People v. McDonald, 88 N.Y.2d 281 (1996)

When a professional billing code has a clear, technically defined meaning within a specific profession, using alternative methods not meeting that definition to obtain reimbursement constitutes larceny.

Summary

Defendants McDonald and Strogov, podiatrists, were convicted of grand larceny for submitting Medicaid claims under a billing code (90473) for custom-made orthotics. The prosecution argued that the code required a three-dimensional cast of the patient’s feet, while the defendants used less accurate two-dimensional methods. The Court of Appeals affirmed the convictions, holding that the term “casting” had a universally recognized meaning within podiatry, requiring a three-dimensional mold. Submitting claims without meeting this standard, therefore, demonstrated larcenous intent, especially given additional evidence of intentional misrepresentation.

Facts

McDonald and Strogov, participating podiatrists in the New York Medical Assistance Program, submitted claims under billing code 90473 for “Foot mold, balance inlay support (casting and fabrication).” Instead of creating three-dimensional casts of patients’ feet, as the prosecution contended the code required, they used tracings or pressure imprints. These methods involved sending a two-dimensional outline or footprint to a laboratory that supplied prefabricated stock orthotics, rather than custom-made devices based on a three-dimensional mold. The maximum reimbursement under the code was $46.

Procedural History

McDonald was convicted in a jury trial of grand larceny and offering a false instrument for filing. Strogov was convicted of grand larceny in a bench trial. Both defendants appealed their convictions. The Appellate Division affirmed the convictions, finding the billing code unambiguous. The defendants then appealed to the New York Court of Appeals.

Issue(s)

1. Whether the Medicaid billing code 90473, using the phrase “casting and fabrication,” unambiguously requires the creation of a three-dimensional cast or mold of the patient’s feet.

2. Whether there was legally sufficient evidence to prove that the defendants submitted claims under code 90473 with larcenous intent.

Holding

1. Yes, because the term “casting” has a universally recognized meaning within the podiatric profession to require a three-dimensional cast or mold.

2. Yes, because the act of submitting claims under code 90473 without creating a cast or mold constitutes circumstantial evidence of larcenous intent, and additional evidence of intentional misrepresentation existed in both cases.

Court’s Reasoning

The Court found that the term “casting” has a well-established meaning within the podiatric profession, referring to the creation of a three-dimensional cast or mold. Expert testimony confirmed this understanding. The court reasoned that billing codes intended for professional use can rely on technical terms understood within the relevant profession. “As the podiatry fee schedule is intended for use by members of the podiatric profession, the use of technical terms recognized by the profession to describe the scope of permissible work that can be billed under code 90473 provides an explicit and nonarbitrary standard for enforcement of proper Medicaid billing practices and imposing criminal responsibility for flagrant violations thereof.” Because the defendants used methods that did not meet the definition of “casting,” their actions constituted circumstantial evidence of intent to defraud. In McDonald’s case, a former partner testified they knowingly billed for custom-made orthotics when they provided prefabricated devices. In Strogov’s case, an intern was instructed to falsify patient charts to indicate that casts were made. This additional evidence further supported the conclusion of larcenous intent. The court stated, “in each case, the evidence was legally sufficient to support the fact finder’s conclusion that defendants’ improper billing was done with criminal intent.”