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Mar 22 2017

Ignore an Audit – Go to Jail

March 22, 2017 (Houston)

James SmithBy James Smith – “Environmental Alert” (Schirrmeister, Diaz-Arrastia, Brem LLP)

A physician did nothing to change billing practices, even after Medicare denied some of the physician’s remittance claims as a result of an audit.  This and other evidence helped convict the physician of Medicare fraud.

In US v. Uzoaga, the government asserted that the physician knowingly allowed a third party to submit fraudulent bills on behalf of the physician.  Despite the physician’s assertion of no knowledge, the jury convicted; the physician received a sentence of over three years in prison.

Deliberate Ignorance Can Prove Knowledge

The government argued that the denial of certain claims by Medicare, as a result of the audit, should have put the physician on notice of the high probability of illegal conduct.  Moreover, the physician’s own patient files contained records of tests that the physician should have known were unnecessary, which again should have alerted the physician of the probability of fraudulent billing to Medicare.

As a result of the physician benefiting from and asserting no knowledge of the fraudulent billing, the trial court instructed the jury that remaining deliberately ignorant when circumstances showed a high probability of illegal conduct may be circumstantial proof of guilty knowledge.

Conviction Upheld Based on Deliberate Ignorance

The physician appealed, and the Fifth Circuit Court of Appeals upheld the conviction.  The Fifth Circuit acknowledged that “deliberate ignorance” instructions should be rare, but should be given when the evidence shows that the defendant was aware of a high probability of criminal conduct, and still maintains no knowledge.

The Fifth Circuit specifically mentioned that the physician allowed the practices to continue even after an audit identified improper billing practices.  The physician’s refusal to take action based on the audit results was evidence that the physician had guilty knowledge.

Never Ignore an Audit

Individuals who ignore audits and allow practices identified as questionable to continue risk criminal liability for “knowingly” violating the law.  (This can apply to both government and private audits, and to both internal and third party audits.)  If a defendant denies knowledge of the practices identified in an audit, a “deliberate ignorance” instruction is a distinct possibility.

For a copy of the Fifth Circuit’s opinion click here.

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