Appendix — Akin v. United States

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APPENDIX A — PER CURIAM OPINION OF THE

UNITED STATES COURT OF APPEALS FOR THE

FIFTH CIRCUIT DATED AND FILED MAY 16, 2001

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 00-50140

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

CHARLES PHILIP AKIN,

Defendant-Appellant.

Appeal from the United States District Court

For the Western District of Texas

(SA-97-CR-131-1-HFG)

Before JONES, DeMOSS, and BENAVIDES, Circuit Judges.

PER CURIAM:*

Defendant-Appellant Charles Philip Akin appeals his

conviction and sentence for conspiracy to defraud the United

* Pursuant to Stu Cir. R. 47.5, the Court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in Stu Cir. R. 47.5.4.

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Appendix A

States, in violation of 18 U.S.C. § 371; mail fraud, in

violation of 18 U.S.C. §§ 2, 1341; money laundering, in

violation of 18 U.S.C. § 1956(a)(1)(A)(i); and submitting

false claims, in violation of 18 U.S.C. §§ 2, 287. Finding no

reversible error, we affirm.

Akin is a dentist, who engaged in the medical supply

business from 1991 to 1993. He manufactured a type of

wheelchair cushion costing $45 that he marketed to nursing

homes as an “orthotic” device reimbursable by Medicare.

To this end, Akin became a Medicare provider and received

$1,289 per device.

Ultimately, the government indicted Akin and two other

defendants? in connection with the filing of false claims with

Medicare. Under the Medicare program, Medicare providers

are furnished with a handbook dealing with the billing of

medical equipment supplies and periodically receive

newsletters discussing covered and non-covered supplies and

services. To obtain reimbursement, a health care supplier

submits claims to Medicare carriers on a standardized form,

commonly referred to as the HCFA-1500 Form. That form

requires the use of a standardized code to define the service

or product for which reimbursement is requested, and health

care suppliers have the responsibility of accurately

identifying the service or product administered to recipients.

According to the government, Akin billed his wheelchair

cushion under Code L0430, which pertained to items

qualifying as “TLSO [Thoracic Lumbar Sacral Orthotic],

anterior-posterior-lateral control (body jacket), with interface

2. The other two defendants are not a part of this appeal.

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Appendix A

material, custom fitted,” notwithstanding the fact that he

knew that his product was not an orthotic device, but a

non-reimbursable wheelchair cushion.

The jury convicted Akin on all counts of the indictment,

and among other things, he was sentenced to 87 months of

imprisonment, substantially less than the statutory maximum.

This appeal followed.

On appeal, Akin raises several points of error. First, he

contends that the indictment should have been dismissed

because the basis for those charges was a vague and indefinite

Medicare claims code, which failed to give him fair notice

of the illegality of his conduct. Next, Akin maintains that

the individuat-or-eumulative error of the district court in

admitting certain lay testimony, in denying his motion to

suppress, and in refusing his proposed jury instructions

mandates reversal of his conviction. Finally, he asserts that

his sentence violated Apprendi v. New Jersey, 120 S. Ct.

2348 (2000), because it was enhanced based on facts that

were not included in the indictment nor found by a jury

beyond a reasonable doubt.

After having the benefit of oral argument and thoroughly

reviewing the briefs, the record excerpts, and pertinent

portions of the record, and the applicable law, we conclude

that the district court did not commit any reversible error

with respect to the points raised by Akin. Accordingly, the

judgment of conviction is AFFIRMED.

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APPENDIX B— DECISION OF THE SOCIAL SECURITY

ADMINISTRATION OFFICE OF HEARINGS AND

APPEALS IN ORTHOCONCEPTS v. METRAHEALTH

DATED JANUARY 3, 1996

In re

OrthoConcepts

v.

MetraHealth

Social Security Administration Office of Hearings and

Appeals Decision, Dkt. No. 000-45-1375, Jan. 3, 1996.

* * *

STEWART, Administrative Law Judge: This case is before

the Administrative Law Judge on a request for hearing filed

by the appellant’s representative, the Kelly Law Firm of

Atlanta, Georgia, on September 5, 1995. The hearing was

held on December 12-13, 1995, in Falls Church, Virginia.

The appellant was represented at the hearing by attorneys

James P. Kelly and Stephen C. Petrovich. Testifying at the

hearing were Kenneth M. Greene, Certified Orthotist and

President of OrthoConcepts; Richard J. Nobbe, Vice

President of Clinical Services, OrthoConcepts; Gerald I.

Blank, M.D., former Medical Director of a major Medicare

Part B carrier and James C. Russ, Certified Orthotist and

Professor of Orthotics at Northwestern University.

The Administrative Law Judge has carefully considered

all the testimony presented at the hearing, the documents

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Appendix B

identified in the record as exhibits, the video and slide

presentations, the display of the medical devices at issue,

the arguments presented and the briefs filed.

ISSUE

The first issue before the Administrative Law Judge is

whether the orthotic devices the appellant sold to multiple

catastrophically crippled beneficiaries are “braces” and

therefore eligible for coverage under Part B of Title XVIII

of the Social Security Act (Act), or if the devices are

“wheelchairs” or “wheelchair seating systems” and are

therefore not eligible for coverage under the durable medical

equipment (DME) provisions of Part B because the

beneficiaries reside in skilled nursing facilities (SNFs).

The second issue to be decided is whether the appellant

is liable for a Medicare overpayment in the amount of

$2,149,112.91 because the Carrier determined that the

devices sold by the appellant are wheelchairs or wheelchair

seating systems and were therefore not eligible for coverage

under Medicare’s DME guidelines because the beneficiaries

reside in SNFs.

DECISION

It is the decision of the Administrative Law Judge that

the orthotic devices the appellant sold to multiple

beneficiaries are orthotic “braces” and not wheelchairs; and

are therefore eligible for coverage under the provisions of

Title XVIII of the Act because the devices are used for the

purpose of supporting a weak or deformed body member or

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Appendix B

to restrict or eliminate motion in a diseased or injured part

of the body. Payment should be made for those devices for

which payment was denied by the Carrier. The undersigned -

also finds that the appellant is not liable for any Medicare

overpayment because payment was correctly made for the

orthotic braces initially reimbursed by the Carrier under the

L-Codes billed by the appellant.

EVALUATION OF THE EVIDENCE

The appellant is a company that provides general orthotic

management and treatment to catastrophically crippled

patients who reside in SNFs (Appellant’s ALJ hearing brief,

pages 2-5). These patients are generally elderly persons with

chronic disease and multiple impairments, 1.e., strokes with

resulting paralysis, crippling arthritis, Alzheimer’s,

Parkinson’s, osteoporosis, as well as other debilitating

neuromuscular diseases. These debilitating conditions render

these patients immobile and confined to either a chair or a

bed. This immobility causes secondary complications,

including spasticity, the development of pressure sores,

multisited contractures, musculoskeletal deformities,

circulatory problems such as phlebothrombosis and

pulmonary embolism, and both respiratory and urinary

infections. ,

Taking into account an individual patient’s disease(s)

and/or injury(ies) as well as all other medical factors which

may impact on the treatment of the patient’s resulting

biomechanical deficits, the appellant provides custom

fabrication and fitting of orthotic braces. These orthotic

braces provide: (1) relief of pain by restricting or limiting

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Appendix B

motion or weight bearing; (2) immobilization and protection

of weak musculoskeletal segments; (3) reduction of axial

load; (4) retardation of the progression of deformity; and

(5) improvement of function.

On or about December 22, 1994, the Carrier notified

one of the appellant’s seven subsidiary companies, New York

Therapeutic Technologies, Inc. (NYT), that it was suspending

its Medicare payments because of possible “fraud and/or

wilful misrepresentation” regarding claims NYT submitted

for supplying orthotic braces to multiple beneficiaries in

ENFs. Specifically, the Carrier accused NYT of billing for

orthotic braces when in actuality it was providing wheelchair

szating systems to the beneficiaries. On April 13, 1995, the

Carrier notified NYT that it was liable for an overpayment

in the amount of $1,251,335.97 for claims filed and

reimbursed during 1994 and 1995. On March 30, 1995, the

Carrier notified another of the appellant’s subsidiary

companies, Massachusetts Therapeutic Technologies, Inc.

(MAT), that it was suspending its Medicare payments for

the same reasons as mentioned in the case of NYT. On April

13, 1995, the Carrier notified MAT that it was liable for an

overpayment in the amount of $897,776.94 for the years 1994

and 1995.

At the fair hearing level, the hearing officer agreed with

the Carrier’s determination that the appellant was supplying

the beneficiaries with wheelchair seating systems with

attachments because the orthotic braces were designed to fit

iato a wheeled base in order for the beneficiaries to be

transported within SNFs. The hearing officer agreed with

the appellant’s contention that the orthotic devices were

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Appendix B

“braces”, however, daek tte braces could not function

independently without attachment to a wheeled frame made

by the appellant they should be classified as wheelchairs

under Medicare’s DME guidelines. The hearing officer said

that since items of DME are not covered by Medicare when

they are primarily used in a SNF, the devices sold by the

appellant were not eligible for coverage under Medicare Part

B. The hearing officer upheld the Carrier’s overpayment

determinations and the denial of any additional payments

for the orthotic “braces” at issue. In its ALJ hearing brief,

the appellant in footnotes 11 and 12 claims that NYT and -

MAT account for over 74% of the appellant’s total revenues

for all seven of the sister subsidiaries, and that there is a

total of $829,223.22 for claims submitted by these two

subsidiaries that have been denied payment by the Carrier.

Section 1834(j)(2)(B) of the Act requires suppliers of

medical equipment to submit with a claim for coverage of

items of medical equipment, a “certificate of medical

necessity” (CMN) completed by a beneficiary’s physician.

The CMN submitted with the claim must contain information

required by the Carrier to show that an item is reasonable

and necessary for the diagnosis or treatment of illness or

injury or to improve the functioning of a malformed body

member. |

Section 1861(n) and 1861(s)(6) of the Act provide for

Medicare coverage of items of DME when determined to be

medically reasonable and necessary. DME is defined under

the regulations as “equipment which: (1) can withstand

repeated use; i.e., could normally be rented, and used by

successive patients; (2) is primarily and customarily used to

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Appendix B

serve a medical purpose; (3) is generally not useful to a

person in the absence of an illness or injury; and (4) is

appropriate for use in a patient’s home” (42 Code of Federal

Regulations (CFR) 414.202 and Section 2100.1 of the MCM

and Section 60-9 of Health Care Financing Administration’s

Medicare Coverage Issues Manual (CIM)).

Under Section 1861(n) and Section 410.38(b) of 42 CFR,

a “skilled nursing facility” as defined in Section 1819(a)(1)

of the Act may not be considered a patient’s home for the

purpose of coverage of items of DME. A skilled nursing

facility is defined as an institution which is primarily engaged

in providing skilled nursing care and related services for

residents who require medical or nursing care, or

rehabilitation services for the rehabilitation of injured,

disabled, or sick persons, and is not primarily for the care

and treatment of mental diseases.

Section 1861(s)(9) of the Act and Section 414.202 of

42 CFR authorize Medicare coverage of leg, arm, back, and

neck braces, including replacements if required because of

a change in the patient’s physical condition. Orthotic devices

such as braces are paid by Medicare Carriers according to

Medicare fee schedule guidelines as set forth under Section

414.228 of 42 CFR.

Section 2133 of the MCM states that leg, arm, back, and

neck braces are covered when furnished incident to physicians’

services or on a physicians’ order. Braces include rigid and

semi-rigid devices which are used for the purpose of supporting

a weak or deformed body member or restricting or eliminating

motion in a diseased or injured part of the body.

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Appendix B

Section 1862(a)(1)(A) of the Act excludes from coverage

any expenses incurred for items or services which are not

reasonable and necessary for the diagnosis or treatment of

illness or injury or to improve the functioning of a malformed

body member.

After careful consideration of the facts, testimony and

the relevant Medicare regulations pertaining to this case, the

Administrative Law Judge concludes that the orthotic devices

provided by the appellant are “braces” under Medicare

regulations, and therefore payment may be made under

Part B of the Act for the braces the appellant provided to the

beneficiaries. The testimony of the expert witnesses, audio-

visual presentations and orthotic demonstrations presented

in the hearing provided conclusive evidence that the orthotic

devices are “braces as defined in Section 2133 of the MCM.

The undersigned also finds that the seven separate L-Codes

used by the appellant in billing Medicare for these orthotic

braces reflect the nature of the services rendered under the

Health Care Financing Administration’s coding system.

The evidence and testimony rendered at the hearing

clearly indicate that the appellant’s orthotic devices are

“braces” within the definition given by Section 2133 of the

MCM. The appellant’s devices are fabricated from rigid and

semi-rigid materials and utilize bands, uprights, joints, and

straps (Appellant’s ALJ hearing brief at p.11). The materials

used in a brace depend on the patient’s size, the need for

flexibility, rigidity, long term durability and the expected

demands the patient will place on the brace (/d. at 11). The

evidence and testimony clearly indicated that the appellant’s

orthotic devices support weakened or deformed body

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Appendix B

members or restrict or eliminate motion of those body

members as required under Section 2133. Furthermore, the

appellant’s devices are supplied to patients pursuant to a

physician’s prescription as required by Section 1834(j)(2)(B)

of the Act, and the devices appear to be reasonable and

necessary for the diagnosis or treatment of illness or injury

or to improve the functioning of a malformed body member

as required by Section 1862(a)(1)(A) of the Act.

The evidence and testimony presented at the hearing also

show that the fact that the orthotic devices are attached to

wheeled frames does not change the primary function of these

devices, nor does the wheeled frame make these devices

DME as defined in Section 60-9 of the CIM. Section 60-9

lists four requirements that must be satisfied in order for

medical equipment to be classified as DME. DME must

(1) be able to withstand repeated use; must (2) primarily and

customarily be used to serve a medical purpose; must

(3) generally not be useful to an individual in the abserice of

an illness or injury; and (4) is appropriate for use in the home.

The appellant’s orthotic devices do not meet two of these

four requirements.

I am persuaded by the testimony of James C. Russ, a

certified orthotist and a professor of orthotics at Northwestern

University. Dr. Russ, who has taught orthotics for many

years, visited the appellant’s facility and, although initially

skeptical, came to the conclusion that the devices were

braces. Indeed, he praises them as superior to other products

currently on the market which utilize straps and buckles,

which patients find uncomfortable and which care givers find

difficult to use. He noted that the orthotic devices at issue

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Appendix B

are custom-fitted and crafted for individual patients, and are

not designed for repeated use by successive patients. The

orthotic devices designed by the appellant are made for

patients who are catastrophically crippled and who reside in

SNFs. The catastrophic nature of their afflictions requires

full time nursing care, which is normally found only in long

term care facilities. The complexity of design and use of the

appellant’s braces do not make them appropriate for use in a

~ beneficiary’s home as required in Section 60-9. The evidence

is clear that the appellant’s orthotic devices are in fact braces

and not items of DME, and the wheeled frames attached to

the braces serve an incidental function in relationship to the

orthotic purpose of the appellant’s devices.

I was further persuaded by the testimony of Gerald I.

Blank, MD, who until recently was medical director of a

large Part B carrier. In this capacity, he reviewed and

commented upon claims for reimbursement, including claims

for durable medical equipment. Dr. Blank testified that the

devices in question had been properly coded by the appellant,

using the separate “L” codes notes previously.

FINDINGS

After a careful consideration of the entire record, the

Administrative Law Judge finds that:

(1) The appellant sold orthotic devices which are

“braces” as defined in Section 2132 «f te MCM to multiple

catastrophically crippled beneficiar?«s who reside in SNFs.

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Appendix B

(2) The fact that the orthotic devices are attached to a

wheeled frame does not make them “wheelchairs” as defined

under the DME provisions of Section 60-9 of the CIM.

(3) The L-Codes used by the appellant in billing Medicare

for these orthotic devices accurately reflect the nature of the

services rendered to each of the beneficiaries listed in the

files.

(4) The amount in controversy is over $500.00.

DECISION

It is the decision of the Administrative Law Judge that

the orthotic devices sold by the appellant to beneficiaries

residing in skilled nursing facilities were in fact “braces”

and are therefore eligible for coverage under the Medicare

Part B provisions of Title XVIII of the Social Security Act.

Therefore, the Carrier is directed to make payment under

the Medicare fee schedule for all outstanding claims the

appellant has submitted for these orthotic devices, and the

Carrier’s previous overpayment determinations are hereby

reversed.

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APPENDIX C — RULING NO. 96-1 OF THE

DEPARTMENT OF HEALTH AND HUMAN SERVICES,

HEALTH CARE FINANCING ADMINISTRATION

DATED SEPTEMBER 18, 1996

HCFA Rulings

Department of Health and Human Services

Health Care Financing Administration

Ruling No. 96-1

Date September 1996

HCFAR — 96-1 SEPTEMBER 1996

HCFA Rulings are decisions of the Administrator that serve

as precedent final opinions and orders and statements of

policy and interpretation. They provide clarification and

interpretation of complex or ambiguous provisions of the

law or regulations relating to Medicare, Medicaid, Utilization

and quality Control Peer review, and related matters.

HCFA Rulings are binding on all HCFA components, its

intermediaries and carriers, including carrier hearing officers,

the Provider Reimbursement Review board, the Medicare

Geographic Classification Review board, the Departmental

Appeals board, and administrative law Judges who have

Medicare appeals. These Rulings promote consistency in

interpretation of policy and adjudication of disputes.

This Ruling states the policy of the Health Care Financing

administration regarding the distinction between The

statutory benefits of “orthotics” and “durable medical

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Appendix C

equipment” under Medicare Part B. The distinction may have

an effect on the Medicare approved amount of payment and

is necessary in those instances where items are furnished in

skilled nursing facilities that meet the definition in section

1819(a)(1) of the Social Security Act (the Act) or hospitals

due to the express exclusion from part B coverage of durable

medical equipment when used in a hospital or skilled nursing

facility.

The Ruling clarifies that the “orthotics” benefit in section

1861(s)(9) of the Act, insofar as braces are concerned, is

limited to leg, arm, back, and neck braces that are used

independently rather than in conjunction with, or as

components of, other medical or non-medical equipment. It

also clarifies that accessories used in conjunction with, and

necessary for the full functioning of, durable medical

equipment fall under the durable Medical equipment benefits

category. Finally, the Ruling provides several examples that

illustrate the application and scope of these two terms.

Medicare Program

Medicare Sujypiementary Medical Insurance (Part B)

CLARIFICATION OF THE TERMS “ORTHOTICS,”

“BRACES,” AND “DURABLE MEDICAL EQUIPMENT”

UNDER MEDICARE PART B

HELD: The “orthotics” benefit described in section

1861(s)(9) of the Social Security Act, insofar as braces are

concerned, is limited to leg, arm, back, and neck braces that

are used independently, rather than in conjunction with, or

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Appendix C

as components of, other medical or non-medical equipment.

It is also held that leg, arm, back, and neck braces used in

conjunction with, and necessary for the full functioning of,

durable medical equipment are accessories to the durable

medical equipment and, hence, subject to the requirements

of section 1861(n) of the Social Security Act.

CITATIONS: Sections 1834(a)(4) and (h) and 1861(n) and

(s)(9) of the Social Security Act (42 U.S.C. 1395m(a)(4)

and (h) and 1395x(n) and (s)(9); and 42 CFR 414.202.

BACKGROUND

The Medicare program’s long-standing policy has been to

limit payment for “orthotics” under Medicare Part B to leg,

arm, back, and neck braces that are stand-alone devices used

independently of other kinds of medical equipment. Recent

decisions issued by administrative law judges and Medicare

carrier hearing officers have, however, diverged from this

policy and have interpreted section 1861(s)(9) of the Act,

insofar as braces are concerned, as encompassing all devices

that serve to support or restrict motion in a part of the body,

even if the devices may not reasonably be used on their own

and are primarily intended to be used with other equipment.

The purpose of this Ruling is to provide clarification and

guidance regarding the scope and meaning of the statutory

benefits for “orthotics” and “durable medical equipment.”

ORTHOTICS

Section 1834(h) of the Social Security Act (the Act) provides

for payment of “orthotics and prosthetics” as described “in

din cao Sas was “

NIH eB “

2) WERENT LPL NR ERE ANT ABN Rite THORS a ROME E ARS

fiat le be OS RN

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Appendix C

section 1861(s)(9)[.]” Section 1861(s)(9) of the Act in turn

lists only the following:

(9) leg, arm, back, and neck braces, and artificial

legs, arms, and eyes, including replacements if

required because of a change in the patient’s

physical conditicn{.]

In light of-this limited statutory language, we defined

“orthotic devices” in 42 CFR 414.202 of our regulations,

which states in pertinent part: ~

Prosthetic and orthotic devices means —

* * * * *

(3) Leg, arm, back, and neck braces, and artificial

legs, arms, and eyes , including replacements if

required because of a change in the beneficiary’s

physical condition. (Emphasis added).

DURABLE MEDICAL EQUIPMENT

In contrast to the very specific wording of section 1861(s)(9)

of the Act, section 1861(n) of the Act employs an open-ended

reference to what constitutes “durable medical equipment”

by stating that the term “includes” items, such as oxygen

tents, hospital beds, and wheelchairs, that may be used in

the home. Our definition of durable medical equipment set

forth at 42 CFR 414.202, in part, tracks this language by

referring in a similarly open-ended manner to medical

equipment that can withstand repeated use and is appropriate

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Appendix C

for use in the home. In light of the breadth of the durable medical

equipment category set forth in the statute and regulation, section

2100.5 of the Medicare Carnier’s Manual, Part 3 — Claims

Process, “Coverage of Supplies and Accessories,” provides

that payment for durable medical equipment extends to

coverage of “supplies and accessories” that are “necessary

for the effective use of durable medical equipment.”

SEATING DEVICES AS AN EXAMPLE OF DURABLE

MEDICAL EQUIPMENT

Many items, including wheelchairs and hospital beds (both

expressly classified as durable medical equipment under

section 1861(n) of the Act and section 2100.1 of the Medicare

Carrier’s Manual, Part 3 — Claims Process, “Definition of

Durable Medical Equipment”), support portions of the body.

Other items, such as splints or casts (both classified under

section 1861(s)(5) of the Act), protect or restrict movement

of a portion of the body. None of these items is appropriately

classified as a “brace” under section 1861(s)(9) of the Act.

(We also generally exclude orthopedic shoes or other shoe

inserts or supportive devices for the feet from coverage.)

To the extent that a wheelchair seating system or other

equipment may or may not function properly or not achieve

its full “therapeutic benefit” without attached components

supporting or restricting motion in a body part, the

attachments are appropriately viewed as a necessary

accessory that is an integral part of the durable medical

equipment and is, accordingly, payable as durable medical

equipment, provided that the other prerequisites for

classification as durable medical equipment are met.

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Appendix C

Many seating systems (including wheelchairs) incorporate

as integral parts various rests and supporting and positional

attachments that are modifications of the seating system and

that are intended to be used with the seating system to which

they are attached. Section 1861(n) of the Act expressly

classifies wheelchairs as durable medical equipment.

Furthermore, the legislative history and prior Congressional

enactments evidence no intent to classify separately integral

components or attachments to seating systems as “braces.”

Section 4152(c)(4) of the Omnibus Budget Reconciliation

Act of 1990 (OBRA 1990), Public Law 101-508, enacted on

November 5, 1990, amended section 1834(a)(4) of the Act,

governing customized durable medical equipment, to extend

coverage to customized wheelchairs that have been

“measured, fitted, or adapted in consideration” of a patient’s

“disability” and including “customized features, modifications,

or components” in “accordance with instructions from the

patient’s physician.” The Congress explained that these

customized features could “include, but are not limited to”

items such as “attachments to convert wheelchairs to

one-armed drive,” “postural control devices,” and “custom

molded cushions and inserts or lateral supports.” (House

Report No. 101-881, 101st Cong., 2d Sess., 1990 USCCAN

at 2270.) Thus, ample evidence establishes that the Congress

intended sophisticated wheelchairs, including chairs with

functional attachments, to be classified in their totality as

durable medical equipment.

Even though the Congress was addressing customized

wheelchairs, the intent to classify this equipment in its totality

as durable medical equipment extends by analogy to ordinary

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Appendix C

wheelchairs with attachments. Taken together with the

narrow wording of section 1861(s)(9) of the Act, the

Congress’s treatment of attachments to wheelchairs thus

strongly supports the conclusion that a device supporting or

restricting motion in a body part but that is an integral part

of other equipment is not appropriately classified under the

brace benefits category set forth in section 1861(s)(9) of the

Act. Our long-standing policy governing the breadth of the

durable medical equipment benefits category reflects this

congressional intent.

CONCLUSION AND ILLUSTRATIONS

For the reasons set forth above, we therefore conclude that

“orthotics” payable under section 1861(s)(9), insofar as

braces are concerned, and sections 1834(a) and (h) of the

Act are properly limited to leg, arm, back, and neck braces

that are stand-alone devices used independently of other

kinds of medical equipment. When a device that supports or

restricts motion in a part of the body is not generally used,

or may not reasonably be used, on its own and is primarily

intended to be used with other medical or non-medical

equipment payable as durable medical equipment, the durable

medical equipment benefits category, and not the brace

benefits category, applies.

Following are three examples that illustrate the application

and scope of the terms “orthotics” and “durable medical

equipment”:

Illustration 1. A supplier manufactures and supplies medical

devices to individuals who are generally elderly and suffer

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Appendix C

from Alzheimer’s or other debilitating neuromuscular

diseases that have caused them to be nonambulatory,

immebile, and confined to a chair or bed. Due to their

immobility, these patients may suffer from secondary

complications, such as pressure sores, multisited

contrictures, musculoskeletal degeneration and deformities,

and circulatory problems.

Unde‘ a physician’s order, the supplier furnishes individually

fittedattachments designed to be used in conjunction with a

chairto seat and position the patient. The attachments, which

the supplier labels “orthotic braces,” are alleged to position

limbsand other body parts properly; restrict motion or weight

bearitg; immobilize and protect weak musculoskeletal

segments; reduce load; retard progression of musculoskeletal

defornity; and improve function. The design of the supplier’s

“orthotic braces” requires them to be attached to the chair

framé¢, and the “orthotic braces” cannot function or be used

apart from the chair to which they are attached.

Disctssion: Although the devices in question may support

or restrict movement in parts of the body, they are not braces

withia the meaning of 1861(s)(9) of the Act because they

are irtegral parts of a seating system and are not designed or

intenled to be used apart from the seating system.

Illustration 2. A supplier furnishes what it describes as a

lumb2r support cushion comprised of a number of attachment

strap; and front and back cushions molded to fit the patient’s

body The device is alleged to supply corrective support and

pres:ure to the back to address postural defects and

concitions such as scoliosis (curvature of the spine).

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Appendix C

Although capable of being worn separately while standing

or lying down, the device is designed to fit into a seated

base. In practice, the device is also predominantly worn and

used while the patient is seated and is most frequently used

by patients who are largely chairbound.

Discussion: Although the device in question may support

or restrict movement in parts of the body, it is primarily

intended to be used in conjunction with a seat and is

comparable to a custom molded cushion or seat insert. The

support cushion is accordingly not a brace within the meaning

of section 1861(s)(9) of the Act.

Illustration 3. A supplier manufactures a sophisticated

hospital bed with motorized sections that may be individually

adjusted to position the patient’s body and with straps and

lateral support devices that provide support and limit

movement of the patient’s extremities, including limbs. The

bed, with its lateral supports, is used with patients who have

suffered severe accident trauma, including potential spinal

cord injury, and who must be carefully positioned with

iimited motion to prevent further injury.

Discussion: Although the lateral supports, straps, and

motorized sections support and restrict motion in parts of

the body, all of these features are integral parts of a hospital

bed, which is classified as durable medical equipment, and

these components may therefore not be separately

categorized as braces under section 1861(s)(9) of the Act.

HELD: The “orthotics” benefit described in section

1861(s)(9), insofar as braces are concerned, and sections

23a

Appendix C

1834(a) and (h) of the Social Security Act is limited to leg,

arm, back, and neck braces that are used independently, rather

than in conjunction with, or as components of, other medical

or non-medical equipment. It is also held that leg, arm, back,

and neck braces used in conjunction with, and necessary for

the full functioning of, durable medical equipment are

accessories to the durable medical equipment and, hence,

subject to the requirements of section 1861(n) of the Social

Security Act.

EFFECTIVE DATE

This Ruling is effective September 18, 1996.

Dated: September 18, 1996

Bruce C. Vladeck,

Administrator,

Health Care Financing Administration

24a

APPENDIX D — EXCERPTS FROM MEMORANDUM

AND RECOMMENDATION OF UNITED STATES

MAGISTRATE JUDGE OF THE UNITED STATES

DISTRICT COURT FOR THE WESTERN DISTRICT

OF TEXAS, SAN ANTONIO DIVISION

DATED AND FILED MAY 17, 1999

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

SAN ANTONIO DIVISION

SA-97-CR-131-OG

UNITED STATES OF AMERICA

V.

CHARLES PHILIP AKIN, TEDDY LEE HENDERSON,

and WILLIAM GEORGE GURASICH,

MEMORANDUM AND RECOMMENDATION

OF UNITED STATES MAGISTRATE JUDGE

TO: Honorable H. F. Garcia

United States District Judge

x» * *

[7] * * *

Motion to Dismiss

A criminal indictment must contain a “plain, concise and

definite written statement of essential facts constituting the

25a

Appendix D

offense charged.”'° It must fairly and adequately appraise

the defendant of the offenses with which he is charged by

listing each prima facie element of the alleged offense,

notifying the defendant of the charges against him, and

providing a double jeopardy defense against future

prosecutions.'' Defects in an indictment may be raised before

trial, but they are also [8] noticed by the court at any time

during the proceedings.'? The sufficiency of an indictment

in stating a criminal offense is a question of law for the court,

not for the trier of fact.'°

The due process clause further requires that a penal

statute sufficiently define criminal conduct so that an

ordinary person can understand what conduct is prohibited."

The vagueness doctrine requires that the statute provide

adequate notice to one of ordinary intelligence that certain

conduct is proscribed so as to avoid erratic and arbitrary law

enforcement.'®

10. F.R.Crim.P. 7(c).

11. See United States v. Flores, 63 F.3d 1342, 1360-61 (Sth

Cir. 1995), cert. denied 117 S.Ct. 87 (1996); United States v. Clark,

139 F.3d 485, 488 (Sth Cir. 1998), cert. denied 119 S.Ct. 227 (1998).

12. F.R.Crim.P. 12(b).

13. United States v. Mann, 517 F.2d 259, 266 (5th Cir. 1975),

cert. denied 423 U.S. 1087 (1976).

14. United States v. Daniel, 813 F.2d 661, 663 (Sth Cir. 1987)

citing Kolender v. Lawson, 461 U.S. 352 (1983).

15. Daniel, 813 F.2d 661, 663 (citations omitted).

26a

Appendix D

Turning to the case at bar, defendants requests dismissal

not for insufficiency of the indictment, nor for any vagueness

inherent in the false claims or other statutes with which they

are charged, but rather for the asserted vagueness of the

Medicare definitions by which the jury will determine whether

defendants’ conduct was fraudulent. Specifically, defendants

claim that the criminalization of their conduct violates due

process since the HCFA product code definition under which

they are accused of filing fraudulent claims was not sufficiently

precise. They would like the Court to declare as a matter of

law that their conduct could not have constituted fraud.

Some ambiguity undoubtedly existed before 1996 in the

definition of Code L0430 found in the Medicare Carriers

Claims Manual.'* However, the statutes under which

defendants are charged — false claims, mail fraud and money

laundering — are clear. Even if the definition of product

code L0430 was ambiguous on a national level, the

wheelchair supports for which Defendants were [9]

reimbursed by Medicare may still have been excluded from

any reasonable interpretation of the Code definition. Whether

or not the foam supports Defendants supplied can be

considered “back braces” is a question of fact that a jury

must address. In this regard the jury can consider all the

relevant evidence and opinions as to a reasonable

interpretation of the Code definition, as well as evidence of

defendants’ conduct in connection with designing and

marketing the product and obtaining the reimbursements."’

16. See Testimony of Ann Berriman, May 10 evidentiary hearing.

17. In a similar case involving a criminal prosecution for

fraudulent Medicare claims, the 11th Circuit determined that a

(Cont’d)

27a

Appendix D

Defendant himself alludes to this fact issue in his motion:

“The code definition during the years in question were [sic]

sufficiently general and vague to permit a reasonable

contention that defendant’s fitted body supports met that

definition” (emphasis added).'* The jury must decide if

defendant’s contentions are reasonable.

For these reasons, I recommend that the motion to

dismiss the indictment be denied.

[13]* x oe

SIGNED May 17, 1999.

s/ Nancy Stein Nowak

NANCY STEIN NOWAK

United States Magistrate Judge

(Cont’d)

private insurer’s manual definition of consultation (a request for

examination by a physician or “other appropriate source”) was not

unconstitutionally vague as applied to the defendant’s conduct when

there was ample evidence he had intended to defraud the

Government. United States v. Hooshmand, 931 F.2d 725, 732-33

(11th Cir. 1991). ?

18. Docket Entry No. 42, page 9.

28a

APPENDIX E — CONSTITUTIONAL PROVISIONS,

- STATUTE AND REGULATIONS INVOLVED

AMENDMENT V

No person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or

indictment of a Grand Jury, except in cases arising in the

land or naval forces, or in the Militia, when in actual service

in time of War or public danger; nor shall any person be

subject for the same offence to be twice put in jeopardy of

life or limb; nor shall be compelled in any criminal case to

be a witness against himself, nor be deprived of life, liberty,

or property, without due process of law; nor shall private

property be taken for public use, without just compensation.

AMENDMENT VI

In all criminal prosecutions, the accused shall enjoy the

right to a speedy and public trial, by an impartial jury of the

State and district wherein the crime shall have been

committed, which district shall have been previously

ascertained by law, and to be informed of the nature and

cause of the accusation; to be confronted with the witnesses

against him; to have compulsory process for obtaining

witnesses in his favor, and to have the Assistance of Counsel

for his defence.

42 U.S.C. § 1395x(s)(9)

(s) The term “medical and other health services”

means any of the following items or services:

- * * *

29a

Appendix E

(9) leg, arm, back, and neck braces, and

artificial legs, arms, and eyes, including

replacements if required because of a

change in the patient’s physical

condition;

42 C.F.R. §§ 410.100(g)(1)

§§ 410.100 Included services.

* * *

(g) Orthotic device services. These services

include —

(1) Orthopedic devices that support or

align movable parts of the body, prevent

or correct deformities, or improve -

functioning; . . .

42 C.F.R. §§ 410.36(a)(3)

§§ 410.36 Medical supplies, appliances, and devices: Scope

(a) Medicare Part B pays for the fo'lowing medical supplies,

appliances and devices:

30a

Appendix E

(3) Leg, arm, back, and neck braces and artificial

legs, arms, and eyes, including replacements if

required because of a change in the individual’s

physical condition.

* * * *