United States v. Borrasi
2011 U.S. App. LEXIS 9253, 85 Fed. R. Serv. 320, 639 F.3d 774 (2011)
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Rule of Law:
The Medicare Anti-Kickback Statute (42 U.S.C. § 1320a-7b) is violated if one purpose of a remuneration is to induce patient referrals, even if other legitimate services are also compensated. Additionally, third-party statements referenced within an otherwise admissible business record constitute inadmissible double hearsay unless each layer independently falls under a recognized hearsay exception.
Facts:
- Dr. Roland Borrasi owned Integrated Health Centers, S.C. ('Integrated'), a corporate group of healthcare providers in Romeoville, Illinois.
- Borrasi became acquainted with Chief Executive Officer Wendy Mamoon and Director of Operations Mahmood Baig of Rock Creek Center, L.P., an inpatient psychiatric hospital primarily funded by Medicare reimbursements.
- Between 1999 and 2002, Borrasi, Mamoon, Baig, and others conspired to pay bribes to Borrasi and other Integrated individuals in exchange for an increasing stream of Medicare patient referrals to Rock Creek.
- Rock Creek paid $647,204 in potential bribes to Borrasi and Integrated physicians over this period, and Borrasi referred approximately 484 Medicare patients in 2001 alone.
- To conceal the bribes, Borrasi and other Integrated employees were placed on the Rock Creek payroll, given false titles (e.g., Borrasi as 'Service Medical Director'), faux job descriptions, and asked to submit false time sheets, despite not being expected to perform actual duties.
- Rock Creek also paid the salary for Integrated’s secretary and lease payments for one of Integrated’s offices, purportedly for an outpatient clinic but effectively supplementing Borrasi’s rent.
- Mahmood Baig was paid to oversee the admission and stays of Integrated’s referrals to Rock Creek and ensure referred patients returned to facilities Borrasi could access, maximizing Medicare reimbursement claims.
Procedural Posture:
- In December 2006, a grand jury returned an indictment against Roland Borrasi, Wendy Mamoon, and Mahmood Baig, charging them with one count of conspiracy to defraud the United States government (18 U.S.C. § 371) and six counts of Medicare-related bribery (42 U.S.C. § 1320a-7b et seq.).
- Mahmood Baig pled guilty to all seven counts.
- Wendy Mamoon and Roland Borrasi proceeded to a three-week trial in the United States District Court for the Northern District of Illinois, Eastern Division (Judge William J. Hibbler).
- The jury returned verdicts of guilty on each count against Borrasi and Mamoon.
- The district court then held a joint, two-day sentencing hearing for Borrasi and Mamoon.
- The district court calculated Borrasi’s offense level at 28 (yielding a range of 78-97 months’ imprisonment) and Mamoon’s offense level at 26 (yielding a range of 63-78 months’ imprisonment).
- The court sentenced Borrasi to seventy-two months’ imprisonment and two years’ supervised release, and Mamoon to six months’ imprisonment, one year of home confinement, and five years’ supervised release. Each defendant was required to pay $497,204 in restitution.
- Borrasi moved the district court to reconsider his sentence, arguing it should be significantly lower to comport with Mamoon’s.
- After a hearing, the district court denied Borrasi’s motion, concluding that the disparate sentences were justified.
- Borrasi timely appealed his conviction and sentence to the United States Court of Appeals for the Seventh Circuit.
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Issue:
Does 42 U.S.C. § 1320a-7b prohibit payments where one purpose is to induce patient referrals, irrespective of other legitimate purposes, and can substantive descriptions of third-party reports contained within business meeting minutes be admitted without an independent hearsay exception for the reports themselves?
Opinions:
Majority - Kanne, Circuit Judge
Yes, 42 U.S.C. § 1320a-7b prohibits payments where one purpose is to induce patient referrals, irrespective of other legitimate purposes, and substantive descriptions of third-party reports contained within business meeting minutes cannot be admitted without an independent hearsay exception for the reports themselves. The court affirmed the conviction, rejecting Borrasi's argument for a 'primary motivation' doctrine for the Medicare fraud statute. The Seventh Circuit joined other circuits (Third, Fifth, Ninth, and Tenth) in holding that the statute is violated if part of the payment compensated past referrals or induced future referrals, even if the payments also compensated for professional services, because the text refers to 'any remuneration.' The district court's jury instructions, which required the jury to find 'some amount was paid not pursuant to a bona fide employment relationship,' accurately reflected this 'one purpose' standard. Regarding the evidentiary challenge, the court found the district court did not err in excluding the substantive content of reports referenced in Rock Creek committee meeting minutes. While the minutes themselves were admissible business records, the reports they referred to were statements made by non-testifying physicians, constituting double hearsay. Since Borrasi failed to lay an independent foundation for the reports to fall under their own hearsay exception, their substantive descriptions were inadmissible. Even if the exclusion was erroneous, the court concluded it would have been harmless error given the overwhelming evidence of Borrasi's guilt, including testimony about kickbacks and recorded conversations where Borrasi admitted to receiving 'free money' for referrals.
Analysis:
This case solidifies the 'one purpose' rule for the Medicare Anti-Kickback Statute (42 U.S.C. § 1320a-7b) within the Seventh Circuit, aligning it with a consensus among other circuits. This broad interpretation significantly eases the burden on prosecutors in healthcare fraud cases, as they are not required to prove that referrals were the sole or primary purpose of a payment. The ruling on hearsay serves as an important reminder of the strict application of Federal Rules of Evidence 803(6) and 805, particularly regarding double hearsay within business records, reinforcing that each layer of hearsay must have its own exception. This precedent enhances the government's ability to combat healthcare fraud by broadly interpreting 'remuneration' and strictly adhering to evidentiary rules.
