Justia White Collar Crime Opinion Summaries

A nurse practitioner was accused of orchestrating a large-scale Medicare fraud scheme beginning in 2018. The evidence showed that she signed prescriptions for durable medical equipment and genetic testing that were medically unnecessary, often without examining patients or verifying their needs. She worked with telemarketers who cold-called Medicare beneficiaries, fabricated records, and sold prescriptions to medical providers who then billed Medicare. The practitioner received significant kickbacks for her participation and later recruited others to help. When government investigations targeted similar schemes, she attempted to cover her tracks but continued fraudulent conduct by billing for nonexistent telemedicine appointments, at times claiming over twenty-four hours of appointments in a single day. Ultimately, she received more than $1.66 million from these activities, and law enforcement discovered a written confession during a search of her residence.A grand jury indicted her on conspiracy, health care fraud, and false statement charges. Pretrial, the United States District Court for the Southern District of Florida denied her motion to exclude her written statement, finding the attorney-client privilege was waived. During jury selection, her request to strike a potentially biased juror for cause was denied, forcing her to use a peremptory challenge. At trial, disputes arose over the introduction of her inculpatory statement, and the court allocated more time for the government’s closing argument than for her defense. The jury found her guilty, and she was sentenced based on intended loss, not just actual billed amounts, despite her objections.The United States Court of Appeals for the Eleventh Circuit reviewed her claims, including the unequal allocation of closing argument time, a misstatement in oral jury instructions, jury selection issues, the handling of her statement, and sentencing calculations. The court held that although the district court abused its discretion by giving the government more closing argument time based solely on its burden of proof, this error was harmless due to overwhelming evidence of guilt. The court found no reversible error on the other grounds and affirmed her conviction. View "USA v. Hernandez" on Justia Law

The defendant, a physician specializing in obstetrics and gynecology in Illinois, owned and operated a medical practice where she engaged in fraudulent billing to health care benefit programs, including Medicaid and Tricare, from February 2018 to April 2022. She submitted claims for procedures and services that were either not provided or not medically necessary, including telemedicine visits, office visits, and tests. Some of these fraudulent claims were for endometrial ablations, a procedure with significant consequences for patients’ reproductive health.Facing a thirteen-count indictment for health care fraud, the defendant pleaded guilty to two counts pursuant to a plea agreement. These counts specifically alleged the submission of fraudulent claims to Tricare for a telemedicine visit and lab testing. The United States District Court for the Northern District of Illinois, Eastern Division, held a sentencing hearing, during which it considered testimony from patients, expert witnesses, and victim impact statements. The court found that the defendant performed medically unnecessary procedures without informed consent, and that her statements during the plea hearing and subsequent professional regulation proceedings indicated a failure to accept responsibility.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed three main issues: the district court’s denial of a reduction for acceptance of responsibility, application of a sentencing enhancement for reckless risk of serious bodily injury, and the substantive reasonableness of the 120-month sentence. The Seventh Circuit held that the district court did not clearly err in its factual findings, properly applied the sentence enhancement, and did not abuse its discretion in weighing aggravating and mitigating factors. The court affirmed the judgment of the district court, upholding the defendant’s sentence. View "USA v Ghosh" on Justia Law

Several third-party payors who covered prescriptions for Avandia, a diabetes medication manufactured by GlaxoSmithKline LLC, brought a putative class action alleging that the company misrepresented Avandia’s cardiovascular risks and benefits. They claimed these misrepresentations led health care providers to prescribe Avandia more frequently than less expensive alternatives, causing the payors to reimburse for prescriptions that otherwise would not have been issued. The plaintiffs sought class certification on behalf of entities that paid for Avandia prescriptions during a specified period.The United States District Court for the Eastern District of Pennsylvania previously reviewed this case. It denied GlaxoSmithKline’s motion to dismiss the plaintiffs’ Racketeer Influenced and Corrupt Organizations Act (RICO) claim, and the Third Circuit affirmed that denial. Later, the District Court granted summary judgment to GlaxoSmithKline on certain claims, but the Third Circuit reversed in part and remanded for further proceedings. Most recently, the District Court granted class certification, finding the class ascertainable and concluding that common issues would predominate regarding causation. It relied on evidence of a common scheme to deceive and statistical analyses showing marketing campaigns increased prescriptions.The United States Court of Appeals for the Third Circuit reviewed the District Court’s class certification. The Third Circuit held that while the class is ascertainable, the record does not yet demonstrate that common questions predominate on causation. The court clarified that plaintiffs in pharmaceutical fraud RICO class actions may use statistical evidence to prove causation, but such evidence must establish causation, not merely correlation. Because the plaintiffs’ statistical evidence failed to satisfy this standard, the Third Circuit vacated the District Court’s class certification and remanded for further fact-finding on predominance under the clarified standard. View "In re Avandia Marketing" on Justia Law

Three physicians—Evann Herrell, Mark Grenkoski, and Keri McFarlane—worked at Express Health Care, a clinic claiming to treat opioid addiction but operating as a pill mill. The clinic prescribed controlled substances in high volumes for cash, disregarding legitimate medical standards. Doctors spent minimal time with patients, ignored signs of diversion, and falsified records. EHC also submitted fraudulent Medicare claims by ordering unnecessary drug tests. McFarlane eventually cooperated with the FBI. Herrell, Grenkoski, and McFarlane were among the few who went to trial after most other clinic staff pleaded guilty.The United States District Court for the Eastern District of Kentucky conducted a 30-day jury trial, resulting in convictions for conspiracy to distribute controlled substances, falsifying medical records, wire and health care fraud, and money laundering. The defendants filed post-trial motions for acquittal and new trials, which the district court denied. Each defendant was sentenced to prison and filed timely appeals, raising challenges related to sufficiency of the evidence, evidentiary rulings, jury instructions, trial severance, and sentencing.The United States Court of Appeals for the Sixth Circuit reviewed the case. Applying the appropriate standards of review—including abuse of discretion for evidentiary and severance decisions and de novo review for legal questions—the court found sufficient evidence to support all convictions. It held the challenged evidentiary rulings were either correct or harmless. The jury instructions appropriately conveyed the required mens rea under Supreme Court precedent. The court determined that denial of severance for McFarlane was not an abuse of discretion and that cumulative error did not warrant reversal. Grenkoski’s challenge to sentencing correction was rejected due to jurisdictional limits. The Sixth Circuit affirmed all convictions and sentences. View "United States v. Herrell" on Justia Law

Several pharmacists in Michigan and Ohio operated independent pharmacies where they engaged in fraudulent billing practices. Rather than reversing insurance claims for prescriptions that were never picked up by patients, these pharmacists intentionally left the claims uncorrected, thereby receiving payments for medications that were not actually dispensed. They also increased the volume of such claims by waiving copays and substituting generic drugs for brand-name ones while billing for the more expensive medication. An audit by Qlarant, a government contractor, uncovered that the pharmacies had billed Medicare and Medicaid for far more medication than they had purchased, resulting in significant financial losses to insurers.The United States District Court for the Eastern District of Michigan tried four of the charged pharmacists after their co-defendants pleaded guilty. A jury convicted all four of conspiracy to commit healthcare and wire fraud, with additional healthcare fraud convictions for two defendants. The district court granted a motion for acquittal on some substantive counts, sentenced the defendants to terms ranging from 24 to 120 months, and imposed restitution obligations commensurate with their roles in the scheme. The defendants appealed, raising issues about the admission of expert testimony, evidentiary rulings, variance from the indictment, jury polling, sentencing enhancements, and restitution orders.The United States Court of Appeals for the Sixth Circuit reviewed the convictions and sentences. It held that the admission of the government’s expert testimony did not violate the Confrontation Clause, that the district court properly excluded certain defense evidence and did not err in qualifying the expert in front of the jury, and that the evidence supported a single overarching conspiracy. The court also found no error in the calculation of loss amounts, enhancements for sophisticated means, or the procedure and amount of restitution. The Sixth Circuit affirmed the judgments of the district court. View "United States v. Hamaed" on Justia Law

The case involves a Massachusetts psychiatrist who owned and operated a clinic providing treatment for addiction with imported drugs. The drugs included naltrexone and disulfiram in forms not approved by the FDA for use in the United States. The shipments were brought in from Hong Kong and falsely described on import documents as “plastic beads in plastic tubes,” with their value understated. The government charged the defendant with several crimes, including international money laundering, unlawful importation of merchandise, and receipt and delivery of misbranded drugs. The jury found the defendant guilty on some counts but acquitted him on others, including all counts against his wife.The United States District Court for the District of Massachusetts conducted the trial. After the jury’s verdict, the court sentenced the defendant to 36 months’ imprisonment on each count, to be served concurrently, and calculated the sentence using the fraud guideline in the United States Sentencing Guidelines. The defendant appealed, arguing that the district court erred in its evidentiary rulings, in admitting or excluding certain testimony, and in its application of the Sentencing Guidelines.The United States Court of Appeals for the First Circuit reviewed the case. It affirmed the defendant’s convictions, finding no reversible error in the district court’s evidentiary decisions or in its exclusion of expert testimony. The appellate court vacated the sentence for the misdemeanor misbranding conviction because it exceeded the statutory maximum. The court retained jurisdiction over the appeal and remanded to the district court for clarification regarding the application of the fraud guideline, specifically instructing the lower court to explain the basis for its use of that guideline and to address the impact of recent amendments related to acquitted conduct. View "US v. Shafa" on Justia Law

The defendant, a pharmacist and owner of a retail pharmacy, was implicated in a federal investigation after concerns arose about the prescribing patterns of a local physician whose patients often filled prescriptions at the defendant’s pharmacy. The government alleged that the defendant improperly filled prescriptions for controlled substances and fraudulently billed Medicaid and Medicare by instituting a policy requiring customers to fill three non-controlled prescriptions for every controlled substance prescription (the “3:1 Policy”), thereby submitting claims for prescriptions that were not medically necessary.Following indictment, the United States District Court for the District of Kansas presided over the defendant’s trial. The jury convicted the defendant on two counts related to the unlawful distribution of controlled substances and two counts of healthcare fraud. On direct appeal, the convictions were affirmed. After the Supreme Court clarified the intent requirement for drug distribution offenses in Ruan v. United States, the defendant filed a motion under 28 U.S.C. § 2255 claiming ineffective assistance of trial counsel for failing to object to a jury instruction about the scienter requirement for distributing controlled substances. The district court vacated the distribution counts but denied relief on the healthcare fraud counts, finding no prejudice as to those.The United States Court of Appeals for the Tenth Circuit reviewed whether the challenged jury instruction affected the convictions for healthcare fraud. The court held that the instruction at issue pertained only to the distribution counts and did not impact the fraud counts, which were based on separate conduct and legal standards. The court affirmed the district court’s denial of relief on the healthcare fraud counts, concluding that any error in the jury instruction did not prejudice the defendant regarding those convictions. View "United States v. Otuonye" on Justia Law

An orthopedic surgeon partnered with a medical supply businessman to form a durable medical equipment company. The company was formally listed under the surgeon’s mother’s name, even though she had no actual ownership or management role. The surgeon provided his mother’s personal information to his partner, who submitted Medicare enrollment forms on the company’s behalf. In January 2019, the company submitted a Medicare form notifying a change in business hours, but it falsely listed the mother as the sole owner and manager. The company ceased operations after Medicare began to suspect fraud.A federal grand jury in the Southern District of Florida indicted the surgeon on charges of conspiracy to defraud the United States and pay health care kickbacks, and making a false statement relating to health care matters. The jury acquitted him of conspiracy but convicted him of making a false statement. The United States District Court for the Southern District of Florida sentenced him to thirty-three months in prison, imposed three years of supervised release, and ordered him to pay $315,704.52 in restitution and to forfeit $125,000. The defendant challenged several aspects of his conviction and sentence, including venue, the sufficiency of the indictment, the sufficiency of the evidence, jury instructions, forfeiture, and restitution.The United States Court of Appeals for the Eleventh Circuit affirmed the district court’s rulings on all grounds except restitution. The court held that the evidence was sufficient to support the false statement conviction and found no error in the jury instructions or the forfeiture order. However, the court determined that the government had not shown by a preponderance of the evidence that the false statement actually caused the losses for which restitution was ordered. The restitution order was vacated and the case remanded for further proceedings on that issue. View "United States v. Alexander" on Justia Law

A healthcare provider operating as a covered entity under the federal Section 340B Drug Pricing Program purchased pharmaceuticals from several drug manufacturers. The provider alleged that these manufacturers engaged in a fraudulent scheme by knowingly charging prices for drugs that exceeded the statutory ceiling, resulting in inflated reimbursement claims submitted to Medicaid, Medicare, and other government-funded programs. The provider did not seek compensation for its own overcharges, but instead brought a qui tam action under the False Claims Act (FCA), seeking to recover losses on behalf of the federal and state governments.The United States District Court for the Central District of California dismissed the complaint with prejudice. It reasoned that, under the Supreme Court’s holding in Astra USA, Inc. v. Santa Clara County, Section 340B does not confer a private right of action for covered entities to sue drug manufacturers over pricing disputes; such claims must instead be pursued through the Section 340B Administrative Dispute Resolution process. The district court concluded that the provider’s FCA claims were essentially attempts to enforce Section 340B and should therefore be barred.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s dismissal. The appellate court held that the provider’s FCA claims were not barred by the absence of a private right of action under Section 340B or by the Astra decision, because the action was brought to remediate fraud against the government and not to recover personal losses or enforce Section 340B directly. The court further found that the provider had plausibly pleaded falsity under the FCA. The Ninth Circuit remanded the case for further proceedings. View "ADVENTIST HEALTH SYSTEM OF WEST V. ABBVIE INC." on Justia Law

A former employee of a pharmaceutical manufacturer brought a qui tam lawsuit under the False Claims Act, alleging that the company improperly calculated and reported its “Best Price” for certain drugs to the Centers for Medicare and Medicaid Services (CMS), as required under the Medicaid Rebate Statute. The plaintiff claimed that, during a period from 2005 to 2014, the company failed to aggregate multiple rebates and discounts given to different entities on the same drug, resulting in inflated “Best Price” reports and underpayment of rebates owed to Medicaid. The complaint asserted that the company was subjectively aware that CMS interpreted the statute to require aggregation of all such discounts, especially after the company’s communications with CMS during a 2006–2007 rulemaking process and the company’s subsequent internal audit.After the government and several states declined to intervene, the United States District Court for the District of Maryland dismissed the amended complaint, finding that, even under the subjective scienter standard established in United States ex rel. Schutte v. SuperValu Inc., the plaintiff had not plausibly alleged that the company acted with actual knowledge, deliberate ignorance, or reckless disregard as to the truth or falsity of its reports. The district court also suggested that ambiguity in the statute precluded a finding of falsity.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed the dismissal de novo. The Fourth Circuit held that the plaintiff’s allegations—including the company’s awareness of CMS’s interpretation of the rule, its targeted audit and compliance efforts, and its continued use of non-aggregated reporting—plausibly alleged the requisite subjective scienter under the False Claims Act. The court clarified that statutory ambiguity does not, at the pleading stage, negate scienter or falsity, and remanded for the district court to address other elements, including falsity, in the first instance. The Fourth Circuit reversed the dismissal and remanded for further proceedings. View "United States ex rel. Sheldon v. Allergan Sales, LLC" on Justia Law