The U.S. Fifth Circuit recently upheld convictions and sentences against five named defendants, each charged with conspiracy to commit health care fraud, conspiracy to violate the Federal Anti-Kickback Statute (AKS) and several counts of substantive health care fraud. In United States v. Barnes, No. 18-31074, 2020 WL 6304699 (5th Cir. Oct. 28, 2020), the Fifth Circuit rejected arguments from five convicted former employees (four physicians and one biller) of Abide Home Care Services, Inc. (“Abide”) who had appealed the trial court’s determination that there was sufficient evidence to support their convictions.

Medicare reimbursement for home health care services was central to the health care fraud and conspiracy convictions in the Barnes opinion. Medicare regulations require that a Medicare patient be in need of skilled services and be “homebound,” as certified by the patient’s physician in order to receive reimbursement for home health care services. The physician certification requires that a physician review an in-home assessment completed by a nurse and approve a plan of care using forms which are then submitted to Medicare. Patients require recertification every sixty days. Payment for home health services varies depending on the complexity of the patient’s diagnosis, with more complex diagnoses receiving higher Medicare reimbursements.

The Government alleged that the defendants committed fraud by billing Medicare for plans of care that they authorized for medically unnecessary home health services which included diagnoses that were not medically supported. Four of the defendants were formerly employed physicians at Abide where they served as “house doctors” that referred patients for home health care services, reimbursable by Medicare. The fifth defendant, a spouse of one of the physician-defendants, served as a biller for Abide. Because Abide employees could predict how much Medicare would reimburse for any particular patient, they were encouraged to “get the score up” on any files that did not meet Abide’s “break-even point.” Moreover, the Government argued that the physician-defendants were paid for referrals, disguised as compensation for services performed as medical directors. Finally, the biller-defendant was alleged to have been paid a salary that increased as her physician-husband’s referrals increased.

As noted above, on appeal, the defendants contended that there was insufficient evidence to support their convictions. In rejecting their argument, the Fifth Circuit pointed to several significant findings from the trial court and held that such findings were sufficient to allow a jury to conclude the conduct was fraudulent. These findings included testimony that employment agreements with the physicians were merely established to create a paper trail, disguising the real intent of the arrangement which was compensation for referrals. Abide staff also would sign for the physician defendants with their knowledge and that certain patients were recertified by the physicians without the patient ever knowing or being treated by such physician. Also, the court pointed to statistical evidence brought out at trial showing that Abide physicians diagnosed patients with complex (and therefore more profitable) diagnoses with significantly greater frequency than other providers in the region—indeed, Abide was an outlier nationally. The owner of Abide also admitted to conspiring with the defendant-physicians to pay them for referrals. Finally, the trial record demonstrated that the biller generated weekly reports tracking revenue and had a “911 code” in the event that law enforcement arrived as evidence sufficient to persuade a jury that she was aware criminal activity was occurring. Collectively, the Fifth Circuit believed a reasonable juror could have convicted the defendants.

On all counts, the recent appellate decision granted significant deference to the trial court’s findings. This case illustrates the uphill battle defendants have on appeal for health care fraud convictions, particularly the difficulty of prevailing on an argument of insufficient evidence. It is also another example, without discussion in the opinion, that while the employment safe harbor to the federal Anti-Kickback Statute has broad applicability that the government views the safe harbor’s rules with limits if it encourages referrals as the individuals convicted in this case were all employees.