On June 25, 2018, a three-judge panel on the U.S. Court of Appeals for the Sixth Circuit ruled in United States v. Paulus that the trial court judge wrongly overturned a Federal jury’s conviction of a Kentucky cardiologist accused of healthcare fraud and making false statements to healthcare benefit programs by submitting claims to Medicare and Medicaid for medically unnecessary procedures. A jury in the U.S. District Court for the Eastern District of Kentucky convicted the defendant cardiologist based on accusations that he routinely exaggerated the extent of blockage when interpreting patients’ angiograms—e.g., noting blockage of 80 percent instead of 30 percent—to justify performing and billing for medically unnecessary stent procedures. After the verdict, Judge David L. Bunning entered a judgment of acquittal on the basis that the government had not proven fraudulent intent or a false statement because the defendant’s interpretations of angiograms could not be subject to proof or disproof. On appeal, the Sixth Circuit disagreed and reversed Judge Bunning’s decision. There is a great deal of controversy surrounding False Claims Act claims based on the theory that the underlying services were not medically necessary. Many argue that this theory will lead to courts inappropriately second-guessing the professional judgment of physicians, and this is an issue to watch closely.

The district court explained that the accepted medical standard allows a doctor to insert a stent when a patient’s angiogram shows at least 70 percent blockage, but cardiologists may reach different conclusions when estimating the degree of blockage displayed in an angiogram. The government’s trial experts testified that variability between two cardiologists would generally range between 10–20 percent (meaning one might record 60 percent blockage while another records 80 percent) but that larger errors would be rare. However, the defendant cited several studies indicating that inter-observer variability was much larger than 10–20 percent, arguing that these studies prove that his interpretations could not have been false. The district court overturned the jury’s conviction, holding that the government did not prove falsity and fraudulent intent because the degree of blockage “is a subjective medical opinion, incapable of confirmation or contradiction.” Slip Op. 8. The district court based this conclusion on evidence presented at trial regarding the difficulty of interpreting angiograms and the frequency of disagreement among cardiologists regarding the degree of blockage.

The Sixth Circuit disagreed, reinstating the jury’s guilty verdict and holding that “[t]he degree of [blockage] is a fact capable of proof or disproof. A doctor who deliberately inflates the blockage he sees on an angiogram has told a lie; if he does so to bill a more expensive procedure, then he has also committed fraud.” Id. at 9. Dismissing the district court’s justification for overturning the verdict, the Sixth Circuit reasoned that “[t]he difficulty of interpreting angiograms has no bearing on the capacity of [defendant’s] statements to be false.” Id. at 10. The court noted that “it is up to the jury—not the court—to decide whether the government’s proof is worthy of belief” in circumstances where “[e]ven state-of-the-art scientific measurements may be imprecise.” Id. at 9.

The case is United States v. Paulus, No. 17-5410. For a copy of the court’s opinion, please click here.