• United States v. Garcia, et al. No. 2:09-cr-00236 (S.D. Tex. May 26, 2009)
  • July 6, 2009 | Authors: Karen A. Gibbs; Rogelyn D. McLean
  • Law Firms: Crowell & Moring LLP - Irvine Office; Crowell & Moring LLP - Washington Office
  • The U.S. District Court for the Southern District of Texas upheld indictments against an owner and an employee of a durable medical equipment company and an orthotist charged with conspiracy and participation in a scheme to defraud Medicare and Medicaid. The government claimed that the defendants entered into a scheme to sell therapeutic shoes from a facility that had no on-site practitioner as required by Texas law.

    Defendant Marguerite Garcia owned Orthopedic Specialists D.M.E., Inc. ("Orthopedic Specialists"). Ms. Garcia's husband, Defendant Eli Garcia, was an employee of Orthopedic Specialists but was not a licensed practitioner of any kind. Defendant John Martinez and his brother were both licensed orthotists.

    From 1996 to September 1, 1999, Orthopedic Specialists legally provided orthotics and prosthetic goods to customers and billed Medicare and Medicaid for those supplies and services, because Texas law did not require a licensed podiatrist, orthotist or prosthetist to be on-site. After September 1, 1999, however, Texas law was amended to require that any facility practicing orthotics or prosthetics was required to be accredited by having an on-site orthotist or prosthetist licensed by the State of Texas.

    The government alleged that after Texas law changed on September 1, 1999, the defendants entered into a scheme whereby the Martinez brothers agreed to lend their names to Orthopedic Specialists so that it could obtain state accreditation and continue to submit claims for payment to Medicare and Medicaid. The government alleged that the billings of Orthopedic Specialists were fraudulent because the Martinez brothers spent limited time on-site. As a result, the government asserted that Eli Garcia, and not either of the Martinez brothers, served as the on-site "practitioner" for Orthopedic Specialists.

    The defendants moved to dismiss the indictment contending that the government failed to sufficiently allege a penal offense. The district court denied the motion to dismiss the indictments. The court found that the government had successfully alleged a scheme to defraud Medicare and Medicaid since the "crux of the government's fraud claim is that defendants were able to bill Medicare/Medicaid for services rendered by an unlicensed individual because they represented [that Orthopedic Specialists] had an on-site licensed orthotist."

    In addition to their motion to dismiss the indictment, the Garcias moved for a bill of particulars in which they sought greater specificity from the government as to the false and fraudulent representations it was alleging. The court held that a bill of particulars was not warranted, finding that the thirty-one-page indictment plus discovery voluntarily provided by the government was adequate to put the Garcias on notice of the crimes the government charged. The government had voluntarily provided the Garcias and the Martinez brothers with discovery materials, including the reports of interviews of government witnesses.