People v. Hepner

Page 417

26 Cal.Rptr.2d 417

21 Cal.App.4th 761

The PEOPLE, Plaintiff and Respondent, v. Gershon HEPNER and Cheryl Ann Spinner, Defendants and Appellants In re Gershon HEPNER, On Habeas Corpus.

Nos. B069504, B079058.

Court of Appeal, Second District, Division 4, California.

Jan. 5, 1994.

Rehearing Denied Feb. 4, 1994.

Review Denied April 12, 1994.

[21 Cal.App.4th 764] Robert S. Gerstein, Santa Monica, under appointment by the Court of Appeal, for defendant and appellant Gershon Hepner.

Suzanne H. Paboojian, Salinas, under appointment by the Court of Appeal, for defendant and appellant Cheryl Ann Spinner.

Daniel E. Lungren, Atty. Gen., George Williamson, Chief Asst. Atty. Gen., Carol Wendelin Pollack, Sr. Asst. Atty. Gen., Linda C. Johnson, Supervising Deputy Atty. Gen., and Pamela C. Hamanaka, Asst. Supervising Deputy Atty. Gen., for plaintiff and respondent.

RAPPE, Associate Justice. ^*

INTRODUCTION

Appellants, Gershon Hepner, M.D. and Cheryl Ann Spinner, appeal from judgments of conviction after the denial of their motions to suppress evidence and their resulting guilty pleas to various felony charges arising from a widespread insurance fraud related to Dr. Hepner's medical practice. (Pen.Code, § 1538.5, subd. (m).) The trial court imposed on Dr. Hepner a total prison sentence of eight years, four months, $70,000 in fines, and $210,868 in restitution. Based on the parties' stipulation that Dr. Hepner had served 135 actual days in custody, the court calculated conduct credits of 67 days for a total of 202 days total custody credits. As to Spinner, the court suspended prison sentences, placed her on probation conditioned on serving 365 days in county jail, imposed $15,000 in fines, and ordered $8,466 in restitution. There were no custody credits.

PROCEDURAL BACKGROUND

On April 9, 1991, the trial court denied appellants' motion to quash a search warrant used to search Dr. Hepner's office located at 2080 Century Park East, Suite 903, Los Angeles, California.

On September 5, 1991, the trial court denied appellants' motion to traverse the affidavit supporting the search warrant.

On January 29, 1992, the trial court denied appellants' motion to reconsider the earlier rulings.

On March 12, 1992, the trial court denied appellants' motion to reconsider the motion to traverse the warrant on the basis of newly discovered evidence, namely Patricia Bates' testimony she did not recall giving the affiant a 90 percent fraud estimate.

FACTS

1. The Motion to Quash the Search Warrant

a. The Search Warrant and Affidavit

The parties agreed the challenged search warrant permitted the seizure of all patient files in Dr. Hepner's Century City office. The parties also agreed about the specificity with which the property in the search warrant was described. However, they disagreed about whether the affidavit, attached and incorporated by reference into the search warrant, set forth sufficient probable cause for the broad description.

On June 7, 1989, Lon Malcolm, a Senior Criminal Investigator with the California Department of Insurance, Bureau of Fraudulent Claims since June 1, 1987, prepared and submitted the affidavit in support of the search warrant. Malcolm had had previous law enforcement experience of about 10 years, during which he had dealt with fraudulent insurance claims, including medical fraud.

In his affidavit, Malcolm stated Dr. Hepner "is a Gastroenterologist by specialty, however, the bulk of his practice is dedicated to personal injury." In addition to the Century City office, Dr. Hepner had offices "in Inglewood, Hollywood and Studio City." However, the records for all four offices were maintained in the Century City office.

Malcolm stated former and current employees had informed him that Dr. Hepner was "engaged in extensive, systematic insurance fraud in concert with many of his employees, patients, and various attorneys" and that he "bill[ed] insurance carriers for millions of dollars for services not actually rendered." Malcolm was investigating "allegations of Grand Theft, Tax Evasion, Insurance Fraud, and Conspiracy to Defraud."

Malcolm set forth information received from the following people who had worked for Dr. Hepner in his Century City medical office: (1) Rebecca Marble, a physical therapy aide; (2) Patricia Bates, a physical therapy aide; (3) Dolores Williams; (4) Elise Vasta, a physical therapist; (5) Antoinette Meier; (6) Holiday Jackson, a massage therapist; (7) Myriana Orenstein, a registered physical therapist; (8) Caty Van Houten, a physical therapy aide; (9) Linda Cunningham, an employee in the billing section; and (10) Melia Workman, a receptionist. Cunningham and Workman received "limited immunity from prosecution."

The affidavit set forth widespread fraudulent practices directed by Dr. Hepner. Dr. Hepner paid a number of his employees, including Marble, Cunningham, Workman and others, a significant portion of their salary "under the table" in cash. He also defrauded patients' insurance carriers. For example, Jackson had explained to Malcolm "four different fraudulent methods to generate income from insurance carriers. [Dr. Hepner] would bill for: 1) patients who had been in fictitious accidents; 2) patients who had been in accidents but were not injured; 3) over treatment of legitimately injured patients; 4) inappropriate treatment of legitimately injured patients."

According to Marble, Orenstein, Van Houten and Workman, in order to generate patients, "[m]any of [whom were] not injured or ill," for this scheme, Dr. Hepner paid cash referral fees as large as $500 to employees, attorneys, patients and others. As to patients with some injury, according to Jackson, Dr. Hepner "made it clear that if patients were feeling good, the massage therapists were not to indicate that fact on the chart." Dr. Hepner "encouraged the massage therapists to falsify the chart notes to keep patients in treatment longer."

Marble, Bates, Williams, Vasta, Meier, Jackson, Orenstein, Van Houten, Cunningham and Workman indicated Dr. Hepner and his employees had "patients" enter multiple signatures on sheets of paper listing numerous dates to which office employees later added false treatment notes documenting supposedly necessary long term therapy. The false entries were used to support fraudulent insurance claims based on "bogus office visits and treatments."

For example, Bates stated "patients" were "instructed to sign their names 15-20 times on a blank piece of paper whether they received any treatment or not." Samples of these lists, provided by Bates, were attached to the affidavit. Bates also revealed "that front office personnel [were] instructed to randomly assign an asterisk to patient date and signature entries. This [became] a flag to billing personnel ... to charge an additional fee for that particular treatment." Marble, hired in May 1986, indicated "[p]hony treatment notes would then be entered next to each date and signature." Marble "observe[d] many of these patients repeating this process frequently." Williams, who worked for Dr. Hepner from April 1984 to May 1985, agreed that "insurance carriers were 'constantly' being billed for office visits that had not taken place." She noted "patients were instructed to sign their names next to long lists of random dates." Vasta, who worked for Dr. Hepner from September 1986 through the date of the search warrant, "admitted that she had on occasion filled out false treatment notes on patients' charts" until May 1987 when she and some others refused to cooperate any longer. Meier said Dr. Hepner "asked her to fill out 'stacks and stacks' of phony treatment notes that patients had already signed." Van Houton, hired in December 1987 and still employed in May 1989, indicated Dr. Hepner "personally writes in the multiple treatment dates in the patients' charts and has the patient sign next to each date without the benefit of receiving the purported treatment." Cunningham, who worked for Dr. Hepner from June 1985 until June 1987, indicated Dr. Hepner "personally instructed [her] to enter random dates on patients' medical charts. She would write 'pages' of dates for patients to sign, being careful to leave room for phony treatment notes to be added later. [Dr. Hepner] told her to be sure that the random dates did not include weekends or holidays. In addition ..., [Dr. Hepner] had Miss Cunningham routinely add false treatments. [Dr. Hepner] reviewed all bills before they were sent out to insurance carriers or attorneys. Frequently, [Dr. Hepner] would return a bill to Miss Cunningham telling her to 'make the bill bigger.' She would then randomly add dates of treatment and false services. [Dr. Hepner] would then add those dates to the 'History Physical Evaluation Form.' " Workman, who worked for Dr. Hepner from January 1986 until September 1987, indicated that within one month of starting to work in the office, Dr. Hepner "began to have her write in treatment notes in patients' medical charts." At first, Dr. Hepner "would personally hand her a few charts at a time and would instruct her to write specific treatments in the charts, such as: Heat, Ultrasound and Massage (written as 'HUM' on the charts.) These notes would be written in just underneath the patients' signatures which were entered previously by the patients themselves next to random dates written in by [Dr. Hepner] and his employees. Miss Workman had seen [Dr. Hepner] and his employees writing in these random dates. [p] After a month or so of this, [Dr. Hepner] left her on her own to enter in random treatment notes onto patient charts that [Dr. Hepner] continued to give her on an ongoing basis. [Dr. Hepner] would often check her work and make comments such as 'use different colored pens' or 'use different styles of writing.' " Workman "stated that she wrote fake treatment notes in literally thousands of patients' medical charts."

Meier, Cunningham and Workman related instances...