US v. Chikvashvili (4th Cir., 6/9/17) Healthcare Fraud and “But For” Causation

June 28th, 2017
Elizabeth Franklin-Best

On June 9, 2017, a full panel joined to deny relief to this appellant. Chikvashvili was convicted of two counts of healthcare fraud resulting in death under 18 U.S.C. §1347. Chikvashvili was found guilty of directing unqualified radiologic technicians to interpret x-rays, and billing Medicare as though licensed professionals had performed the work. Two patients died when their x-rays were misread by technicians employed by Chikvashvili.

Chikvashvili argued on appeal that to be criminally responsible for the deaths of the patients, the false billing, as opposed to the fraudulent scheme, must be the “but for” cause of their death. Since the billing did not cause the death of the two patients, so he argued, then in the court should vacate the resulting in death convictions.

Appellant founded a company called Alpha Diagnostics and he was the company’s CEO. This company provided portable diagnostic imaging services such as x-rays, sonograms, and electrocardiograms. A technician would go to a patient’s location, perform the imaging, and then transmit the results to a doctor for interpretation. Appellant would submit billing to Medicare and Medicaid for payment. According to these former employees, Appellant would routinely request payment for two x-ray images when only one had been taken. Also, unqualified technicians were responsible for interpreting these images, even though they should not have been doing so. Appellant directed his employees to interpret scans, prepare reports, and submit the results to attending physicians while passing off their handiwork as that of actual board certified radiologists and cardiologists. Then Appellant would seek reimbursement as though qualified physicians had performed the work. On at least two occasions, patients died after Appellant’s technicians overlooked congested heart failure. The government called expert witnesses to prove that Appellant’s reports on two patients failed to identify the congestive heart failure that killed them.

In addition to healthcare fraud resulting in death, Appellant was also charged with conspiracy to commit healthcare fraud, healthcare fraud, wire fraud, false statements relating to healthcare matters, and aggravated identity theft.

As to Appellant’s claim that the fraudulent billing did not, in fact, cause the death of the patients, the Court rejected this argument.

Congress established the crime of healthcare fraud in 18 U.S.C. §1347.

Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice–
(1) to defraud any healthcare benefits program; or
(2) to obtain, by means of false or fraudulent pretenses, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, in connection with the delivery of or payment for health care benefits, items, or services, shall be fine under this title or imprisoned not more than 10 years, or both.

Congress authorized the imposition of a life sentence where the violation results in death.” Id.

Appellant argued he should be acquitted because his submission of false claims did not directly cause the death of the patients. The Court however found that the plain language of the statute criminalizes “a scheme or artifice” to defraud the healthcare benefit program. When this violation– a fraudulent healthcare scheme taken as a whole– results in death, the perpetrator may be punished by life imprisonment. The structure of the statute, that is, shows the Congress intended that when a scheme, and not just a false billing, results in death, the life imprisonment is appropriate.

Appellant also argued there was insufficient evidence to support his convictions. He argued that the indictment charged him with violating §1347 “by submitting two claims to Medicare for payment.” He argued that the government failed to prove that the deaths of the patients were caused by his fraudulent billing and concluded that he was therefore entitled to acquittal. The Court rejected this argument as well. The Court noted that the indictment plainly alleged that the Appellant directed unqualified personnel to analyze x-rays for purposes of defrauding Medicare. It held there was simply no merit to Appellant’s claim that the indictment only criminalized his false billing. From the indictment, it was clear that Appellant was charged with directing a larger fraudulent scheme that led to the deaths of the patients.

Appellant also challenged one of the government experts who testified as to the causation issue. Appellant claims that the testimony was not based on sufficient facts and data, and was not a reliable application of the expert methodology to the facts at hand. This government expert testified that the X-ray misreads caused the death of the two patients. Essentially the expert testified that had the patients’ conditions been appropriately identified, these patients would have taken other medical steps that would have prevented their deaths. “But for” these misreads, these patients would have lived.

Under Rule 702, a qualified expert may offer an opinion if these conditions are satisfied:
a) the expert scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
b) the testimony is based on sufficient facts or data;
c) the testimony is the product of reliable principles and methods; and
d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702.

The Court concluded that the expert’s application of a differential diagnosis methodology was “a standard scientific technique of identifying the cause of a medical problem by eliminating the likely causes until the most probable one is isolated.” Westberry v. Gislaved Gummi AB, 178 F.3d 257, 262 (4th Cir. 1999). In short, the Court did not find that the district court erred in admitting this opinion on the causation issue.

The Court concluded its opinion by noting that insurers are not the only victims of fraudulent billing schemes and that medical fraud can do much more harm that merely drain our system of funds. Healthcare crimes can impose real dangers to the patient victims of fraud. The Court clearly approved of this stiff sentence when fraud results in the deaths of vulnerable patients.

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