The Seventh Circuit Court of Appeals has upheld the conviction of Carrie Musselman, a chiropractor from Illinois, for healthcare fraud. This decision, issued on August 27, 2026, affects healthcare providers and sets a precedent for how billing practices are scrutinized within the medical community.
Musselman was found guilty of fraudulently billing Medicare for medical services that were either misclassified or inaccurately attributed to unauthorized providers. The case is significant because it highlights the legal consequences of improper billing practices, which can lead to substantial financial penalties and prison time for healthcare professionals.
Background
The case against Carrie Musselman originated from a federal grand jury indictment in September 2022. The indictment charged her with engaging in a scheme to defraud Medicare from May 2016 to November 2018, including ten counts of wire fraud and two counts of obstructing a federal audit. The allegations centered on her chiropractic practice, Preferred Care Chiropractic, which she expanded to include non-chiropractic medical services through Preferred Care Medical Center.
During the trial, it was revealed that Musselman had engaged in various fraudulent billing practices. These included billing services provided by nurse practitioners and physician assistants under physicians’ names to receive higher reimbursements. Additionally, she billed an adhesive pain-relieving device under a code intended for surgically implanted devices and incorrectly billed allergy drops under a code meant for allergy shots.
The trial lasted 13 days, culminating in a jury verdict in February 2025. Musselman was convicted of healthcare fraud and five counts of wire fraud, while being acquitted on five other wire fraud charges and two obstruction charges. Following the trial, the district court sentenced her to 20 months in prison and ordered her to pay over $2 million in restitution.
The Ruling
The Seventh Circuit, led by Judge Maldonado, reviewed Musselman’s appeal, which focused on two primary issues. The first issue was the discovery of a document created by the jury foreperson that included outside research regarding jury deliberations. The second issue was the inclusion of an “ostrich” instruction, which informed the jury that they could find Musselman guilty if they believed she deliberately avoided learning about the fraudulent billing practices.
The court ruled that the document found in the jury room did not have a prejudicial effect on the verdict. The judges noted, “The district court reasonably concluded that the juror’s outside research did not have a prejudicial effect on the verdict.” The court emphasized that the foreperson’s notes were not shared with the other jurors and did not influence their deliberations.
Regarding the ostrich instruction, the court found sufficient evidence to support its inclusion. The judges stated, “The evidence supported the use of the ostrich instruction,” affirming that Musselman’s actions demonstrated a deliberate effort to avoid knowledge of the fraudulent activities occurring in her practice.
Impact
This ruling has significant implications for healthcare providers and their billing practices. It reinforces the legal standards around healthcare fraud and the responsibilities of medical professionals to ensure accurate billing. The decision serves as a warning to providers that ignorance of fraudulent activities within their practices will not absolve them of responsibility.
Moreover, the ruling may influence how future cases of healthcare fraud are prosecuted. It highlights the importance of maintaining ethical billing practices and the potential consequences of engaging in fraudulent behavior. As healthcare systems continue to face scrutiny over billing practices, this case underscores the need for providers to be vigilant in their compliance with Medicare regulations.
What's Next
It is unclear if Musselman will seek further appeal options. The Seventh Circuit ruling may stand as a precedent for similar cases in the future, but it is possible that other legal avenues could be explored in the coming months.