August 20, 2013
STATE OF NEW JERSEY, Plaintiff-Respondent,
ROSTISLAV VILSHTEYN, a/k/a STEVEN VILSHTEYN, Defendant-Appellant.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 13, 2013
On appeal from Superior Court of New Jersey, Law Division, Essex County, Indictment No. 10-05-0050.
George L. Schneider argued the cause for appellant (Genova Burns Giantomasi & Webster, attorneys; Mr. Schneider, of counsel and on the brief; Francis M. Giantomasi, on the brief).
Jenny M. Hsu, Deputy Attorney General, argued the cause for respondent (Jeffrey S. Chiesa, Attorney General, attorney; Ms. Hsu, of counsel and on the brief).
Before Judges Grall, Simonelli and Koblitz.
A jury found defendant Rostislav "Steven" Vilshteyn guilty of second-degree health care claims fraud by submitting or causing the submission of fictitious bills, N.J.S.A. 2C:21-4.2 and N.J.S.A. 2C:21-4.3c, and third-degree Medicaid fraud by submission of false claims with the intent to fraudulently secure payments, N.J.S.A. 30:4D-17(b). The jury acquitted defendant of third-degree Medicaid fraud by giving kickbacks, N.J.S.A. 30:4D-17(c). Defendant was sentenced to a five-year term of imprisonment for health care claims fraud and a concurrent three-year term for Medicaid fraud. His sentence also includes obligations to pay $200, 000 in restitution and the appropriate fines, penalties and assessments.
Defendant appeals his conviction asserting six grounds for reversal and arguing that the cumulative impact of the errors requires it. He argues:
I. DEFENDANT'S MOTION FOR JUDGMENT OF ACQUITTAL SHOULD HAVE BEEN GRANTED BECAUSE THE EVIDENCE PRESENTED BY THE STATE WAS MANIFESTLY INSUFFICIENT.
II. THE SUMMARY CHARTS OF BILLING RECORDS RELATING TO BLOOMFIELD HEALTH PAVILION PATIENTS WERE NOT ADMISSIBLE AS BUSINESS RECORDS; WITHOUT THOSE RECORDS DEFENDANT'S MOTION FOR JUDGMENT OF ACQUITTAL SHOULD HAVE BEEN GRANTED.
III. STATEMENTS BY THE PROSECUTOR IN SUMMATION VIOLATED THE N.J.R.E. 404(B) PROHIBITION ON OTHER CRIME EVIDENCE BY SUGGESTING THAT DEFENDANT HAD COMMITTED FRAUD WITH RESPECT TO OTHER UNNAMED PATIENTS AT BHP WHO DID NOT TESTIFY AT TRIAL (NOT RAISED BELOW).
IV. THE TRIAL JUDGE'S INAPPROPRIATE COMMENTS UNDERMINED THE DEFENSE AND DENIED DEFENDANT A FAIR TRIAL (NOT RAISED BELOW).
V. THE JURY CHARGES CONTAINED CRITICAL ERRORS OF OMISSION AND COMMISSION (NOT RAISED BELOW).
A. The Charge on the Statutory Inferences Was Unwarranted.
B. The Charge Was Deficient In Failing To Instruct the Jury that Defendant's General Supervisory Control Over BHP Did Not Equate to Criminal Culpability for All Acts of Improper Billing.
C. Giving an Unnecessary Charge and Omitting a Necessary Charge Constituted Plain Error.
VI. THE COURT MISINTERPRETED THE REQUIREMENTS FOR A CLAWANS MISSING WITNESS INSTRUCTION AND, AS A RESULT, ERRED IN FAILING TO INSTRUCT THE JURY ACCORDINGLY.
VII.THE CUMULATIVE IMPACT OF THE ERRORS ASSERTED IN POINTS III, IV, V, AND VI REQUIRES REVERSAL.
The most significant of the foregoing issues is defendant's claim that the jury instructions on health care claims fraud were flawed. We agree but determine the error to be harmless.
The charges against defendant were based on his role in the operation of Bloomfield Health Pavilion (BHP), an outpatient community health care facility in Newark providing mental health and substance abuse therapy. Medicaid benefits paid to BHP on behalf of Medicaid beneficiaries were for sessions of individual psychotherapy, individual substance abuse psychotherapy, or group psychotherapy. The grand jurors did not allege that defendant was one of the "practitioners" providing these therapies; in fact, they noted that defendant "is not a practitioner."
Defendant and Oleg Grabov founded BHP and applied to the Division of Medical Assistance and Health Services (DMAHS) for authorization to become a "Medicaid Provider" for the State, which entitled BHP to payment for services it gave to Medicaid beneficiaries. They co-signed the applications and provider agreements necessary to receive payment for the three types of therapy — one application for mental health services and another for substance abuse services. Both of the applications and provider agreements required the co-signors, defendant and Grabov, to verify that they would comply with all applicable State and Federal regulations. Upon approval they received two identification numbers and billing codes for the services they provided and a manual describing the services that qualified for payment under those codes.
As the manual explained, services were to be billed on a session-by-session basis. A session of individual psychotherapy required a session of at least forty-five minutes of direct and personal clinical involvement with either the patient, a member of the patient's family or both. A bill for a session of individual substance abuse psychotherapy was permissible for a session of no fewer than fifty minutes of personal involvement with one and only one patient during which the practitioner performed no other duties. Group substance abuse sessions were billable for groups of eight or fewer clients that met for at least one-and-a-half hours.
Following Grabov's death in November 2006, defendant served as BHP's chief executive. BHP had the following process for tracking and billing services covered by Medicaid. At the start of a session clients signed in to indicate their attendance, and at the conclusion of a session the practitioner who conducted the session completed a progress note for each client, which recited the client's name, the duration and type of session and the date of service. On a daily basis, the progress notes and sign-in sheets were given to BHP's biller, who filed electronic claims using BHP's provider number and the appropriate billing code for the service. BHP then sent the electronic claims to an authorized electronic billing submitter for New Jersey Medicaid. The submitter gathers and cannot alter claim information; the submitter simply transmits it to New Jersey's fiscal agent for approval. The fiscal agent approves or denies the claim and transmits the information to the New Jersey Medicaid Management Information System.
An informant brought BHP's activities to the attention of the Medicaid Fraud Division in November 2007. The informant was concerned about BHP providing incentives for persons on Medicaid to use its services — specifically, vouchers for Pathmark stores. When interviewed by an investigator, defendant acknowledged giving the vouchers, which he contended was a motivational device. Although the State presented significant testimony about BHP's use of vouchers to support a charge of illegal kickbacks, as previously noted, the jury acquitted defendant of that charge.
In the context of the kickback investigation, the investigators asked to review the charts of twenty BHP clients. Defendant asked for and was given a week to provide the charts, and he provided them as agreed. He was asked for the charts of fifty more clients, and defendant again produced them after a week. The "charts" defendant provided were the progress notes and sign-in sheets.
According to the investigator, the records "were a mess." The sign-in sheets did not have the time of arrival, and they were generally not signed on the sheet at all — pre-signed labels were affixed to the sheets. The progress notes also failed to state the time at which the session commenced or ended. As a consequence, the Medicaid Fraud Division suspended BHP's Medicaid payments, BHP's provider numbers were terminated, and the matter was referred to the New Jersey Division of Criminal Justice.
At trial, the State presented the testimony of BHP employees and clients who indicated the services BHP provided fell far short of meeting Medicaid's billing criteria for group and individual sessions. Group sessions involved more than eight and as many as twenty-five clients, and clients were placed in groups without any consideration for the services they needed. Individual sessions were as short as fifteen, twenty or thirty-five minutes, and as many as three clients participated in sessions that were reported as individual sessions.
Members of the BHP staff testified about defendant's continuing demands for them to see more patients. They recounted his recommendations for shorter group sessions and individual sessions with more than one client at a time. One employee, who was a former client only due to her interest in the Pathmark vouchers, described her role as BHP's recruiter of Medicaid patients.
These witnesses also described practices involving unnecessary or inappropriate treatment. Clients requiring substance abuse treatment and those requiring different mental health treatment were indiscriminately grouped together. One woman, who repeatedly said that she came to BHP for help with anger management, was assigned to a substance abuse group. She left BHP after attending the substance group sessions twice a day for a few months and receiving no response to her continued requests for help with anger-management treatment other than one fifteen-minute individual session.
There was also evidence that defendant was wholly indifferent to whether his staff was providing treatment appropriate for a client's condition. An employee who was BHP's clinical supervisor resigned for that reason. He left the job when defendant insisted that he continue an intake interview of a woman in apparent need of detoxification treatment that BHP could not provide. Even though the clinical supervisor told defendant why he told the woman to leave BHP, defendant had the woman taken off BHP's transport bus and returned to the clinic.
The clients also testified about services for which Medicaid was billed that they had not received. The State's evidence showed that BHP billed Medicaid for twelve individual sessions allegedly attended by the woman who wanted but did not get help with anger management and left BHP in June 2007 after receiving only one fifteen-minute individual session. Some of the sessions billed for her were reportedly provided in July and August 2007.
Another woman testified that she never had an individual session. In her case, BHP billed Medicaid for eighty-nine individual substance abuse psychotherapy sessions and seven individual psychotherapy sessions, a total payment of $1606.
A man who acknowledged attendance at BHP motivated only by his interest in a woman who was receiving treatment there, testified that he was pulled out of a group session for an individual session of no longer than fifteen minutes. According to him, that was the only individual session he had. Medicaid, however, was billed as if this client attended fifty-seven individual sessions, a total of $1112.
Another man, who sought treatment for addiction and depression, received individual therapy sessions which would last about twenty minutes. Despite the fact that none of those sessions were the required forty-five or fifty minutes in length, BHP billed for thirty-four individual sessions, a total of $884.
Defendant testified and denied billing for any services that BHP did not provide or holding group sessions with more participants than permitted. He further asserted that he never instructed anyone who worked with him to misrepresent the amount of time they spent with a client.
The trial court properly denied defendant's motion for judgment of acquittal at the close of the State's case. R. 3:18-1. There is no question that the evidence, "giving the State the benefit of all its favorable testimony as well as all of the favorable inferences" was adequate to permit "a reasonable jury" to find defendant guilty of both crimes beyond a reasonable doubt. State v. Reyes, 50 N.J. 454, 458-59 (1967).
The elements of the crime of health care claims fraud are set forth in two statutes N.J.S.A. 2C:21-4.2 and N.J.S.A. 2C:21-4.3. The first of these statutes defines the prohibited conduct and the second states the "culpability requirements" and grade of the crime, which vary depending upon whether the defendant is a "practitioner" or a person who is "not a practitioner." Pursuant to N.J.S.A. 2C:21-4.2, the conduct constituting health care claims fraud is defined to mean
making, or causing to be made, a false, fictitious, fraudulent, or misleading statement of material fact in, or omitting a material fact from, or causing a material fact to be omitted from, any record, bill, claim or other document, in writing, electronically or in any other form, that a person attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted for payment or reimbursement for health care services.
The second statute provides that a person who is not a practitioner is guilty of this crime if he or she knowingly or recklessly commits health care claims fraud. N.J.S.A. 2C:21-4.3c-d.
The grand jurors charged defendant as a person "who is not a practitioner." They alleged that he knowingly submitted or caused to be submitted "false, fictitious, fraudulent or misleading statements of material facts in claims for payment or reimbursement, " by asserting "that psychological and substance abuse counseling services had been provided even though the said . . . services had not been provided, and/or had not been provided to the extent alleged." To establish a non-practitioner's guilt of second-degree health care claims fraud, the State was required to prove defendant "knowingly commit[ted] five or more acts of health care claims fraud and the aggregate pecuniary benefit obtained or sought to be obtained [wa]s at least $ 1, 000." N.J.S.A. 2C:21-4.3c. Each claim submitted for payment is a separate act of health care claims fraud. State v. Fleischman, 189 N.J. 539, 553-54 (2007).
Similarly, defendant's conviction for third-degree Medicaid Fraud required proof that he "knowingly and willfully ma[de] or cause[d] to be made any false statement or representation of a material fact in . . . any document necessary to apply for or receive any benefit or payment under" the New Jersey Medical Assistance and Health Services Act. N.J.S.A. 30:4D-17(b).
Viewed in the light most favorable to the State, the documentary evidence and the testimony of BHP employees and clients was adequate to support finding each element of both crimes. There was evidence that BHP submitted bills for payment for services that simply were not provided.
There was also adequate evidence to establish that defendant knew about the false billings. Circumstantial as it may be, it was sufficient for a reasonable jury to find beyond a reasonable doubt that defendant knew that the billings were false.
BHP's clients and staff clearly described circumstances under which individual counseling qualifying for reimbursement from Medicaid funds would have been an apparent, practical impossibility. There was ample evidence that the situation was a product of defendant's zeal and effort in securing more and more Medicaid beneficiaries as clients and his demanding more and more of his staff. Moreover, defendant's knowledge of the fraudulent nature of BHP's billings is supported by the testimony reporting that he directed shorter sessions than those Medicaid required.
Contrary to defendant's claim on appeal, the foundation of the State's case was not defendant's status as the person in charge. Rather, the basis was the evidence of actions defendant took and directions he gave as the person in charge.
Although defendant had no objection to the jury instructions at the time, on appeal he claims that there were three errors in the charge warranting reversal of his convictions. In Point V of his brief, defendant contends that A) the court erred in instructing the jury on two permissive inferences the Legislature has codified for use in prosecutions of health care claims fraud pursuant to N.J.S.A. 2C:21-4.2 and N.J.S.A. 2C:21-4.3, and B) the court should have directed the jurors on the circumstances under which the jurors could find defendant accountable for actions taken by his employees.
Because defendant did not object on either ground at trial, he must establish plain error. R. 2:10-2. In order to do that, he must demonstrate "legal impropriety in the charge prejudicially affecting the substantial rights of the defendant and sufficiently grievous to justify notice by the reviewing court and to convince the court that of itself the error possessed a clear capacity to bring about an unjust result." State v. Hock, 54 N.J. 526, 538 (1969), cert. denied, 399 U.S. 930, 90 S.Ct. 2254, 26 L.Ed.2d 797 (1970). We must view the charge as a whole to determine whether it was improper. State v. Nero, 195 N.J. 397, 409 (2008).
Discussion of defendant's objections to the court instructing the jurors on the statutory inferences requires reference to the structure of N.J.S.A. 2C:21-4.3, which provides two sorts of health care claims fraud — one applicable to practitioners, N.J.S.A. 2C:21-4.3a-b, and the other applicable to persons who are not practitioners, N.J.S.A. 2C:21-4.3c-d.
The elements of the crimes do not differ, the difference is in the grade of the offense. A practitioner who knowingly commits health care claims fraud in the course of providing professional services is guilty of a crime of the second degree, regardless of the number of acts or the amount of the benefit at issue. N.J.S.A. 2C:21-4.3a. In contrast, a person who is not a practitioner and knowingly commits health care claims fraud is guilty of a crime of the third degree, unless he commits five or more acts of health care claims fraud with an aggregate benefit of at least $1000, in which case it is a crime of the second degree. N.J.S.A. 2C:21-4.3c. Similarly, where health care claims fraud is committed recklessly, a practitioner commits a crime of the third degree, whereas a person who is not a practitioner commits a crime of the fourth degree. N.J.S.A. 2C:21-4.3b, d.
While the elements of health care claims fraud for practitioners are the same, N.J.S.A. 2C:21-4.3f includes two permissive inferences at issue here, only one of which is applicable to persons who are not practitioners. Both inferences are included in the model jury charge, with direction that they be given if applicable. Model Jury Charge (Criminal), "Health Care Claims Fraud: Knowing Nonpractitioner" (2002).
Each inference identifies circumstances — predicate facts — from which the jurors may infer the "falsity, fictitiousness, fraudulence or misleading nature of a statement." N.J.S.A. 2C:21-4.3f. Neither permits an inference of knowledge of the falsity of a claim or other statement.
With respect to the inference applicable to practitioners only, the predicate or "basic" facts giving rise to an inference of an untruthful statement, which is the "elemental" or "ultimate" fact that may be inferred, involve the assessment of the patient's or client's condition to select a course of treatment. N.J.S.A. 2C:21-4.3f(1); see generally State v. Ingram, 98 N.J. 489, 495 (1985) (explaining the operation of statutory inferences). In the case of a practitioner, N.J.S.A. 2C:21-4.3f(1) permits an inference of a statement's falsity if a service is rendered "without the practitioner, or an associate of the practitioner, having performed an assessment of the physical or mental condition of the patient or client necessary to determine the appropriate course of treatment."
The second inference applies to both practitioners and persons who are not practitioners. The predicate facts for this inference of untruthfulness are that a document submitted for payment is "for more treatments or procedures than can be performed during the time in which the treatments or procedures were represented to have been performed." N.J.S.A. 2C:21-4.3f(2).
Because defendant was not indicted or tried as a practitioner, the statutory inference arising from a failure to assess a client's condition did not apply. Thus, defendant is correct that it should not have been charged. The question for this court, however, is whether the error not raised at trial had a clear capacity to prejudice defendant's "substantial rights" and bring about "an unjust result." Hock, supra, 54 N.J. at 538.
It is important to stress that an erroneous instruction on a permissive inference is markedly and qualitatively different than an erroneous charge on an element of an offense. A permissive inference "has no substantive effect independent of the jury instruction." State v. Thomas, 132 N.J. 247, 256 (1993); see also Ulster County Court v. Allen, 442 U.S. 140, 157, 99 S.Ct. 2213, 2224-25, 60 L.Ed.2d 777, 792 (1979). An inference that is permissive simply commends the jurors attention to facts from which they may or may not infer an element of the crime depending upon how they view the evidence. See id. at 256 (quoting Ulster County Court, supra, 442 U.S. at 169, 99 S.Ct. at 2231, 60 L.Ed.2d at 799 (Powell, J., dissenting)). Thus, a purely permissive inference, like those at issue here, "places no burden of any kind on the defendant." Ulster County Court, supra, 442 U.S. at 157, 99 S.Ct. at 2224, 60 L.Ed.2d at 792. Moreover, it does not alter the elements of the crime at all; it simply describes a way the jurors may, but need not, consider the evidence. Permissive inferences are a "staple of our adversary system of factfinding. It is often necessary for the trier of fact to determine the existence of an element of the crime — that is, an 'ultimate' or 'elemental' fact — from the existence of one or more 'evidentiary' or 'basic' facts." Id. at 156, 99 S.Ct. at 2224, 60 L.Ed.2d at 791.
Thus, an instruction on a permissive inference "affects the application of the 'beyond a reasonable doubt' standard only if, under the facts of the case, there is no rational way the trier could make the connection permitted." Id. at 157, 99 S.Ct. at 2225, 60 L.Ed.2d at 792. As the New Jersey Supreme Court has explained, a permissive inference is constitutionally permissible if "the elemental fact . . . bear[s] a rational connection, in terms of logical probability, to the [basic] fact." Thomas, supra, 132 N.J. at 255.
In our view, the capacity for prejudice from the court's delivery of the inapplicable statutory inference was so minimal as to give us no reasonable basis for doubting the verdict. The court's instruction on this inference was as follows:
If you find the defendant submitted, or attempted to submit, or caused to be submitted, or attempted to cause to be submitted any record, bill, claim, or other document for treatment, or a procedure without his associate having performed the assessment of the physical or mental condition of the patient or client, that would be necessary to determine the appropriate course o[f] treatment, then you may infer that the statement of fact [in] the record, bill, claim or document submitted for payment or reimbursement, for treatment, or procedure, was false, fraudulent, or misleading.
Admittedly, with respect to persons like defendant who are not practitioners, the rational and logical link between the predicate and elemental fact is not as strong as it is in the case of a practitioner who presumably is schooled in what type of assessment is needed to determine the appropriate course of treatment. But on the facts of this case, there was significant evidence that BHP's clients were assigned to group sessions without any regard to the suitability of the session for the patient's condition. In short, in this case there was a rational basis in the evidence for jurors to make the link between measures taken to select treatment and the submission of bills for payment that were false, fraudulent or misleading. See Ulster County Court, supra, 442 U.S. at 157, 99 S.Ct. at 2225, 60 L.Ed.2d at 792. Thus, there is no reason for concern that the jurors drew an irrational inference.
Any concern about the risk of prejudice is further dissipated by the instruction read as a whole. As previously noted, the judge also instructed the jurors on the permissive inference applicable to any person charged with health care claims fraud — one that is based on the submission of bills for services that could not have been rendered within the time reported. Contrary to defendant's claim, the evidence in this case did provide a rational basis for that inference — the discrepancy between the time Medicaid required for billing for a session of individual therapy and the time BHP allotted for that service. This was one of the primary focuses of the State's case on health care claims fraud. As the charge on this statutory inference was clearly proper, it is difficult to perceive how defendant could have been prejudiced by the charge on another inference that was supported by that record but not set forth in the statute.
For all of the foregoing reasons, we conclude that the instructions on the statutory inferences do not warrant reversal of defendant's convictions. Any error was, beyond a reasonable doubt, harmless.
Defendant's objection to the omission of an instruction on the circumstances under which he could be held accountable based upon acts of his subordinates lacks merit. The judge instructed the jurors on the elements of health care claims fraud, which required proof that defendant knowingly submitted or caused to be submitted claims for payment that were fraudulent.
The instruction given includes the functional equivalent of N.J.S.A. 2C:2-6b(1), which provides that a defendant is legally accountable for the conduct of another if the defendant, "acting with the kind of culpability . . . sufficient for the commission of the offense . . . causes an innocent or irresponsible person to engage in such conduct." For that reason, we reject this claim of error in the jury charge.
Defendant's objection to the admission of charts demonstrating false billing warrants no discussion beyond the brief comments that follow. R. 2:11-3(e)(2). The data was extracted from admissible computerized business records and with proper foundation, which was provided, was admissible pursuant to N.J.R.E. 803(c)(6). Carmona v. Resorts Int'l Hotel, Inc., 189 N.J. 354, 380 (2007). The business records rule "reflects the realization that records trusted and relied upon by businessmen are indispensable in commercial litigation even though they do not meet prior technical judicial standards for admissibility." Biunno, Weissbard & Zegas, Current N.J. Rules of Evidence, comment 1 on N.J.R.E. 803(c)(6) (2013). And a bookkeeper's ledger is admissible as a business record without having each customer testify about the individual transactions recorded therein. See Hackensack Hospital v. Tiajoloff, 85 N.J.Super. 417, 419 (App. Div. 1964), certif. denied, 44 N.J. 396 (1965) (hospital books of account were admitted to prove that services were rendered as stated in the record).
Here, the records were offered to establish billings submitted by BHP, not what services BHP did or did not provide. The State offered testimony to establish the latter. The fact that the charts the technician created compiled only some of the data the technician extracted from the database does not alter the reliability of the data or the applicability of N.J.R.E. 803(c)(6).
Based upon our review of the record in light of the issues raised in Points III, IV, V, VI and VII of defendant's brief, we have concluded that they have insufficient merit to warrant any discussion in a written opinion. R. 2:11-3(e)(2).