UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


UNITED STATES

v.

KRIZEK, GEORGE O.


98-5455a

D.C. Cir. 1999


*	*	*


Tatel, Circuit Judge: After a three-week bench trial, the  district
court found that defendants, a psychiatrist and his  wife/secretary,
submitted claims for reimbursement for ser- vices performed for
Medicare/Medicaid patients in violation of  the False Claims Act.
Because it was impossible to identify  precisely which claims were
fraudulent, the district court held  defendants liable only for claims
submitted on days they  billed for more than twenty-four hours of
work, and then only  for those patient sessions that exceeded the
twenty-fourth  hour. Following an appeal to this court, we remanded to
the  district court to consider additional evidence from the Gov-
ernment and to recalculate the number of false claims based  on a new
definition of "claim." Finding the district court's  actions on remand
inconsistent with our mandate, we again  remand for further


I


Dr. George Krizek practiced psychiatry in Washington,  D.C. His wife
Blanka functioned as his secretary and was  responsible for his
billing. In 1993, the Government filed a  civil complaint alleging
that for six years the Krizeks had  submitted claims for reimbursement
for services provided to  Medicare/Medicaid patients in violation of
the False Claims  Act, 31 U.S.C. ss 3729-31. After a three-week bench
trial,  the district court found that the Krizeks had submitted claims
 for reimbursement "when Dr. Krizek could not have spent the 
requisite time providing services...." United States v. Kri- zek, 859
F. Supp. 5, 12 (D.D.C. 1994). Ruling that the  Krizeks would be
"presumed liable" under the False Claims  Act for all claims they
submitted in excess of nine hours per  day, the district court
referred the case to a Special Master to  determine the number of
false claims in excess of the nine- hour benchmark and to calculate
the precise amount of the  Krizeks' liability.


In the proceedings before the Special Master, the Govern- ment
introduced into evidence all "HCFA 1500" forms that 


the Krizeks had submitted to the Government for reimburse- ment. HCFA
1500 forms serve as invoices for billing Medi- care and Medicaid: they
must contain the doctor's name, the  patient's name, the dates
services were provided, and a five- digit code identifying each
service provided to a particular  patient, called a "CPT code." For
example, the CPT code  90844, which Dr. Krizek used frequently,
indicates an individ- ual psychotherapy session lasting approximately
forty-five to  fifty minutes. While a single HCFA form includes
services  for only one patient, it may include services rendered to
that  patient on multiple days.


HCFA 1500 forms contain only the CPT codes that Dr.  Krizek billed, not
the actual time he spent with each patient.  As a result, the Special
Master had to fashion a methodology  to convert the codes into time
periods in order to determine  the number of hours the doctor actually
billed each day.  Because of the large number of claims (some days Dr.
Krizek  saw upwards of fifty patients), changing the assumptions of 
how much time each code represented would materially affect  the total
time billed for the entire day. Largely accepting the  Government's
proposed methodology for translating CPT  codes into time periods, the
Special Master attributed to each  code the amount of time at the low
end of its stated range  (unless the doctor had indicated a different
time period on the  form). For the frequently used CPT code 90844, for
example,  the Special Master assumed a forty-five-minute session, the 
low end of the forty-five to fifty-minute range. For CPT code  90843,
another frequently used code, this one having a twenty  to
thirty-minute range, the Special Master assumed twenty  minutes. Using
this methodology and determining that each  CPT code represented a
"claim" under the False Claims Act,  the Special Master identified 264
days on which the Krizeks  billed for more than nine hours, amounting
to 1,149 false  claims. Multiplying by $5,000, the minimum fine per
claim  under the False Claims Act, the Special Master calculated a 
total fine of $5.7 million.


The district court accepted the Special Master's findings of  fact.
United States v. Krizek, 909 F. Supp. 32, 33 (D.D.C.  1995) ("Krizek
II"). Seemingly moved by the enormity of the 


$5.7 million fine, however, the district court abandoned the  nine-hour
presumption, ruling instead that defendants could  only be liable
under the False Claims Act for claims submit- ted on days on which
they billed for more than twenty-four  hours of work, and then only
for those patient sessions  exceeding the twenty-fourth hour. Id. at
34. Applying this  new benchmark, the Special Master identified three
days on  which the Krizeks billed more than twenty-four hours; on 
those days, he found a total of eleven false claims. The  district
court, assessing the $10,000 maximum fine under the  False Claims Act
for each violation, entered judgment against  the Krizeks for
$110,000, plus unjust enrichment damages of  $47,100. Id. Both parties


In United States v. Krizek, 111 F.3d 934 (D.C. Cir. 1997)  ("Krizek
III"), this court affirmed the Krizeks' liability under  the False
Claims Act but remanded for further proceedings  with respect to the
calculation of the number of violations and  the penalties to be
assessed. In so doing, Krizek III resolved  two issues central to the
current appeal. First, it held that  "the District Court's use of a
twenty-four hour presumption,  having earlier announced its intent to
use nine hours as the  benchmark, prejudiced [the Government's]
prosecution of the  claim." Id. at 938. In this regard, the court
noted that the  Government, in reliance on the district court's
nine-hour  benchmark, had adopted conservative estimates regarding the
 time attributable to each CPT code and declined to pursue  discovery
of Dr. Krizek's billings for non-Medicare/Medicaid  patients. Id.
Second, Krizek III rejected the conclusion of  both the Special Master
and the district court that each  individual CPT code on a HCFA 1500
form represents a  "claim" under the False Claims Act, holding instead
that each  HCFA 1500 form is a claim. Id. at 939-40. For example, if a
 particular HCFA 1500 form identifies five services performed  by Dr.
Krizek for a single patient on five separate days, the  form could
constitute at most one false claim.


On remand, the district court ordered the Krizeks to give  the
Government their records of private pay patients seen on  the ten
"worst" days--those days the Government identified 


as reflecting the Krizeks' most egregious billing practices.  Citing
the "meager fruit" to be expected from further discov- ery when the
ten worst days plus fifteen additional days  voluntarily provided by
the Krizeks yielded only two addition- al days on which the Krizeks
had billed more than twenty- four hours, the district court rejected
the Government's re- quest for additional discovery. United States v.
Krizek, 7  F. Supp. 2d 56, 58 (D.D.C. 1998) ("Krizek IV"). At the same
 time, the district court refused to find False Claims Act  liability
on the two additional twenty-four-hour days because  "the Government
cannot prove that the claims in excess of 24  hours were the ones
billed to Medicare/Medicaid as opposed  to those billed to
non-Medicare/Medicaid private patients."  Id. Turning to Krizek III's
definition of "claim," and reason- ing that "[o]n the evidence
submitted, the Government has  failed to establish which of the
claims, under the new defini- tion, are the ones in excess of the 24
hour presumption," the  district court found insufficient evidence in
the record to  establish more than one false claim per day. Id. at 59.
The  district court fined the Krizeks $30,000, $10,000 for each false 


II


In this second appeal, again brought by both sides, the  parties
fundamentally misunderstand the limited scope of this  court's remand
in Krizek III. In their cross-appeal, for  example, the Krizeks argue
that Krizek III's direction to the  district court to consider
additional evidence regarding the  conservative time assumptions the
Government adopted in  reliance on the nine-hour benchmark "reopened
the methodo- logical issue," allowing them to challenge the factual
under- pinnings of the Special Master's calculations. Not so. Kri- zek
III's remand rested on its express finding that the switch  from a
nine-hour to a twenty-four-hour benchmark prejudiced  the Government's
prosecution of its case. Krizek III intend- ed nothing more than to
give the Government an opportunity  to revisit its assumptions, not to
reopen all aspects of the  Special Master's methodology.


We will not consider the Krizeks' cross-appeal for a second,  equally
important reason. Although they insist that they  "challenged the
government's methodology at every conceiva- ble step," they failed to
do so at one critical juncture: their  original appeal to this court.
See Hartman v. Duffey, 88 F.3d  1232, 1236 (D.C. Cir. 1996) ("We do
not reach the merits of  defendant's arguments on this issue because
of the defen- dant's failure to pursue it in its prior appeal."),
cert. denied,  520 U.S. 1240 (1997).


Equally misconstruing Krizek III's limited remand, the  Government
faults the district court for failing to reconsider  the twenty-four
hour benchmark. Nothing in Krizek III  entitled the Government to
challenge that benchmark on  remand. Krizek III assumed the validity
of the twenty-four- hour benchmark and remanded for the limited
purpose of  giving the Government an opportunity to revisit its
assump- tions. If this court had intended to require the district
court  to go beyond evaluating the Government's assumptions and to 
reconsider the twenty-four-hour benchmark, it would have  done so
directly, not as elliptically as the Government claims  it did.


Although the twenty-four-hour benchmark is a closed mat- ter in this
litigation, we do think the Government has pointed  out three respects
in which the district court's actions are  inconsistent with Krizek
III's mandate: the district court  refused to consider the
Government's evidence regarding the  conservative assumptions it
adopted in reliance on the nine- hour benchmark; it excluded time
billed to Dr. Krizek's  private pay patients from the calculation of
twenty-four-hour  days; and it applied an incorrect methodology to
determine  the number of false claims over the twenty-four-hour bench-
mark. With respect to the first two issues, Krizek III could  not have
been clearer: "The government argues that the  District Court's use of
a twenty-four hour presumption, hav- ing earlier announced its intent
to use nine hours as the  benchmark, prejudiced its prosecution of the
claim. We  agree and remand for further proceedings." Krizek III, 111 
F.3d at 938. To flesh out the nature of that prejudice, Krizek  III
directed the district court to (1) focus on the conservative 


assumptions the Government offered to determine how much  time to
allocate to each CPT code and (2) allow discovery of  records of time
billed to Dr. Krizek's private pay patients.  Id.


Referring to the first of these tasks, Krizek III character- ized the
Government's time estimates as conservative, con- cluding that:
"Considering the large number of claims sub- mitted on any given day
these assumptions may have had a  material effect on the damages
proved up by the government.  However, because the damages were likely
to be substantial  already [using a nine-hour benchmark], the
government chose  not to proffer less generous approximations." Id.
Notwith- standing Krizek III's clarity, the district court flatly
refused  to listen to the Government's arguments about its conserva-
tive assumptions, let alone to allow the Government to intro- duce
additional evidence. When Government counsel raised  the issue at a
September 5 Status Call, the district court said:  "You're dead on
that issue. There is no--you're not going to  now say, okay, it's 30
[minutes]. No, no. The Court of  Appeals didn't say that. The Court of
Appeals ... indicated  they accepted that." In response, Government
counsel quot- ed the passages from Krizek III discussed above. "You've
 misread that," replied the district court.


Don't mislead this Court, Mr. Hegyi.... You're mis- leading the Court
now. That's not what it says.... All  it says is that you were
generous, and it doesn't say that  I now go back and have to let you
be less generous....  Look, Mr. Hegyi, I'm not going to argue with you
any  more. So let's go on. No, you're not going to continue  with that
because the Court of Appeals affirmed the  Special Master and I'm not
going to undo that work.


Instead of defending the district court's actions with re- spect to the
Government's conservative assumptions, the Kri- zeks argue that the
Government failed to preserve the issue  for appellate review. The
record demonstrates to the con- trary. Not only did the Government
twice bring the issue to  the attention of the district court during
the September 5  Status Call, but it reiterated its claim in written
submissions  to the district court: "The United States is aware that


September 5, 1997 status conference the Court indicated it  would not
permit such a re-calculation. However, the United  States includes
this proposal out of an abundance of caution  to prevent a possible
future claim of waiver or abandonment  by the Government." Given the
district court's refusal to  discuss the assumptions and particularly
given its accusation  that Government counsel was trying to mislead
the court, we  have no idea what more the Krizeks think the Government
 should have done (short of risking contempt) to preserve the  issue
for appeal.


To avoid any confusion about the scope of our remand from  this appeal,
we state our instructions with specificity. The  district court must
first allow the Government to submit  additional evidence regarding
its conservative assumptions.  It should then consider whether the
Government's evidence  requires any change in the Special Master's
calculation of the  number of hours billed each day. Nothing in this
remand  "reopens" the methodological issues raised by the Krizeks in 
their cross-appeal. The Krizeks may respond to the Govern- ment's
claim that its assumptions were too conservative in  light of the
twenty-four-hour benchmark, nothing more.


Krizek III's direction to the district court regarding the  handling of
private pay patients breaks down into two issues:  discovery regarding
the Krizeks' billing of private pay pa- tients and incorporation of
private pay patients into the  calculation of the number of hours
billed each day. Begin- ning with the first issue, we disagree with
the Government  that the district court improperly restricted its
discovery.  Since the private pay records for the twenty-five worst
days  yielded only two additional twenty-four-hour days, the district 
court's conclusion that further discovery would not likely have 
identified any more was hardly an abuse of discretion. See  Food Lion,
Inc. v. United Food and Commercial Workers  Int'l Union, 103 F.3d
1007, 1012 (D.C. Cir. 1997) ("[A] district  court's decision to permit
or deny discovery is reviewable only  for an abuse of discretion.").


We do agree with the Government, however, that the  district court's
refusal to include time billed to private pay 


patients in the calculation of the number of hours the Krizeks  billed
per day was inconsistent with the Krizek III mandate.  Krizek III
stated: "Presumably, if the government had intro- duced evidence on
[private pay] patients it could have estab- lished that the Krizeks
billed in excess of twenty-four hours  on more days than indicated by
Medicare and Medicaid  records alone." 111 F.3d at 938. Clearly
implicit in this  statement is the proposition that private pay
patients be  included in calculating twenty-four-hour days. Why else 
would Krizek III have ordered such discovery? Yet the  district court
refused to include private pay patients, explain- ing, "the Government
cannot prove that the claims in excess  of 24 hours were the ones
billed to Medicare/Medicaid as  opposed to those billed to
non-Medicare/Medicaid private  patients." Krizek IV, 7 F. Supp. 2d at
58. "The mere  assumption that all hours exceeding the 24 hour
benchmark  were hours billed to Medicare/Medicaid," the district court
 said, "is insufficient to prove knowing or reckless conduct."  Id. at


In refusing to include private pay patients as required by  Krizek III,
the district court imposed on the Government a  burden not required by
the False Claims Act. The Govern- ment does not have to "prove that
the claims in excess of 24  hours were the ones billed to
Medicare/Medicaid." The False  Claims Act requires only that the
Government prove that the  Krizeks acted "in reckless disregard of the
truth or falsity of  the information" they submitted to the
Government, and that  it do so not beyond a reasonable doubt, but "by
a preponder- ance of the evidence." 31 U.S.C. ss 3729(b)(3), 3731(c).
Yet  under the district court's reasoning, it would be virtually 
impossible for the Government to establish liability on any 
twenty-four-hour day that included private pay patients.


Particularly in view of the district court's exceptionally 
conservative twenty-four-hour benchmark--i.e., the Krizeks  could be
found liable only on days they billed for more than  twenty-four hours
of work, a physical impossibility--we think  the False Claims Act
preponderance standard is easily satis- fied when any patient is seen
beyond the twenty-fourth hour.  Reinforcing this conclusion, an
affidavit by a Government  Special Agent lists several reasons for


false claims were most likely the Medicare/Medicaid claims,  including
that many Medicare/Medicaid patients were being  treated for severe
psychiatric disorders and likely lacked the  ability to monitor bills
submitted on their behalf, that the  private pay patients had an
"active self-interest" in ensuring  that the Krizeks billed them
properly, and that the Krizeks  had a greater incentive to keep (and
therefore not defraud)  their more lucrative private pay patients.


In sum, Krizek III's inclusion of private pay patients has  two
implications for the calculation of the number of false  claims,
implications the district court must account for on  remand. First, it
adds two more twenty-four-hour days,  bringing the total to five.
Second, it increases the number of  false claims on the three original
twenty-four-hour days.


This brings us to the final respect in which the district  court's
actions were inconsistent with Krizek III. Krizek III  required the
district court to recalculate the number of false  claims submitted by
the Krizeks in light of the court's redefi- nition of "claim" as the
HCFA 1500 form itself, not the  individual CPT codes on the forms. 111
F.3d at 940. Al- though determining the number of false claims
requires noth- ing more than calculating how many forms actually
contained  fraudulent entries, the district court simply concluded
that  three twenty-four-hour days equals three false claims. The 
district court explained:


On the evidence submitted, the Government has failed to  establish
which of the claims, under the new definition,  are the ones in excess
of the 24 hour presumption. The  evidence merely establishes that on
the 3 days in ques- tion, the Defendants billed in excess of 24 hours
to  Medicare/Medicaid. Based on this record, the Court can  only
conclude that on each of the 3 days, there was at  least one false
claim under the definition established by  the Court of Appeals....
While there certainly could  have been more than one form with a false
statement  submitted on each given day, there is insufficient proof in
 the record.


Krizek IV, 7 F. Supp. 2d at 59.


Again, we think the district court heightened the Govern- ment's burden
of proof beyond the False Claims Act's pre- ponderance standard. The
Government need not prove which  particular patient sessions occurred
after the twenty-fourth  hour. Indeed, both parties agree that would
be an impossible  task because records indicating the time of day Dr.
Krizek  saw particular patients do not exist. Even defense counsel 
seems to agree that the district court's rationale for finding  only
three false claims is flawed, conceding at oral argument  that the
proper method of determining the number of false  claims is to count
the number of patient sessions after the  twenty-fourth hour and then
to eliminate any overlap among  those sessions, i.e., instances in
which the Krizeks billed on a  single HCFA form more than one patient
session occurring  after the twenty-fourth hour.


To accomplish this simple task, the parties in the district  court need
do nothing more than utilize the methodology for  calculating the
number of false claims developed by the  Special Master. The Special
Master's methodology was em- ployed by the district court in Krizek II
and not appealed by  the Krizeks. Krizek III's new definition of
"claim" merely  adds an additional step--the elimination of overlap.


We need not describe the Special Master's methodology  here; his
procedures and assumptions are fully explained in  the record. Suffice
it to say that his methodology, based on  assumptions favorable to the
Krizeks, identified which partic- ular patient sessions occurred after
the twenty-fourth hour  and produced a total of eleven such sessions
on the three  original twenty-four-hour days. To calculate the number
of  false claims, all the district court needed to do on remand  from
Krizek III--and all it needs to do now--is eliminate any  overlap
among patient sessions occurring after the twenty- fourth hour that
are billed on the same HCFA form. For  example, if Dr. Krizek saw
patient X after the twenty-fourth  hour on two of the twenty-four-hour
days, and billed both  days on the same HCFA 1500 form, only one false
claim  occurred, not two.


Not surprisingly, the parties do not even agree about this  simple
mathematical calculation. Citing an affidavit by its  Special Agent,
the Government claims that there is no overlap  among the eleven false
claims found by the district court in  Krizek II. Counsel for the
Krizeks, who conceded at oral  argument that the district court's
reasoning was flawed,  nonetheless claims that eliminating the overlap
would yield  the same result as the district court reached in Krizek
IV-- only three false claims. To support this proposition, counsel 
directed us to a chart in the record before the district court.  As we
read that chart, however, it speaks not to the overlap  among the
three twenty-four-hour days the district court  originally identified,
but to overlap among one of those three  days and the two
twenty-four-hour days the Government  discovered when accounting for
private pay patients. The  chart, moreover, fails to employ the
Special Master's method- ology for identifying which particular
patient sessions oc- curred after the twenty-fourth hour.


The district court's task on remand is simple and mathe- matical. To
determine the number of false claims, it must (1)  use the Special
Master's methodology to count the number of  patient sessions that
occurred after the twenty-fourth hour on  the five twenty-four-hour
days (the three original twenty- four-hour days plus the two
additional twenty-four-hour days  discovered on remand from Krizek
III) and then (2) eliminate  any overlap among those sessions.


III


This prosecution of a single doctor has now spanned over  six years. It
has consumed three weeks of trial, several days  of hearings before
the Special Master and the district court,  two fully briefed, fully
argued appeals, and five published  opinions (three by the district
court and two by this court).  The five days on which the false claims
were made occurred  over twelve years ago. According to defense
counsel, Dr.  Krizek no longer practices medicine and is dying of


It is time for the parties to stop refighting battles long-ago  lost
and for the district court to bring this prosecution to an 


expeditious close. To facilitate that goal, we repeat our 
instructions. (1) The district court must permit the Govern- ment to
introduce evidence regarding its conservative as- sumptions and then
consider whether to change any of the  Special Master's assumptions in
light of this evidence. (2)  The district court must include private
pay patients in its  recalculation of the number of hours the Krizeks
billed on  each of the five twenty-four-hour days. (3) Then, using the
 methodology adopted by the Special Master, the district court  must
determine the number of false claims by recalculating  the number of
patient sessions after the twenty-fourth hour  on each of the five
twenty-four-hour days and eliminating any  overlap. We fully expect
that these simple steps will bring  this prosecution to a


The clerk is directed to issue the mandate forthwith.


So ordered.