## Facts

- Dr. Lorne Allan Semrau, a clinical psychologist, owned and ran companies providing follow-up psychiatric care to nursing home patients in Tennessee and Mississippi.
- The companies billed Medicare and Medicaid using CPT codes submitted through private intermediaries.
- The government alleged Semrau directed “upcoding” by billing certain follow-up visits under a higher-paying CPT code (e.g., 99312) when a lower-paying code (e.g., 90862) more accurately matched the services performed.
- Semrau had received audit warnings that the practice was improper upcoding but allegedly continued and instructed staff to change codes on claims.
- Semrau argued the CPT billing system was confusing and that he acted in good faith without intent to defraud.
- Before trial, Semrau sought to introduce fMRI-based lie-detection evidence through Dr. Steven Laken, associated with a company developing fMRI lie detection.
- Laken administered three fMRI tests to Semrau regarding intent; results were mixed (two “not deceptive,” one “deceptive”), and the proffered conclusion was that Semrau was “generally truthful.”
- The government did not have advance notice of the testing and did not observe or participate in question selection or protocol controls.
- The district court excluded the fMRI testimony under Federal Rule of Evidence 702 (Daubert reliability) and, alternatively, Rule 403 (prejudice and jury confusion).
- After a jury trial, Semrau was convicted on three counts of health care fraud under 18 U.S.C. § 1347 (and acquitted on other counts), sentenced to 18 months’ imprisonment, and ordered to pay restitution.

## Issues

1. Whether the district court abused its discretion by excluding expert testimony on fMRI lie detection under Federal Rule of Evidence 702 and Daubert.
2. Whether the district court properly excluded the fMRI lie-detection evidence under Federal Rule of Evidence 403.
3. Whether the trial evidence was sufficient to support convictions for health care fraud under 18 U.S.C. § 1347, including proof of knowing participation and intent to defraud.
4. Whether the jury instructions on health care fraud and good faith were legally adequate.

## Decision

- The Sixth Circuit affirmed the convictions and the evidentiary rulings.
- The court held the district court did not abuse its discretion in excluding fMRI lie-detection testimony under Rule 702 because the technology and methodology were not shown sufficiently reliable for criminal-trial use.
- The court further held that exclusion was independently proper under Rule 403 due to limited probative value and substantial risks of unfair prejudice and jury confusion.
- The court held the evidence permitted a rational jury to find Semrau knowingly engaged in a scheme to defraud through upcoding despite warnings and relevant billing guidance.
- The court rejected challenges to the jury instructions, concluding they adequately stated the elements of health care fraud and the good-faith defense.

## Legal Principles

- Under Rule 702 and Daubert, the proponent of expert scientific testimony must show sufficient reliability, including support from testing, peer review, known or potential error rate, standards, and general acceptance as applied to the intended forensic use.
- District courts have broad discretion to exclude scientific evidence where studies are limited, conducted under artificial conditions, and lack validation in real-world, high-stakes settings relevant to criminal adjudication.
- Even if expert evidence has some probative value, Rule 403 permits exclusion when risks of unfair prejudice, misleading the jury, or confusion substantially outweigh that value, including when a technique may be given undue weight due to an appearance of objectivity.
- For health care fraud under 18 U.S.C. § 1347, the government must prove a knowing execution (or attempt) of a scheme to defraud a health care benefit program; intent may be inferred from circumstantial evidence, including warnings and continued improper billing directives.
- Jury instructions are sufficient if, taken as a whole, they accurately state the law on the offense elements and fairly present the defendant’s good-faith theory.

## Conclusion

The Sixth Circuit upheld exclusion of fMRI-based credibility evidence offered to show lack of fraudulent intent, ruling the district court acted within its discretion under Rules 702 and 403, and it affirmed Semrau’s health care fraud convictions based on evidence of continued upcoding after audits and warnings and properly instructed deliberations on intent and good faith.


United States v. Semrau, 693 F.3d 510 (6th Cir. 2012)