IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 97-10786
_____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
HENRY EDWARD EUGENE BONHAM;
BEVERLY LARAE BULGER,
Defendants-Appellants.
_________________________________________________________________
Appeals from the United States District Court
for the Northern District of Texas
(4:98-CR-88-1-Y)
_________________________________________________________________
June 22, 1999
Before KING, Chief Judge, and REYNALDO G. GARZA and JOLLY, Circuit
Judges.
E. GRADY JOLLY, Circuit Judge:*
Dr. Henry E. Bonham, a psychiatrist, and Beverly L. Bulger,
his office manager, appeal their convictions and sentences,
involving Medicaid, Medicare, and CHAMPUS fraud. They were
convicted of twenty-two counts of mail fraud and aiding and
abetting mail fraud, and one count of conspiring to commit mail
fraud and to submit a false claim to a federal governmental agency.
Bonham was also convicted of an additional count of submitting a
false claim to a federal governmental agency and aiding and
abetting the submission of a false claim. Bonham argues for
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
reversal of each of his convictions, contending: (1) none of the
convictions are supported by the sufficiency of the evidence; (2)
each of the convictions violate the due process clause of the Fifth
Amendment to the United States Constitution; (3) the district court
erred under Fed.R.Evid. 404(b) in admitting the extrinsic evidence
of his improper billing practices; and (4) his prosecution runs
afoul of the separation of powers clause of the United States
Constitution.
Bulger also contends that the evidence is insufficient to
support her mail fraud and false claim convictions. In her
remaining arguments on appeal, Bulger challenges the district
court’s application of §§ 2F1.1 and 3A1.1(b) of the United States
Sentencing Guidelines.
For the foregoing reasons, we affirm each of the defendants’
convictions and sentences.
I
A
Appellant Dr. Henry E. Bonham maintained a psychiatric
practice in various parts of the state of Texas. The government
alleged that Bonham, through the use of deceptive billing
practices, bilked the federal government out of millions of dollars
in health care proceeds. The evidence showed that from 1991,
onward, Bonham entrusted the day-to-day operations of his practice
to his office manager Beverly Bulger. The fact that is predicate
2
to this criminal case, however, is that Bonham was a certified
provider of services under three federally funded health insurance
programs–-Medicare Part B, Medicaid, and the Civilian Health and
Medical Program of the Uniformed Services (“CHAMPUS”).
Briefly stated, Medicare Part B, Title XVIII of the Social
Security Act, 42 §§ 1395j to 1395w-4, is a health insurance
program that provides medical benefits primarily to persons
sixty-five years of age and older who are eligible for Social
Security retirement benefits and to individuals under sixty-five
who have received Social Security benefits for at least two years.
Medicaid, Title XIX of the Social Security Act, § 42 U.S.C.,
1396-1396v, is a federal and state cooperative cost-sharing
program, which provides necessary medical assistance to families
and individuals with insufficient income and resources. Finally,
CHAMPUS is a Defense Department program that provides medical
benefits to the spouses and unmarried children of living and
deceased members of the military services.
Further background information on these federal health care
programs is instructive in understanding the exact nature of the
appellants’ alleged fraudulent billing practices. Under the
federal regulations applicable to Medicare, Medicaid, and CHAMPUS,
a physician is required to submit each of his claims for
reimbursement to the appropriate intermediary or carrier, on the
claim form prescribed by the Health Care Financing Administration
3
(HCFA)--the HCFA 1500 form. To accurately complete the HCFA 1500
form, the physician is required to provide, inter alia, the
following information: his medical provider number, relevant
patient information, the appropriate diagnostic billing code
identifying the services for which reimbursement is sought, and the
identity of the health care provider who rendered the services.
The face of the HCFA 1500 form also includes the following
certification–-one that a physician attests to each time that he
submits a claim:
SIGNATURE OF PHYSICIAN OR SUPPLIER (MEDICARE, CHAMPUS,
FECA AND BLACK LUNG)
I certify that the services shown on this form were
medically indicated and necessary for the health of the
patient and were personally furnished by me or were
furnished incident to my professional service by my
employee under my immediate personal supervision, except
as otherwise permitted by Medicare or CHAMPUS
regulations.
For services to be considered as “incident” to a
physician’s professional service, (1) they must be
rendered under the physician’s immediate personal
supervision by his/her employee, (2) they must be an
integral, although incidental part of a covered
physician’s service, (3) they must be of kinds commonly
furnished in physician’s offices, and (4) the services of
nonphysicians must be included on the physician’s bills.
[. . . .]
No Part B Medicare benefits may be paid unless this form
is received as required by existing law and regulations
(42 C.F.R. 424.32).
Thus, to determine whether a patient has been provided a
compensable medical service under the Medicare, Medicaid, or
4
CHAMPUS program, or to determine the appropriate pay scale by which
to reimburse the physician for such care, the federal agencies rely
heavily, if not solely, on the representations the physician has
made on the HCFA 1500 form. The federal agencies likewise rely on
the physician’s use of a diagnostic billing code to determine what
type of health care the patient has received. The appellants’
alleged violation of this honor system is the basis for the mail
fraud convictions underlying this appeal.
The government charged that Bonham and Bulger, using the HCFA
1500 form, executed a billing scheme whereby they submitted
fraudulent insurance claims to Medicare, Medicaid, CHAMPUS, private
insurance companies, and individuals through the United States
mail. The insurance claims were fraudulent because the psychiatric
services for which Bonham and Bulger sought reimbursement had not
been personally provided by Bonham, nor were the services provided
under his direct personal supervision1, or rendered a “incident to”
a medical service provided by him, as required by the applicable
federal regulations. In submitting the HCFA 1500 forms, the Bonham
and Bulger deliberately misused billing codes, which, by their
1
To comply with the direct personal supervision requirement,
the physician is not required to be present in the same room with
his aide. However, the physician must be in the office suite and
immediately available to provide assistance and direction
throughout the time services are being performed. Medicare and
Medicaid Guide (CCH), § 3315 (citing MCM § 2050.2); see also 42
C.F.R. 411.351.
5
plain language, contemplated psychiatric and other medical services
personally provided by a physician.2
B
On January 7, 1997, the grand jury returned a 26-count
superseding indictment against Bonham and Bulger.3 Each count of
the indictment pertained to the appellants-defendants’ unlawful
billing practices and their submission of false and fraudulent
insurance claims. Specifically, the indictment charged both
appellant-defendants with 23 counts of mail fraud and aiding and
abetting mail fraud (counts 1-23),4 and one count of conspiring to
commit mail fraud and to submit a false claim to a federal
2
From the record before us, its seems that Bonham and Bulger
customarily submitted the claims using the following diagnostic
billing codes: 90801 (psychiatric diagnostic interview and
examination); 90830 (psychological testing); 90841 (individual
psychotherapy, time unspecified); 90843 (individual psychotherapy,
20 to 30 minutes); 90844 (individual psychotherapy, 45 to 50
minutes); 90845 (medical psychoanalysis); 90846 (family
psychotherapy); 90862 (management of psychotropic medication);
99238 (hospital discharge day management); 99253 (inpatient
consultation); and 99262 (follow-up patient consultation). These
codes, referred to herein as “CPT codes,” were developed by the
American Medical Association (“AMA”), and are listed in the AMA’s
manual, Common Procedural Terminology, Fourth Edition.
3
The superceding indictment also named a third defendant, Gina
Weems, under counts 1-23, and count 26. The district court granted
Weems a judgment of acquittal during the course of trial.
4
18 U.S.C.§ 1341 and 2.
6
governmental agency (count 26).5 Bonham, individually, was
indicted on 2 counts of submitting a false claim to a federal
governmental agency and aiding and abetting the submission of a
false claim (counts 24-25).6
On March 3, 1997, the defendants’ joint trial commenced, and
on March 28, 1997, the jury rendered its verdict. The jury
convicted Bonham on counts 1-3 and 5-23 (mail fraud and aiding and
abetting mail fraud), count 24 (submitting a false claim to a
federal governmental agency and aiding and abetting the submission
of a false claim), and count 26 (conspiring to commit mail fraud
and to submit a false claim). Next, the jury found Bulger guilty
of mail fraud, specifically, counts 1-3, and 5-23, and conspiring
to commit mail fraud and to submit a false claim (count 26). Both
defendants were acquitted on mail fraud (count four).
On July 14, 1997, after a contested sentencing hearing, the
district court sentenced Bonham to 60 months imprisonment on count
1, and 60 months imprisonment on each of counts 2-3, 5-24, and 26.
The district court ordered that Bonham’s sentences on counts 2-3,
5-24, and count 26 run concurrently with one other, but
consecutively to his sentence on count 1, only to the extent
necessary to produce a combined sentence of 87 months. Bonham was
also ordered to make restitution in the amount of $3,911,000.
5
18 U.S.C. § 1341; 18 U.S.C. 287.
6
18 U.S.C. § 287 and 2.
7
Next, the district court ordered Bulger to serve 46 months
imprisonment on each of her convictions, with the sentences to run
concurrently. In calculating Bulger’s sentence the district added
a two-level enhancement to Bulger’s offense level under U.S.S.G.
§ 3A1.1(b), based on the unusual vulnerability of the victims of
the mail fraud–-Dr. Bonham’s patients. The district court also
increased Bulger’s offense level by ten under U.S.S.G.
§ 2F1.1(b)(1)(N), based on the $3,911,000 in loss caused by the
fraud. Bulger and Bonham both timely appealed each of their
judgments of conviction and sentences.
II
As a threshold matter, we note that many of the arguments that
Bonham and Bulger have raised on appeal are frivolous.
Specifically, we find no merit in Bonham’s arguments under the due
process clause,7 the separation of powers clause,8 nor Fed.R.Evid.
7
Bonham’s reliance on Siddiqi v. United States, 98 F.3d 1427
(2d Cir. 1996), is misplaced. The record is clear that during the
prosecution of Bonham’s case, and likewise on appeal, the
government pursued the same, single theory of guilt; one, we add,
that previously earned our approval in United States v. Sidhu, 130
F.3d 644, 647 (5th Cir. 1997). Furthermore, our discussion in part
three of this opinion belies Bonham’s contention that the
government’s experts failed to agree on the proper interpretation
of the CPT codes established by the AMA. We therefore reject
Bonham’s alternative due process argument that the CPT codes are
unconstitutionally vague. In sum, we find no due process violation
with respect to Bonham’s convictions.
8
We find no purpose in addressing at any length, under the
plain error standard, or otherwise, Bonham’s separation of powers
argument raised for the first time of on appeal. Bonham contends
that his convictions violate the separation of powers clause
8
404(b)9. Similarly implausible are Bulger’s arguments that the
district court erred in adding a ten-level enhancement to her
offense level under U.S.S.G. § 2F1.1, based on the loss caused by
because he was prosecuted, not for a crime enacted by Congress, but
for the improper use of the CPT codes devised by the AMA, which
resulted from agency, i.e., executive action of the HCFA in
contracting with the AMA for the use of its CPT codes in the
Medicare, Medicaid and CHAMPUS programs. Bonham, in advancing this
argument, has misconstrued the basis of his federal convictions,
which rest on his fraud in violation of specific criminal statutes.
9
We cannot say that the district court erred under Fed.R.Evid.
404(b) in admitting extrinsic evidence of Bonham’s improper billing
practices through the testimony of Robert and Robin Wester. The
Westers’ testimony provided circumstantial proof of the scheme to
defraud the federal and private health care insurers, as well as
Bonham’s specific intent to commit mail fraud. We have previously
recognized that bad acts or wrongs, which establish a scheme to
defraud, are not the type of extrinsic acts contemplated by
Fed.R.Evid.404(b), and therefore the rule does not prohibit the
admission of such evidence. United States v. Hatch, 926 F.2d 387,
394 (5th Cir. 1991).
9
the fraud10, and in adjusting her offense level upward by two under
the vulnerable victim enhancement, U.S.S.G. § 3A1.1(b)11
10
We agree with the government that the district court’s
calculation of the loss resulting from the fraud at $3,911,000, was
both a reasonable and conservative estimate of the loss. See
Sidhu, 130 F.3d at 651 (citations omitted). The district court
initially calculated the loss resulting from the fraud at
$8,693,000. The district court then gave the defendant a 25%
credit, representing the time Bonham purportedly spent personally
treating his patients. The record illustrates that the district
court was generous in this regard, however. Bonham’s office
records show that he spent even a lesser percentage of time with
his patients. The district court further reduced its loss
calculation by yet another 40% to reflect payments that Bonham did
not expect to receive from the insuring entities and patients.
This last reduction netted the district court’s final estimate of
$3,911,000. Moreover, in making its initial calculation, the
district court only considered the fraudulent insurance claims
submitted from January 1990 to November 1994, and did not include
the claims Bonham filed against Medicaid in 1990 and 1991, nor his
claims filed against Medicare in 1990. Finally, in adjusting
Bulger’s offense level upward by ten, the district court rejected
the thirteen-level increase recommended in the PSI Report, and
departed downward from the adjustment mandated by the guideline
itself. See U.S.S.G. § 2F1.1(b)(1)(N) (if loss is more than
$2,500,000 add 13 level increase). In doing so, the district court
concluded that a thirteen-level increase overestimated Bulger’s
culpability, as she was only Bonham’s employee and not the director
of the mail fraud scheme. See Sidhu, 130 F.3d at 651 (citations
omitted) (noting district court properly accounted for defendant’s
relative culpability under U.S.S.G. § 2F1.1 by treating him as a
“minor participant”). In the light of this record, we cannot say
that Bulger has demonstrated error with respect to the district
court’s application of U.S.S.G. § 2F1.1.
11
Bulger argues that the district court’s application of
U.S.S.G. § 3A1.1(b) (1995) is improper because she is neither a
physician, nor did she stand in a fiduciary relationship with
Bonham’s patients. Alternatively, Bulger contends that the true
“victims” of the mail fraud scheme were Medicaid, Medicare, and
CHAMPUS–-entities who are not “unusually vulnerable” for the
purposes of the guideline. Each of these contentions are
meritless.
U.S.S.G. § 3A1.1(b) (1995) provides that “if the defendant
knew or should have known that a victim of the offense was
10
.We apply the sentencing guidelines in effect on the date that
Bulger was sentenced, July 14, 1997. U.S.S.G. §§ 1B1.11(a) and
(b)(1). See also 18 U.S.C. § 3553 (a)(4)(A).12. We likewise
discern no merit to the defendants’ remaining points error, namely
their numerous challenges to the sufficiency of the evidence.
However, because of the manner in which Bonham and Bulger have
gilded over the substantial evidence against them, we find that
each of the defendants’ sufficiency of the evidence arguments
warrant specific attention.
We further note that the evidence presented by the government
in support of the defendants’ convictions and sentences is
considerably commingled and overlapping. Thus, we will first
address, collectively, Bonham and Bulger’s challenge to the
sufficiency of the evidence supporting the mail fraud counts.
Second, we will address the defendants’ contention that no proof
exists in support of their conspiracy conviction. Third, we will
dispose of Bonham’s challenge to his false claim conviction. With
this framework in mind, we turn now to the record before us.
unusually vulnerable due to age, physical or mental condition, or
that a victim was otherwise particularly susceptible to the
criminal conduct, increase by 2 levels.”
Nothing in the plain language of the guideline, nor its
commentary, can be read to support Bulger’s interpretation of the
vulnerable victim enhancement.
Second, in applying the vulnerable victim enhancement to
Bulger’s offense level, the district court concluded that Bulger
was aware that Bonham’s patients were unusually vulnerable because
of their psychological conditions. The district court further
concluded that “[b]ecause of their mental and emotional conditions,
Bonham was able to convince patients or their families that
hospitalization was necessary. By targeting these groups of
individuals, Bulger and Bonham were able to access the benefits
afforded by the insurance carriers.” The district court’s factual
finding is entirely supported by the record, and, thus, we accord
the district court the appropriate deference. Moreover, we have
time and again recognized that a physician’s unwitting patients,
specifically, those with mental infirmities, are the “unusually
vulnerable” victims of the physician’s fraudulent billing scheme.
United States v. Burgos, 137 F.3d 841, 844 (5th Cir.), cert.
denied, 119 S.Ct. 833 (1999); United States v Sidhu, 130 F.3d 644,
655 (5th Cir. 1997); United States v. Bachynsky, 949 F.2d 722,
735-36 (5th Cir. 1991). This rationale is controlling here. We
find no error with the district court’s application of U.S.S.G.
§ 3A1.1(b).
11
III
A
Bonham challenges the sufficiency of the evidence supporting
his convictions for twenty counts of mail fraud and aiding and
abetting mail fraud on the following grounds: (1) the government
presented four different interpretations of the “direct
supervision” requirement to the jury; (2) the evidence presented at
trial, at best, established that he had only “improper” billing
practices; (3) the government failed to prove that the
psychotherapy services for which he billed the federal entities,
private insurers, and individuals had not been actually provided by
his therapists; and, thus, (4) without a showing of such loss from
the purported fraud, the government has failed to meet its burden
of proof of a reasonable doubt.
Bulger’s first argument is that the government failed to
establish that she placed any of the fraudulent insurance claims
underlying the twenty-two counts of mail fraud and aiding and
abetting mail fraud in the United States mail. Bulger similarly
contends that there exists no evidence that she entered, or caused
the billing information to be entered on any of the claims.
Therefore, citing United States v. Ragan, 24 F.3d 657 (5th Cir.
1994), Bulger argues that the government failed to “link” her to
the indictment transactions, and, thus, each of her mail fraud
convictions should be reversed.
To establish a violation of the federal mail fraud statutes,
18 U.S.C. §§ 1341 and 2, the government must prove: (1) a scheme to
defraud; (2) the use of mails to execute that scheme; and (3) the
defendant’s specific intent to commit fraud. United States v.
Tencer, 107 F.3d 1120, 1125 (5th Cir. 1997), cert. denied, 118
S.Ct. 390 (1997) (citations omitted). A conviction for aiding and
abetting mail fraud must be corroborated with sufficient proof that
the defendants: (1) voluntarily associated with the criminal
enterprise; (2) voluntarily participated in the venture; and (3)
sought by independent action to make the venture succeed. Sidhu,
130 F.3d at 650 (citations omitted).
B
(1)
Viewing the evidence in the light most favorable to the jury’s
verdict, as we must, Sidhu, 130 F.3d at 648, we hold that the
government met its burden of establishing each of the defendants’
guilt beyond a reasonable doubt. The superceding indictment
alleged that from 1985 until January 7, 1997, Bonham and Bulger
knowingly devised and participated in a scheme to submit false and
fraudulent insurance claims to Medicare, Medicaid, CHAMPUS, private
insurers, and individuals. The theory of the government’s case was
that the defendants systemically billed the federally funded health
care programs, private insurers, and individuals for psychotherapy
and related medical services that were not personally provided by
12
Bonham, not provided under his “direct personal supervision,” nor
provided “incident to” a medical service rendered by him, as
required by the applicable federal regulations. The government
further charged that Bonham, with Bulger’s assistance, filed the
insurance claims under his name and provider number, deliberately
using CPT codes that affirmatively misrepresented that he had
personally provided the psychiatric care for which he sought
payment. If rendered at all, the medical services were rendered by
Bonham’s nurses and therapists--employees for whose work Bonham was
not lawfully entitled to be reimbursed. Even still, the
defendants’ submitted fraudulent claims for medical services that
the therapists and nurses had not provided, or had not provided in
the manner or length of time billed.
(2)
We are satisfied that through the testimony of Bonham’s former
billing clerks,9therapists,10 nurses,11 and patients,12 the government
9
Jennifer Joergensen testified that daily, Bulger created
hospital charge sheets, which listed the names of Bonham’s
patients, where they were hospitalized, the dates of their
hospitalization, and the charges to be posted to their accounts.
Joergensen stated that notwithstanding the medical care the
patients actually received, Bulger charged each patient for the
same “set” of standardized services: physician’s rounds, stress
reduction therapy, individual psychotherapy, and group
psychotherapy. To create the charge sheets, Bulger used an office-
generated patient list, which only identified the patients by name.
She made no attempt to verify the true nature of the patient’s
psychiatric care, or if patients had been treated by therapists
instead of Bonham. Bulger then gave the completed charge sheets to
Joergenson, and instructed her to bill the patients accordingly.
Joergenson testified that these “charges” were, in turn, used to
generate the insurance claims mailed to Medicaid, Medicare,
CHAMPUS, the private insurers, and individuals. Next, Kelly
Bridges, one of Bonham’s former receptionists, similarly testified
that under direct orders from Bulger, she routinely charged each
patient for the same cluster of psychiatric services. Finally,
consistent with Joergenson and Bridges’s testimony, Renee Husky,
testified that Bulger provided her nursing home charge sheets, and
instructed her to bill Bonham’s nursing home patients in a cookie-
cutter fashion. Husky also stated that Bulger never provided her
any proof of whether Bonham or his therapists had actually treated
the patients as billed. Husky further testified that Bulger
instructed her to use particular codes to update the patients’
accounts–-CPT billing codes 90801 and 90843. Husky stated that she
never knew, however, what information the codes communicated to the
13
insurance companies.
10
Georgia Williams testified that for the year she worked as
a therapist for Bonham, from August 1991 until September 1992, she
was not a licensed psychotherapist, and did not become one until
after she left Bonham’s employment. Notwithstanding, Williams
stated that her job responsibilities included providing 45 minutes
of daily psychotherapy to 15 or 20 geriatric patients daily.
Williams further testified that during the year of her employment,
she never saw Bonham personally provide psychotherapy to his
patients. Williams also testified that Bonham directed her to
complete daily, false progress notes on his geriatric patients.
Thus, for six months, Williams charted events in the patients’
files that had not occurred, and listed medical systems that the
patients did not have. Williams also documented that the geriatric
patients received 45 minutes of psychotherapy, although, because of
her heavy patient load, she spent only two to five minutes with the
patients. Finally, Williams testified that Bulger instructed her
to tell the patients that Bonham was “out on an emergency” when
they inquired about his absence.
A second therapist, Carrie Gasparovic, testified that she
complied with Bulger’s instructions to falsely chart that she
conducted 30-minute psychotherapy sessions with Bonham’s adolescent
patients who were hospitalized at CPC Oak Bend Hospital.
Gasparovic further stated that, in any event, she never conducted
45- to 50-minute individual psychotherapy sessions with the
patients–-a time period for which the patients were customarily
billed. Further, when the government questioned her if she had
been instructed to spend less time with the patients, Gasparovic
responded that it was “something” about the Medicaid patients; “we
didn’t need to spend as much time with them.” Gasparovic also
testified that for a ten dollar bonus, she conducted Bonham’s
physician’s rounds on weekends.
Finally, Mary Elizabeth Costas testified that Bonham was never
present when she provided psychotherapy to his patients in the
Huguley Hospital. Similar to Williams, however, Costas was not a
licensed psychotherapist in March of 1993, when first hired by
Bonham. Costas testified that when she expressed to Bonham that
his patients had become disenchanted because they were being
treating by therapists, Bonham responded that he was no longer
seeing patients for individual psychotherapy.
11
Carrie Crawford worked for Bonham as a licensed vocational
nurse, starting in August of 1992. Crawford testified that she and
second nurse, Lynn Hibben, customarily conducted the psychiatric
evaluations of Bonham’s nursing home patients. Using a book of
14
diagnostic codes compiled by Bonham, Crawford would randomly
dictate codes for each patient. Crawford testified that Bonham
told her which codes to dictate when conducting the evaluations,
and, thus, it only took five to ten minutes to complete the
evaluations. The trial evidence further established that Bonham
would bill the medical insurers for psychiatric evaluations
conducted by the nurses. In doing so, Bonham would falsely certify
that he personally spent 70 minutes at the patients’ bedside.
Margaret Escamilla gave a similar account of her work
experience with Bonham. Escamilla testified that for approximately
two and one half months, starting in July 1992, she worked part-time
as a psychiatric nurse for Bonham, and conducted psychiatric
evaluations of Bonham’s nursing home patients. Escamilla was still
in college at the time, however, and had not obtained a degree.
Escamilla stated that although she was not qualified to conduct the
evaluations, Bonham never accompanied her to the nursing homes.
Bonham instead trained her to complete the nursing evaluations using
an outline, and his book of diagnosis codes. Escamilla further
testified that Bonham did not follow up on the nursing home patients
as he represented he would and that, unbeknownst to her, he had
billed Medicare for the psychiatric evaluations she had completed.
12
From March 1998 until June 1998, Robin Wester was hospital-
ized at the Psychiatric Institute of Forth Worth and Medical Plaza
hospital. Wester stated that during that entire period, Bonham
never provided her the 60 minutes of individual psychotherapy, nor
the 60 minutes of family psychotherapy, for which he billed her
father’s insurer, Aetna. Regarding a 30-minute medicine check for
which Bonham billed Aetna, Wester stated that Bonham never treated
her for that period of time. Moreover, the group psychotherapy
sessions Wester attended were always conducted by therapists.
Wester clarified, however, that the time she spent with the
therapists was “usually very brief.” Wester’s father also
testified that the three family psychotherapy sessions that he
attended with his daughter were each conducted by Bonham’s
therapists. Bonham, however, billed Aetna as if he had personally
conducted the sessions.
Amy Lynn Kelty-Jacobs testified that during her stay at the
Psychiatric Institute of Forth Worth from November 12, 1991 until
December of 1991, she only saw Bonham for three or four times, in
increments of only 5 or 10 minutes. Kelty-Jacobs further testified
that Bonham never provided her the 30 nor 45 to 50 minutes of
individual psychotherapy for which he billed CHAMPUS. Finally,
Kelty-Jacobs stated that her medical charts included false
information--diagnoses for prescriptions that she had never taken,
and entries that falsely represented that she had been treated by
15
established the existence of the mail fraud scheme beyond a
reasonable doubt.
(3)
The numerous incidents of phantom billing also provided some
evidence from which the jury could have reasonably inferred the
defendants’ guilt. On Sunday, November 24, 1991, 38 of Bonham’s
patients were collectively billed $7,150 in psychiatric treatment,
although Bonham was not scheduled to treat patients that day.
Next, on November 25, 1991, 70 of Bonham’s clinical patients were
charged for diagnostic psychiatric interviews and 45-minute
psychotherapy sessions. The total amount billed was $13,363.00.
Again, there existed no proof, i.e., patients’ files, physician’s
notes, that the services were actually rendered. The testimony of
Bonham for several consecutive days in one week, several weeks in
a row.
Leesa Jo Pavelka similarly testified that during her
hospitalization at CPC Oak Bend Hospital from October 5, 1992 until
November 21, 1992, she hardly saw Bonham; maybe two or three times.
Pavelka had no recollection of attending the 20- nor 30-minute
individual psychotherapy sessions with Bonham, for which he billed
Medicaid.
Kerri Springfield also denied receiving the psychiatric care
for which she and CHAMPUS were subsequently billed. Springfield
testified that during her three hospitalizations in the Medical
Plaza Hospital and the Huguley Hospital in 1991 and 1992, Bonham
never conducted fifteen weekly individual psychotherapy sessions
with her, and never made physician’s rounds to see her. At best,
Springfield saw Bonham once a week for fifteen minutes. She had
daily encounters with his therapists, however. On September 14,
1992, however, Bonham sent Springfield a bill totaling $6,689.31.
The invoice also showed that a claim for charges in excess of
$83,000 had been submitted to CHAMPUS.
Penny Schmidt offered a similar account of her psychiatric
treatment under Bonham’s care from February 19, 1992 to March 6,
1992. Schmidt was also a patient at Psychiatric Institute of Fort
Worth. Schmidt testified that she saw Bonham maybe once or twice
walking down the hall, and that he never provided her the
biofeedback, medication checks, individual psychotherapy, and group
psychotherapy as listed in the CHAMPUS insurance claim. Schmidt
also stated that Bonham had not personally treated her as
represented in the physician’s notes included in her patient file.
Smith instead testified that the individual and group psychotherapy
sessions she attended were conducted by Georgia Williams, Bonham’s
therapist.
16
the government’s witnesses made clear, however, that
notwithstanding how Bulger manipulated Bonham’s appointment books
by varying the amount of time a patient would be seen, Bonham, nor
his therapists could have treated that number of patients in one
working day, and certainly could not have provided them 45 minutes
of psychotherapy. Finally, on Thanksgiving Day, in 1991, Bonham
vacationed in Cancun, Mexico. Although he admitted at trial that
he treated no patients this day, 20 of his patients were
collectively charged $3,244 for individual psychotherapy sessions
allegedly conducted by him.
(4)
We next note that the government presented evidence to
corroborate each of the twenty-two substantive counts of mail
fraud. To establish that Bonham did not personally render the
medical services underlying each of the twenty-two counts of mail
fraud and aiding and abetting mail fraud, the government presented
proof, and, indeed, Bonham admitted on cross-examination, that he
was actually out of town on particular dates that he was alleged to
have treated his patients.13 Additionally, for each of the twenty-
two counts, the government introduced: (1) the HCFA 1500 claim form
that Bonham submitted to Medicare, Medicaid, CHAMPUS, and the
private insurance companies; (2) the copies of the canceled checks
remitted to Bonham in payment on the claims; and (3) status reports
that itemized the psychiatric services that Bonham alleged to have
provided his patients, the CPT codes Bonham and Bulger used to make
these representations, and the benefits paid by the insuring
entities.
Finally, representatives from Medicare, Medicaid, and CHAMPUS all
testified that under the federal regulations applicable to each of
the twenty-two counts, Bonham and Bulger’s method of billing was
unlawful.
(5)
13
With respect to counts five and six, the evidence presented
at trial established that Bonham was in Washington, D.C., from
April 23-24, 1992. Likewise for counts seven, eight, and nine,
Bonham was in Tucson, Arizona, from November 5-7, 1992. Next, from
February 17-19, 1993, the dates relative to counts ten, eleven,
twelve, and thirteen, Bonham vacationed in Albuquerque, New Mexico.
For the remaining counts of mail fraud (counts fourteen through
twenty-two), for the period of March 16-19, 1993, Bonham was in
Cancun, Mexico.
17
Barbara Harvey,14 the Medicare representative, testified to the
Medicare regulations, as applied to mail fraud counts 1-2, 5-8,
10-11, 15-16, 18, 20-22. Harvey explained that when a physician
submits a claim to Medicare on the HCFA 1500 form, the physician,
vis-à-vis his signature on the form, has certified that he either
personally provided the medical services for which the Medicare
claim was submitted, or that he directly supervised the performance
of that service by one of his employees. Harvey also testified
that a physician’s (Bonham’s) use of the CPT codes 90843 and 90844
on the HCFA 1500 form constituted an affirmative representation
that he personally spent the time indicated in the code treating
the patient. Harvey explained, however, that under the Medicare
regulations, a physician--in this case, Bonham--could not
“personally provide” psychotherapy to a patient from a telephone in
Cancun, Mexico; nor could Bonham, from Mexico, “directly supervise”
psychotherapy sessions being conducted by therapists back in his
Texas clinics.
The defendants attempted to respond to this damaging
testimony, by asking Harvey a series of questions on cross-
examination as to whether Medicare permitted Bonham to bill for
services performed by his therapists or other employees. Harvey
responded affirmatively in each instance but, in doing so,
explicitly emphasized that Bonham was nonetheless required to abide
by Medicare’s billing regulations, i.e., that he personally provide
the services billed or that he meet the direct supervision
requirement, or the incidental services requirement. Harvey
further testified that with the exception of certain exclusions
under the guidelines not applicable here, the direct supervision
requirement must be met with respect to every service provided by
a non-physician.
Harvey next testified that to bill Medicare for services
provided “incident to” a physician’s services, the physician was
not required to be present in the room with the patient. Instead,
Medicare regulations only required the physician (Bonham) to be
present in the office suite when his employees provided the
“incidental” services. Harvey clarified, however, that the only
medical service she could qualify as being provided “incident to”
psychotherapy would be an injection given to the patient by the
physician’s employee. In response to a hypothetical question posed
by defense counsel, Harvey expounded even further on this concept:
an injection provided by a nurse is not provided “incident to” a
physician’s services if the physician is out of the office when the
14
Harvey is the director of customer support for the Medicare
division of Blue Cross and Blue Shield of Texas. Blue Cross and
Blue Shield administers the Medicare program in the state of Texas.
18
nurse administers the shot, and, thus, the physician would not be
authorized to bill Medicare for the injection.
Next, Mary Ann Wallace15 interpreted the Medicaid regulations,
as applied to counts 9, 12, 13, 14, 17, and 19. Wallace stated
that for the purposes of billing Medicaid for a physician’s medical
services, a physician was required to be physically present to
treat the patient. Wallace likewise testified that to lawfully be
reimbursed from Medicaid for psychotherapy billed under psychiatric
CPT code 90943, the physician (Bonham) must have personally
provided the psychotherapy. Wallace further clarified that for the
purposes of billing Medicaid under code 90843, a physician is
permitted to have a staff person assist him during the psychiatric
session, but the physician, nonetheless, must be physically present
in the room, actually treating the patient. A physician,
therefore, is not permitted to bill Medicaid under CPT code 90843
for psychotherapy provided by either a licensed vocational or
registered nurse. Wallace did testify that under the Medicaid
guidelines a physician could arrange for “cover”–-to have another
accredited, licensed physician to provide psychotherapy to his
patients during his short-term absence. The absent physician was
required to indicate on the claim form that some other doctor
treated the patient. Wallace stated that Bonham made no such
representations in his Medicare claim forms.
Finally, Ruth Smith,16 interpreted the CHAMPUS regulations, and
testified to count three. Smith testified that CHAMPUS only pays
the claims for services of those health care professionals, i.e.,
physicians, therapists, and nurses, who are listed as “authorized
providers” under the CHAMPUS program.17 CHAMPUS also permits
physicians to personally bill for medical services rendered by
their therapists, provided that the therapists themselves are
15
Wallace is the manager of the professional claims services
area of NHIC with Medicaid.
16
Smith is a program integrity specialist with the office of
CHAMPUS in Aurora, Colorado.
17
To become an authorized provider, an individual must complete
a CHAMPUS application, which certifies, inter alia, his
professional credentials, and that he is licensed to practice in
his state. Indeed, physicians, physician’s assistants and
therapists are required to be certified and licensed in the state
in which they practice to participate in the CHAMPUS program. Once
a physician or therapist becomes authorized under CHAMPUS, for
billing purposes, the physician or therapist is given a provider
number, which is generally the same as his tax identification or
social security number. [10 R 156].
19
authorized to treat patients under the program. In such instances,
the physician is required to indicate on the HCFA 1500 form that
his therapists, not he, actually provided the medical services
billed. Smith further testified that the claim form expressly
instructs the physician to indicate therein if “other providers”
have treated the patient. Smith testified, however, that according
to CHAMPUS records, none of Bonham’s nine therapists were
identified as authorized providers under the program. Smith then
stated that if Bonham, consistent with CHAMPUS regulations, had
indicated on the CHAMPUS claim form that his therapists had
actually provided the psychotherapy session underlying count 3, the
claims would not have been honored. Smith similarly testified that
if Bonham had indicated to CHAMPUS that he was in New Mexico on
February 18, 1993, rather than his office suite, CHAMPUS would have
denied the claims for psychotherapy that Bonham alleged he provided
that day. The only service Smith could phantom as being rendered
“incident to” individual psychotherapy provided by Bonham would be
a nurse escorting a patient into the room. Smith’s testimony on
this point is telling.
Indeed, we are of the view that this record literally speaks
volumes with respect to Bonham and Bulger’s guilt, which fully
supports the jury’s verdict. In choosing among reasonable
constructions of this evidence, the jury properly rejected the
defendants’ theory of the case--that the psychiatric services for
which they billed Medicare, Medicaid, and CHAMPUS were, at all
times, provided under Bonham’s direct personal supervision, and
that a licensed physician treated Bonham’s patients in his absence.
Similarly, the jury reasonably could have found implausible
Bonham’s self-serving, and uncorroborated testimony that he
honestly believed it was permissible to bill Medicaid, Medicare,
and CHAMPUS at a physician’s rate for the work of his nurses and
therapists, and that he contacted the federal agencies, who in
turn, verified the accuracy of his billing procedures.
(6)
Furthermore, we find that neither defendant has weakened the
strength of the evidence of their guilt by their arguments on
appeal. First, in arguing that the government presented varying
interpretations of the direct supervision requirement, Bonham has
distorted the nature and content of the testimony of Smith, Roberta
Stellman, and Dr. Myron F. Weiner. Smith testified only to the
general billing requirements applicable to CHAMPUS and, in doing
so, offered no interpretation of the “direct supervision”
requirement. The testimony that Bonham cites in support of his
argument otherwise only reinforces our conclusion here. We are
likewise convinced that Dr. Stellman testified to issues regarding
“cover” and medical services provided “incident to” a physician’s
treatment of a patient. These concepts, while relative, are
20
nonetheless quite different from notion of “direct supervision,” a
distinction that Bonham has attempted to blur.
Weiner did state, however, as Bonham argues on appeal, that
“direct supervision” by a physician means that “the person does it
under your control–not always under your observation, but certainly
reports very directly to you.” Notwithstanding, consistent with
our obligation to attribute all reasonable inferences from the
testimony in favor of the jury’s judgment of conviction, our task
here is not to view this statement in isolation, but in conjunction
with the whole of Weiner’s testimony. In doing so, we find that
Weiner’s interpretation of “direct supervision” is entirely
consistent with Harvey’s earlier testimony that Bonham could not
provide direct supervision to his therapists while he vacationed
outside of Texas, specifically, in Cancun, Mexico. In response to
a hypothetical question on the issue, Weiner testified that the
“direct supervision” requirement was not met where the physician’s
(Bonham’s) nurse conducts psychiatric evaluations of nursing home
patients while he is out of the state–-circumstances identical to
the facts of this appeal. Weiner further explained that the absent
physician should not submit a claim for a nurse’s evaluation,
misrepresenting it as his own; to do so would be to charge the
insurer for psychiatric care that the physician did not provide.
Thus, after viewing Weiner’s testimony in its proper light, we
cannot say that the government presented inconsistent
interpretations of the “direct supervision” requirement to the
jury. Bonham, in parsing the above isolated statement from
Wallace’s testimony, has attempted to manufacture a discrepancy in
the record that does not exist.
Second, in the light of the testimony of Bonham’s former
employees and patients, as informed by the testimony of the
Medicare, Medicaid, and CHAMPUS representatives, Bonham’s argument
that he only had improper, rather than unlawful, billing practices
is frivolous. The law in this circuit is entirely consistent with
the Second Circuit’s explicit pronouncement that a physician’s
deliberately misleading use of a particular billing code in claims
submitted to Medicare supports criminal fraud charges under 18
U.S.C. § 1341 and 18 U.S.C. 287. Cf. Siddiqi, 98 F.3d at 1428 to
Sidhu, 130 F.3d at 647-49.
Finally, Bonham’s assertion that his therapists fully provided
the medical services for which he billed–-an argument, we add, not
supported by the evidence--does nothing to undermine the
overwhelming case against him. The truly relevant considerations
underlying Bonham’s convictions are not what services his
therapists allegedly provided, but what medical services Congress
through its legislation, and the agencies through implementing
regulations, intended to pay for under Medicare, Medicaid, and
CHAMPUS. Notably, the testimony of the representatives of federal
agencies was entirely consistent on this point: the government
21
would not have knowingly compensated Bonham at the much higher fee
schedule applicable only to physician’s services for the
psychiatric treatment purportedly provided by his therapists. This
testimony, which stands uncontested on the record before us,
disposes of Bonham’s final argument–-that the government failed to
show loss from the fraud.
(7)
Bulger argues that there exists no evidence that she actually
placed any of insurance claims underlying the 22 counts of mail
fraud in the United States mail. Even if we assume her statement
to be true, this fact does not warrant the reversal of her
convictions. To sustain a § 1341 or § 1342 mail fraud conviction
the government need not establish that the defendant personally
sent the offending articles through the mail. United States v.
Manges, 110 F.3d 1162, 1169 (5th Cir. 1997), cert. denied, 118
S.Ct. 1675 (1998). Where, as here, the mailing of the insurance
claims was an essential part of the defendants’ scheme, it is
sufficient if the claims were sent either by a victim of the
scheme, or an innocent third party Manges, 110 F.3d at 1169
(internal citations and quotations omitted). Bulger concedes in
her brief that several of Bonham’s unindicted employees were
responsible for mailing the HCFA 1500 forms on which the fraudulent
insurance claims were submitted. This concession is fatal to her
appeal. These individuals qualify as “innocent third parties” as
contemplated by Manges.
Ragan does also nothing to advance Bulger’s position. In
Ragan, 24 F.3d at 659, the government conceded that the defendant
never personally entered the information on the fictitious trade
tickets underlying his convictions for eighteen counts of mail
fraud. Therefore, to sustain the convictions, we held that the
government had the burden of proving that the defendant was so
involved with the information being placed onto the trade tickets
by the third party that reasonable and fair-minded men would agree
that the defendant “caused” the fraudulent information to be to be
transmitted through the mail. Id. (citing United States v.
Vontsteen, 872 F.2d 626, 628 (5th Cir. 1989). In United States v.
Humphrey, 104 F.3d 65, 70 (5th Cir. 1997), cert. denied, 520 U.S.
1235 (1997) (citations omitted), we further expounded on this
premise. We explained that if a defendant acts “with the knowledge
that the use of the United States mail would follow in the ordinary
course, or that the use of the mail was reasonably foreseeable,”
then she has “caused” an article to enter the United States mail
for the purposes of § 1341. Id.
Applying Ragan, as informed by Humphrey, we find there exists
sufficient proof that Bulger “caused” the fraudulent insurance
claims to be placed in the mail. It is without dispute that the
placement of the HCFA 1500 form in the mail provided the sole means
by which the defendants submitted, as well as recouped payment on
22
the fraudulent insurance claims. Thus, from the evidence that
Bulger instructed Bonham’s staff to bill the nursing home patients’
using a specific CPT code, and that she routinely charged each
patient for a “set” of psychiatric services–-information she later
instructed the staff to transferred to the HCFA 1550 forms--we find
that Bulger acted with the requisite knowledge of a very
foreseeable, if not an obvious fact–-the mailing of the HCFA 1500
form would follow in the ordinary course of the scheme.
(8)
In sum, the evidence supporting the jury’s verdict is
overwhelming. Bonham and Bulger’s convictions on the twenty-two
counts of mail fraud and aiding and abetting mail fraud are
therefore affirmed.
IV
A
Bonham and Bulger next argue that the sufficiency of the
evidence fails to support their conviction on count 26, conspiring
to commit mail fraud and to submit a false claim to a federal
governmental agency. The ultimate points of contention between the
government and the defendants are: (1) whether the government met
its burden of establishing the existence of the conspiratorial
agreement; and (2) whether the defendants committed any overt acts
in furtherance of the agreement.
B
To establish the existence of a mail fraud and false claims
conspiracy the government must establish beyond a reasonable doubt:
(1) an agreement between two or more persons; (2) to commit these
crimes; and (3) an overt act committed by one of the conspirators
in furtherance of the agreement. Id. at 681-82.
Resolving all inferences and credibility determinations from
the evidence in favor of the government, we hold that Bonham and
Bulger’s concert of action in actively submitting false and
fraudulent claims to Medicaid, Medicare, and CHAMPUS provided
circumstantial evidence from which the jury reasonably found the
existence of the mail fraud and false claim conspiracy. See Sidhu,
130 F.3d at 648.
Next, we need only to refer to much of the ground previously
covered in this appeal to hold that the government met its burden
of showing at least one of the co-conspirator’s took an act in
furtherance of the conspiracy. See Sidhu, 130 at 658. Bonham
acted complicitly in the mail fraud and false claim conspiracy when
he deliberately misused the CPT codes to misrepresent the nature of
the psychiatric services provided his patients, the duration of
such services, and the fact that he never treated the patients.
Bonham also instructed his employees to falsify information
contained in the patients’ progress notes, and the actual length of
the psychotherapy sessions they conducted. Moreover, although
23
further proof is unnecessary to sustain the defendants’
convictions, see Sidhu, 130 F.3d at 649, (co-conspirator liable for
reasonable foreseeable acts of her cohort), we further note that
Bulger acted in furtherance of the conspiracy when she instructed
the office staff to add bogus charges to the patients’ accounts.
Bulger also scheduled patients for 20-minute psychotherapy
sessions, which she later billed as 45-minute sessions. To be
sure, this case bears an uncanny resemblance the conspiracy for
which the defendant psychiatrist and his office manager were
convicted of in Sidhu, 130 F.3d at 647-50. Thus, we need not dwell
on this issue further. We affirm Bonham and Bulger’s conspiracy
conviction on count 26.
V
A
In his final argument on appeal Bonham challenges the
sufficiency of the evidence supporting his conviction for one count
of submitting a false claim to a federal governmental agency and
aiding and abetting the submission of a false claim. Bonham
presses the same arguments here as he did in challenging his
convictions for the twenty-two counts of mail fraud.
B
To sustain Bonham’s conviction for filing a false claim under
18 U.S.C. § 287, the government must prove that: (1) a false or
fraudulent claim was presented against the United States; (2) the
claim was presented to a governmental agency; and (3) the defendant
knew that the claim was false. Upton, 91 F.3d at 681. Bonham’s
conviction for aiding and abetting the submission of a false claim
must be supported with sufficient evidence that Bonham: (1)
voluntarily associated with the criminal enterprise; (2)
voluntarily participated in the venture; and (3) sought by
independent action to make the venture succeed. See Sidhu, 130
F.3d at 650 (citations omitted) (aiding and abetting mail fraud).
We are satisfied that the government presented evidence
sufficient to meet its burden of proof on each of the essential
elements of these crimes beyond a reasonable doubt. Count 24 of
the superceding indictment alleged that Bonham knowingly and
willfully submitted a false and fraudulent claim to CHAMPUS, an
agency of the United States, for medical services purportedly
provided to Georgia Malyszka. The evidence presented at trial
established that on February 25, 1993, Bonham filed a $1,375 claim
with CHAMPUS for psychiatric and related medical services that he
purportedly provided Malyszka from February 14-20, 1993. On
April 7, 1993, CHAMPUS paid Bonham $366 on the claim. The record
shows, and Bonham concedes, however, that he did not personally
provide the medical services claimed for the dates of February
17-19, 1993, as he was in Albuquerque, New Mexico. Smith, the
CHAMPUS representative, testified that if the government had known
24
that Bonham was out of the state from February 14-20, 1993, the
government would have denied the claim as false.
Regarding the remaining dates listed in the CHAMPUS claim,
Malyszka testified that she was never treated by Bonham during her
February 1993, stay at the CPC Oak Bend Hospital. Malyszka stated
that she instead met with Betty Spainhour daily, one of Bonham’s
therapists. Bonham’s appointment book supports this testimony.
The appointment book showed that Malyszka was scheduled for
45-minute psychotherapy sessions with Spainhour on the 15, 16, 18,
and 19 of February 1993. Malyszka was paired with a second
therapist on February 17, 1993. Neither one of these therapists
were listed as authorized providers under the CHAMPUS program,
however. Bonham, therefore, was not lawfully entitled to be
reimbursed for psychotherapy they purportedly provided.
Significantly, Malyszka further testified that even her
psychotherapy sessions with Spainhour only lasted five to ten
minutes, and that the multiple 45-minute individual psychotherapy
sessions, the family psychotherapy sessions, and the psychiatric
diagnostic interview, for which CHAMPUS reimbursed Bonham, never
occurred. Malyszka explained that prior to Bonham’s trial, she had
neither met nor spoken to the physician. Incriminatingly,
Malyszka’s patient file contained progress notes signed by Bonham,
which falsely represented that he conducted the 45-minute
psychotherapy sessions for which he billed CHAMPUS.
In the light of the record before us, we are fully satisfied
that the jury properly rejected as untenable Bonham’s testimony
that he properly complied with the CHAMPUS regulations in
submitting this claim. We therefore affirm Bonham’s false claim
conviction.
VI
For the aforementioned reasons, we AFFIRM each of the
defendants’ convictions and their respective sentences on all
counts.
A F F I R M E D.
25