Casemaker Note: Portions of this opinion were specifically rejected by a higher court in 276 Ga. 423.
Casemaker Note: Portions of this opinion were specifically rejected by a higher court in 577 S.E.2d 551
Casemaker Note: Portions of this opinion were specifically rejected by a later court in 581 S.E.2d 726
Reconsiderations Denied March 19, 2002.
Certiorari Granted June 21, 2002.
[Copyrighted Material Omitted]
[254 Ga.App. 311] Thomas C. Rowsey, Atlanta, for appellant (case no. A01A2319).
Furlong & Franco, Leonard L. Franco, Atlanta, for appellant (case no. A01A2339).
Paul L. Howard, Jr., Dist. Atty., Thurbert E. Baker, Atty. Gen., Harrison W. Kohler, Senior Asst. Atty. Gen., for appellee.
A Fulton County grand jury indicted Michael J. Kell and Michael D. Culver for conspiracy to defraud the State, Medicaid fraud, false writings, and, as to Kell, three counts of tax evasion. Following a bench trial, the trial court found Kell and Culver guilty of the charged offenses. They appeal, primarily challenging the sufficiency of the evidence and venue. For reasons that follow, we affirm in part and reverse in part the convictions of both defendants.  Viewed favorably
to support the verdict,  the evidence shows that Kell, a medical doctor, founded Private Clinic and Private Clinic Laboratories ("PCL"), which were located in the same building in Fulton County. Culver worked for Kell, helping with Kell's daily business activities and acting as his "right hand man."
Both Kell and PCL were enrolled as Medicaid providers with the Georgia Department of Medical Assistance ("DMA"), the state agency that administered the Medicaid program. In the early 1990s, Kell individually billed Medicaid millions of dollars annually as a physician provider in Georgia's methadone drug treatment program. During this time, PCL submitted only a small volume of Medicaid billings. Around 1996, however, the DMA discontinued the methadone program, ending Kell's significant reimbursements for methadone treatments.
Also in 1996, Kell became concerned about the legality of referring his Medicaid patients to a laboratory that he owned. Accordingly, he agreed to sell PCL's assets to Servicios Medicos Panamericanos Sociedad ("Servicios"), a Costa Rican corporation, for $300,000, payable over five years. Ecomed Labs, LLC, a corporation organized [254 Ga.App. 298] by Kell's attorney and in which Servicios held 98 percent of the ownership, took over PCL's laboratory operations. Kell employees Mark Bailey and Patsy Lewis were told that each owned one percent of Ecomed's stock, although they never paid for the stock, received a stock certificate, or earned any stock dividends.
Following the sale, various Kell employees began working for Ecomed, and Kell served as Ecomed's laboratory director, as well as an Ecomed corporate officer. Bailey was also appointed trustee of a trust Servicios created to operate Ecomed. Bailey acted in that capacity until 1997, when Kell became trustee.
After taking over PCL's operations, Ecomed became a Medicaid provider and granted to Michael Jon Kell, M.D., Ph.D. & Associates, P.C. ("Kell P.C."), one of Kell's corporations, a power of attorney to submit electronic claims to DMA for Medicaid reimbursement. In 1996, after the State discontinued the methadone program, Ecomed began submitting Medicaid billings to DMA in excess of $1 million, which caught the attention of DMA investigators. As described by one DMA employee, the billings from Kell and the laboratory "almost swapped." When the methadone program ended, billings "in excess of a million dollars ... started coming out of the laboratory."
DMA investigators reviewed Ecomed's Medicaid records and determined that the laboratory was submitting a high volume of billings for urine drug testing on a small patient base, charging Medicaid $25,000 to $30,000 annually per patient for these tests. Investigators further discovered that "testing was occurring with such a frequency that the results would not be back from the first test before [the patients] were given their second or sometimes third test in a week." The billings also revealed that Kell referred these patients to Ecomed through Private Clinic.
For urine drug tests conducted between September 1996 and November 1997, Medicaid paid Ecomed between $180 and $204 per test. These tests, often run on a patient twice a week, screened for multiple drugs, such as amphetamines, barbiturates, alcohol, and methadone. The individual cost to screen for each drug factored into the overall price.
In contrast, Michael Kulas, a Kell employee who worked with the billing system, testified that Ecomed charged self-pay patients referred by the Grady Hospital Drug Dependence Unit just $19.20 for a urine drug test. Invoices generated throughout the summer of 1996 also confirmed that Ecomed charged Grady Hospital $19.20 to test a patient's urine, and the evidence showed that Ecomed conducted urine drug tests on Grady patients during the September 1996 through November 1997 time period. The documentary evidence does not reveal which individual drug screens were included in those tests. But Kulas testified that the tests conducted on Grady self-pay [254 Ga.App. 299] patients were the same as those run on Medicaid patients. Ecomed's lab manager similarly testified that she knew of no difference between the urine tests performed
on patients referred by Grady and patients referred by Private Clinic, such as the Medicaid patients.
Investigators also discovered that, in 1994, PCL, through Kell, bid for a contract with Grady Health System to perform drug testing on Grady patients. The proposal recommended that patients be tested at least weekly for methadone and opiates to detect abuse. According to the proposal, however, drugs such as amphetamines, barbiturates, propoxyphene, and alcohol "[could] be adequately monitored through once a month testing in persons without recent histories of abuse." Thus, PCL advocated that Grady "test for all drugs [listed in the proposal] at least once a month on a random schedule, except for opiates and methadone (and prescribed/ abused drugs in any particular patient) [which should] be tested at least once a week on a random schedule."  Despite this recommendation, between August 1996 and November 1997, Ecomed screened certain Medicaid patients well over once per month for amphetamines, barbiturates, propoxyphene, and alcohol, even when those patients showed no recent history of abuse.
In addition to this Medicaid-related evidence, the State introduced testimony and documents involving taxation. In 1995, the employee leasing company that processed the payroll for various Kell-related companies ("employee leasing") issued Kell a W-2 form reporting that he earned $342,457.81 in wages. The following year, Kell received $23,000 in miscellaneous income from Ecomed, wages totaling $25,798.56 from employee leasing, and $34,496 in compensation as an officer of Kell P.C. As an officer in PCL, Kell also earned $204,022 in compensation for the October 1, 1995 through September 30, 1996 fiscal year, and $121,539 from October 1, 1996, through September 30, 1997. In 1997, employee leasing reported $165,340.75 in wages for Kell, and he also earned $27,600 as a Kell P.C. corporate officer. The evidence further showed that, in 1998, Kell received $67,456 from employee leasing and $194,325 from UD Testing, a company that employed Kell as its research director.
Despite earning significant income between 1995 and 1998, Kell paid no state income taxes for those years. In 1995, he filed a state tax return reporting just $178 in adjusted gross income and claiming $47,078 in itemized deductions. Kell also asserted that he was entitled to a $1,125 refund, the amount employee leasing withheld from his wages for state income tax purposes. The State's tax expert testified, however, that, even with the claimed deductions, Kell earned [254 Ga.App. 300] $293,580 in 1995 taxable income, giving him state tax liability of $17,442.80. In 1997, the State Revenue Department sent Kell a proposed tax assessment for taxes due in 1995. Kell denied any tax liability and submitted several affidavits to the Revenue Department stating that he was not subject to compulsory federal and state income tax laws, which, in his opinion, applied only to federal and state employees. Kell did not file a state tax return in 1996, 1997, or 1998.
Michael Culver apparently shared Kell's tax views. The evidence showed that in 1995, he earned $43,087.92 in wages. Based on these wages, the State's tax expert determined that Culver earned $39,288 in taxable income and owed $2,167 in 1995 state income taxes. Nevertheless, Culver reported no taxable income on his 1995 return and, like Kell, claimed a refund equaling the approximate amount of state income tax withheld from his wages--$290. When assessed by the Revenue Department for unpaid 1995 taxes, Culver refused to pay, submitting instead an affidavit virtually identical to those signed by Kell.
In both 1996 and 1997, Kell provided withholding exemption certificates to employee leasing, asserting that because he had no tax liability the prior year and would not incur liability that year, he was exempt from tax withholding requirements. Although employee leasing found these certificates questionable, it honored them and did not withhold federal or state income taxes from checks distributed to Kell in 1996 and 1997.
At some point, Kell and Culver also established the First Meliorite Church, which met in Private Clinic's offices and had only three
members, Kell, Culver, and Bailey. Kell and Culver opened two bank accounts in the church's name. Between 1996 and 1999, Kell deposited numerous checks he received from employee leasing and UD Testing into one of those accounts. After analyzing that account, the State's expert in summary financial data concluded that Kell used it to pay significant personal expenses during those years, including mortgage payments on his home, child support payments, and high school tuition payments.
Based on the evidence presented, the trial court found Kell and Culver guilty of the indicted charges. Kell appeals his convictions in Case No. A01A2339, and Culver appeals in Case No. A01A2319.
Case No. A01A2339 
1. Kell argues that the State failed to present sufficient evidence to prove Medicaid fraud. In addressing this argument, we must consider [254 Ga.App. 301] whether "the evidence, construed favorably to support the verdict, was sufficient to authorize the [factfinder] to find him guilty beyond a reasonable doubt of [this offense]."  As discussed below, the State failed to establish venue beyond a reasonable doubt, requiring reversal.  Because the State presented sufficient evidence of Kell's guilt, however, "the Double Jeopardy Clause does not preclude the State from retrying [him], so long as it does so in a forum in which venue is properly established."  Sufficiency of Evidence to Prove Guilt. In the indictment, the State charged that, between September 16, 1996, and September 15, 1997, Kell obtained "payments from the Georgia Department of Medical Assistance ... to which [he was] not entitled and in excess of what [he was] entitled, by [a] fraudulent scheme and device," in violation of OCGA § 49-4-146.1(b). Describing the fraudulent scheme, the State alleged that PCL's sale to Servicios was a sham, leaving the lab and its profits in Kell's control; that Kell charged Medicaid a higher rate for urinalysis drug screens than he charged Grady Health System; and that he billed Medicaid for medically unnecessary drug tests.
To support these allegations, the State presented evidence that neither Kell nor PCL received any portion of the $300,000 asset sale price from Servicios. Furthermore, following the purported sale, PCL's lab manager continued to perform her same duties at the lab, Kell ran the lab and served as an Ecomed officer, and Ecomed gave Kell P.C. power of attorney over its Medicaid billings. Kell also sent a letter to the lab's clients explaining that PCL had simply changed its name to Ecomed and would continue providing clients with the same services. Finally, the State's expert testified that 96 percent of the checks Ecomed wrote between March 1996 and March 1999 for amounts over $5,000 were made out to Private Clinic, PCL, or Kell P.C. Those payments totaled over $1 million.
Based on the evidence presented, a reasonable factfinder could conclude that Kell maintained control over Ecomed and its Medicaid billings, and he received significant payments from the laboratory. The trier of fact could also find that, although Medicaid paid Ecomed approximately $200 for each urine test conducted between September 1996 and November 1997, the laboratory routinely charged Grady self-pay patients just $19.20 for what Ecomed and Kell employees described as the same test. And the State presented evidence that regulations prohibited providers from billing Medicaid "for an amount greater than the lowest price regularly and routinely [254 Ga.App. 302] offered to any segment of the general public for the same service or item on the same date(s) of service." Furthermore, the factfinder could determine that Ecomed charged Medicaid to screen patients without a recent history of abuse more than once a month for amphetamines, barbiturates, propoxyphene, and alcohol, despite PCL's statement in the 1994 Grady bid proposal that only monthly testing was necessary. Finally, Kulas testified that Kell told
him how much to bill Medicaid for various services, and the State established that, between September 16, 1996, and September 15, 1997, the DMA wrote numerous checks to Ecomed. From this evidence, a reasonable trier of fact could find Kell guilty beyond a ...