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Sixth Circuit Says Evidence Of DME Provider�s High Profit Margin Was Relevant To Establish Motive In Fraud Case

 
 

HLD, v. 33, n. 7 (July 2005)

Sixth Circuit Says Evidence Of DME Provider's High Profit Margin Was Relevant To Establish Motive In Fraud Case

The Sixth Circuit held that evidence showing the high profit margin received by the owner of a durable medical equipment (DME) provider was relevant and admissible to establish motive in a case involving healthcare fraud, mail fraud, illegal kickbacks, money laundering, and engaging in illegal transactions.

The case involved Hussein Amr, owner of a DME company called United States Medical Supply (USMS), who allegedly (1) induced patients to purchase power wheelchairs that they did not ask for or need, (2) offered free lift chairs to induce patients to purchase power wheelchairs, (3) failed to offer patients the option of renting rather than purchasing, (4) charged for accessories that were already included with the chairs, and (5) inflated repair charges.

A jury found Amr guilty on twenty-two counts and returned a forfeiture verdict of $1,015,384.55. Amr appealed on the issue of whether the district court erred in allowing the government to introduce evidence establishing that USMS was making a profit of over $4,000 per power wheelchair, a portion of which was obtained by up-coding. Specifically, Amr argued that such evidence was irrelevant, or that its probative value was substantially outweighed by the danger of unfair prejudice.

The appeals court affirmed the judgment below. The appeals court found the evidence of the high profit margin "highly relevant to show why the Defendant, in violation of Medicare rules, steered patients who expressed interest only in lift or manual chairs to purchase power wheelchairs and did not inform the patients that they had a right to lease the chairs." Thus, the appeals court concluded that the evidence was relevant to establishing Amr's motive. The appeals court also found the evidence was prejudicial only in the sense that it damaged Amr's case, "and not that it suggested a decision to the jury on an improper basis."

United States v. Amr, No. 03-2131 (6th Cir. May 25, 2005). To read the case, go to http://www.ca6.uscourts.gov/opinions.pdf/05a0434n-06.pdf

 

 

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