Defendants Joseph Betro, Mohammed Zahoor, Tariq Omar, and Spilios Pappas engaged in a broad conspiracy to defraud Medicare by giving patients medically unnecessary back injections. To make matters worse, the defendants billed Medicare for injections their patients never received while they bribed them with opioid prescriptions. The defendants also supplemented their gains by ordering medically unnecessary urine-drug-testing panels and by referring patients to ancillary services like home healthcare in exchange for kickbacks.
Worried the DEA might learn of their scheme, the defendants also conspired to limit their working hours so their prescription practices would not stand out from other pain doctors. They were unsuccessful, however, and the DEA suspended their business, named Tri-County, from receiving future Medicare reimbursements. Undeterred, the defendants created a new company, called "Tri-State" so they could continue their operations. Over the duration of their conspiracy, the defendants fraudulently billed over $132 million to Medicare.
The DEA ultimately caught on to the defendants' scheme again, and a federal grand jury subsequently indicted them for conspiracy to commit healthcare fraud and wire fraud under 18 U.S.C. § 1349 and for committing healthcare fraud under 18 U.S.C. § 1347. Several of the co-conspirators pleaded guilty and agreed to testify against the defendants. A jury convicted the defendants on all counts.
The defendants subsequently appealed their convictions and sentences. The Sixth Circuit affirmed the judgment in a published opinion.
Pappas, Zahoor, and Betro challenged the sufficiency of the evidence supporting their convictions. The Court rejected their arguments, holding that sufficient evidence supported the jury's decision.
All four defendants argued that the Court should reverse their convictions for prosecutorial misconduct. Specifically, they asserted the prosecutor mislead the jury by: (a) incorrectly treating the defendants "as a collective"; (b) using the co-defendants' guilty pleas a substantive evidence by telling the jury "the only question" they had to consider was whether the defendants "were doing the same thing" as the co-defendants who pleaded guilty; and (c) referring to evidence that was unavailable to the jury. The Court disagreed with all three arguments. It held that the district court's jury instructions cured any confusion caused by referring the defendants collectively. In addition, while it admitted it was a "close issue," the Court held the prosecutor's references to the co-conspirators' plea agreements was insufficiently flagrant to reverse the district court's decision overruling the defendants' motions for a new trial. Finally, it held the prosecutor did not improperly bolster the testimony of the Government's witnesses by stating the Government could have called more patients. It found that the prosecutor was responding to challenges raised by the defendants during trial.
Omar challenged the district court's admission of evidence regarding his spending, arguing the risk of prejudice substantially outweighed its relevance pursuant to FRE 403, and that it was inadmissible propensity evidence under FRE 404(b). However, the Court held such evidence was relevant to prove Omar's motive for participating in the conspiracy.
Betro argued the district court erred in admitting testimony from three doctors who worked at Tri-County. Specifically, he asserted the district court permitted them to testify without qualifying them as experts pursuant to FRE 702 or by testing their reasoning using the Daubert factors. Finding that the doctors' testimony related to their roles in treating patients, the Court held the district court was not required to qualify them as experts.
After rejecting several other claims raised by the defendants, it next turned to the challenges raised by Pappas, Omar, and Zahoor to their sentences. First, the three defendants claimed the district court erred in calculating the conspiracy's intended loss as $108,900,000 -- the full amount billed by the coconspirators. Pappas argued the district court erred in calculating this figure because it did not make an explicit finding of "pervasive fraud." Noting the conspiracy involved a "shots-for-pills protocol" intended to maximize profits, it held the Government presented sufficient evidence to establish pervasive fraud by a preponderance of the evidence. The Court also rejected Pappas's argument that the district court erred by sentencing him based on the intended, not actual, loss.
Omar alleged the district court in refusing his request to reduce his loss amount for claims he billed for services not related to his fraud. The Court rejected this argument, noting he had produced no evidence to the district court that he provided legitimate services.
Finally, Zahoor argued the district court erred by assessing amounts billed by other doctors in the conspiracy to his loss calculation and by applying the two-level enhancement for an offense involving sophisticated means pursuant to U.S.S.G. § 2B1.1(b)(10)(C). The Court disagreed on both counts. It held the district court did not err in finding the amounts attributable to the other co-conspirators was reasonably foreseeable to Zahoor. It also affirmed the district court's application of the "sophisticated means" enhancement because the Government produced evidence the co-conspirators manipulated their shifts to stay under the DEA's radar, that they used special templates for patients designed to pass a Medicare audit, and that they created a new entity to continue the conspiracy after Medicare suspended the Tri-County clinic.
Zahoor challenged the substantive reasonableness of his 96-months sentence. Noting the district court varied downward from the bottom of the 262 to 372-month range recommended by the Guidelines, it held that his sentence was substantively reasonable.
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