Case: 10-50726 Document: 00511731074 Page: 1 Date Filed: 01/19/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
January 19, 2012
No. 10-50726
Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff - Appellee
v.
SYLVIA DELGADO,
Defendant - Appellant
Appeal from the United States District Court
for the Western District of Texas
Before JONES, Chief Judge, and DAVIS and DeMOSS, Circuit Judges.
EDITH H. JONES, Chief Judge:
Sylvia Delgado was convicted by a jury of defrauding Medicaid and
Medicare of $1.4 million. Delgado appeals her conviction, arguing that the
evidence was insufficient; prejudicial evidence was admitted; the jury
instructions were flawed; her sentencing level was erroneously increased for
obstruction of justice; and the district court erred by denying Delgado’s request
for post-trial contact with a juror. Because there is sufficient evidence to support
the conviction and no reversible error, we AFFIRM.
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BACKGROUND
Delgado, a self professed medical billing expert with thirty years of
experience in medical coding and billing, owned a billing company called Med
Comp Electronic Billing. In 1992, Delgado started doing billing and record work
for Dr. Rafael Solis, a psychiatrist. In 2002, Delgado was approached by a
Licensed Master Social Worker (“LMSW”) named Robert Rael (“Rael”) with a
business idea of providing group psychotherapy counseling to the elderly. Rael’s
idea consisted of having a psychiatrist refer patients to Rael for group
psychotherapy sessions. Delgado agreed to approach Dr. Solis with the idea, and
the three formed Synergy in early 2002.
Dr. Solis, as a licensed psychiatrist, was the medical director of Synergy.
He performed initial evaluations of patients, prescribed medication, and
conducted individual counseling sessions. Dr. Solis referred the patients to
Synergy for group psychotherapy, which was billed under his Medicaid and
Medicare numbers even though he did not conduct or supervise the group
sessions. Rael agreed to conduct the group therapy sessions using Dr. Solis’s
billing numbers because Rael was not authorized under Texas law to have his
own billing numbers. Delgado performed all of the billing and split Synergy’s
Medicaid and Medicare billing proceeds with Rael. Rael received seventy
percent of the proceeds and paid for operating expenses. Delgado received thirty
percent of the proceeds. Dr. Solis was initially not paid by Synergy, but starting
in January 2005, Synergy paid him $2,000 per month. Medicare and Medicaid
paid $1.4 million for therapy conducted at Synergy from 2002 until 2005. In just
over three years, Rael profited $508,953.10 and Delgado profited $388,059.20
from Medicaid and Medicare.
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The “therapy” conducted at Synergy was ineligible for the Medicaid and
Medicare payments that Rael and Delgado received. While group psychotherapy
can be billed to these programs, the sessions must meet stringent requirements.
Multiple sessions for one patient in one day are usually prohibited.
Consequently, Medicaid and Medicare billing systems automatically reject more
than one group therapy code, 90853, per day per patient. Delgado, through
research and talking to other billing practitioners, learned how to circumvent
this system using a modifier in conjunction with the billing code. After
discovering this modifier, Delgado billed up to six group therapy sessions per day
per patient. Medicare’s program integrity contractor flagged Dr. Solis because
his office billed the group therapy code 17,000 times in one year compared to his
peer group’s average of 500 claims.
Federal regulations also require that group psychotherapy be conducted
by a state licensed psychiatrist, psychologist, or qualified mental health
professional. Rael, as a LMSW, is unqualified to conduct therapy sessions in
Texas without supervision, and there is evidence that Delgado was told that Rael
was not authorized to conduct these therapy sessions. Non-physician providers
can conduct therapy “incident to” treatment provided by a physician if the
following supervision requirements are met: the doctor must be actively involved
in the patients’ care, the doctor must be on the premises, and the doctor must be
available to assist the patients during treatment. Dr. Solis admitted to
investigators that he did not supervise the therapy at Synergy. Indeed, Dr. Solis
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worked most of the time at his office in San Antonio,1 for the Social Security
Administration, the Texas Rehabilitation Center, and the GEO prison center.
In reality, Rael was not even conducting most of the therapy but instead
spent seventy-five percent of the “therapy” time alone in his office. Robert
Martinez, who has a sixth grade education, conducted most of the sessions.
Martinez picked up the patients around 12:30 p.m. on weekdays and brought
them to Synergy, where they would sign an attendance log, watch television,
talk to each other, and eat doughnuts for the first hour. The “therapy” consisted
of watching television, eating meals, socializing, being read to, playing loteria,
and celebrating birthdays. For these activities, Delgado billed Medicaid and
Medicare up to six group psychotherapy sessions per day per patient.
Unsurprisingly, the regulations prohibit describing the following as group
therapy: social activities, socialization, music therapy, recreational activities, art
classes, excursions, cognitive stimulation, motion therapy, and eating together.
What Synergy did is billable to the programs, if at all, as adult day care, which
is reimbursed at a much lower rate and for no more than two units per day.
Synergy did not even qualify for adult day care, however because it failed to
furnish nursing staff, personal care services, and physical therapy services.
Delgado was frequently present at the Synergy office during this
“therapy.” Initially, Delgado occupied an office in the same suite as Synergy.
She moved two doors down to another suite of offices as Synergy expanded but
continued to visit the Synergy to collect sign in sheets, talk to Rael, and attend
birthday parties. When Dr. Solis was in town, Delgado escorted patients to
1
San Antonio is nearly three hours drive away from Synergy, which is located in Del
Rio, Texas.
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Dr. Solis’s office for individual counseling. Despite her proximity and frequent
visits to Synergy, she billed for group psychotherapy when both Rael and
Dr. Solis were out of town or out of state and even on a holiday. Delgado’s
involvement with Synergy was not limited to her visits and the billing. She was
a founder of the company, received thirty percent of the billing proceeds, and
exerted influence over the operation of Synergy when she forced Rael to fire an
employee.
In May 2005, Medicare’s integrity contractor, Tri-Centurion, began
investigating Synergy’s billing practices. In response, Rael, Dr. Solis, and
Delgado consulted a lawyer and sent a statement to the investigators that
Dr. Solis supervised all of the sessions and the group therapy was legitimate.
Delgado and Rael also arranged to have the patients submit, as affidavits, their
handwritten copies of a statement that Delgado wrote. A witness testified that
she helped Delgado change words in some of the statements so they would not
all be exactly the same but would all still claim that Rael conducted legitimate
group psychotherapy sessions. After these affidavits were submitted, a criminal
investigation began. When Delgado knew federal investigators were going to
interview Dr. Solis, she advised him: “[p]lease do not give them too much
information only whatever questions they might want answered as you already
know.” After Rael’s arrest, Delgado tried to get a message to Rael through a
relative telling him to “stick to their stories.”
Based on the investigation, a grand jury returned a ten-count indictment
against Delgado.2 A jury found Delgado guilty on all counts. She was sentenced
2
Rael was indicted, pled guilty, and testified for the government at trial. Dr. Solis was
indicted, but the jury acquitted him of all but three false statements charges.
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to 51 months in prison and ordered to pay $1,411,203.08 in restitution.
Delgado’s prison sentence included a two-step increase for obstruction of justice
because of Delgado’s improper contact with a juror. Delgado appeals her
conviction and sentence.
DISCUSSION
A. Sufficiency of the Evidence
Delgado argues that there is insufficient evidence to support her conviction
for health care fraud, conspiracy, and making false statements. When reviewing
jury verdicts, “the standard of review is whether, after viewing all the evidence
and inference that may be drawn therefrom in the light most favorable to the
verdict, any rational trier of fact could have found the essential elements of the
offense beyond a reasonable doubt.” United States v. Stephens, 571 F.3d 401,
404 (5th Cir. 2009) (citing United States v. Holmes, 406 F.3d 337, 351 (5th Cir.
2005)). “The jury is free to choose among reasonable constructions of the
evidence and the evidence need not exclude every reasonable hypothesis of
innocence or be wholly inconsistent with every conclusion except that of guilt.”
United States v. Ferguson, 211 F.3d 878, 882 (5th Cir. 2000). After reviewing the
evidence, we find the evidence sufficient to support the conviction.
1. Fraud and Making False Statements3
Delgado contends that the evidence was insufficient to establish that she
knew the therapy she was billing for was fraudulent. Thus, she could not have
3
The criminal conduct at issue is codified at 18 U.S.C. §§ 1035 and 1347. The former
provision concerns making false statements or representations in connection with the payment
of health care benefits and the latter concerns defrauding any health care benefit program.
Both provisions require proof that the defendant acted knowingly and willfully.
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had the requisite mens rea to commit fraud or make false statements. We
disagree.
First, because of her ownership and involvement in Synergy and her
schedule-keeping for Dr. Solis, Delgado knew he could not be conducting or
personally supervising the therapy. Second, there was abundant evidence of
Delgado’s knowledge that “therapy” at Synergy was nothing more than adult day
care conducted by a man with a sixth grade education. Third, knowing that the
Medicaid and Medicare billing systems would reject more than one group
psychotherapy session per day, Delgado researched how to get around that
feature by perusing the federal manuals, consulting other billing professionals,
and trial and error. The jury could have concluded from this that she should
have known that something was wrong with her billing method. Fourth,
Delgado billed for days when she knew Rael and Dr. Solis were out of town and
even on a holiday.
Finally, the evidence shows that Delgado knew these practices were
against federal guidelines. She is a medical billing expert with thirty years
experience who received continual updates from Medicaid and Medicare. She
had to research how to evade the billing system and highlighted newsletters that
showed Synergy was in violation of the regulations. She was also told by
investigators that Synergy’s practices were illegal but continued to engage in
them.
From this and other evidence, the jury could readily infer her criminal
intent to commit healthcare fraud and make false statements relating to health
care matters.
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2. Conspiracy
To prove conspiracy to commit healthcare fraud, violating 18 U.S.C.
§ 1349, the government must establish the existence of an agreement between
two or more people to pursue the offense of fraud; the defendant knew of the
agreement; and the defendant voluntarily participated in the conspiracy. See
United States v. Montgomery, 210 F.3d 446, 449 (5th Cir.2000). “Direct evidence
of a conspiracy is unnecessary; each element may be inferred from
circumstantial evidence.” United States v. Garza-Robles, 627 F.3d 161, 168 (5th
Cir. 2011) (quoting United States v. Mitchell, 484 F.3d 762, 768-69 (5th
Cir.2007)). Delgado argues that there is insufficient evidence to convict her
under each of these elements. Her strongest argument is that the three
participants did not intend to run Synergy in violation of the law because Rael
thought he could legitimately conduct therapy sessions. She contends they did
not learn otherwise until they were confronted by investigators.
Despite this claim, there is sufficient evidence for a rational jury to
conclude that Delgado and Rael agreed to fraudulently bill Medicaid and
Medicare. First, regardless of their allegedly benign motives for forming
Synergy, the program soon began billing substantial amounts of money to
Medicare and Medicaid for activities that obviously fell short of reimbursable
group psychotherapy. Second, Delgado negotiated a generous cut of the profits
for herself considering her allegedly limited duties. Third, she knew the
applicable regulations and had to work hard to find a way to get around the
billing system in order to bill up to six sessions per day per patient. As a result,
she billed Medicaid and Medicare over a million dollars for ineligible “therapy”
and received over $130,000 per year while the scheme existed. After the
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investigation began, she encouraged her co-conspirators to stick to their stories
and to give as little information to the investigators as possible. In sum, the
circumstantial evidence, coupled with testimony of Rael and Martinez, supports
the jury’s conclusion that Delgado participated in a conspiracy to defraud
Medicare and Medicaid.
B. Admission of Medicaid and Medicare Newsletters and Manuals
Delgado argues that the admission of Medicaid and Medicare newsletters,
manuals, and other reference materials was harmful error because the
publications were irrelevant to her state of mind and posed the risk of turning
regulatory violations into a criminal offense in the minds of the jury. This court
reviews evidentiary decisions by the trial court for abuse of discretion. United
States v. Hicks, 389 F.3d 514, 522 (5th Cir. 2004). “Even where the district court
erroneously admitted prejudicial evidence, the defendant’s conviction will not be
reversed if the error was harmless.” Id.
The government points to Eleventh Circuit case law where healthcare
manuals were found to be relevant. In United States v. Gold, 743 F.2d 800, 815
(11th Cir. 1984), the Eleventh Circuit stated:
Under FED. R. EVID. 401 and 402, the basic test governing admissibility is
that evidence is relevant if it has “any tendency to make the existence of
any fact that is of consequence to the determination of the action more
probable or less probable than it would be without the evidence.” By this
standard, there can be little question that the provisions of the Carrier's
Manual were admissible.
In the instant case, the government had to prove that Synergy’s billing practices
were unauthorized by regulation. The manuals and newsletters were relevant
to that determination. The government also established that newsletters were
mailed to Delgado by introducing newsletters discovered in her office with
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mailing labels still attached. Delgado told investigators that she “glanced over”
newsletters and highlighted pertinent sections and provided investigators with
excerpts from newsletters that she had highlighted. One of these newsletters,
however, was conspicuously missing the page that indicated that Synergy’s
“therapy” was ineligible for reimbursement.
Additionally, Delgado’s promotional brochure boasted that she kept up
with the frequent updates in government regulations. Because Delgado had
access to the regulatory publications and had read at least some of them, the
material was also relevant because it increased the probability that Delgado
knew her billing practices were illegal.
The district court, cognizant of the danger of the jury’s misusing the
regulatory material, gave the following instruction during the jury charge:
You have heard evidence about the various Medicare and Medicaid rules
and regulations and manuals, excerpts of the manuals, newsletters, state
statutes, and copies of those items have been received as exhibits in this
trial. You are advised, however, that any potential violations of those
rules and/or regulations and/or state statutes by any of the defendants are
not sufficient in and of themselves to prove the charges alleged in the
indictment. The government’s burden is to prove the elements of the
offense alleged beyond a reasonable doubt as defined in these instructions.
We assume the jury followed this careful instruction. The district court did not
abuse its discretion by admitting these materials with the limiting instruction.
C. Deliberate Indifference Instruction
Delgado claims the district court abused its discretion by giving a
deliberate indifference instruction that relieved the government of having to
prove her actual knowledge of the wrongdoing. This court reviews jury
instructions to determine “whether the court’s charge, as a whole, is a correct
statement of law and whether it clearly instructs the jurors as to the principles
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of law applicable to the factual issues confronting them.” United States v.
Moreno, 185 F.3d 465, 476 (5th Cir. 1999) (citations omitted). This court should
review whether the charge is supported by fact under the abuse of discretion
standard. United States v. Nguyen, 493 F.3d 613, 619 (5th Cir. 2007). “When
examining whether the evidence sufficiently supports the court’s charge, we
must view the evidence and all reasonable inferences therefrom in favor of the
government.” Moreno, 185 F.3d at 476.
The Fifth Circuit consistently upholds instructions of deliberate ignorance
if they have the required factual basis. Moreno, 185 F.3d at 476. The
instruction is only warranted “when a defendant claims a lack of guilty
knowledge and the proof at trial supports an inference of deliberate
indifference.” Id. (quoting United States v. Posada-Rios, 158 F.3d 832, 875 (5th
Cir. 1998)). “The evidence at trial must raise two inferences: (1) the defendant
was subjectively aware of a high probability of the existence of the illegal
conduct; and (2) the defendant purposely contrived to avoid learning of the
illegal conduct.” United States v. Lara-Velasquez, 919 F.2d 946, 951 (5th Cir.
1990). The court errs in giving the instruction if the defendant does not claim
a lack of guilty knowledge. Id.
After reviewing the record, we are assured that the district court did not
abuse its discretion. Delgado’s defense relied on her claiming ignorance of
wrongdoing and the two inferences were raised at trial. First, there is ample
support for her subjective awareness of the wrongdoing, as shown by the above
recitation of evidence. Second, the evidence equally supports that she
purposefully contrived to avoid learning of illegal conduct. Delgado sought
advice from other Medicaid and Medicare experts but asked selective questions
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that obfuscated Synergy’s wrongdoing. Also, she highlighted newsletters for
Rael and Dr. Solis but excluded pages, and claims she did not read them, that
contained standards Synergy violated. The district court did not abuse its
discretion by giving the deliberate indifference jury instruction.
D. Obstruction of Justice
Delgado argues that the district court judge erred by enhancing her base
offense level for obstruction of justice. Specifically, Delgado claims that because
she self-reported her contact with the juror, she could not have been willfully
trying to obstruct justice. This court reviews de novo the district court’s
interpretation of the sentencing guidelines, and factual findings are reviewed for
clear error. United States v. Juarez-Duarte, 513 F.3d 204, 208 (5th Cir. 2008).
The district court’s finding is not clearly erroneous if it is plausible in light of the
whole record. Id. Further, “[t]he clearly erroneous standard is particularly
strong because the judge had the opportunity to observe the demeanor of the
witnesses.” United States v. Santiago, 410 F.3d 193, 197 (5th Cir. 2005).
A review of trial and sentencing transcripts confirms that the court did not
clearly err by enhancing Delgado’s sentence level. Although Delgado heard the
court’s express and repeated warnings not to talk to the jurors at any time, she
began talking to a juror anyway. She told the juror “we still have a check for you
in the office,” referencing a tax refund check that her brother, an accountant,
had for the juror. Delgado startled the juror by using a formal name the juror
only used on official documents like tax returns. The district court found that
Delgado had been playing games with the jury and that Delgado was
communicating to this juror, a member of an anonymous jury, that she knew her
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identity. This evidence renders the court’s credibility choice more than
plausible.
E. Denial of Delgado’s Motion to Contact and Interview a Juror
Delgado argues that the district court abused its discretion and violated
her Sixth Amendment rights by denying her the opportunity to contact a juror
after the trial. This court reviews the district court’s decision to deny a post-trial
interview of a juror for abuse of discretion. Salinas v. Rodriguez, 963 F.2d 791,
794 (5th Cir. 1992). “The duty of the trial court, when jury misconduct is alleged
after the trial, ‘must be judged on the peculiar facts and circumstances of each
case.’ ” Id. at 795 (quoting United States v. Sedigh, 658 F.2d 1010, 1014 (5th Cir.
1981)). Moreover, jurors under oath are presumed to have faithfully performed
their official duties. United States v. Eldred, 588 F.2d 746, 752 (9th Cir. 1978).
Delgado asserts that one of the jurors worked at the same correctional
facility where Dr. Solis sometimes provided inmate psychiatric care. Because
she contends the juror may have lied about this connection to Dr. Solis during
voir dire, she desired to contact the juror after the trial. The judge denied
Delgado’s motion. Given the inappropriate contact with a juror at trial, who may
be the same juror Delgado wanted to contact post-trial, the judge was justified
in its denial. In any event, there is no evidence that the juror was guilty of
misconduct. This court does not assume that jurors lie in response to questions
during voir dire. United States v. Masat, 896 F.2d 88, 95 (5th Cir. 1990).
Because Delgado offered no evidence of juror misconduct, the judge was within
her discretion to deny the motion.
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CONCLUSION
For the reasons stated, we conclude that the evidence was sufficient to
convict Delgado on all counts. On all of her other claims we find that no error
or no reversible error was committed by the district court. AFFIRMED.
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