United States v. Nerey, 16-13614

• Citation: 877 F.3d 956
• Decision Date: 12 December 2017
• Docket Number: No. 16-13614,16-13614
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Carlos Rodriguez NEREY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

877 F.3d 956

UNITED STATES of America, Plaintiff-Appellee,

v.Carlos Rodriguez NEREY, Defendant-Appellant.

No. 16-13614

United States Court of Appeals, Eleventh Circuit.

December 12, 2017

Daniel J. Marcet, Wifredo A. Ferrer, Anne P. McNamara, Emily M. Smachetti, U.S. Attorney's Office, MIAMI, FL, Elizabeth Young, U.S. Department of Justice, Civil Division, Office of Immigration Litigation, WASHINGTON, DC, for Plaintiff-Appellee.

Alfredo A. Izaguirre, Alfredo A. Izaguirre, PA, CORAL GABLES, FL, for Defendant-Appellant.

Before HULL, JORDAN, and BOGGS,^* Circuit Judges.

HULL, Circuit Judge:

In this direct criminal appeal, defendant Carlos Rodriguez Nerey appeals both his convictions and total sentence related to his role as a patient recruiter and his receipt of kickbacks in a complex health care fraud scheme. Following a five-day trial, a jury found defendant Nerey guilty on the two charges against him in the indictment. After thorough review of the briefs and extensive trial record, and with the benefit of oral argument, we affirm.

I. PROCEDURAL HISTORY

On September 29, 2015, defendant Nerey and several other individuals—including Milka Alvarez, Jesus Perez, Joel Alvarez, Sandra Jaramillo, Adolfo Larrea, and Maria Teresa Pupo—were charged in a thirteen-count superseding indictment. All of Nerey’s co-defendants eventually pled guilty while he proceeded to trial. Nerey was charged on two counts: (1) conspiracy to defraud the United States under 18 U.S.C. § 371 by paying and receiving health care kickbacks, in violation of 42 U.S.C. § 1320a-7b(b)(1)(A), (b)(1)(B), and (b)(2)(A) (Count 2) and (2) knowingly soliciting and receiving kickbacks in connection with a federal health care program, in violation of 42 U.S.C. § 1320 -7b(b)(1)(A) (Count 9).

On April 1, 2016, a jury found Nerey guilty on both counts. The district court denied Nerey’s motion for judgment of acquittal before the verdict was rendered and denied his renewed motion thereafter. On May 27, 2016, the district court sentenced Nerey to sixty months’ imprisonment on each count to run concurrently, three years of supervised release, and restitution in the amount of $2,366,746.

II. TRIAL EVIDENCE

Because defendant Nerey challenges the sufficiency of the evidence supporting his convictions, we outline the trial evidence about the Medicare program, the various home health care agencies engaged in the fraud and kickbacks, and Nerey’s involvement.

A. Medicare

Medicare is a health insurance program overseen by the federal government and is intended for people of age 65 or older or people with a qualifying disability. Medicare is funded through taxpayer contributions and small recipient premiums. Patients who qualify for Medicare benefits have services furnished by a Medicare provider like a doctor, hospital, or home health agency. Once a service is performed, that provider can bill Medicare and claim payment. Medicare contractors designated by the respective states will then review claims submitted for payment. Some claims take two weeks to process, while others may take up to a month.

Claim reviewers look to the following five components for the legitimacy of claims: (1) the patient’s entitlement to Medicare; (2) proper enrollment of the provider; (3) the provision of services; (4) compliance with coverage rules; and (5) proper reporting of records. Because Medicare receives such a high volume of claims, however, rarely do all claims receive a complete and thorough review. Categorically, Medicare does not pay for claims based on kickbacks or bribes. See 42 U.S.C. § 1320 -7b(b).

B. Home Health Care

Under Medicare, "home health care" refers to medical services for patients who require special treatment because they are "homebound." Homebound patients suffer from a physical or mental limitation that prohibits them from leaving home on a routine basis without the assistance of a wheelchair, walker, or another individual.

Homebound status must be determined and documented by a physician. For home health care agencies to properly bill Medicare, their patients must have a prescription for home health care. Patients must meet with a physician and establish a plan of care in order to legitimately receive a prescription. Thereafter, the treating physician is required to provide progress notes once treatment begins.

All treatment provided in home health care is by skilled professionals—licensed doctors, nurses, and therapists. With respect to therapy, Medicare covers physical therapy, occupational therapy, and speech language pathology. Massage therapy is not covered under home health care. Likewise, therapy notes taken after a session must be recorded by, and come from, a licensed physical therapist.

Relevant to our review is the fact that home health care agencies engage in fraud when they, inter alia, (1) submit claims for a patient who does not qualify for treatment, (2) fail to perform the work billed to Medicare, or (3) pay a kickback to a patient recruiter. As the name suggests, a patient recruiter procures eligible Medicare beneficiaries and exchanges their information with providers for a kickback on any claims paid by Medicare.

C. Jesus Perez and Mercy Home Care, Inc.

The fraud perpetrated in this case, including Nerey’s involvement, centers on Jesus Perez, one of Nerey’s co-defendants. Perez had a long history with home health care agencies, starting with his work at Wong Home Health Care in 2006 and then La Caridad in 2013 or 2014. At trial, Perez admitted to engaging in Medicare fraud and paying patient recruiters as far back as his work at La Caridad.

Eventually, in late 2014, Perez transitioned to working for Mercy Home Care, Inc. ("Mercy HC"), where he continued these illegal practices. Before he became the owner of Mercy HC, Perez complained to Nerey, one of his previous acquaintances, about the salary Perez was receiving there as an employee. Nerey responded by suggesting that Perez begin inflating invoices.

Perez later became the owner of Mercy HC in October 2014 and enlisted the assistance of close friends and family, including Jesus Garcia and Adolfo Larrea, to help run his operation. At trial, Joel Alvarez described Adolfo Larrea as Perez’s "right hand." Several individuals, including Perez’s then-wife, Anelys Ayala, were used to cash checks for the payment of illegal kickbacks to recruiters. Another patient recruiter at Mercy HC was Yovani Suarez, who went by the nickname "Tito." As the group would later discover, Suarez was a confidential informant for the Federal Bureau of Investigation ("FBI").

Perez’s testimony suggested that he obtained ownership of Mercy HC from its actual owner, Contrado Pineida, through falsified documents. Perez insisted that the transfer was nonetheless done at Pineida’s instruction. Under Perez’s leadership, Mercy HC submitted fraudulent claims to Medicare and negotiated extensive kickbacks for patient recruiters.

Raciel Leon served as the manager at Mercy HC and kept a book of patient recruiters and payoffs. Leon’s logbook was used to keep track of which recruiters held claim to recruiting which patients. It included patient information along with a column coded by letters to mask kickback recipients. To keep track of his patients, Nerey would cross-reference this logbook with his own records. While each recruiter had his or her own letter or letters, entries containing the letter G stood for "gordo," or "fat guy" in Spanish, which was Nerey’s nickname. When paying their recruiters, Perez and Leon utilized inflated invoices, which were later submitted to Medicare, to mask payoffs and made special notations on the memo lines in checks to recruiters—such as "SS" or "special service"—to identify recruiting payments.

D. Nerey, Sweet Life Staffing, and Nerey Professional Services, Inc.

Around November 2014, Nerey became associated with Mercy HC. Nerey was active in Mercy HC’s operation by recruiting patients through an established book of patients and purchasing prescriptions, both real and forged, for home health care. Sandra Jaramillo and Karla Garcia, two other co-defendants, both testified that defendant Nerey carried around a small notebook full of patient names and information. At Mercy HC, Nerey was Perez’s top source of patients, all of whom were eligible Medicare beneficiaries. Perez paid Nerey between $1,800 and $2,200 per patient recruited.

Nerey used several companies—the two most relevant being Sweet Life Staffing ("Sweet Life") and Nerey Professional Services, Inc. ("NPS")—to funnel kickback money. Mercy HC would split payments to Nerey between cash to him, which he requested, and checks to Sweet Life and NPS, which eventually became necessary due to the amount of money involved in the conspiracy.

Sweet Life was a therapy-staffing company used by Nerey to process his recruiting kickbacks. While several witnesses testified that Nerey claimed ownership of Sweet Life, the registered owner was actually Daylin Cabrera. Nonetheless, Nerey required that all of the patients he recruited be assigned to Sweet Life for "therapy." Nerey processed kickbacks through Sweet Life using inflated and falsified invoices for fraudulent therapy services. Invoices were handled in several ways, but often broken into smaller $30 amounts per therapy session to cover up larger kickback amounts.

Nerey was not a licensed physical therapist or nurse, but nearly every fact witness testified that he regularly wore medical scrubs when they encountered him. Likewise, witnesses reported that patients received massages from Nerey and others he employed in the place of prescribed physical therapy. Karla Garcia described Nerey’s therapy office as a "very little" building with two small rooms and a lobby located inside a shopping center.

Defendant Nerey also owned and created NPS as a shell corporation to deposit and process kickback payments. NPS observed no formalities of an established business and paid no taxes, wages, or licensing fees during its existence. The company...