Court: District Court, E.D. Louisiana; July 2, 2018; Federal District Court
A criminal action has been initiated against Dr. Muhammad Kaleem Arshad, Dr. Padmini Nagaraj, and Mr. Joseph A. Haynes, who are accused of participating in a scheme involving healthcare fraud and illegal kickbacks. The defendants have filed a motion to dismiss the indictment, which the United States opposes. The court must decide whether the indictment should be dismissed for failing to state an offense or due to alleged misstatements of law before the grand jury. After an oral hearing, the court has denied the motion in its entirety.
The defendants were indicted on February 8, 2018, for ten counts of healthcare fraud related to actions taken from September 2010 to April 2015. The indictment claims they knowingly engaged in fraudulent billing of Medicare for unnecessary home health care services in exchange for bribes. Specifically, they allegedly referred patients who were not homebound and did not need home health services to Home Health Agencies (HHAs), received kickbacks for these referrals, concealed these transactions, and diverted fraud proceeds for personal benefits.
Mr. Haynes, identified as a marketer for 'Company A,' collaborated with Kim Ricard, a co-conspirator, to recruit Medicare beneficiaries for HHAs, which paid Ricard for each referral. Haynes had access to patient information and facilitated arrangements for kickbacks between the psychiatrists, Dr. Arshad and Dr. Nagaraj, and the HHAs. The indictment asserts that both doctors referred patients who did not qualify for home health services and falsely certified patients for unnecessary treatments, which violated 18 U.S.C. § 1347 and § 2. Additionally, all three defendants face charges under 42 U.S.C. § 1320a-7b(b)(1)(A, B) and 18 U.S.C. § 371 for soliciting and receiving kickbacks in exchange for referrals to home health services.
Arguments presented for dismissing the Indictment are based on an alleged incorrect definition of 'homebound' integrated across all charges. The Defendants highlight two specific sections of Count 1, claiming that the Indictment inaccurately states that a patient qualifies for home health care benefits only if confined to home. They argue that the Medicare Act clarifies that being bedridden is not a requirement for being considered 'confined to home,' and that short absences for medical care do not disqualify an individual from this status. Thus, the Defendants assert that the Indictment's definition is fundamentally flawed, warranting dismissal for failing to state an offense.
Additionally, they argue that the Government's grand jury presentation was legally deficient, requesting dismissal of the entire Indictment with prejudice and the release of grand jury materials. The Court reviews these arguments, noting that the Indictment must contain a clear statement of the essential facts constituting the offense as per Federal Rule of Criminal Procedure 7. The Court accepts the allegations as true for analysis.
Defendants claim that the incorrect definition affects all ten counts, but Counts Seven through Ten, which allege violations of the Federal Anti-Kickback Statute, do not rely on the 'homebound' definition. These counts address unlawful payments for referrals, independent of beneficiaries' homebound status. The Court determines that these counts meet legal sufficiency requirements, denying the motion regarding Counts Seven through Ten.
Counts One through Six of the Indictment charge Dr. Arshad and Dr. Nagaraj with conspiracy to commit health care fraud under 18 U.S.C. § 1349 and five counts of health care fraud under 18 U.S.C. § 1347. The Indictment alleges that the defendants engaged in health care fraud by referring unqualified patients for home health services, with definitions and terms mirroring those in similar indictments within the district. To secure a conviction for conspiracy, the Government must demonstrate that two or more individuals agreed to commit health care fraud, that the defendants were aware of the unlawful purpose, and that they intended to further that purpose. For health care fraud, the Government must establish that the defendants knowingly executed a scheme to defraud a health care benefit program or to obtain money through false pretenses related to health care services.
The defendants do not challenge the essential elements of the charges but argue that the definition of 'homebound' in the Indictment does not clarify that short home departures do not disqualify a beneficiary from receiving services. However, the defendants did not identify any misstatement of law, as the definition aligns with the Medicare program statutes. The Indictment asserts that the defendants knowingly conspired to defraud Medicare through false statements about patients' functional limitations and ordered excessive, unnecessary, and duplicative home health services. The Court finds that allegations of ordering unnecessary services support the fraud counts, irrespective of whether a patient is deemed 'homebound.' Consequently, the Court rules that the Indictment is not facially deficient, adequately detailing the charges and elements necessary for the defendants to prepare their defense.
The motion to dismiss based on Rule 12(b)(3)(B) is denied. Regarding dismissal for grand jury misconduct, the Court assesses whether the Indictment contains a material misstatement of law, as claimed by the defendants, and considers their request to review the grand jury proceedings for possible erroneous definitions presented during that process.
Defendants did not identify any misstatements of law in the Indictment, leading the Court to reject their motion for dismissal on that basis. The Court will only address the request for release of the grand jury transcript. While federal courts have supervisory authority over grand jury processes, this power is limited and should only be invoked in extraordinary circumstances. Grand jury proceedings are presumed regular, and this presumption can only be overcome with specific proof of irregularities. The burden lies with the party seeking disclosure to demonstrate a compelling need for the materials, which must outweigh the policy of grand jury secrecy. Defendants must show both a violation and resulting prejudice to succeed in their request. In this case, Defendants failed to demonstrate any violations or evidence that the release of transcripts is necessary to prevent injustice. Their claim regarding the Government's alleged erroneous instruction on the term "homebound" is based on speculation and insufficient to establish a particularized need. Additionally, references to testimony from a separate trial involving a co-conspirator do not support their arguments, as that case involved different charges and did not relate to the definition of "homebound." Consequently, the Court finds no need for disclosure of grand jury materials and declines to exercise its supervisory power in this instance.
Defendants Dr. Muhammad Kaleem Arshad, Dr. Padmini Nagaraj, and Mr. Joseph A. Haynes' motion to dismiss the Indictment and to release grand jury testimony has been denied. The Court found the Indictment is not facially deficient and assessed whether dismissal is warranted under its supervisory powers. Defendants claimed the Indictment contained a material misstatement of law regarding the definition of "homebound" and requested to review the grand jury proceedings. The Court reiterated that Defendants failed to identify any misstatement within the Indictment, thus rejecting this basis for dismissal.
The Court acknowledged its supervisory authority over grand jury processes, which is constrained and should only be invoked in extraordinary circumstances. Grand jury proceedings are presumed regular unless compelling proof of irregularities is provided. The burden of proof lies with the party seeking disclosure, which must show: (1) the necessity of the material to prevent injustice, (2) the greater need for disclosure than for secrecy, and (3) that the request is narrowly tailored.
In this case, Defendants did not demonstrate any violations or evidence necessitating the release of grand jury materials. Their claim that the Government misinformed the grand jury about "homebound" was deemed speculative and insufficient to establish a particularized need. The Court concluded that mere allegations and conjecture regarding potential grand jury errors do not warrant the disclosure of transcripts. Overall, Defendants failed to establish the necessary criteria for the dismissal of the Indictment or the release of grand jury materials.
The jury's definition of "homebound" was allegedly misstated, but this does not imply that the Government improperly instructed the grand jury. The witness's testimony in a separate case is irrelevant to the current matter. Ms. Ricard, unlike the Defendants, was charged with different crimes, specifically involving kickbacks, identity theft, and false statements, making the homebound definition immaterial to her case. The Defendants have not demonstrated a specific need for disclosing grand jury proceedings or shown any error or prejudice resulting from non-disclosure. Consequently, the Court will not disclose grand jury materials to prevent injustice. The motion to dismiss the Indictment and release grand jury testimony by Defendants Dr. Muhammad Kaleem Arshad, Dr. Padmini Nagaraj, and Mr. Joseph A. Haynes is denied. The Court accepts the allegations in the indictment as true when evaluating a motion to dismiss. The Defendants claimed the Indictment was a "speaking indictment" requiring a heightened pleading standard under Rule 12, but did not provide supporting case law, and the Court found none in its research. Pretrial motions concerning defects in the indictment must be raised if the basis is reasonably available and can be determined without trial.
Defense counsel contended during the oral hearing that if the Court deems the definition of "homebound" legally erroneous, leading to the dismissal of Counts One through Six, then Counts Seven through Ten should also be dismissed without further examination due to the incorporation of the incorrect definition. The defense did not provide legal support for this assertion, and the Court's research did not uncover any precedent supporting this theory. Relevant case law indicates that an indictment tracking statutory language is generally sufficient. Additionally, the presumption of regularity in grand jury proceedings can only be challenged by demonstrating specific irregularities, and mere speculation about improper instructions does not suffice to overcome this presumption. Various cases were cited to illustrate these points, emphasizing the importance of the integrity of grand jury processes and the standards required for dismissing indictments based on alleged misconduct.
