Petition for Writ of Certiorari — Gleicher v. United States

9Q0-

its . FILED

No.

FEB-? 199)

In The OFFICE OF THE Cucak

Supreme Court of the United States

-_

—"

October Term, 1990

BARRY GLEICHER and BIOPHARMACEUTICS, INC.,

formerly PATIENT MEDICAL SYSTEMS CORP.,

Petitioners,

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

JAMES M. LEMONEDES

Attorney for Petitioners

30 Lincoln Plaza

Suite 7W

New York, New York 10023

(212) 581-7914

KENNETH JOEL HABER

ELIZABETH MILGRAM

Of Counsel

24 Gold Kettle Court

Gaithersburg, Maryland 20878

(301) 670-0016

11719

ue * NJ (201) 257-6850°(800) 3 APPEAL*NY (212) 840-4640eMA (617) 542-1114

TAEDA, ine. DC (202) 783-7288°PA (215) 925-6500°USA (800) 5 APPEAL

YO

QUESTIONS PRESENTED FOR REVIEW

1. Is it a violation of Petitioners’ due process rights requiring

reversal of a criminal conviction for fraud when: (a) the sole basis

of the fraud charged is failure to comply with interpretive

regulations, which were not promulgated under the Administrative

Procedure Act and are not entitled to the force and effect of law;

(b) the Government’s position completely contradicts its position

in other litigation in which it argued that these interpretive

regulations have no force and effect of law; (c) the interpretive

regulations cited by the Government do not apply to Petitioners

and do not support the ‘‘rules’’ it charged Petitioners with

violating; and (d) the very ‘‘rules’’ articulated by the Government

rely on a term that has more than one meaning?

2. Does the Public Protection Clause of the Paperwork

Reduction Act, 44 U.S.C. § 3512, require reversal of a criminal

conviction for fraud where the fraud alleged is only the failure

to comply with information collection requests that never received

Office of Management and Budget approval?

3. Does the Second Circuit’s holding that a Magistrate’s

jurisdiction to select a jury does not require a written waiver by

the defendant in a criminal case, create a conflict with the Ninth

Circuit, which held in United States v. France, 88 F.2d 223 (9th

Cir. 1989), aff’d by equally divided court, 59 L.W. 4089 (Jan.

22, 1991) (Justice Souter did not participate), that United States

v. Gornez, 109 S.Ct. 2237 (1989) required such a waiver?

4. In light of this Court’s grant of certiorari in Pertz v. United

States, 59 L.W. 3377 (Jan. 22, 1991), should this case, which

contains virtually the exact same facts be joined therewith, or

held pending decision?

ul

TABLE OF CONTENTS

Page

Questions Presented for Review ................ceeeees i

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Reasons for Granting the Writ:

I. The convictions are based on violations of Petitioners’

due process rights and must be reversed. ........

A. The ‘‘Point of Sale Rules’’ Contained In The

Carrier’s Manual, Which Were Never

Promulgated Under The Administrative

Procedure Act, Are Unenforceable And Cannot

Support The Convictions. .................

1. The Indictment and Prosecution Were

Based On Violations Of the Point Of Sale

Rules Contained In The Carrier’s Manual.

II.

it

Contents

2. Rules Not Promulgated Under The

Administrative Procedure Act Are Merely

Interpretive Regulations And Are Not

A an ee

3. Failure To Comply With Interpretive

Regulations Cannot Provide The Basis For

EE OS re ere

The Government’s Position That The Carriers

Manual Creates Enforceable Rules’ Is

Impermissibly Inconsistent With Its Prior

Position in Other Litigation An Violative Of

Petitioners’ Due Process Rights. ...........

Page

1]

14

16

The Carriers Manual Does Not Apply to

Medicare Suppliers And Its Provisions Do Not

Create The ‘‘Point Of Sale Rules’’ On Which

The Convictions- Were Based...............

1. The Carriers Manual Applies To Carriers,

IS «NW VGN a6 dea ewes ewe bse

2. The Provisions Of The Carriers Manual

Can Not Reasonably Be Construed To

Create The ‘‘Point Of Sale Rules’’ Relied

On By The Prosecution. ..............

The ‘‘Point Of Sale Rules’’ Relied On By The

Prosecution Are Unconstitutionally Vague. . .

The Public Protection Clause of the Paperwork

Reduction Act prohibits this criminal prosecution.

17

18

19

21

24

iv

Contents

Page

III. The magistrate had no statutory jurisdiction to select

a jury in this felony case without Petitioners’ knowing

oe eee et rere ee 29

So Le eae te eet ae rakes ceed 30

TABLE OF CITATIONS

Cases Cited:

American Ambulance Service of Pa. v. Sullivan, 716 F.

Sem. BGR GED. Peis WOR) nn occ sce ce cescwcccecss 13

Batterton v. Francis, 432 U.S. 416 (1976) .............. 1]

Bethesda Hospital Ass’n. v. Bowen, 485 U.S. 399 (1988)

ed Slow as a we dab kale Seek EERO TECK Cb ees 20

Bronston v. United States, 904 U.S. 352 (1973)......... 9

Dole v. United States Steel Workers of America, 58 L.W.

GD occ bss sunnccedcewkece cues 24, 25, 26, 27, 28

Dunn v. United States, 442 U.S. 100 (1979) ........... 21, 23

Glick v. Secretary of H.H.S., 714 F. Supp. 39 (D.C.

Se Ce « nctia Waeeka tne s Came 11, 13, 14, 18, 20

\

Helvering v. Gregory, 69 F.2d 809 (2d Cir. 1934) ....... 10

Integrated Generics, Inc. v. Bowen, CV87-2032 (E.D.N.Y.)

Contents

Page

Krieger v. Krauskopf, 121 A.D.2d 448, 503 N.Y.S.2d 418

(2d Dept. 1986), aff'd, 70 N.Y.2d 637, 518 N.Y.S.2d

957 (1987), cert. denied, 108 S. Ct. 731 (1988)...... 15

Kuzma v. U.S. Postal Service, 798 F.2d 29 (2d Cir. 1986)

on wee 6 Sanath alceh Die eran See eaae waar eee 25

Linoz v. Heckler, 800 F.2d 871 (9th Cir. 1986) ......... 13

Melashenko v. Bowen, No. CV-F-87-533, 5 CCH

Medicare/Medicaid Guide 438,827 (E.D. Cal. 1990)

ia Raed apices eee chic bok ti al a ake ec oe ae 16, 17

Morton_v. Ruiz, 415 U.S. 199 (1974) .................. 12

N.L.R.B. v. Curtin, Matheson Scientific, Inc., 110 S. Ct.

Se a as ack o's Nae aed eo ee a eaeeacawe 28

Northwest Hospital v. United States, 4 Cl. Ct. 109 (U.S.C.C.

NG dé a dss aaaiais Sink Ob Os ae aa ee ee 19

O’Malley v. New York City Transit Authority, 896

Fee ee ee ees Es 06 8k bs kccewedenchunceeesn 9

Peretz v. United States, 59 L.W. 3501 (Jan. 22, 1990)

anid Kia Gata ned sdb a eee aude ceentes ee ee i, 30

Schweiker v. Hansen, 450 U.S. 785 (1980) ......... [2. ta. G2

St. Mary’s Hospital v. Blue Cross and Blue Shield Ass’n.,

Fe Was Se Se Gas CD 6 840 sc cen nant eaaeenns 13

vi

Contents

Page

United States v. Aikins, 912 F.2d 285 (9th Cir. 1990)

United States v. France, 886 F.2d 223 (9th Cir. 1989)

aff’d by an equally divided court, 59 L.W. 4089 (Jan. 22,

1991) (per curiam) (Justice Souter not participating)

United States v. Garcia, 848 F.2d 1324 (2d Cir. 1988),

rev’d sub. nom. United States v. Gomez, 109 S. Ct.

of) rire rer Sere irra a Sate 29

United States v. Gomez, 109 S. Ct. 2237 (1989) ......... i, 29

United States v. Goodwin, 457 U.S. 368 (1982) ......... 17

United States v. Hatch, 919 F.2d 1394 (9th Cir. 1990)

vii

Contents

Page

United States v. Stauffer Chemical Co., 684 F.2d 1174 (6th

ED ss hak tae CUTAW Ad Gul aeen oe eae: 19

SPEEA ch Gdn abe uner e eee caer eek Site aa are 9

United States v. Wong, 884 F.2d 1530 (2d Cir. 1989)

Pee eee TOT TEE PER EER hart er a he 29

United States v. Zacher, 586 F.2d 912 (2d Cir. 1978)

(ELENA A 4SERI NESS OUNSECARRES EEL EOC RAOL CD 10, 11, 15

Statutes Cited:

FS Ss ws enn sch bicdhcnkankksscauweetes 3, 11, 12

Pe ES TE OT 56 550 555 nan nk ek bh onauandeenaeicknl 9, 23

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- Contents

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Other Authorities Cited:

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ix

Contents

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Medicare Carriers Manual Provisions:

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No.

In The

Supreme Court of the United States

October Term, 1990

BARRY GLEICHER and BIOPHARMACEUTICS, INC.,

formerly PATIENT MEDICAL SYSTEMS CORP.,

Petitioners,

VS.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

PRELIMINARY STATEMENT

Petitioners, BARRY GLEICHER and BIOPHARMA-

CEUTICS, INC., formerly PATIENT MEDICAL SYSTEMS

CORP. (‘‘PMS’’)', respectfully request that a writ of certiorari

1. Biopharmaceutics, Inc., a publicly-owned Delaware corporation, has

no parent corporation or subsidiaries except a wholly-owned subsidiary,

(Cont’d)

be granted to review a Judgment and Opinion of the United States

Court of Appeals for the Second Circuit entered in the above-

captioned proceeding.

OPINION BELOW

The United States District Court for the Eastern District of

New York (Wexler, J.), wrote no opinion. The Decision of the

United States Court of Appeals for the Second Circuit affirming

the convictions is reported at 914 F.2d 1514 (2d Cir. 1990), and

is reprinted in the Appendix herewith.? The Second Circuit further

denied Petitioners’ Petitions for Rehearing on November 9, 1990

and November 22, 1990, and a copy of these Orders are contained

in the Appendix herewith.

JURISDICTION AND TIMELINESS

The jurisdiction of this Court is invoked under Title 28,

United States Code, § 1254(1). This Petition is timely because

it was filed within ninety days of the Second Circuit’s denial of

the Petitioners’ timely Petitions for Rehearing on November 9

and November 22, 1990.

(Cont’d)

Biopharmaceutics, Inc., a New York corporation, 100 percent of the stock of

which was purchased, subsequent to the events at issue in the Indictment, by

Patient Medica! Systems Corp., a defendant below. The only affiliate corporation

is Outback Oil & Mineral Exploration Corporation, a publicly-owned corporation

which is a major shareholder in Biopharmaceutics, Inc. Defendant Patient

Medical Systems Corp. changed its name in 1987 to Integrated Generics, Inc.,

consistent with its changing its line of business to generic drugs. In 1988,

Integrated Generics, Inc., was reincorporated in Delaware as Biopharmaceutics,

Inc.

2. All references to the Appendix shall be listed as ‘‘___a.”’

PROVISIONS INVOLVED

The provisions involved include the following statutes,

regulations and provisions of the Medicare Carriers Manual, the

relevant text of which is set forth in Appendix at 127a.

l. STATUTES

Administrative Procedure Act

5 U.S.C. § 553 — Rule Making

Paperwork Reduction Act

44 U.S.C. § 3507 — Public information collection

activities — Submission to Director; approval and

delegation

44 U.S.C. § 3512 — Public protection

Magistrate’s Act

28 U.S.C. § 636 — Jurisdiction, powers and temporary

assignment

Criminal Code

18 U.S.C. § 3401 — Misdemeanors; application of

probation laws

II. REGULATIONS

Office of Management and Budget

5 C.F.R. § 1320.5 — Public Protection

Il.

Medicare Carriers Manual Provisions

§ 3102.B AREA CARRIER — SUPPLIER’S

SERVICES — Suppliers with Branch Offices or

Sales/Rental Outlets in More Than One Carrier

Jurisdiction

§ 3110. TRANSFERRING REQUESTS FOR

MEDICARE PAYMENT

§ 4011.8 Jtem 8: Name and Address of Physician or

Supplier

§ 4105.5 Claims From Suppliers With Central Billing

Operations For Branch Offices in More Than One

Carrier’s Jurisdiction

-§ 4105.8 Claims From Suppliers With Central Billing

Operations For Branch Offices in More Than One

Carrier’s Jurisdiction

STATEMENT OF CASE

Petitioner PMS was a Medicare supplier that provided durable

medical equipment and disposable medical supplies to Medicare

Part B beneficiaries’ in various states. Petitioner, BARRY

3. The Medicare Program, administered by the Department of Health and

Human Services (‘‘HHS’’) through HCFA, is a system of health insurance for

the elderly and the disabled. See Social Security Amendments of 1965, Public

Law 89-97, Title I, 79 : tat. 286 (1965) (codified as amended at 42 U.S.C. § 1395,

et seq.) (‘Medicare Act’’). Medicare Part B benefits cover the purchase and

rental of durable medical equipment, such as seat-lift chairs. 42 U.S.C. § 13951;

42 C.F.R. § 410.10(h), 410.38 (1988). In purchasing or renting such equipment,

a beneficiary may assign his entitlement to Part B benefits to the supplier. The

(Cont’d)

GLEICHER (‘‘Gleicher’’) was a Vice-President of PMS.‘

PMS provided supplies and equipment, ranging from enteral

feeding supplies to seat-lift chairs, to Medicare beneficiaries and

accepted an asignment of the beneficiaries’ claims as payment.

PMS submitted these claims to private insurance companies that

had contracted with the Health Care Financing Administration

(‘“‘HCFA’’), to serve as Medicare carriers.‘ Each claim was

submitted on ‘‘form HCFA-1500’’ (‘‘the claim form’’) (56a) the

form prescribed by HCFA. PMS utilized the same procedures

for filing claims as did other multi-state suppliers: claims from

various States were processed through a central computer and

submitted to the Medicare carriers through regional offices.

In the summer of 1985, some of these private carriers began

to create their own billing instructions describing the ‘‘appropriate

carrier’’ with which particular claims should be filed. Each carrier

developed its own instructions, often conflicting with those of

other carriers. Subsequently, each carrier, citing its version of

(Cont'd)

supplier then submits the claim to the Medicare carrier and payment is made

directly by the carrier. 42 U.S.C. § 1395f; 42 C.F.R. § 405.250 (1987).

4. Another Vice President for PMS, STEVEN B. WEISS (‘‘Weiss’’), and

another corporation, HEALTH-MED, INC. (‘‘Health-Med’’), were also indicted,

jointly tried and convicted with the Petitioners. At this time, Weiss’ appeal is

still pending before the Second Circuit. United States v. Weiss, No. 90-1086

(2d Cir.) Health-Med is out of business and elected not to appeal.

5. HCFA is responsible for operational direction and policy guidance in

administration of the Medicare Act. 42 C.F.R. §§ 401.101, 401.108 (1989).

A.dditionally, it is empowered to negotiate and administer agreements with

individual Medicare carriers. 42 U.S.C. § 1395u; 42 C.F.R. § 421.200 (1989).

The carriers are expected to review each claim, make a determination of

**reasonable charge,’’ and pay the claim. 42 U.S.C. § 1395u; 42 C.F.R.

§§ 405.501, 405.502 (1989).

the instructions, denied that it was the ‘‘appropriate carrier’’ to

process PMS’ claims.* The claims were shifted from carrier to

carrier or back to PMS, so that numerous claims were not

processed or paid for over two years.’ As a result, PMS was forced

to leave the health care business.

In 1987, PMS initiated a civil action against the Secretary

and a Medicare carrier to challenge the validity of these uncodified,

ad hoc, inconsistent, and arbitrary billing instructions. /ntegrated

Generics, Inc. v. Bowen, CV87-2032 (E.D.N.Y.) (stayed pending

decision in United States v. Weiss, No. 90-1086 (2d Cir.)). In

response, the Government initiated this action indicting PMS,

Gleicher, Weiss and Health-Med for conspiring to defraud the

United States, mail fraud, and making false statements on

Medicare claim forms.

6. Different carriers were using different reasons to justify their refusal

to process and pay PMS’ Medicare claims. Carriers outside of New York state

asserted that PMS’ principal place of business was in Franklin Square, New

York, and therefore all claims should be submitted to the carrier for that

geographic jurisdiction, Empire Blue Cross/Blue Shield of New York. At the

same time, however, Empire refused to pay the claims and asserted that they

should be submitted to the carrier within the geographic jurisdiction in which

the beneficiary resided. (75a-76a).

The New Jersey carrier advised co-defendant Steven B. Weiss, then President

of Health-Med, which had an office in New Jersey, that the New Jersey carrier

would only accept claims for New Jersey beneficiaries, and claims for New York

beneficiaries should be submitted to a New York carrier (13a, 78a). Yet, this

same carrier, at approximately the same time, advised Gleicher ‘‘since you are

from New York, you should send any claims you have for New Jersey Medicare

patients to your carrier in New York’’ (14a, 77a). This carrier was thus using

the ‘‘beneficiary’s address’’ basis te avoid claims from Health-Med, and the

‘toffice address’’ basis to avoid claims from Gleicher.

7. PMS is presently owed payment for numerous claims. The amount due

far exceeds the amount of fine imposed by the court, and any claim for

overpayment made by the government.

The Prosecution’s entire case was premised on the argument

that the Medicare Carrier’s Manual (‘‘CM’’) provisions created

“*point of sale rules’’, and that Petitioners fraudulently and falsely

circumvented these ‘‘rules’’*. The trial judge made clear that the

existence of the rules was an essential premise to a finding of

wrongdoing:

If there are no rules and regulationss, there cannot

be any fraud, it’s that simple. I rule that there was

[sic] regulations .. .

8. The essence of the Prosecution’s fraud and false statements theories

is contained in the following paragraphs of the Indictment:

14. Pursuant to the HHS Medicare Carriers Manual,

‘(Manual)’, which is provided to all Medicare suppliers, a

carrier’s jurisdiction to receive, analyze and pay Medicare

claims, and the basis for the carrier’s calculation of the

amount of reimbursement to which suppliers are entitled, is

determined, in part, by the location where the service is

furnished to the beneficiary, i.e., the location where the

supplier meets with the beneficiary or receives the beneficiary’s

call for the supplier’s services. This location is known as the

**point of sale’’.

15. A Medicare provider is eligible to receive only the

prevailing rate of reimbursement in the geographic location

of the point of sale. Pursuant to the Manual, Medicare

suppliers are required to file Medicare claims with the

Medicare carriers located in the geographic location where

te services were furnished, i.e., the point of sale.

16. The Medicare Claim Form requires the supplier to

list its name and address. The Manual requires that suppliers

with branch offices located in more than one carrier’s

jurisdiction identify on the Claim Form the address of the

branch office actually supplying the service to the Medicare

beneficiary. . .

(37a-38a).

(85a). The Government specifically agreed.’

Jury selection for the criminal trial was conducted on April

3, 1989 before Federal Magistrate David F. Jordan. The Magistrate

did not request, and the Petitioners did not provide, written waivers

of their rights to have an Article III Judge preside at the jury

selection. '°

Petitioners were jointly tried and convicted. The Second

Circuit affirmed the convictions of Gleicher and PMS on

September 19, 1990 implicitly accepting the validity and

enforceability of the ‘‘point of sale rules’’ in its decision (9a).

Both Petitioners submitted timely Motions for Rehearing, and

these motions were denied on November 9, 1990 and November

22, 1990, respectively.

9. The trial judge provided this explanation in the civil trial, which was

stayed until the conclusion of the criminal proceedings. At that time, the

government attorney explained that if there were no rules or regulations that

prohibited Petitioners’ conduct, “‘then obviously the criminal indictment would

have to have been thrown out.’’ (83a).

10. The Prosecution submitted an affirmation in opposition to Petitioners’

joint motion for a judgment of acquittal and asserted that counsel had orally

consented to the Magistrate’s supervision of jury selection. (124a).

6

REASONS FOR GRANTING THE WRIT

I.

THE CONVICTIONS ARE BASED ON VIOLATIONS OF

PETITIONERS’ DUE PROCESS RIGHTS AND MUST BE

REVERSED.

A. The ‘‘Point of Sale Rules’’ Contained In The Carrier’s Manual,

Which Were Never Promulgated Under The Administrative

Procedure Act, Are Unenforceable and Cannot Support The

Convictions.

1. The Indictment and Prosecution Were Based On Violations

Of The Point Of Saie Rules Contained In The Carrier’s Manual.

Petitioners were charged with and convicted of mail fraud,

18 U.S.C. § 1341, conspiring to defraud the United States, 18

U.S.C. § 371, and making false statements on Medicare and

Medicaid forms, 42 U.S.C. § 1395n(aX(1) and § 1396h(a)(1) (1982

ed.). Convictions for mail fraud and conspiring to defraud the

United States must be reversed if the existence of a fraud is not

proven. See O’Malley v. New York City Transit Authority, 896

F.2d 704, 706-07 (2d Cir. 1990) (mail fraud); United States v.

Weischenberg, 604 F.2d 326, 331-32 (Sth Cir. 1979) (conspiracy

to defraud the United States ). A conviction for false statements

must be reversed if the statement is literally true. See Bronston

v. United States, 409 U.S. 352, 362 (1973) (reversing conviction

for perjury because statement was literally true, even though it

was unresponsive and ‘‘false by negative implication’’).

Every count in the Indictment is based on the premise that

petitioners were legally obligated to comply with certain ‘‘point

10

of sale ruies’’ contained in the CM'' and that Petitioners’ failure

to comply with these ‘‘rules’’ constituted fraud and made the

statements by petitioners literally false (37a-38a, 70a-71a, 96a).

These alleged ‘‘point of sale rules’’ relied on by the Prosecution

were: (1) That Medicare suppliers are required to file claim forms

with the ‘‘appropriate’’ Medicare carrier in the geographic location

where the ‘‘point of sale’’ occurred, and (2) that multi-office

Medicare suppliers are required to ‘‘place the address for the

branch office covering the point of sale in box 31 of the claim

form’’ (37a-38a, 96a-97a).

At trial, the Prosecution argued that, based on the ‘‘point

of sale rules’’, a New York carrier was the ‘‘appropriate’’ carrier

to process Petitioners’ seat-lift chair claims, that Petitioners knew

claims should have been submitted to a New York carrier and

that Petitioners’ New York office address, rather than its Ohio

or Illinois office addresses should have been listed in box 31. Thus,

the Prosecution argued, the Petitioners acted fraudulently by filing

claim forms with ‘‘inappropriate’’ carriers and made false

statements by placing the wrong branch office address in box 31.'*

11. The CM provisions relied on by the Prosecution are fully set forth

in the Appendix and are discussed in more detail at page 19, infra. The term

‘*‘point of sale’? however, is never used in the CM.

12. The Prosecution argued that Petitioners’ motivation for submitting

claim forms to the Ohio carrier was to obtain a higher reimbursement rate.

In fact, no such motivation on Petitioners’ part can be inferred. The New York

carrier, which according to the Prosecution was the ‘‘appropriate’’ carrier for

certain claims, actually paid a higher rate of reimbursement than the Ohio carrier

paid at that time. (65a). Assuming arguendo, however, that Petitioners were

seeking a higher reimbursement in submitting these claims to the Ohio carrier,

this in itself is not improper when there is no requirement that a Medicare supplier

submits its claims to a particular carrier and there is no prohibition against

seeking the highest reimbursement. See United States v. Zacher, 586 F.2d 912,

916 (2d Cir. 1978); United States v. Porter, 591 F.2d 1048, 1057 (Sth Cir. 1979);

see also, Helvering v. Gregory, 69 F.2d 809, 810 (2d Cir. 1934).

1]

The Prosecution, the trial court'’ and the Second Circuit'*

all assumed that the ‘‘point of sale rules’’ imposed a legal

obligation on Petitioners to file claims with a particular carrier

and to complete box 31 of the claim form in a particular way.

Yet, these ‘‘rules’’ can only give rise to such obligations if the

CM is entitled to the force and effect of law. See Schweiker v.

Hansen, 450 U.S. 785, 789 (1980) (per curia) (examining the Social

Security Claims Manual and explaining that it ‘‘is not a regulation.

It has no legal force. . .’’); United States v. Reinis, 794 F.2d 506,

508 (9th Cir. 1986) (reversing fraud conviction because the currency

transaction reporting ‘‘rule’’ relied on by Prosecution was never

promulgated under the APA); Glick v. Secretary of HHS, 714

F. Supp. 39, 41 (D.C. Mass. 1989). If the CM provisions are not

entitled to the force and effect of law, the convictions must be

overturned. United States v. Vail, 252 F. Supp. 823, 825 (S.D.

Ohio, 1966); United States v. Zacher, 586 F.2d 912, 916 (2d Cir.

1978); United States v. Porter, 591 F.2d 1048, 1057 (Sth Cir. 1979);

United States v. Reinis, supra.

2. Rules Not Promulgated Under The Administrative

Procedure Act Are Merely Interpretive Regulations And Are Not

Enforceable.

The Medicare Act provides no procedures for the filing

of claims and instead delegates to HCFA the authority to establish

regulations. 42 U.S.C. § 1395n(aX1). HCFA may establish both

substantive regulations, which are entitled to the force and effect

of law, and interpretive regulations, which are mere guidelines

and not binding on any parties. 5 U.S.C. § 553; Batterton v.

Francis, 432 U.S. 416, 425 n.9 (1976) Schweiker,

13. (84a, 85a); see also fn. 9 and accompanying test, supra.

14. See page 14, supra.

12

supra, 450 U.S. at 789. HCFA must comply with the

Administrative Procedure Act (‘‘APA’’) requirements of public

notice and comment before any substantive regulation may be

validly promulgated. 5 U.S.C. § 553.'* In addition to properly

promulgated substantive regulations published in the C.F.R.,

HCFA has also produced numerous publications addressing a

variety of administrative subjects. These include various manuals,

such as the CM.

In examining the enforcement and application of regulations

by administrative agencies, this Court has explained:

The Administrative Procedure Act was adopted

to provide, inter alia, that administrative policies

affecting individual rights and obligations be

promulgated pursuant to certain stated procedures

so as to avoid the inherent arbitrary nature of

unpublished, ad hoc determinations.

Morton v. Ruiz, 415 U.S. 199, 232 (1974). In Morton, this Court

held that the Bureau of Indian Affairs (‘‘BIA’’) had improperly

relied on a rule in the BIA Manual to deny a benefits claim. The

court assumed that BIA could limit benefits to Indians living on

reservations or in certain states, but noted ‘‘the question that

remains is whether this has been validly accomplished’’. Jd. at

231. Because the BIA failed to comply with the requirements of

the APA, the court unanimously found the rule invalid. Jd. at 235.

15. HCFA’s substantive regulations are published in the Code of

Federal Regulations (‘‘C.F.R.’’). See 42 C.F.R. § 400, et seq. The C.F.R.

regulations never addressed where a claim form was to be filed or how it was

to be completed. See, 42 C.F.R. § 405.250 (1987) (subsequently redesignated

as 410.170(a) (1989); 42 C.F.R. § 405.1660 (1987) (subsequently redesignated

and amended as 425.5(a)(5) (1989)).

13

It is well settled that the provisions of agency manuals, such

as the CM, are merely interpretive regulations'* which are not

entitled to the force and effect of law and which have no binding

effect. Id.; Schweiker, supra, 450 U.S. at 789; St. Mory’s Hospital

v. Blue Cross and Blue Shield Assn, 788 F.2d 888, 890 (2d Cir.

1986) (examining the Medicare Providers Reimbursement Manual);

Linoz v. Heckler, 800 F.2d 871 (9th Cir. 1986) (concluding that

because CM provisions were not promulgated under the APA,

they could not be relied on by HCFA to deny a claim for benefits);

Glick, supra, 714 F. Supp. at 41; American Ambulance Service

of PA v. Sullivan, 716 F. Supp. 861, 871 (E.D. Pa. 1989) (‘‘It

is clear that the carriers manual and letter 10-80 [HCFA’s letter

to carriers] are interpretive rules. . .’’). On this basis, both this

Court and other federal courts have refused to compel a party

to comply with such manual provisions. See Schweiker, supra;

Glick, supra.

Glick is particularly relevant to the issues presented herein.

In Glick, a Medicare carrier sought reimbursement from a

physician for claims that the carrier had processed and paid.

The carrier argued that Glick should repay those claims for

which he failed to provide documentation required by the

CM. Glick initiated suit to challenge the validity of the CM

provisions and argued that because the CM was not promulgated

under the mandates of the APA, it could not impose any filing

requirements on him and could not be relied on to refuse to process

and pay his claims. The Glick court agreed explaining: ‘‘to the

extent that the regulations contained in the Carrier’s Manual [CM]

have not been officially promulgated, plaintiff [Glick] cannot be

held accountable to them.’’ 714 F. Supp. at 41.

16. At one point, the Prosecution itself argued that the CM provisions

were not rules or regulations. See fn. 19, infra.

14

Glick raised the same APA argument that Petitioners

presented in this case: the CM can impose no obligation on the

part of Medicare suppliers because it has never been promulgated

in accordance with the mandates of the APA. When Petitioners

initiated a suit for virtually the identical reasons as in Glick,

however, Petitioners were indicted for fraud. It is indeed a travesty

of justice to determine, as in Glick, that Medicare suppliers

‘cannot be held accountable’’ to CM provisions, yet in this case

to find that Medicare suppliers are criminally liable for failure

to comply with those provisions.

3. Failure To Comply With Interpretive Regulations Cannot

Provide The Basis For A Conviction.

On appeal, the Second Circuit did not address the

enforceability of the CM provisions, apparently assuming that

they constituted valid substantive regulations, the violation of

which could serve as the basis for a fraud conviction. The court

stated that: ‘‘The Manual [CM] explains the basis upon which

a provider of services is to determine to which carrier it should

submit a claim’’ (8a), and that ‘‘it was the Manual that explained

the proper address to be shown in box 31’’ (22a). On this basis,

it affirmed the convictions, concluding that because the addresses

Petitioners ‘‘gave in box 31. . .were not addresses from which

the sale was made. . .’’ the Petitioners were guilty of providing

‘*false information.’’'’ Jd.

17. Petitioners contend that contrary to the Second Circuit’s

assumption, the CM provisions were far from clear and did not explain at all

what the provider of services should do in complezing and submitting claims.

See pp. 21-24, infra. In fact, it was box 24B of the claim form, not box 31 that

asked for ‘‘Place of Service’’and provided place of service codes (56a). It is

undisputed that Petitioners always completed this box by filling in the code

for ‘‘Patient’s Home’’, that the patients’ names and addresses were listed on

the forms as requested, and that the parties were actually provided with the

equipment.

15

Petitioners respectfully contend that it is precisely because

the CM is the only document relied on by the Prosecution to

establish that Petitioners provided ‘‘false information’’, that the

conviction cannot stand.'* The CM provisions are, at best,

interpretive regulations, and in the rare criminal cases that have

charged a failure to comply with interpretive regulations, the

indictments and/or convictions have been overturned. United

States v. Vail, 252 F. Supp. 823, 825 (S.D. Ohio, 1966) (dismissing

Indictment for failure to file excise tax returns, because the filing

regulations were never properly promulgated under the APA);

United States v. Zacher, 586 F.2d 912, 914, 916-17 (2d Cir. 1978)

(reversing bribery conviction because no Medicaid rule prohibited

defendant’s receipt of supplemental payments, even though he

believed his actions were illegal or questionable); United States

v. Porter, 591 F.2d 1048, 1057 (Sth Cir. 1979) (reversing conviction

because no statute or regulation prohibited doctors from

submitting blood work to particular labs for the sole purpose of

obtaining higher fees despite Medicare carrier publications and

letters); United States v. Reinis, supra, 794 F.2d at 508. Petitioners

simply may not be criminally punished for failure to comply with

the CM provisions. Any other conclusion elevates the interpretive

regulations of the CM to the level of substantive regulations and

18. Nor did the Prosecution present any letter from any carrier that

requested the branch office covering the point of sale be listed in box 31.

Furthermore, an argument that carriers’ letters would satisfy the publication

requirements of the APA has previously been considered and rejected by the

Federal Courts. The Fifth Circuit in United States v. Porter, supra, 591 F.2d

at 1057, held that mere letters from Medicare carriers could not form the basis

for a criminal prosecution. Cf. Krieger v. Krauskopf, 121 A.D.2d 448, 503

N.Y.S.2d 418 (2d Dept., 1986), aff’d 70 N.Y.2d 637, 518 N.Y.S.2d 957 (1987),

cert. denied, 108 S.Ct. 731 (1988) (Letters from HCFA stating payment rules

were of no force and effect absent a demonstration that the procedures of the

APA for promulgation and publication of such rules had been followed). In

this case, Petitioners could not have been expected to comply with the carriers’

instructions, as the instructions were inconsistent and contradictory. See fn.

6 and accompanying text, supra.

16

vitiates the very purpose of the APA.

B. The Government’s Position That The Carriers Manual Creates

Enforceable Rules Is Impermissibly Inconsistent With Its Prior

Position in Other Litigation And Violative Of Petitioners’ Due

Process Rights.

The Prosecution’s position that the CM created enforceable

‘‘point of sale rules’’ is completely contradictory to the

Government’s prior position concerning the CM in Melashenko

v. Bowen, No. CV-F-87-533, 5 C.C.H. Medicare/Medicaid, par.

38,827 (E.D. Cal. 1990).'° Dr. Melashenko, excluded from

participation in the Medicare program, sought a permanent

injunction against the Office of Inspector General (‘‘OIG’’) for

its failure to follow CM procedures in refusing to reinstate him.

The government successfully argued that the CM provisions ‘‘are

not law or regulations’’, but merely ‘‘guidelines which have no

‘legal force’ and are not binding on the Secretary.’’ (116a). The

Government explained that the CM provisions were never

published in the Federal Register and were not promulgated in

accordance with the APA. Accordingly, the government requested

that if Court found the CM established ‘‘substantive rules, that

it must strike them down as being violative of the APA’’. (118a).”°

1S. Indeed, the Prosecution inconsistently characterized these CM

provisions. At trial, it argued that the CM provisions created ‘‘point of sale

rules’’ (61a-62a, 71a). On appeal, however, it argued that these CM provisions

were not rules or regulations (106a-107a). The Prosecution made this latter

assertion in response to Appellants’ argument that before any CM provision

can create a rule that places an obligation on Medicare suppliers, the CM

provisions must comply with the mandates of the PRA. The Prosectuion argued

that the CM is exempt from such PRA mandates because the CM provisions

are merely explanatory guides (106a-107a).

20. This same argument was raised by Petitioners at trial (68a). Inexplicably,

the trial judge rejected this argument without the benefit of an opinion stated

from the bench or in a written decision.

17

The instant prosecution is based on CM provisions, which,

as the Government argued in Melashenko, are of ‘‘no force and

effect’’. The Government’s inconsistent interpretation of the CM

between the Melashenko case and the case at bar establishes a

clear due process violation. Cf. United States v. Bogart, 783 F.2d

1428, 1438 (9th Cir. 1986) (remanding to determine whether

Government’s conduct was so ‘‘outrageous’’ as to constitute a

due process violation, and observing that such conduct includes

‘*those hopefully few cases where the crime is fabricated entirely

by the police to secure the defendant’s conviction. . .’’).?' The

Government cannot in one case be permitted to argue that the

CM provisions ‘‘have no legal force’’ and in another to argue

that the CM provisions must be complied with under threat of

criminal prosecution. Cf. United States v. Goodwin, 457 U.S.

368, 372 (1982) (‘‘To punish a person because he has done what

the law plainly allows him to do is a due process violation ‘of

the most basic sort’ ’’).

C. The Carriers Manual Does Not Apply to Medicare Suppliers

And Its Provisions Do Not Create The ‘‘Point Of Sale Rules’’

On Which The Convictions Were Based.

The Prosecution construed certain CM provisions to create

the following ‘‘point of sale rules’’: CM provision 3102.b allegedly

required Medicare suppliers to file claim forms with the carrier

21. Throughout these proceedings, the Prosecution has continually read

and relied on only selected portions of the CM provisions to create out of whole

cloth these imaginary ‘‘point of sale rules”’. Finally, in summation, the prosecutor

abandoned any attempt to even rely on the CM, as he created his own ‘‘point

of sale rule.’’ The Prosecution advised the jury that a supplier must have an

office in the area of the ‘‘point of sale’’ (70a). The Record is completely devoid

of any proof of this new point of sale rule. Indeed, the CM specifically contradicts

this new rule; CM 3102.b (on which the prosecutor so heavily relies) gives an

example of a carrier having processing jurisdiction in a location where the supplier

does not have an office.(see, e.g., Example #3 at p. 136a).

18

located in the geographic location where the point of sale occurred,

while CM provisions 4105.5 and 4011.8 allegedly required multi-

office Medicare suppliers to place the address for the branch office

covering the point of sale in box 31 of the claim form (37a-38a,

70a-71a). Petitioners argue, however, that even if the CM as a

whole were treated as containing substantive regulations having

the force and effect of law, those provisions do not creat the “‘point

of sale rules’’ asserted by the Prosecution. Neither on its face

nor through any reasonable interpretation can the CM as a whole,

or any of its provisions, be construed to have imposed on

Petitioners the requirements alleged by the Prosecution.

1. The Carriers Manual Applies To Carriers, Not Suppliers

Initially, it must be observed that the CM places no obligation

on Medicare suppliers. Glick, supra, 714 F. Supp. at 41. The Glick

court, in addition to finding that because ‘‘the regulations

contained in the Carriers Manual [CM] have not been officially

promulgated, plaintiff cannot be held accountable to them”’, id.,

further observed that the CM ‘“‘provisions are designed to put

carriers, not practitioners, on notice’’. Id. (emphasis supplied).

The Glick rationale is completely supported by the

publication, distribution, use and content of the CM. The CM

is published by HCFA for Medicare carriers — it is, after all,

titled The Carriers Manual. It is distributed by HCFA to carriers

and it is mot provided to Medicare suppliers.”* It instructs the

carriers and is used by them to decide how to process claims.*’

22. The Indictment mistakenly alleges that the CM ‘“‘is provided to all

Medicare suppliers.’’ (37a). At trial, however, it was established that the CM

is not provided to Medicare suppliers unless they specifically request it from

HCFA and pay for it (62a-63a).

23. The Indictment itself admits this (37a-38a).

19

2. The Provisions Of The Carriers Manual Can Not

Reasonably Be Construed To Create The ‘‘Point Of Sale Rules’’

Relied On By The Prosecution.

Even if, as the Prosecution argues, the CM could be held

to impose obligations on Medicare suppliers, as well as carriers,

the provisions relied on by the Prosecution cannot be construed

to create the ‘“‘point of sale rules.’’ Indeed, the CM provisions

explicitly contradict the Prosecution’s arguement.** None of the

CM provisions cited by the Prosecution, nor any other provision

in the CM, ever refer to the term ‘‘point of sale.’’ ,

The CM provisions relied on by the Prosecution speak of

*‘jurisdiction for processing of claims’’, not filing of claims. CM

4105.5. Moreover, ‘‘the carrier receiving the claim must develop

the location of sale’’, CM 4105.5, and ‘‘determine jurisdiction

in referring the claim to the servicing carrier where appropriate’,

CM 4011.8, and finally, ‘‘if the request for Medicare payment

24. CM provision 3102.b addresses carrier jurisdiction for payment requests

and refers to CM provision 4105.8, which addresses carrier ‘‘jurisdiction for

processing of claims.’’ These provisions must be read in conjunction with CM

provision 3110, which provides: ‘‘If the request for Medicare payment was

misdirected, the carrier reroutes it.’’ It is a basic principle of statutory

interpretation that the statute must be construed wherever possible to give effect

to all provisions and render apparently inconsistent provisions harmonious.

Northwest Hospital v. United States, 4C1.Ct. 109, 112 (U.S.C.C.,1983); United

States v. Stauffer Chemical Co., 684 F.2d 1174, 1186 (6th Cir. 1982).

Accordingly, the only permissible interpretation of these CM provisions is that

they address a carrier’s jurisdiction for processing claims, and they do not create

a filing requirement on the part of Meaicare suppliers.

CM 4105.5 never addresses box 31 of the claim form. The Prosecution

tried to cure this obvious defect by arguing that the CCH Medicare/Medicaid

Guide explains how to fill in box 31 (113a). The idea that an enforceable filing

requirement could be created by a private publishing company is itself an

absurdity and an obvious violation of Petitioners’ due process rights.

20

was misdirected, the carrier reroutes it. . ."” CM 3110. Particularly

in the light of Glick, supra, these CM provisions suggest that a

Medicare supplier may file his claim with any carrier, and the

carrier, not the supplier, must determine the appropriate carrier

for processing and reroute the claim.

It is a most basic tenet of statutory interpretation that the

‘‘plain meaning’’ of the words in the statute determine questions

of interpretation. Bethesda Hospital Assn. v. Bowen, 485 U.S.

399, 403-04 (1988) (rejecting the Secretary’s interpretation of the

Medicare statute because ‘‘the strained interpretation offered by

the Secretary is inconsistent with the express language of the

statute’). Here, the Prosecution strains interpretation of the CM

provisions by attempting to impose obligations on Medicare

suppliers that are contradicted by explicit reference to carriers.

The claim form itself further refutes the Prosecution’s

argument concerning the alleged ‘“‘point of sale rules’’. (56a). It

does not state that a claim must be filed with any particular

Medicare carrier. Moreover, box 31 of the claim form simply

requests the supplier’s name and address, it does not specify that

multi-office suppliers list any particular branch office in box 31.7°

Petitioners respectfully contend that because the CM places

no obligation on Medicare suppliers and because it does not create

the ‘‘rules’’ alleged by the Prosecution, the Second Circuit was

plainly mistaken when it assumed that ‘‘the Manual [CM] explains

the basis upon which a provider of services is to determine to

which carrier it should submit a claim’’ (8a), and when it further

stated ‘‘it was the manual that explained the proper address to

be shown in box 31’’. (22a). Petitioners’ failure to do that which

25. Box 24 of the claim form does request ‘‘Place of Service’’ (56a). It

is undisputed that Appellants listed the beneficiary’s address on the claim form,

and indicated in box 24 that the ‘‘place of service’ was the beneficiary’s address.

21

they were not required to do simply cannot constitute fraudulent

conduct.

D. The ‘‘Point Of Sale Rules’’ Relied On By The Prosecution

Are Unconstitutionally Vague.

Assuming, arguendo, that Medicare suppliers may be required

to comply with CM provisions, and that the CM provisions relied

on by the Prosecution do create ‘‘point of sale rules,’’ those rules

are unconstitutionally vague. In examining the validity of

regulations or laws that are being used to criminally punish

individuals, this Court has a:

. . .long established practice of resolving questions

concerning the ambit of a criminal statute in favor

of leniency [citations omitted]. This practice reflects

not merely a convenient maxim of statutory

constructions. Rather, it is routed in fundamental

principles of due process which mandate that no

individual be forced to speculate, at peril of

indictment, whether his conduct is prohibited

[citations omitted]. Thus to insure that a legislature

speaks with special clarity when marking the

boundaries of criminal conduct, courts must

decline to impose punishment for actions that are

not ‘plainly and unmistakably’ proscribed

[citations omitted].

Dunn v. United States, 442 U.S. 100, 112 (1979). In Dunn, the

Supreme Court reversed a conviction on the grounds that the

appellants’ conduct was not clearly proscribed by the criminal

statute.

Failure to comply with the ‘‘point of sale rules’’ could serve

as the basis for an indictment only if the term ‘‘point of sale’’

22

refers to a specific location, such that a supplier would clearly

know to which carrier it must submit its claim forms, and which

particular branch office it should list in box 31. The term ‘‘point

of sale’’, however, has multiple definitions and is open to

numerous interpretations.

The Indictment itself presents two different definitions for

the term. At page 5 paragraph 14, it defines ‘‘point of sale’’ as

‘the location where the supplier meets with the beneficiary or

receives the beneficiary’s call for the supplier’s services.’’ At page

6 paragraph 15, the Indictment contradicts itself, defining ‘‘point

of sale’’ as ‘‘the location where services were furnished’’

(37a-38a).?*

The Prosecutor himself demonstrated confusion regarding

his definition of ‘‘point of sale’’. At trial, he explained that ‘‘point

of sale is the [patient’s] home’’ (66a).*” At other times during

trial and in his appellate brief, however, he contradicted himself

arguing that ‘‘point of sale’’ is determined by the office address

of the supplier (73a, 97a). Petitioners question how, if the

prosecution is unable to consistently define the term that is the

26. In fact, a host of definitions or interpretations for the term ‘‘point

of sale’’ are possible. Is ‘‘point of sale’? — (1) where the beneficiary meets

the supplier; or (2) where the beneficiary’s call is received by the supplier; or

(3) where the supplier shipped equipment from; or (4) where the equipment

was shipped to; or (5) the beneficiary’s address; or (6) the supplier’s address?

Obviously a situation could arise in which each of these incidents occurred in

different states for a single daim. How is it then possible to determine the “‘point

of sale’’?

27. If the ‘‘point of sale’’ is the patient’s home, the theory that Petitioners

falsely completed box 31 to mislead carriers regarding the true point of sale

is patently ridiculous. At the top of each claim form, clearly listed are boxes

requesting the name and home address of the patient (See 56a, boxes | and

4). It was undisputed at trial that these boxes were always properly filled in.

23

essence of its fraud theory, Petitioners can be guilty of having

committed fraud?

As the definition of ‘‘point of sale’’ is susceptible to more

than one interpretation, any regulation that relies on this term

to impose some obligation on the public cannot speak with clarity

in marking the boundaries of criminal conduct. See Dunn, supra,

442 U.S. at 112; United States v. Murphy, 809 F.2d 1427, 1430-31

(9th Cir. 1987).

Murphy is closely analogous to the present case. In Murphy,

the defendant was charged with conspiring to defraud the United

States pursaunt to 18 U.S.C. § 371, by providing false information

on a “‘currency transaction report’’. The Government argued that

the language of the reporting form required the defendant to

disclose the person from whom he obtained the currency, and

that by instead listing the person for whom the currency was being

deposited, Murphy had made false statements and committed

fraud.

The indictment was dismissed for failure to state facts

sufficient to constitute an offense against the United States. The

Ninth Circuit affirmed, finding the currency transaction reporting

form ambiguous and that it did not clearly request the information

the indictment charged should have been listed. The form was

open to more than one interpretation and the defendant was not

required to look to the ‘statutory language to clarify his duties’’

as to completing it. The Court stated:

Due process requires that penal statutes define

criminal offenses with sufficient clarity that an

ordinary person can understand what conduct is

prohibited. . . Section 5313 and its regulations do

not clearly require depositors to identify the source

of their funds. Therefore, the imposition of

24

criminal sanctions on these facts would violate due

process.

809 F.2d at 1431 (citations omitted).

In the instant case, as in Murphy, the Indictment charges

that the Petitioners withheld information that they were allegedly

obligated to give, and in each case the form seeking this

information is unclear and ambiguous. The reasoning and holding

of Murphy therefore should be applied to the instant action.

II.

THE PUBLIC PROTECTION CLAUSE OF THE

PAPERWORK REDUCTION ACT PROHIBITS THIS

CRIMINAL PROSECUTION.

In enacting the Paperwork Reduction Act (‘“‘PRA’’), Congress

required all federal agencies, particularly HCFA”*, to comply with

specific regulations before any request for information can be

made from the public. 44 U.S.C. § 3507. Dole v. United Steel

28. The Senate report concerning the enactment of this legislation made

the following observations under its heading of ‘‘Need for Legislation’’:

Federal paperwork requirements, whether they are. . .,

medicare forms. . .are something each individual touches,

feels and works on. The cumuiative impact is excessive. . . .

The burden of filling out forms is causing doctors to

discourage medicare business. Processing a medicare claim

has become a nightmare for many older Americans. Hospitals

have witnessed an explosion in paperwork since the advent

of medicare. One hospital President in St. Louis testified that

his institution’s clerical staff increased fifteen percent in the

first year of medicare... .

(Cont'd)

25

Workers of America, 58 L.W. 4200, 4202 (1990); Kuzna v. United

States Postal Service, 798 F.2d 29, 31-32 (2d Cir. 1986), cert.

denied, 479 U.S. 1043 (1987). The PRA prohibits a federal agency

from adopting regulations that impose collection requests on the

public without first receiving, approval from the Office of

Management and Budget (‘‘OMB’’) and obtaining an OMB control

number, which must appear on the face of the information

collection request. 44 U.S.C. § 3507; Dole, supra; Kuzma, supra.

The PRA further contains a Public Protection Clause that prohibits

any penalty from being imposed upon the public for failure to

comply with a request that has not received OMB approval or

does not display a valid OMB control number.”®

This Court has recently reviewed the PRA’s Public Protection

Clause*®® and held:

(Cont'd)

Most frightening was the testimony of several witnesses who

said that they were ‘afraid of their government’. They had

been bombarded with Government forms, neglected or

wrongly answered some particular form, and were afraid that

the ‘Government’ was going to ‘get’ them as a result — a

nagging feeling of fear... .

The Act establishes a framework of accountability and a

reasonable set of controls to make the shower of paperwork

requirements that rain upon the public more manageable.

5 U.S. Code, Cong. & Ad. News (1980), PL 96-930, Senate

Report Number 96-930, pp. 6243-44.

29. The full text of this section of the PRA is recited

in the Appendix.

30. The Court’s review of the PRA concerned a different

issue:

(Cont’d)

26

If a request does not receive OMB approval, it

is not issued a control number, and the agency

is prohibited from collecting the information....

In addition, if the agency nevertheless promulgates

the paperwork requirement, members of the public

may ignore it without risk of penalty.

Dole v. United Steel Workers of America, 58 L.W. 4200, 4202

(Feb. 2, 1990) (citations omitted).

In the present case, the Second Circuit asssumed that the

CM provisions constituted an information collection request which

required OMB approval.*' (21a). Nevertheless, the Second Circuit

concluded that the Public Protection Clause of the PRA was not

applicable because the ‘‘gravamen of the crimes for which the

appellants were convicted... was not ‘failing to... provide

information’ but knowingly providing false information’’ (21a).

The Second Circuit viewed the Petitionerrs’ failure to list a

particular branch office address in box 31 of the claim form as

a ‘‘deliberate misstatement’’: ‘“‘The addresses they gave in box

31... were not the addresses from which the sale was made...’’,

finding that ‘‘it was the Manual [CM] that explained the proper

(Cont'd)

whether the OMB has the authority to review agency regulations concerning

the disclosure of information to parties other than government agencies. The

court concluded that the PRA grants OMB the authority to review only

information collection requests designed ‘‘to provide information to a federal

agency’. 58 L.W. at 4203. Because Medicare carriers contract with HCFA and

collect information on its behalf, the CM provisions are intended to provide

information to a federal agency. 42 C.F.R. § 421.200 (1989). This Court

acknowledged that ‘‘typical information collectioa requests include. . .Medicare

forms. . .”” 58 L.W. at 4202. Accordingly, the information collection requests

of the CM are clearly within the jurisdiction of OMB.

31. Neither the CM provisions relied on by the Prosecution, nor the CM

as a whole, ever received OMB approval or listed a valid OMB control number.

27

address to be shown in box 31, i.e. point of sale’’ (22a)*?.

Accordingly, the Second Circuit concluded that the information

given by Petitioners was false because it was not the information

requested in the CM.

It is respectfully submitted that the Second Circuit is plainly

mistaken. Petitioners contend that precisely because it is the CM,

and not the claim form, that defines the ‘‘proper address’’ to

be shown in box 31°’, and because the CM provisions never

received OMB approval, Petitioners were entitled to ignore the

CM’s information collection requests in completing the claim form

without risking criminal prosecution. 5 C.F.R. § 1320.5(a); see

United States v. Hatch, 919 F.2d 1394, 1397-98 (9th Cir. 1990)

(reversing conviction because C.F.R. regulation had not received

OMB approval); United States v. Smith, 866 F.2d 1092, 1098-99

(9th Cir. 1989) (reversing conviction because filing regulations

never received OMB approval); see Dole, supra, 58 L.W. at 4202.

Moreover, if Petitioners were entitled to ignor the CM provisions

altogether when completing the claim forms, their failure to list

the addresses that are requested by the CM cannot constitute fraud.

The analysis of the Second Circuit would vitiate the purpose

of the PRA and is inconsistent with its legislative history. The

Public Protection Clause was intended to apply particularly in

cases like this, in which the Government alleges that a ‘‘wrongly

32. Petitioners respectfully contend, contrary to the Second Circuit’s

finding, that the CM provisions were far from clear and they did not fully explain

that a particular branch office must be listed in box 31. In fact, the CM provisions

never referred to this box on the claim form. See fn. 24 and accompanying text.

33. It is undisputed that the claim form does not require that any particular

branch office be listed in box 31. (56a). The Second Circuit even quoted the

claim form’s language: ‘‘Box 31 of the form asks for the ‘PHYSICIAN’S OR

SUPPLIER’S NAME ADDRESS ZIP CODE’ and ‘TELEPHONE NUMBER’ ”’

(11a).

28

answered... form’’ is sufficient basis for a charge of fraud.**

The Second Circuit’s analysis additionally refuses to credit

the determination by the OMB regarding this information

collection request. The OMB specifically considered the CM

provisions’ reporting requirements regarding a listing of a

particular branch office on the claim form. The OMB advised

HCFA that no such reporting requirement had receivede OMB

approval, and as such, the Public Protection Clause of the PRA

applied (87a-88a). The OMB specifically explained: *‘I would like

to make you aware that, if a contractor [carrier] imposes a

requirement for information from the public that is not required

on the HCFA-1500 [claim form] or other approved collections

subject to the PRA, the public protection clause of the Act (section

3512) applies.’’ (88a). The OMB has further expiained that: ‘‘While

the form 1500 [claim form] has been approved, the requirement

in the manual [CM] is not on the form, nor is the requirement

directed to respondents, made readily available to the respondents,

or identified as instructions to the respondents.’’(91a).

The PRA authorized the OMB to make such determinations.

44 U.S.C. § § 3503, 3518; Dole, supra, 58 L.W. at 4202. As

OMB’s determination was not unreasonable, the courts may not

substitute their opinion for that of the agency. N.L.R.B. v. Curtin,

Matheson Scientific, Inc. 110 S.Ct. 1542, 1549 (1990). Further,

because the claim form did receive OMB approval, the public

is entitled to rely solely on that form to contain all information

collection requests and reporting requirements. The public cannot

be expected or required to be aware of or comply with any

requirements stated in the CM, as the CM was not OMB approved.

34. See fn. 28, supra.

29

Il.

THE MAGISTRATE HAD NO STATUTORY

JURISDICTION TO SELECT A JURY IN THIS FELONY

CASE WITHOUT PETITIONERS’ KNOWING WRITTEN

WAIVER.

The jury selection in this case was conducted on April 3,

1989 before Magistrate David F. Jordan. The relevant case law

in the Second Circuit at that time provided that a Magistrate had

the authority to select a jury in a criminal case, even over the

explicit objectgion of the defendant. United States v. Garcia, 848

F.2d 1324, 1327-29 (2d Cir. 1988). Accordingly, any objection

by Petitioners on this issue was futile. United States v. France,

886 F.2d 223, 227-28 (9th Cir. 1989). Moreover, there could be

no knowing waiver of this right, as it had not yet been clearly

articulated by this Court.

On Appeal, Petitioners relied on this Court’s decision in

United States v. Gomez, 109 S.Ct. 2237 (1989), rev’ing. United

States v. Garcia, supra. The Gomez decision explained that the

Magistrate’s statutory jurisdiction to preside in a criminal case

‘*depends on defendant’s specific, written consent’’. 109 S.Ct.

at 2245. Because the Petitioners never specifically consented in

writing to the selection of the jury by a Magistrate, the Magistrate

was without jurisdiction and a re-trial is required.

The Second Circuit rejected this argument on the ground that:

‘‘A defendant must ‘object to the selection of the jury by a

magistrate’ ’’ (33a, citing United States v. Wong, 884 F.2d 1530,

1538-39 (2d Cir. 1989)). There is presently a conflict between the

circuits on this issue. The Ninth Circuit has held that because

a Magistrate’s jurisdiction to select a jury is contingent upon a

defendant’s written consent, the failure to object does not

constitute a waiver of the defendant’s constitutional right to have

30

an Article III Judge preside at this critical stage of the criminal

proceedings. United States v. Aikins, 912 F.2d 285, 288 (9th Cir.,

1990) (ordering re-trial of a felony case where the defendants had

actually orally consented to the selection of a jury by a Magistrate,

but ‘‘their consent was not in writing’’).

The Supreme Court recently considered this issue and

affirmed the Ninth Circuit’s reversal of a conviction on these

grounds. United States v. France, 886 F.2d 223 (9th Cir. 1989),

aff’d by an equally divided Court, 59 L.W. 4089 (Jan. 22, 1991)

(per curiam) (Justice Souter did not participate in this decision).

This Court further has granted certiorari in another Second Circuit

case that presents the identical issue. Peretz v. United States.,

59 L.W. 3501 (Jan. 22, 1991).

This Petition for certiorari should be granted in order to

resolve the conflict between the Second and Ninth Circuits on

the issue as to whether a Magistrate has the jurisdiction to select

a jury in a criminal case in the absence of a specific written and

knowing waiver of defendant. At the least, this petition should

be held pending this Court’s decision in Peretz.

CONCLUSION

For the reasons stated above, the Petition for writ of certiorari

should be granted and the Judgment of the Court of Appeals

summarily reversed under the requirements of the APA, the PRA

and Gomez v. United States. Alternatively, the matter should be

set down for full briefing and oral argument. At the least, the

Petition should be held pending the decision in Peretz.

Respectfully submitted,

Dated: New York, New York JAMES M. LEMONEDES

February 6, 1991 Attorney for Petitioners