from the CRNA under pre- or post-operative care. He testified that he instructed Dr. Erickson that these pre- and post-operative intervals were ineligible for anesthesia billing where patients were scheduled for consecutive surgeries. He claimed that he told Dr. Erickson that he could bill for five minutes of CRNA services during the pre- and post-operative periods only in cases where an adjacent surgery was not scheduled.

In the summer of 1993, Dr. Erickson and the Center were indicted for one count of mail fraud from January 1990 through June 1993 in violation of 18 U.S.C. 1341 and 1343, and two counts of Medicare fraud in violation of 18 U.S.C. 287 (False Claims).*fn1 They were indicted for knowingly and willfully devising an inflated Medicare billing scheme using the federal mail to obtain reimbursements for CRNA services that exceeded those to which they were legally entitled.

A jury trial was held from March 7 through March 12, 1994. The jury reached no verdict on counts I and II, and the district court declared a mistrial on those counts. The jury found Dr. Erickson and the Center guilty on Count III. At a sentencing hearing on May 31, 1994, the district court departed downward from the United States Sentencing Guidelines and sentenced Erickson to two months imprisonment, four months home detention, and three years of supervised release, along with a fine of $50,000. The district court sentenced the Center to serve three years probation and to pay restitution of $11,910 and a fine of $225,549.

Erickson and the Center appeal their convictions. The United States appeals their sentences. Counts I and II are in stipulated abeyance pending this appeal. Erickson was released on bail pending the appeal.


Appellants claim that the governing regulation is unconstitutionally vague. The regulation, which governs billing for anesthesia services, provides:

Time units involve the continuous actual presence of the physician (or of the medically directed qualified anesthetist or resident) and start when he or she begins to prepare the patient for anesthesia care and ends when the anesthesiologist (or medically directed CRNA) is no longer in personal attendance, that is, when the patient may safely be placed under post-operative care.

42 C.F.R. 414.46(a)(2) (1993).

The district court instructed the members of the jury to find the defendants guilty on Count III if they found that the defendants knowingly and willfully

submitted or caused to be submitted, for Medicare payment, claims for anesthesiological services, well knowing that those claims, while not reflecting overlapping patient attendance, were false and fraudulent, in that they were demands for payment of anesthesia services that were, in whole or in part, not rendered by a physically present provider and were, therefore, not allowable under the regulations providing for Medicare reimbursement, alleged to be in violation of Title 18 U.S.C. 287.

Appellants claim that the term "continuous actual presence" is ambiguous because it does not define a degree of proximity to the patient. The issue before us is whether the phrase "continuous actual presence" can be held to refer clearly to a continually physically present provider.

Whether a regulation is unconstitutionally vague is a question of law subject to de novo review. United States v. Emerson, 846 F.2d 541, 545 (9th Cir. 1988); United States v. Christopher, 700 F.2d 1253, 1258 (9th Cir.), cert. denied, 461 U.S. 960, 77 L. Ed. 2d 1321, 103 S. Ct. 2436 (1983). A penal regulation is void for vagueness unless it "'define[s] the criminal offense with sufficient definiteness that ordinary people can tell what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement.'" United States v. Stansell, 847 F.2d 609, 615 (9th Cir. 1988) (quoting Kolender v. Lawson, 461 U.S. 352, 357, 75 L. Ed. 2d 903, 103 S. Ct. 1855 (1983)). A regulation is not unconstitutionally vague if that regulation is capable of a limited interpretation such that (1) ordinary people could understand what conduct is prohibited, and (2) those enforcing the law are provided with clear standards to constrain them." United ...

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