Department of Justice Updates United States Attorneys’ Manual

After a review ordered by Deputy Attorney General Rod Rosenstein, the Department of Justice has revamped and updated the United States Attorneys’ Manual.  This is the first comprehensive update of the Manual in 20 years.  The Manual is now titled the “Justice Manual.”

The most notable change for that will effect federal criminal practitioners are the changes to the “Principles of Federal Prosecution” section.  The section has been expanded and the language updated.  The updates include language that pushes prosecutors to pursue charges that carry the most substantial penalties.

A few other notable changes

  • The subsection “Need for Free Press and Public Trial” has been removed. The language was replaced with text about balancing “the right of the public to have access to information about the Department of Justice” against other factors.
  • In the section about voting rights, there are no more references to redistricting or racial gerrymandering. There are still references regarding bans on practices such as literacy tests, poll taxes, and measures that deny voting rights based on race.
  • The manual revision also cut language discouraging unnecessary charges, as well as Alford pleas.

The new Manual can be found HERE.

Federal agencies assisting in a criminal investigation ARE part of the prosecution team.

A big victory for the defense in the prosecution of the founder and former top executives at opioid manufacturer Insys Therapeutics.  A magistrate judge assigned to the case ordered federal prosecutors in the United States Attorney’s Office in Boston to turn over documents in the hands of ten different federal agencies’ that could potentially help the company’s former executives fight racketeering and fraud charges.

In June, the defense filed a Motion for an Order Requiring Government to Produce Exculpatory Materials in the Possession of Sister United States Attorney’s Offices and Federal Agencies.  The defense’s motion noted that the same day the Superseding Indictment was unsealed, the United States Attorney’s Office issued a press release acknowledging the joint effort and assistance of six other United States Attorney’s Offices and ten federal agencies that were part of the investigatory team.  However, when pressed by the defense for materials in the hands of the other United States Attorney’s Offices and the federal agencies, the prosecutors claimed those offices and federal agencies were not part of the “prosecution team”.

In its Motion, the defense gave examples of potentially exculpatory materials in the hands of the other ten agencies.  The examples included “any denials by Insys sales representatives or Insys physicians to any federal agent that speaker program payments were intended to be kickbacks”, “DEA communications that opioid products were not suspicious”, and “DEA or FDA communications acknowledging that off-label use of immediate release fentanyl products, such as Subsys, is medically and scientifically legitimate.”

In Opposition, the thrust of the Government’s argument was that the other offices and the other federal agencies were not part of the prosecution team and as a result its Brady obligations did not extend to those offices.  The Government also argued that Defendants didn’t establish that the information sought is material.

The magistrate judge sided with the defense.  The judge ordered prosecutors to hand over any documents in the hands of the 10 federal agencies’ that were part of the investigation that could potentially help the company’s former executives fight racketeering and fraud charges.  The motion as to the United States Attorney’s Offices was moot because those offices had alerted the court that they did not have any documents.

The Government routinely makes similar arguments related to CMS data in health care fraud prosecutions.  Hopefully, this decision paves the way for the release of more information to criminal defendants.

On another note, not sure why the Government wouldn’t want to turn over the information.  The Government should be transparent in its production of evidence, especially exculpatory evidence to defendants.


Civil Injunction to Prohibit Doctors from Prescribing Opioids

Temporary restraining orders—a first-of-its-kind against doctors allegedly prescribing opioids illegally under the Controlled Substances Act (CSA)—were served this week that forbid Michael P. Tricaso, D.O., of Akron, and Gregory J. Gerber, M.D., of Sandusky, Ohio from writing prescriptions.  The Justice Department filed two separate complaints to bar two Ohio doctors from prescribing medications and allege that an investigation revealed the doctors “recklessly and unnecessarily distributed painkillers and other drugs.”  Attorney General Jeff Sessions even made the trip to Cleveland, Ohio to make the announcement.  You can read the press release HERE for more information.

The motions for temporary restraining orders point to the Government’s authority under the Controlled Substance Act for the Attorney General to commence a civil action for appropriate declaratory or injunctive relief relating to any violation of 21 U.S.C. 843(f).

According to the filings, Dr. Tricaso was targeted by a confidential source working for the DEA at a gym.  The confidential source purchased various prescription drugs from Dr. Tricaso, including steroids and Percocet.  The transactions were recorded and Dr. Tricaso is alleged to have made some unfavorable comments including that he would only give the confidential source a prescription for 20 Percocet because that number is “under the radar.”

The allegations against Dr. Gerber are much more extensive, but defensible.  Dr. Gerber was a solo practitioner operating a pain clinic.  The Government claims that Dr. Gerber illegally issued hundreds of prescriptions that exceeded the amount for “legitimate medical purposes.”  As part of its investigation, the Government sent an undercover agent to Dr. Gerber’s offices six times.  The Government alleges that the agent was prescribed by Dr. Gerber a combination of controlled substances, including Oxycodone, with minimal medical examination and no complaints of pain.  The Government also notes that Dr. Gerber was connected to the Insys case and received $175,000 in speaker fees for promoting Subsys.

The motion for temporary restraining order directed at Dr. Gerber attaches an expert medical opinion, patient affidavit, and an affidavit from an agent.  The expert’s affidavit references a review of claims data and medical records.  The expert opines that the prescriptions exceed normal levels.

Also curious is that the Government also attaches as evidence of Dr. Gerber’s illegitimate practices correspondence from Walmart advising that, after an internal review, it will no longer fill prescriptions written by Dr. Gerber.

It will be interesting to watch these cases and see how it develops.



Sixth Circuit rules trial judge must use intended loss in calculating loss figure.

On Friday, the Sixth Circuit in the cases of United States v. Mehmood and United States v. Ahmadani reversed the sentences of two owners of home health care companies. The Sixth Circuit reasoned that the trial judge incorrectly applied the law in calculating the loss figure for sentencing purposes by assigning the loss figure as the gross billings to Medicare.

The Opinion states that “[i]n a case in which the defendant is convicted of a Federal health care offense involving a Government health care program, the aggregate dollar amount of fraudulent bills submitted to the Government health care program shall constitute prima facie evidence of the amount of the intended loss…”

The court noted its agreement with United States v Medina, 485 F.3d 1291, 1304 (11th Cir. 2007) (“Even though [the government’s Medicare witness] testified that Medicare would not pay a claim if they knew parties were receiving kickbacks, this is not sufficient to establish a loss to Medicare.”). Specifically, the court rejected the notion that all claims were illegitimate due to false representations about intent to follow Medicare’s anti-kickback rules.

The Opinion further states that the trial court should have taken into consideration evidence that legitimate services were provided, particularly the testimony of multiple therapists, nurses, and counselors, when calculating loss.  The Court specifically concluded that “to calculate loss for sentencing purposes, the value of any legitimate claims, if established, must be offset against the aggregate billings.”

This opinion could have a big impact on health care fraud cases. It could have the effect of narrowing the focus in health fraud prosecutions to the amount of kickbacks paid instead of gross billings. The difference could mean millions in most cases. The narrowed focus will not only reduce sentences, it will reduce restitution and forfeiture amounts.


HIPAA Prosecution

Yes, you can be prosecuted for a violation of the Health Insurance Portability and Accountability Act.

The Department of Justice threatened to bring more prosecutions for HIPAA violations two years ago.  They were serious.

Last week, the United States Attorney’s Office in Western District of Pennsylvania brought charges against Linda Sue Kalina for illegally obtaining the medical records of more than 100 patients in violation of HIPAA.

Kalina worked as a patient information coordinator at a hospital.  In her capacity as a patient information coordinator, Kalina was authorized to access patient health information.  However, Kalina was not permitted to obtain the electronic records.

The Indictment states that Kalina references four separate occasions when Kalina disclosed the medical information of three patients.

The Indictment charges six counts.  Kalina’s arraignment is pending.

Doctor going to trial Monday on a pill mill case. (UPDATE)

On February 6, 2018, Dr. Andres Mencia was arrested at his clinic on federal charges of Conspiracy to Dispense Controlled Substances, Conspiracy to Commit Health Care Fraud and Wire Fraud, and Money Laundering. The Government alleges that Dr. Mencia and his medical assistants were prescribing high amounts of opioids and other addictive drugs. The Government alleges that Dr. Mencia was prescribing opioids and other drugs in exchange for cash payments.

The prosecution was the result of an undercover investigation involving agents posing as patients. The defense has argued in pleadings that Dr. Mencia is rarely seen on the surveillance video. The defense has also argued that the undercover recordings rarely include Dr. Mencia. The defense also argues that Dr. Mencia’s medical assistants were meeting with the patients and seen pocketing money on video.  The medical assistants quickly pled guilty and will testify against Dr. Mencia.

As if defending a pill mill case is not hard enough, forty-six days before the scheduled trial, the Government filed its Fifth Superseding Indictment adding a charge of structuring to avoid reporting requirements. And just 13 calendar days before the trial the Government noticed seven experts for trial. The expert disclosures reveal that the Government will present evidence of overdose deaths, which seem extremely prejudicial. The defense promptly filed a motion to exclude the late disclosed experts, which was denied without prejudice today.

Given the additional charges and the money laundering counts, Dr. Mencia is facing over twenty years if convicted at trial.

Despite overwhelming odds, the trial is moving full steam ahead on Monday. Marcos Beaton of Black, Srebnick, Kornspan, and Stumpf is representing Dr. Mencia at the trial.

UPDATEDr. Mencia found not guilty on 9 out of 10 counts.  The jury voted guilty on the charge of conspiracy to distribute a controlled substance.  The Miami Herald has the story here.

A blow to good faith error and medical judgment.

Sixth Circuit reversed a decision by the trial court to set aside guilty verdicts for health care fraud and making false statements of a federal jury. Opinion.

Dr. Paulus was a successful Kentucky cardiologist and the first in the nation for the total amount billed to Medicare for angiograms.

Government prosecuted Dr. Paulus alleging that he exaggerated the degree of patients’ stenosis or artery blockages and often claimed 70% blockage when in reality there was 40% or lower blockage. If an angiogram shows at least 70% blockage, the accepted standard of medical care allows a doctor to insert a stent with no further testing.

The trial lasted 27 days. The Government presented testimony of nine doctors. The Government’s experts acknowledged that the interpretations of angiograms could vary from one doctor to another.

Regardless, the jury convicted Dr. Paulus of ten counts of false statements and one count of health care fraud and acquitted on five counts of false statements.

The trial court reversed the guilty verdict and ordered a new trial. The trial court found that Dr. Paulus’ interpretations of angiograms – the images that allow doctors to determine whether patient’s artery has become dangerously narrow and in need of a stent – was a “subjective medical opinion, incapable of confirmation or contradiction.”

The Government appealed.

Sixth Circuit sided with the Government and reversed the trial court finding that “a doctor who deliberately inflates the blockage he sees on an angiogram has told a lie; if he does so to bill a more expensive procedure, then he has also committed fraud. Even state-of-the-art scientific measurements may sometimes be imprecise. But in these circumstances, it is up to the jury—not the court—to decide whether the government’s proof is worthy of belief.”

I think the concerns regarding the consequences of this decision are best summarized by the NACDL in its Amicus Brief filed in the case:


Overturning the judgment below would create a precedent allowing the government to obtain criminal convictions against physicians making difficult, highly subjective medical decisions primarily on the basis of the testimony of a single expert with a contrary view. At best, this type of evidence can establish good faith medical error or perhaps negligence, which Congress did not intend tocriminalize and are already appropriately dealt with by other legal means.

NACDL Amicus Brief.

Facebook, Instagram, and Twitter must turn over public posts and tweets to criminal defendants.

Last week, the California Supreme Court ruled that social media firms like Facebook, Twitter, and Instagram must turn over public posts by users to criminal defendants. This is an important decision that can impact thousands of cases.

For years, social media companies have argued that the Federal Stored Communications Act bars them from sharing electronic communications except in limited cases, such as in response to a search warrant. The social media companies also argued that the defendants had other ways to obtain the information.

The defendants seeking the information were Derrick Hunter and Lee Sullivan. The two men were charged with murder. The information sought was contained on the social media accounts of the state’s star witness and the victim. Hunter and Sullivan argued that their constitutional right to a fair trial entitled them to the information on social media. Hunter and Sullivan explained that there was exculpatory evidence on Instagram, in particular.

The trial judge had found that the defendants’ constitutional rights were at issue and ordered the social media companies to produce the information for the court’s review. The social media companies appealed the ruling and won at the California state appeals court. That ruling prompted defendants to take an appeal to the California Supreme Court.

The California Supreme Court noted that all parties agreed that if a user made a post public, that was consent for it to be shared. However, the court rejected defendants’ view that postings to large groups of friends were public, but also noted that the Federal Stored Communications Act did not permit the social media firms to ignore subpoenas. The state supreme court remanded the case to the trial court to essentially decide what is a public post and what is private. The trial court will also have to decide how to handle posts or tweets that were once public, but later deleted or made private.

Until now, courts have routinely quashed subpoenas to social media firms seeking this type of information. This decision opens the door for criminal defendants, including those fighting health care fraud prosecutions, to mine social media for potentially valuable exculpatory evidence about Government witnesses.

Texas Doctor Charged with $240 million health care fraud scheme

Dr. Jorge Zamora-Quezada was arrested on Monday and charged with leading a $240 million health care fraud and money laundering scheme.  The Indictment charges one count of conspiracy to commit health care fraud, five counts of health care fraud, and one count of conspiracy to commit money laundering.

Dr. Zamora-Quezada is a rheumatology specialist practicing in the South Texas area.  The doctor operates various clinics focused on arthritis and osteoporosis.

The Indictment alleges that Dr. Zamora-Quezada engaged in a wide ranging scheme starting in 2000.  The scheme allegedly involved falsely diagnosing patients with a degenerative diseased and giving patients unneeded treatments.  The Indictment alleges, among other things, that Dr. Zamora-Quezada would falsely diagnosis patients with rheumatoid arthritis and then administer chemotherapy and other toxic medications.  The Indictment also alleges that the doctor and co-conspirators conducted and billed for a battery of fraudulent and repetitive procedures.

The Government claims that Dr. Zamora-Quezada tried to hide his scheme by dismissing patients that questioned his practices and by the creation of fake medical records.

The Government filed a motion seeking pretrial detention.  The motion requested pretrial detention based on Dr. Zamora-Quezada’s access to wealth, his private jet, his ties to Mexico, and his history of intimidating witnesses.  The motion describes the evidence against Dr. Zamora-Quezada, which includes patients that will testify against him and other doctors in the community that will say Dr. Zamora-Quezada was known for his practice of  falsely diagnosing patients.

The detention hearing was held today.  The court granted the Government’s motion for pretrial detention and remanded the doctor to the custody of the U.S. Marshals.  The final pretrial conference in the case is set for July 2, 2018.  The court further noted that it would announce the scheduled trial date soon.

Dr. Zamora-Quezada’s detention complicates trial preparation for the defense.  In health care fraud cases, it is imperative for doctor defendants to assist in reviewing patient records and participating in the creation of a defense.

28th Annual National Institute on Health Care Fraud

I am attending the American Bar Association’s 28th Annual National Institute on Health Care Fraud this week.  Yesterday, I had the opportunity to speak on a panel discussing data mining and other health care fraud enforcement trends with a great group of lawyers – AUSA Carolyn Bell, Kevin Napper, and Andrew Feldman.

The topic of data mining is timely because it has been widely reported that the Government is using real time data analytics to identify potential targets of criminal investigations.  The Government is collecting electronic billing information from health care providers across the country and centralizing the information in one location.  OIG has employed data analytics to constantly review and analyze the data to identify any “spikes” or “outliers.”  The Government refers to this information as “reliable” and “unfiltered.”

We discussed the use of data analytics in the Melgen case.  AUSA Bell was one of three prosecutors that worked on the case.  The Melgen case involved the prosecution of a South Florida ophthalmologist for health care fraud.  Dr. Melgen was reported to be on of the highest individual doctor billers for Medicare.  In the trial, the Government used charts that summarized Dr. Melgen’s billing data and compared it to his peers.   The charts showed huge differences in billings and claims submitted by Dr. Melgen as compared to his “peers.”  For instance, one chart showed that Dr. Melgen collected $57,371,547 for one procedure, while the National median collections for other providers for the same procedure was $3,030,041.

The Government introduced the charts as Rule 1006 evidence.  This was heavily disputed through motions in limine.  The defense argued that the charts should come in through a medical statistician under Rule 702. The Court ultimately ruled that “to the extent the government seeks to present comparison data without laying a proper foundation that the data provides a valid basis for comparison. This, however, does not preclude the government from presenting evidence of the percentages of Defendant’s patients that received various treatments and services based on a review of Defendant’s records, and from inquiring of its expert witnesses what types of percentages would they expect to see in their experience. See United States v. Chibber, 741 F.3d 852, 854-58 (7th Cir. 2017).”

Everyone on the panel was in agreement that defense attorneys will need to hire statisticians to assist in the defense of health care fraud prosecutions.  The statistician will need to review the data to identify flaws in the Government’s analysis and in order to explain why anomalies exist.

More importantly, the statistician will need to attack the Government’s “statistically significant sample” of patients.  Because it would be impossible to review all patient records in these data driven health care fraud prosecutions, the Government picks a “statistically significant sample” of patients to review and present to the jury.  The Government will extrapolate and claim that the sample is representative of all of the provider’s patients. The defense needs the statistician to establish that the Government sample is statistically deficient and not representative of all the patients.


I represent doctors, hospitals, skilled nursing facilities, pharmacies, and other health care providers, during government investigations and defend them in qui tam (whistle-blower) actions. I also regularly counsel companies from a variety of industries on the adoption and operation of their compliance programs and related due diligence issues.

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