United States District Court, C.D. Illinois, Springfield Division
December 9, 2004.
UNITED STATES OF AMERICA, Plaintiff,
SERGIUS A. RINALDI, Defendant.
The opinion of the court was delivered by: RICHARD MILLS, Senior District Judge
The Defendant's motion to withdraw his plea of guilty was
denied in February 2003.
He now seeks reconsideration of that ruling.
Reconsideration is denied.
The case will proceed to sentencing.
I. FACTUAL AND PROCEDURAL BACKGROUND
Defendant Sergius Rinaldi, D.M.D., a dentist specializing in
orthodontics, has practiced in Central Illinois for approximately
25 years, with offices located in Springfield and Edwardsville, Illinois.
His clients have included wards of the State of Illinois under
the protection of or in the custody of the Illinois
Department of Children and Family Services("DCFS"), as well as
those receiving Medicaid assistance from the Illinois Department
of Public Aid ("IDPA").
This case has a lengthy procedural history. On November 9,
2001, a thirteen-count indictment was returned against the
Defendant. On March 25, 2002, the Court accepted the Defendant's
pleas of guilty to mail fraud (Count 1) and obstruction of a
health care fraud investigation (Count 13). The Defendant has not
been sentenced in this case. On January 29, 2003, the Defendant
filed a motion to withdraw his guilty pleas. That motion was
denied by the Court on February 27, 2003. The Court reasoned that
the Defendant had presented no fair and just reason which would
require it to allow him to withdraw his guilty plea.
A. The Defendant's AADD Argument
On March 19, 2003, the Defendant filed a motion asking the
Court to reconsider the Order and Opinion denying his motion to
withdraw the guilty plea. While that motion was pending, the Defendant
appealed the Court's April 10, 2003 Order committing him to the
custody of the Attorney General for a mental evaluation. One of
the bases on which the Defendant initially sought to withdraw his
guilty plea is that he suffers from Adult Attention Deficit
Disorder ("AADD"), and that the disorder prevented him from
forming the requisite criminal intent at the time of the
offenses. In a report dated January 9, 2003, the Defendant was
diagnosed by Robert Chapman, M.D., MBA, as having AADD. Dr.
Chapman opined that the Defendant's capacity to form criminal
intent was diminished as a result of his AADD. In a report dated
January 28, 2004, George Athey, Jr., Ph.D., ABPP, also opined
that the Defendant is "not capable of formulating and carrying
out the intent to defraud with which he has been
The Court ordered an additional mental evaluation because of
the Defendant's argument that he was unable to form the requisite
criminal intent because of his AADD. On May 5, 2003, the
Defendant filed a notice of appeal from that Order directing him
to submit to a custodial mental examination. This case was stayed while the Defendant's
interlocutory appeal was pending. On December 1, 2003, the
Seventh Circuit concluded that this Court's Order for a custodial
mental evaluation of the Defendant was improper. However, the
Seventh Circuit determined that the Court "may invite the
defendant to consent to an outpatient examination." United
States v. Rinaldi, 351 F.3d 285, 289 (7th Cir. 2003).
Following the remand from the Seventh Circuit, the Defendant
was given one week to inform the Court whether he consented to an
outpatient examination. The Defendant did consent to such an
examination. Both the Defendant and the Government filed
suggestions regarding the examination procedure. In an Order
entered on March 11, 2004, the Court appointed Sue Moriearty,
Ph.D., ABPP, to perform a psychological evaluation of the
Defendant. Pursuant to the Government's request, the Court
appointed Phillip E. Bornstein, M.D., FAPA, as an additional
expert. The reports of Dr. Moriearty and Dr. Bornstein have been
received by the Court. The parties have filed supplements to
their briefs. B. The Defendant's Billing Argument
The Defendant also seeks to withdraw his guilty plea on the
basis that he was informed by the Government prior to the entry
of the plea that IDPA, the agency which administers the Medicaid
program in Illinois, only paid for orthodontic procedures on a
"fee for service" basis, requiring the practitioner to actually
perform the service that is billed. IDPA has established
procedures to compensate orthodontists and other medical
practitioners for services provided to Medicaid recipients. It
also has certain rules and regulations which were published for
providers in the Medicaid program. Dental providers were required
to submit invoice forms to a company which administered the
Medicaid program for dental services on behalf of IDPA. Prior to
March 1, 1999, the entity was Delta Dental; after that date, it
was Doral Dental. These companies, or carriers, had a contract
with IDPA to administer claims for dental or orthodontic
services. Claims for children who were wards of the State of
Illinois or were otherwise under the jurisdiction, custody, or
protection of the Illinois Department of Children and Family
Services ("DCFS") were submitted to IDPA through DCFS.
The Defendant contends that he committed no crime if a "bundled
fee" procedure, instead of fee for service, was a permissible
method of billing. He claims that if the proper billing procedure
for orthodontia was a fee for service method, then he would be
expected to see the client and provide a specific service on each
date billed. If the practice and billing procedure for
orthodontia is a bundled fee arrangement, however, then the bills
would be sent monthly for what was going to be a "flat fee" for a
specified number of months. These bills would be sent and the
money owed by the Medicaid program whether the patient was
actually in the office on that date or during the month.
The Defendant contends that prior to pleading guilty, he
believed that he had correctly billed Medicaid under this bundled
fee arrangement. In his motion to reconsider, the Defendant
alleges that he and counsel were convinced by the Government that
the Defense position regarding the propriety of the bundled fee
procedure was incorrect as a matter of law. Moreover, the
Defendant states he was informed by the Government that it would provide the Defense with the "law" demonstrating that
its position was correct. The Defendant alleges the Government
failed to provide the promised law confirming that IDPA paid on
the basis of a fee for service. He claims it was only after the
Government's failure to produce this information that he learned
that IDPA paid for services with a bundled fee arrangement. The
Defendant contends the bundled fee arrangement allowed the
orthodontist to bill monthly whether the service was actually
performed that month or in fact performed multiple times during a
The Defendant alleges that the plea is invalid both factually
and legally. Accordingly, he contends that he is seeking to
withdraw the pleas on the basis of actual innocence.
A. The Legal Standard
There is no absolute right to withdraw a guilty plea. See
United States v. Abdul, 75 F.3d 327, 329 (7th Cir. 1996). A
defendant may withdraw a guilty plea before a court imposes
sentence if he meets his burden of showing "a fair and just reason for requesting the withdrawal."
See United States v. Bennett, 332 F.3d 1094, 1099 (7th
Cir. 2003); Fed.R.Crim.P. 11(d)(2)(B). A defendant seeking to
withdraw a guilty plea faces an "uphill battle" after a thorough
Rule 11 colloquy. See Bennett, 332 F.3d at 1099.
B. The Defendant's AADD Diagnosis
The Defendant alleges it was not until well into the course of
this litigation that the Defense team discovered his AADD
problem. It was following a meeting with the Defendant when his
attorneys, the investigator, and the Defense expert discussed the
problems each encountered with the Defendant's lack of
organization and ability to logically relate. A decision was then
made to have the Defendant evaluated by a forensic psychiatrist.
Based on Dr. Chapman's diagnosis of AADD, the Defendant contends
that the Government cannot prove beyond a reasonable doubt that
he possessed the requisite intent to commit the offenses to which
he pled guilty.
The Defendant alleges the charges at issue are specific intent
crimes and that inadvertent, negligent, or reckless actions fail
to prove specific intent. Dr. Chapman found that an alternative explanation of the
Defendant's behavior that the Government has identified as
knowing criminal conduct is that it results from his "limited
capacity to organize and follow through driven by impaired
impulse control." Dr. Chapman opined that this limited capacity,
if true, would explain hiding documents and altering records. He
further determined that a diminished capacity to form criminal
intent would apply to all of the charges and allegations of which
he is aware. Significantly however, Dr. Chapman found that the
Defendant's limitations associated with AADD "did not rise to the
level of incompetence to plead, stand trial, or proceed."
Moreover, Dr. Chapman concluded that there is no further
"clinical evidence of any mental condition that substantially
impaired [the Defendant's] competence" during the relevant
The Government notes that neither Dr. Moriearty nor Dr.
Bornstein has found any cognitive dysfunction with the Defendant.
Dr. Moriearty found that the Defendant did not clearly meet the
criteria for AADD or Malingering.*fn2 She opined that he functions within the
average range when compared to other men nearing the age of 70.
Dr. Moriearty stated it would have been unlikely that she would
have probed regarding an AADD diagnosis without the advance
notice of that issue. She further noted that the Defendant on
several occasions gave answers about AADD symptoms which were "a
bit too on target and revealed a perhaps suspiciously familiar
acquaintance with [AADD] diagnostic criteria." However, Dr.
Moriearty emphasized that most adults have some symptoms which
are consistent with AADD, but not to the extent that a formal
diagnosis is warranted.
According to Dr. Moriearty, the presence of six or more out of
eight symptoms of inattention that have persisted for at least
six months to a degree that is "maladaptive and inconsistent with
development level" supports a diagnosis of AADD.*fn3 The presence of six or
more symptoms of hyperactivity-impulsivity that have persisted at
that level is also consistent with such a diagnosis.*fn4 Dr.
Moriearty determined that some of the Defendant's self-reported
symptoms are probably true, but those symptoms are not
sufficiently severe to suggest that he currently meets the
criteria for an AADD diagnosis.*fn5 Dr. Moriearty also considered whether the Defendant was
malingering, or intentionally producing false or grossly
exaggerated symptoms. She noted that because some exaggeration of
information is expected in a legal context, there are those who
believe that the AADD symptoms are too easily met. Dr. Moriearty
determined that while there appeared to be some discrepancy
between the Defendant's symptoms and her findings, it was not to
the extent which would support a diagnosis of
malingering.*fn6 Accordingly, she found that the Defendant
did not meet the two criteria necessary for a DSM-IV diagnosis of
Dr. Moriearty opined that the Defendant's symptoms, even as described and perhaps exaggerated by him, would not render him
incompetent when applied to most legal standards. She further
determined that he functions within the normal range on most
tasks. Accordingly, Dr. Moriearty concluded that the Defendant
does not clearly meet the criteria for AADD or malingering.
Dr. Bornstein also examined the Defendant to determine whether
he suffers from any disorder which would interfere with his
competence to: (1) stand trial; (2) enter into a plea
negotiation; or (3) form the criminal intent to defraud. He
determined that the Defendant has narcissistic personality
disorder, which is defined as "[a] pervasive pattern of
grandiosity (in fantasy or behavior), need for admiration, and
lack of empathy, beginning by early adulthood and present in a
variety of contexts."*fn7 However, Dr. Bornstein stated that this personality disorder does not interfere with the
Defendant's ability to form criminal intent to defraud, to
cooperate fully with his attorney on his behalf, or to enter into
plea negotiations or to plead guilty. Dr. Bornstein found that
there is no evidence of any psychiatric disturbance which would
interfere with the Defendant's ability to form the criminal
intent to defraud or to understand the charges against him and
cooperate fully and completely in his defense.
Dr. Bornstein further noted that during the relevant times, the
Defendant was able to design and build a building for his own
use. Moreover, the Defendant was able to practice orthodontia in
two offices in a manner which he describes as "excellent and
above average." Dr. Bornstein determined that the Defendant's
intellectual capacity is clearly above average.
Dr. Bornstein further found that if the Defendant does have a
mild cognitive disorder at this point in his life, it would more
likely be due to some form of mild early dementia such as
Alzheimer's. Significantly, neither a mild cognitive disorder nor
AADD would interfere substantially with the Defendant's intellectual functioning. Dr. Bornstein
determined, therefore, that these disorders are of no legal or
clinical significance. Accordingly, he concluded that the
Defendant is not precluded from forming the criminal intent to
defraud because of any disorder.
The Defendant contends that each of his arguments involves a
claim of actual innocence pursuant to United States v.
Gomez-Orozco, 188 F.3d 422 (7th Cir. 1999), and he should be
allowed to withdraw his guilty plea on that basis. In
Gomez-Orozco, the Seventh Circuit considered the motion to
withdraw a guilty plea to illegal re-entry by an alien.
Gomez-Orozco, 188 F.3d at 424. The Seventh Circuit concluded
that because there was substantial evidence tending to show that
the defendant was an American citizen, his claim of legal
innocence presented a fair and just reason as to why he should be
allowed to withdraw his guilty plea. See id. at 427. For the
reasons that follow, the Court concludes that the Defendant's
AADD diagnosis did not prevent him from forming criminal intent.
Accordingly, he has not presented a claim of actual innocence as
to that issue.
After carefully considering the reports which have been
submitted and the arguments of the parties, the Court is unable to conclude
that the Defendant lacked the requisite intent, because of AADD
or any other disorder, to commit the crimes of mail fraud or
obstruction of a health care fraud investigation. The Court
agrees with the conclusions of Dr. Moriearty and Dr. Bornstein
regarding the Defendant's competency and ability to form criminal
intent. The Court finds that it is particularly significant the
Defendant was able to perform his tasks as an orthodontist in a
manner that was, in his own words, "excellent and above average."
As Helen P. Appleton, PhD.,*fn8 observed, "It is incongruous
that [the Defendant] could be so disabled by ADD or a Cognitive
Disorder that he would be unable to form the intent to defraud,
complete his paperwork, or bill properly while he was able to
perform the full range of tasks required of an orthodontist." The
Court finds this argument made by Dr. Appleton and others to be
The Court also observes that some of the symptoms associated
with AADD, as suggested by Dr. Moriearty, are quite easily met. The
Court does not suggest that the Defendant was malingering.
However, it is evident from human experience that several of the
symptoms of AADD are present in a relatively substantial
percentage of the population. The Court declines to hold that the
presence of even a large number of these symptoms precludes an
individual from forming the requisite intent to defraud.
Based on the foregoing, the Court concludes that the
Defendant's alleged AADD did not interfere with his ability to
form criminal intent. Accordingly, the Defendant's motion to
reconsider on that basis the Order and Opinion denying the motion
to withdraw his guilty plea is DENIED.
C. The Defendant's Billing Argument
The Defendant also seeks to withdraw his guilty plea on the
basis that the bundled fee procedure he used in billing Medicaid
is not unlawful. The Court's previous Order and Opinion denying
the Defendant's motion to withdraw his guilty plea was based in
part on its conclusion that the Defendant was aware of the
information on which he based his argument at the time of the
plea. The Defendant notes that IDPA, "by rule, shall determine the quantity and quality of and the rate of
reimbursement for the medical assistance for which payment will
be authorized . . . which may include . . . dental services."
See 305 ILCS 5/5-5(10). The Defendant further alleges that the
Illinois rules for dental services covered by IDPA do not address
the quantity of follow-up visits required for orthodontics. See
89 Ill. Admin. Code §§ 140.420, 140.421.
In support of his motion to reconsider, the Defendant alleges
that prior to the entry of the plea of guilty, he believed he had
correctly billed Medicaid under a bundled fee arrangement. The
Defendant's attorney raised that issue with counsel for the
Government. The Defendant contends, however, that he was
convinced by the Government that the Defense position was
incorrect as a matter of law, and that the Government would
provide the Defense with legal authority showing this to be the
case. The Defendant asserts the Government has never provided the
promised documentation that this case involved a fee for service.
Moreover, he alleges the Defense was actively investigating the
propriety of the bundled fee system; this investigation was
abandoned based on the Government's representation that it would provide the law supporting the
indictment. The Defendant contends it was only after the
Government failed to present the promised law that he took
additional steps to evaluate the merits of the bundling claim.
The Defendant alleges that following the Government's failure
to provide support that IDPA paid on the basis of a fee for
service, he learned that it paid for services with a bundled fee
arrangement. Accordingly, an orthodontist was allowed to bill
monthly whether the service was actually performed that month or
performed multiple times during a given month. The Defendant
asserts that the Medicaid regulations create a bundled fee
system. Consequently, the dates of service would not be material,
and the claims submitted to IDPA for reimbursement cannot sustain
a fraud conviction, given that they do not convey a material
false statement. The Defendant asserts this is a claim of actual
innocence pursuant to Gomez-Orozco, 188 F.3d at 427.
Relying on United States v. Mead, 533 U.S. 218, 234,
121 S. Ct. 2164, 2175 (2001), the Defendant asserts he cannot be found
guilty of a fraud count based on an agency interpretation of regulations or
statutes. If a policy has not been subjected to formal rule
making (such as agency rulings, interpretations contained in
policy statements, agency manuals, and enforcement guidelines),
it does not have the force of law. The Defendant's argument as to
the billing procedure is based on a policy statement contained in
the Dental Policy Clarification which was produced in discovery:
Question 4: If the monies are not distributed fee for
service, and the provider receives a prorated dollar
amount as above, does the patient have to be seen
Response: The dentist can bill the monthly
adjustments code #08670 whether he sees the patient
or not. Monthly payment will be made for approved
treatment as long as the client remains eligible and
is in active treatment. Since these cases are
severely medically necessary cases with excessive
disfunctional [sic] problems, the dentist will
usually have to see the client on a monthly basis
just to adjust the braces as the teeth become aiigned
In support of his argument that he should be allowed to withdraw
his guilty plea, the Defendant contends the Defense team has
never received the law contradicting the policy statement noted
above, which he alleges allows billing based on a bundled fee
arrangement. The Defendant asserts the Government has provided only the opinions of various individuals,
and not a regulation or statute.
In a letter to the Defendant's attorney regarding that
memorandum, counsel for the Government stated in pertinent part:
[T]he Illinois Department of Public Aid has disavowed
this memorandum and clarified that in all instances,
IDPA would deny payment for any claim for orthodontia
service when a child is not physically present to
receive the service. The `final' word on that subject
came from Steven Bradley, the head of the Bureau of
Comprehensive Health Services for IDPA. According to
Mr. Bradley, that has always been the policy of IDPA
and the author or page 1026 is simply wrong.
The letter containing the above passage is dated March 5, 2002;
the Defendant's plea of guilty was entered before the magistrate
judge on the same day and accepted by this Court approximately
three weeks later. A letter dated June 21, 2002 from Government
counsel to the Defendant's attorney provides in pertinent part:
I have enclosed section 103 of the IDPA provider
manual which specifically provides that `services and
supplies for which payment will not be made include,
but are not limited to . . . unkept appointments.'
As you know, we disclosed a memorandum from a person
at IDPA suggesting a contrary policy as it regards
dentists (bates number 1026) through the discovery process on or
about February 21, 2002. We also discussed this
specific document prior to the plea hearing on March
5, 2002, which resulted in my writing a letter dated
that day clarifying what I understand the evidence
would show. In that letter, it is stated that we
received final word on the IDPA policy from Steven
Bradley, the head of the Bureau of Comprehensive
Health Services. I have asked Investigator Gilvey to
determine if the word from Bradley was oral, or in
writing. I will let you know when he gets back to me.
It is clear from the correspondence between the parties that the
issue regarding the method by which IDPA paid was discussed by
the parties contemporaneously with the entry of the plea.
The Defendant next contends that a charge of Medicaid fraud
cannot be based on the violation of an informal policy that has
not been formally adopted as a regulation. The Defendant claims
this policy requiring patients to be physically present each
month for the orthodontist to be eligible for the remaining
payments exists only in correspondence from the U.S. Attorney's
Office to counsel for the Defendant. Accordingly, it cannot form
the basis for his guilty plea. The Defendant asserts that at the
very least, his interpretation of what the rules required was a
The Government disputes the Defendant's assertion it had
informed him that it would provide counsel with some "law" demonstrating
that IDPA employed a "fee for service" procedure. Rather, its
letters to the Defendant's counsel were intended to confirm
previous conversations and provide information that had been
requested. The Government alleges the Defendant has produced no
correspondence wherein he demanded, or the Government promised,
any law in support of the plea. The Government also contends the
Defendant has argued alternatively that he learned he was
operating under a bundled fee billing procedure both before and
after the entry of his guilty plea.
The Government also notes that the Defendant was indicted for,
and pled guilty to, a massive scheme to defraud IDPA, wherein he
submitted claims for orthodontic services provided to children
which he did not actually provide. The Government claims that the
indictment alleges a broad scheme which occurred over a
seven-year period, and only certain examples in which checks were
mailed to the Defendant in furtherance of the scheme are
included. The Government further asserts that because the
requirement that the mail need only be "in furtherance" of the
scheme to defraud is easily satisfied, it has not listed every fraudulent
check or every fraudulent claim.
After carefully considering the argument of the parties and the
entire record, the Court rejects the Defendant's argument that he
was permitted to bill Medicaid for services not performed
pursuant to a bundled fee arrangement. It appears that the only
basis for this argument is a policy statement found in a Dental
Policy Clarification that has been disavowed, and of which the
Defendant was aware at the time of the entry of the plea. The
Defendant's argument is contradicted by the terms of the general
handbook which was provided to individuals such as the Defendant
who participated in the Illinois Medical Assistance Program. And
the Defendant signed a document agreeing to comply with the terms
of that program. This included an agreement "to bill the
Department as stipulated in the applicable Medical Assistance
Program Handbook(s)." The handbook provides that dental services
are covered. Moreover, it provides that unkept appointments are
not covered. Accordingly, there would be no payment from IDPA
unless the Defendant provided a service. The Defendant argues that the general principles noted in the
previous paragraph apply only to those who practice medicine, and
not those who practice dentistry. While most of the chapters in
the handbook are divided according to the provider's practice,
the first section covers "[g]eneral policy and procedures
applicable to all participating providers." The basis of the
Defendant's argument, therefore, that these principles did not
apply to him, is unclear. The terms forbidding payment for unkept
appointments clearly apply to all providers.
It is also worth noting that there does not appear to be any
support in the record for the Defendant's assertion that counsel
for the Government promised to provide his attorney with "law"
demonstrating that IDPA operated under a fee for service
procedure. The Government alleges that the Defendant's assertion
is "recklessly false and is completely contradicted by the
correspondence he attached to the original motion." After
carefully reviewing the documents attached to the Defendant's
motion to withdraw and other portions of the record, the Court
agrees that there do not appear to be any documents containing a
promise from the Government to supply the Defendant with legal authority concerning the billing issue.
Perhaps the closest thing to such a promise is a passage from the
June 21, 2002 letter, wherein counsel for the Government stated
that he will inform the Defendant's attorney whether the word
from Steven Bradley regarding the IDPA policy was oral or in
writing. In the motion to withdraw his guilty plea, the Defendant
states that he heard nothing more from the Government on that
issue. However, this was not a promise to provide him with law
supporting the indictment. There does not appear to be any
evidence in the record supporting the Defendant's assertion that
the Government promised to provide him with law demonstrating
that IDPA utilized a fee for service procedure.
For the reasons herein given, it is clear that the IDPA does
not pay for services with a bundled fee arrangement. Moreover,
because the only statement indicating that it did pay in such a
manner was provided to the Defendant before the entry of his
guilty plea, there has been no change in circumstances which
would justify allowing the Defendant to withdraw his guilty plea. In its initial Order and Opinion denying the Defendant's motion
to withdraw his guilty plea, the Court found that the Defendant
had not presented a fair and just reason to justify allowing him
to withdraw his guilty plea. Nor has the Defendant's motion to
reconsider provided the Court with a basis to recede from its
prior ruling. None of the Defendant's arguments involve a claim
of actual innocence. Accordingly, the Court will DENY the
Defendant's motion to reconsider the Order and Opinion denying
his guilty plea.
The Court finds no reason to depart from its earlier ruling
denying the Defendant's motion to withdraw his guilty plea.
Accordingly, the motion to reconsider that ruling is DENIED. This
case will proceed to sentencing.
Ergo, the Defendant's motion for reconsideration of the Order
and Opinion denying the motion to withdraw his plea of guilty is
DENIED. The Defendant's sentencing hearing is hereby scheduled
for April 25, 2005 at 2:30 p.m.