The United States Court of Appeals for the Seventh Circuit has upheld the conviction of Carrie Musselman, a chiropractor from Illinois, for healthcare fraud. The court's decision, issued on August 27, 2026, affirms a jury's verdict that found Musselman guilty of fraudulently billing Medicare for medical services. This ruling impacts healthcare providers and reinforces the legal consequences of fraudulent billing practices.
Musselman, who owned and operated a chiropractic practice, expanded her business to include non-chiropractic medical services. Following a federal investigation, she was charged with multiple counts of healthcare fraud, including submitting false claims to Medicare from May 2016 to November 2018. The case was brought to the Seventh Circuit after Musselman appealed her conviction, arguing that the trial court had erred in its handling of jury instructions and evidence.
The background of the case reveals that Musselman operated Preferred Care Chiropractic and later Preferred Care Medical Center. The fraudulent billing practices included misclassifying services provided by nurse practitioners and physician assistants under physicians' names, incorrectly billing a pain-relieving device under a code meant for surgically implanted devices, and billing for allergy drops under a code intended for injections. A jury found her guilty of healthcare fraud and five counts of wire fraud after a 13-day trial.
The court's ruling addressed two main issues raised by Musselman. The first issue involved a document found in the jury room that the foreperson had created based on online articles to assist with deliberations. The second issue was related to the so-called “ostrich” instruction, which informed the jury that they could find Musselman acted knowingly if they believed she deliberately avoided learning about the improper billing practices. The Seventh Circuit, led by Judge Maldonado, affirmed the lower court's decisions regarding both issues.
In its opinion, the court stated, “The district court reasonably concluded that the juror’s outside research did not have a prejudicial effect on the verdict.” The court also supported the use of the ostrich instruction, emphasizing that the evidence suggested Musselman had engaged in behavior that could be interpreted as an attempt to shield herself from confirmation of her fraudulent activities.
The impact of this ruling extends beyond Musselman herself. It serves as a warning to healthcare providers about the legal ramifications of fraudulent billing practices. The court's affirmation of the ostrich instruction also clarifies the standards for establishing knowledge in fraud cases, indicating that a defendant cannot escape liability simply by avoiding the truth.
As for what's next, Musselman has the option to appeal the Seventh Circuit's decision to the U.S. Supreme Court. However, it remains unclear whether she will pursue this route. The case underscores the importance of compliance with Medicare billing regulations and the potential consequences of fraudulent practices in the healthcare industry.