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U.S. v. NACHAMIE

January 6, 2000

UNITED STATES OF AMERICA,
V.
ALAN BARTON NACHAMIE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Scheindlin, District Judge.

OPINION AND ORDER

Pursuant to Fed. R. Cr. P. 17(c), defendant Jose Hernandez has served twenty-four subpoenas duces tecum on non-parties in this prosecution of eight defendants for Medicare fraud.*fn1 The Government has moved to quash all of the subpoenas, and Hernandez opposes the Government's motion.*fn2

I. BACKGROUND

A. The Indictment

The Indictment contains a total of twenty-six counts which are briefly summarized below. Count One alleges that all eight defendants conspired, between 1995 and June 10, 1998, to violate certain laws of the United States, to wit: Sections 1035, 1341 and 1347 of Title 18 and Sections 1320a-7b(a)(2) and 1320a-7b(a)(5) of Title 42 of the United States Code. The objects of the conspiracy are set forth in the indictment and include: (1) executing a scheme to defraud the Medicare program; (2) mailing various documents in furtherance of the scheme; (3) making false statements in connection with the delivery of and payment for health care benefits; (4) making false statements in order to obtain payments from private insurance carriers that administered the Medicare Program; and (5) presenting false claims to the Medicare program.

The Indictment charges that the claims were false in one or more of the following five ways: (1) the claimed services were never rendered; (2) different services were rendered than those that were billed; (3) services were rendered at home but were claimed to have been rendered in an office; (4) services were rendered by unsupervised non-doctors, but were claimed to have been rendered by licensed doctors or by non-doctors under the supervision of a licensed doctor; and (5) services were rendered on a single date, rather than on the various dates claimed.

In a section entitled "Means and Methods of the Conspiracy," the Indictment explains how the scheme worked. Defendants Alan Barton Nachamie and Lydia Martinez*fn3 recruited telemarketers, who telephoned elderly people on Medicare, whose names were obtained from lists received from defendant Edwin Tunick. The telemarketers convinced these Medicare beneficiaries to agree to home visits in which diagnostic tests would be performed, for the purpose of identifying those at risk for heart attacks, strokes and Alzheimer's Disease. The beneficiaries were told the screening and testing were part of a health awareness program under the auspices of Medicare. Nachamie and Martinez then recruited foreign medical school graduates who were not licensed doctors in the United States to visit these beneficiaries at home. During these visits, the non-doctors would conduct a cursory examination and administer two basic tests — a cardiac rhythm test and a Doppler blood circulation test.

The Indictment provides three examples of services that were not performed or services that were billed in place of those that were performed. These examples are: (1) billing for an "event recorder," which permits the monitoring and recording of the heart rhythm 24 hours a day for up to 30 days, when, in reality, the patient received a one-to-two minute cardiac rhythm test; (2) billing for extensive Duplex blood circulation scans, when, in reality, the patient received a less expensive Doppler blood circulation test; and (3) billing for echocardiograms and stress tests, when, in reality, no such tests were given or were improperly given.

The Indictment specifies that the billing was done under provider numbers of different doctors and professional corporations, including three enumerated professional corporations. The indictment also alleges that defendants Nachamie, Martinez and Tunick*fn4 used other corporate names, of which five are enumerated. All defendants are alleged to have submitted claims to Medicare providers, who, in turn, processed the claims and sent checks to the four doctor defendants. At the direction of Nachamie, Tunick and Martinez, the doctor defendants deposited the checks, keeping between 15 and 25% of the funds and writing checks for the remaining portion to the corporations used by Nachamie, Tunick*fn5 and Martinez. Over 10 million dollars was billed to Medicare as a result of this conspiracy.

Thirty-one overt acts are then pled in the Indictment. (1-2) In 1997, an unnamed coconspirator ("CC 1") created phony vascular reports and forged the signature of an unnamed doctor ("Doctor 1"), while that doctor was in prison. Defendant Nachamie admitted to Doctor 1 that he had ordered the preparation of the phony report and the forging of Doctor 1's signature; (3) In the Spring of 1997, CC 1 instructed another unnamed person to vary randomly the diagnostic codes in order to avoid detection by Medicare; (4) In July 1997, Nachamie and CC 1 met with an unnamed doctor in Queens, New York; (5) In 1997, Martinez fired a medical assistant who told others she suspected fraud; (6) In October 1997, Hernandez attended a meeting with Nachamie and Martinez in an office located in Newark, New Jersey; (7) In 1997, Hernandez had a meeting with Nachamie and others at an office located on Jamaica Avenue in Queens, New York; (8) In May 1997, Hernandez sent a memorandum to an unnamed coconspirator attaching sample medical reports; (9) In December 1997, Martinez interviewed a foreign medical school graduate for a job examining Medicare beneficiaries in their home; (10) In February 1998, Nachamie and Tunick met with a potential investor in Florida and Nachamie informed that person that doctors had to be changed frequently to avoid detection by Medicare; (11) On December 18, 1997, the "defendants" caused individuals to visit a beneficiary at her home in New York, New York and perform various medical tests; (12) On March 25, 1998, Doctor 1 spoke with an undercover agent of the FBI; (13-17) On March 5, 1997, the "defendants" caused individuals to visit a beneficiary at his home in Bronx, New York. In March or April 1997, Dr. Kalani signed an Encounter Form for tests performed during that visit. Dr. Kalani received a check from Medicare which included the services rendered on March 25, 1997. He deposited that check and then wrote a check payable to the Flatbush Medical Practice, one of three professional corporations discussed earlier; (18-22) On May 28, 1997, the "defendants" caused individuals to visit a beneficiary at her home in Brooklyn, New York. In May or June 1997, Dr. Vining signed an Encounter Form for tests performed during that visit. Dr. Vining received a check from Medicare which included the services rendered on May 28, 1997. She deposited that check and then wrote a check payable to the Flatbush Medical Practice, one of three professional corporations discussed earlier; (23-27) On June 4, 1997, the "defendants" caused individuals to visit a beneficiary at her home in New York, New York. In June 1997, Dr. Schrager signed an Encounter Form for tests performed during that visit. Dr. Schrager received a check from Medicare which included the services rendered on June 4, 1997. He deposited that check and then wrote a check payable to the American Medical Ventures of Maryland, one of the corporations discussed earlier; (28-31) On February 16, 1998, the "defendants" caused individuals to visit a beneficiary at her home in Brooklyn, New York. In March 1998, Dr. Siegel signed an Encounter Form for tests performed during that visit. Dr. Siegel received a check from Medicare which included the services rendered on February 16, 1998. He deposited that check and then wrote a check payable to the Delta Management Corporation, one of the corporations discussed earlier.

Count Two charges all defendants with participating in a scheme to defraud Medicare in the same ways and means as described in Count One, in violation of Sections 1347 and 2 of Title 18 of the United States Code. Counts Three through Six charge Nachamie, Tunick, Martinez, Hernandez and one doctor per count of making false statements in matters involving the Medicare program, in violation of Sections 1035 and 2 of Title 18 of the United States Code. These false statements are not specified except by the five categories described above.

Counts Seven through Eleven charge Nachamie, Tunick, Martinez and Kalani with submitting false claims to Medicare, in violation of Section 1320a-7b(a)(5) of Title 42 and Section 2 of Title 18 of the United States Code. The claims are identified by date, beneficiary Medicare number and the beneficiary's first name and initial of last name (e.g. "10/96-12/96 068483868A Marie D."). Counts Twelve through Sixteen charge Nachamie, Tunick, Martinez, Hernandez and Vining with submitting false claims to Medicare, in violation of Section 1320a-7b(a)(5) of Title 42 and Section 2 of Title 18 of the United States Code. The claims are identified by date, beneficiary Medicare number and the beneficiary's first name and initial of last name. Counts Seventeen through Twenty-One charge Nachamie, Tunick, Martinez, Hernandez and Schrager with submitting false claims to Medicare, in violation of Section 1320a-7b(a)(5) of Title 42 and Section 2 of Title 18 of the United States Code. The claims are identified by date, beneficiary Medicare number and the beneficiary's first name and initial of last name. Finally, Counts Twenty-Two through Twenty-Six charge Nachamie, Tunick, Martinez, Hernandez and Siegel with submitting false claims to Medicare, in violation of Section 1320a-7b(a)(5) of Title 42 and Section 2 of Title 18 of the United States Code. The claims are identified by date, beneficiary Medicare number and the beneficiary's first name and initial of last name.

B. The Subpoenas

The subpoenas fall into two categories — those served on doctors and those served on billing companies. The subpoenas within each category are identical. Thus the "doctor" subpoenas request the following information:*fn6 (1) Documents reflecting communications with Medicare during the period January 1, 1995 through June 10, 1998 (the dates of the alleged conspiracy), including, but not limited to, Explanation of Benefits reports; (2) Documents relating to communications with certain named persons or entities from January 1, 1995 to the present; (3) Documents relating to agreements between the doctor and the Government from January 1, 1995 to the present; and (4) Documents relating to communications with any third party regarding certain named persons or entities from January 1, 1995 to the present.*fn7

The "billing company" subpoenas request the following information: (1) Documents relating to all communications with a specified list of individuals and entities, including, but not limited to, Current Procedural Terminology ("CPT") codes used to identify services for billing purposes, and payment records; (2) Documents reflecting communications with any third party regarding a specified list of individuals and entities;*fn8 and (3) Documents relating to any meetings between the billing company and a list of seven specified individuals.*fn9

Finally, in his Memorandum of Law in opposition to the motion to quash, Hernandez offers to narrow the scope of the "doctor" subpoenas, if required by the Court, in the following manner: (1) narrowing the scope of the original request 1 by requesting documents relating to payment from and communications with Medicare regarding any patient for whom Medicare claims were submitted during the period January 1, 1995 through June 10, 1998, and who were contacted, examined, consulted or referred by virtue of any connection to defendants Nachamie, Tunick and Martinez; (2) adding a request for records from January 1, 1995 to date regarding communications with any billing service used by the doctor or any entities controlled by the doctor; (3) narrowing the scope of the original request 2 by requesting documents relating to communications with seven individuals and one entity (rather than seven individuals and ...


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