Health Care Fraud Conviction Stands Despite Vague Standards of Care


In Brief

  • A failure to meet medical standards, by itself, would not sustain a health care fraud conviction.
  • The government, however, typically offers additional evidence sufficient to establish knowledge that treatment rendered was neither reasonable nor medically necessary, and therefore, fraudulent.

The Fourth Circuit recently clarified the mens rea requirement in health care fraud prosecutions: even when treatment standards are unclear and diagnostic practice highly subjective, the court will sustain a conviction if the evidence shows the defendant knowingly submitted fraudulent claims. United States v. McLean.

In this case, a quality control review revealed that Dr. John R. McLean, an interventional cardiologist, placed stents in coronary arteries with no significant blockage in approximately half of 25 randomly selected cases. McLean also grossly overstated the level of blockage in his patients, often recording blockages of 80 percent to 95 percent for lesions of no more than 10 percent to 30 percent. Finally, a government expert testified that it was generally accepted in the medical community that coronary artery stents were not necessary absent at least 70 percent blockage and symptoms such as chest pain or a positive stress test.

McLean countered with a defense expert who testified that elective stents were considered medically appropriate if a patient had at least 50 percent blockage. Further, Medicare’s own guidelines did not espouse the prosecution’s 70 percent standard but rather emphasized the importance of the physician’s judgment in determining whether a stent placement would be appropriate. McLean also offered studies that revealed variations between 15 percent and 45 percent in assessments of blockage by different observers. Finally, McLean presented evidence that he stented only 16 percent of the patients in his practice, and that 85 percent of the stents he implanted were appropriate.

McLean argued that he could not be found to have the necessary degree of scienter, or specific intent, to commit health care fraud on these facts because specific intent has two elements: knowledge of a standard, and a knowing violation of the standard. In his subspecialty, McLean contended, the medical community had not agreed upon a standard for when to intervene with stents. He, therefore, could not have possessed the requisite mens rea, or scienter, to commit health care fraud. His errors were malpractice at worst, not criminal.

The argument failed to persuade the Fourth Circuit. The court started with the premise that a statute is not unreasonably vague when an ordinary person would understand that the conduct at issue was not permitted. As applied to McLean, the federal health care fraud statute prohibited the false certification of treatment as reasonable and medically necessary. The court concluded that the evidence was sufficient to support a finding of guilt beyond a reasonable doubt that McLean knew the stent procedures were not medically necessary and lied to insurers about his judgment. Thus, far from being an obstacle to the determination of guilt as McLean had proposed, the law’s scienter, or specific intent requirement, served to cut through the ambiguities of the medical standard and the inherent subjectivity of the diagnostic process. In short, the evidence showed McLean had rendered treatment he knew was wrong.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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