United States v. Chalker

• Decision Date: 13 July 2020
• Docket Number: No. 18-15102,18-15102
• Citation: 966 F.3d 1177
• Parties: UNITED STATES of America, Plaintiff - Appellee, v. Stephen CHALKER, Defendant - Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

966 F.3d 1177

UNITED STATES of America, Plaintiff - Appellee,

v.Stephen CHALKER, Defendant - Appellant.

No. 18-15102

United States Court of Appeals, Eleventh Circuit.

July 13, 2020

Amanda Brooke Harris, U.S. Attorney's Office, FT Mitchell, KY, Jeremy Raymond Sanders, U.S. Department of Justice Criminal Division, Fraud Section, Washington, DC, Sofia Vickery, U.S. Department of Justice Criminal Division, Appellate Section, Washington, DC, Madeleine R. Shirley, Emily M. Smachetti, U.S. Attorney Service - Southern District of Florida, U.S. Attorney Service - SFL, Miami, FL, for Plaintiff-Appellee.

Leonard P. Fenn, DeFabio & Fenn, PA, Coral Gables, FL, for Defendant-Appellant.

Stephen Chalker, Pro Se.

Before WILSON, MARCUS, and THAPAR,^* Circuit Judges.

MARCUS, Circuit Judge:

This appeal follows a four-day jury trial of Stephen Chalker, formerly the pharmacist-in-charge at Pop's Pharmacy in Deerfield Beach, Florida. Chalker challenges his convictions for healthcare fraud and conspiracy to commit healthcare fraud. He cites a host of trial errors, which broadly fall into three groups: (1) one challenge to the sufficiency of the evidence and one to the sufficiency of the indictment; (2) two others to the district court's admission of lay and expert witness testimony; and (3) one to the trial court's refusal to grant a continuance. He also raises one sentencing claim. After thorough review, and having the benefit of oral argument, we affirm.

I.

On June 14, 2018, a federal grand jury sitting in the Southern District of Florida indicted Christopher Liva, Elaina Liva, and Stephen Chalker, charging each of them with one count of conspiracy to commit healthcare fraud, in violation of 18 U.S.C. § 1349. The indictment alleged that the three co-defendants conspired to submit and cause to be submitted false and fraudulent claims to Medicare, TRICARE, and Medicaid. The indictment also charged Chalker alone with three substantive counts of healthcare fraud, in violation of 18 U.S.C. § 1347. Both Christopher and Elaina Liva pled guilty to the conspiracy charge. On November 1, 2018, the district court sentenced Elaina Liva to 24 months in prison, and on November 14, 2018, the district court sentenced Christopher Liva -- who testified against Chalker at trial -- to 48 months in prison. Eight of those months run consecutively to a 78-month sentence that had been imposed on Liva in the Northern District of Ohio for an unrelated healthcare fraud and money-laundering conspiracy.

These are the essential facts adduced at Chalker's trial. In late 2014, Christopher Liva decided to purchase a pharmacy in Deerfield Beach, Florida. He tapped Chalker to be the pharmacist-in-charge.¹ The two had met while working for another pharmacy. Chalker found Pop's Pharmacy, or Pop's, on Craigslist, and Liva bought it from its then-owner, Priti Dubal. But Liva and Chalker had a problem. At the time of Liva's purchase of Pop's Pharmacy, he was under investigation for healthcare fraud in Ohio. And Liva and Chalker didn't want to risk upsetting Pop's Pharmacy's contracts with its pharmacy benefit managers ("PBMs"), who work with insurance companies to develop their lists of covered drugs and contract with pharmacies to process prescription claims. After all, if a PBM were to learn that Pop's Pharmacy's new owner was under investigation for healthcare fraud, it would surely stop doing business with the pharmacy. So Liva named his mother, Elaina, as the majority owner of Pop's.² He asked Chalker to leave him off all emails with PBMs. And when Chalker submitted recertification paperwork to Express Scripts, one of Pop's Pharmacy's PBMs, Chalker falsely named himself as Pop's Pharmacy's owner and affirmed that no owner of Pop's had been the subject of "criminal prosecution including fraud."

Even though Pop's was a community pharmacy, which would typically fill prescriptions for chronic conditions like hypertension

or diabetes, under Chalker's direction, Pop's almost exclusively filled prescriptions for topical compounded medications. Chalker would run "test claims" to see if PBMs would reimburse for certain prescriptions. To entice patients to accept prescriptions, Chalker -- who "had the final say regarding" co-payment policies at Pop's -- would routinely waive co-payments. To further boost their business, Liva and Chalker paid telemarketers to solicit patients and schedule them for interviews with doctors via telemedicine.³ Chalker created pre-printed prescription pads that Pop's shared with its network of telemedicine doctors. Chalker went so far as to create a script for telemarketers to use when speaking with patients.

These practices led to a dramatic spike in business at Pop's Pharmacy. The pharmacy went from billing CVS Caremark, for example -- one of its PBMs -- a couple hundred dollars one week to around $40,000 the next. Indeed, Pop's Pharmacy's plan worked too well at times; Liva and Chalker would have to occasionally "slow down" billing for prescriptions to avoid "raising some red flags." Pop's also received frequent complaints from patients, who said they didn't want, need, or know anything about the drugs they were receiving. Pop's soon started hearing from auditors, too, who had noticed red flags at the pharmacy. One of them, Jennifer Thomas, an investigator with CVS Caremark, received a tip and commenced an audit of Pop's Pharmacy's claims in December 2014. Thomas's audit revealed that Pop's had submitted bills in a few instances even when it didn't have enough drugs in stock to fill those prescriptions. Thomas learned that there had been unauthorized prescription refills; prescriptions were refilled "several more times without the physician knowing," "going above and beyond what the original prescription allowed." And Thomas concluded that Pop's was "not collecting high dollar copayments."

CVS Caremark was not alone. Express Scripts found that Pop's Pharmacy had $670,000 in what it called "purchase verification shortages" -- discrepancies between the drugs Pop's billed and those it had ordered from wholesalers. Express Scripts also found one physician who denied writing prescriptions for three of Pop's Pharmacy's patients. Optum RX, a third PBM, discovered that some of its members denied receiving prescriptions for which Pop's had submitted bills. Optum also found the same practice of submitting claims for reimbursement that outstripped supply -- Optum determined that Pop's hadn't purchased enough drugs to cover seven of the claims the pharmacy had submitted. All three PBMs sought to clawback money they had paid to Pop's and decided to terminate Pop's from their networks, refusing to accept any claims from the pharmacy in the future.

Chalker quit his job at Pop's Pharmacy in late July or early August 2016 -- "one day" he just "didn't come in." Right after he left, Liva testified, "a lot of the audits came to light that weren't being attended to and the reversals and the clawbacks got out of control." After leaving Pop's Pharmacy, Chalker became the pharmacist-in-charge at another local pharmacy, Happy Heart. In January 2017, however, a pharmacy investigator with America's First Choice Health Plan sent Happy Heart a fraud alert. The investigator had received several complaints from patients for both Pop's Pharmacy and Happy Heart, and she noticed that Chalker had been the pharmacist-in-charge at both of them. The investigator determined that, at both pharmacies, Chalker worked with "teletrolls" -- doctors who receive information from telemarketing companies and sign prescriptions for medically unnecessary drugs. She spoke to Chalker by phone to confirm her findings, but Chalker was "defensive" and "unusually hostile." The investigator saw what she called "extreme similarities" between the practices at Pop's and Happy Heart. Ultimately, the investigator reversed approximately $50,000 billed on behalf of eleven beneficiaries.

Chalker's case proceeded to trial on September 4, 2018, and on September 7, the jury returned guilty verdicts on all counts.⁴ Chalker was sentenced soon thereafter. The Presentence Investigation Report ("PSI") recommended an offense level of 29 and a criminal-history category of I, yielding a guidelines range of 87 to 108 months. The district court sentenced Chalker to 78 months’ imprisonment on all counts, to be served concurrently, followed by three years of supervised release.⁵ The court also ordered restitution in the amount of $4,980,679.50. This timely appeal followed.

II.

A.

We review Chalker's claim that insufficient evidence supported his convictions de novo, taking the evidence and drawing all reasonable inferences in a light most favorable to the government. United States v. Ochoa, 941 F.3d 1074, 1102 n.18 (11th Cir. 2019). The substantive healthcare fraud statute, 18 U.S.C. § 1347, says that whoever

knowingly and willfully executes, or attempts to execute, a scheme or artifice --

(1) to defraud any health care benefit program; or

(2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program,

in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned not more than 10 years, or both.

18 U.S.C. § 1347(a). Section 1349 "makes it unlawful to attempt or conspire to commit a § 1347 crime of health care fraud." United States v. Moran, 778 F.3d 942, 960 (11th Cir. 2015).

1.

Our review of the entire trial record satisfies us that the government introduced sufficient evidence to support Chalker's conspiracy conviction. "For a defendant to be found guilty of conspiracy, the government must prove beyond a reasonable doubt (1) that the conspiracy existed; (2) that the defendant knew of it; and (3) that the defendant, with knowledge, voluntarily joined it." United States v. Nerey, 877 F.3d 956, 968 (11th Cir. 2017) (quotation omitted)....