Arnold & Porter Secures Victory For Client In Criminal Healthcare Fraud Trial

WASHINGTON, DC, December 2, 2015 -- After a five-week criminal trial involving what was once a sweeping federal healthcare fraud indictment against a prominent D.C.-area surgeon, Arnold & Porter LLP convinced a jury to unanimously acquit the surgeon on all outstanding charges. The trial was one of the first attempts by the U.S. Department of Justice to bring a criminal prosecution to enforce its interpretation of Medicare’s “incident to” and “anti-markup” billing regulations.

In August 2014, the government brought a 60-count indictment in the U.S. District Court for the Eastern District of Virginia, based on conduct occurring between 2009 and 2012.  The case was assigned to U.S. District Judge Gerald Bruce Lee in the Alexandria Division.  In addition to allegations of health care fraud, this original indictment included charges of aggravated identity theft and obstruction of justice.  After the district court granted numerous pretrial evidentiary motions in the surgeon’s favor, however, the prosecution appealed to the U.S. Court of Appeals for the Fourth Circuit.  In 2015, following the appeal, the prosecution obtained a superseding indictment that dropped ten fraud counts and the obstruction of justice charge.

Trial commenced in October 2015.  The evidence featured hundreds of exhibits and testimony by three dozen witnesses, including three physician experts.  At the close of the evidence, the trial court granted the defense’s Rule 29 motion for acquittal on all six counts of aggravated identity theft.  At that time, the prosecution also dismissed multiple fraud counts after it was revealed that the government had possessed relevant exculpatory evidence for several years.

The jury then deliberated on the remaining 41 counts that charged the surgeon with executing a scheme to defraud Medicare, Tricare, and several private healthcare insurers.  These remaining counts alleged (1) that unnecessary surgeries to remove skin cancer were performed; (2) that services performed by medical assistants “incident to” the surgeon’s services were billed under the surgeon’s provider number instead of the supervising practitioner’s number; and (3) that consultation services by an independent contractor physician were billed at amounts higher than permitted under the “anti-markup” statute related to diagnostic testing.

At trial, the prosecution had argued that the surgeon falsely diagnosed elderly patients with cancer so that he could perform unnecessary surgery.  However, an expert pathologist from the University of Chicago’s medical school explained to the jury that these patients actually did have cancer, and that the non-cancer diagnoses offered by the government’s witnesses were incorrect and, in some instances, “unreasonable.”  Additional testimony and evidence throughout the trial emphasized the complexity and ambiguity of the “incident to” and “anti-markup” billing requirements.

Arnold & Porter’s trial team consisted of Kirk Ogrosky and Murad Hussain, both of whom are members of the Firm’s White Collar and FDA/Healthcare Groups.  Arnold & Porter’s co-counsel included lawyers from Schulte Roth & Zabel LLP.