United States v. Elbeblawy

• Decision Date: 07 August 2018
• Docket Number: No. 16-16048,16-16048
• Citation: 899 F.3d 925
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Khaled ELBEBLAWY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

899 F.3d 925

UNITED STATES of America, Plaintiff-Appellee,

v.Khaled ELBEBLAWY, Defendant-Appellant.

No. 16-16048

United States Court of Appeals, Eleventh Circuit.

August 7, 2018

Ellen Meltzer, Gejaa T. Gobena, Vasanth R. Sridharan, Nicholas E. Surmacz, Andrew H. Warren, U.S. Department of Justice, Criminal Division, Jeremy Raymond Sanders, U.S. Department of Justice, Criminal Division, Fraud Section, Alexander Patrick Robbins, U.S. Department of Justice, Chief Appellate Section Tax Division, Washington, DC, Emily M. Smachetti, Wifredo A. Ferrer, Nalina Sombuntham, U.S. Attorney Service—SFL, Barry Michael Wax, Barry M. Wax PLLC, Miami, FL, for Plaintiff–Appellee.

Richard Carroll Klugh, Jr., Law Office of Richard C. Klugh, Miami, FL, for Defendant–Appellant.

Khaled Elbeblawy, Pro se.

Before WILLIAM PRYOR and MARTIN, Circuit Judges and WOOD,^* District Judge.

WILLIAM PRYOR, Circuit Judge:

This appeal from the convictions and sentence of Khaled Elbeblawy for conspiracy to commit healthcare fraud and wire fraud, 18 U.S.C. § 1349, and conspiracy to defraud the United States and pay healthcare kickbacks, 18 U.S.C. § 371, calls to mind the familiar warning that anything you say to the government can and will be used against you. While he owned or managed three home health entities, Elbeblawy hired patient recruiters and bribed doctors and staffing groups to refer patients with Medicare coverage to his agencies; he falsified medical records; and he billed Medicare for tens of millions of dollars in unnecessary medical services. After he had cooperated with the investigation of these crimes for two years, Elbeblawy and his attorney signed a plea agreement and a statement about its factual basis. The agreement waived two evidentiary rules that would ordinarily bar the admission of statements made during plea discussions. But before Elbeblawy pleaded guilty in open court, he changed his mind and demanded a jury trial. At trial, the district court admitted the factual basis for the plea agreement as well as other evidence that the government obtained as a result of Elbeblawy’s cooperation. The jury convicted Elbeblawy, and the district court sentenced him to 240 months of imprisonment and ordered him to forfeit approximately $36 million. We conclude that the district court did not err when it admitted the factual basis for the plea agreement because Elbeblawy knowingly and voluntarily signed a valid waiver. And we reject Elbeblawy’s arguments that the district court committed other errors at his trial when it calculated his Sentencing Guidelines range. But we vacate the forfeiture order and remand for entry of a new order because the district court impermissibly held Elbeblawy jointly and severally liable for the proceeds of the conspiracy. We affirm in part, vacate in part, and remand.

I. BACKGROUND

Khaled Elbeblawy owned or managed three home health agencies that provided in-home medical nursing and other services to homebound patients, and he used each to defraud Medicare of millions of dollars. Elbeblawy began defrauding Medicare when he was working as a billing agent at Willsand Home Health. He and Eulises Escalona, the owner of Willsand and a cooperating witness for the government, were "falsifying ... medical records, [ ]exaggerating the symptoms [of] ... patients in order to get paid [by] Medicare," and billing for services that were never provided. Elbeblawy quickly saw the potential to bilk Medicare for still more money. He asked Escalona for a promotion to marketing director and offered to "go out there [in] the community and recruit doctors ... [who would accept] kickbacks." He told Escalona that if they "pa[id] kickback[s]," and took "doctors to lunch or g[ave] them nice gift[s]," the doctors would refer patients to them. Escalona agreed, and they began to pay doctors between $400 and $800 per referral. They insisted on paying the doctors only in "[c]ash because cash is the only way that nobody can trace if you pay somebody or not."

Elbeblawy also hired "[b]etween eight [and] ten" "patient recruiters" and purchased referrals from nurses and other home health entities or staffing groups that lacked the authority to bill Medicare. Because the groups required a "large amount of money," it was impractical to pay them in cash. Elbeblawy and Escalona consulted a lawyer who informed them that it was illegal to pay for patient referrals. Undeterred, Elbeblawy and Escalona disguised check payments to the groups by inflating the rate they paid for staffing services. And they described checks to the patient recruiters as payments for consulting and other services. Escalona testified that 90 percent of the patients of Willsand were referred because of a kickback of some kind.

Elbeblawy and Escalona also paid the doctors to approve unnecessary medical services. Elbeblawy would pick the most profitable services, falsify the medical records, and pay the doctors in cash-filled envelopes to sign the appropriate documents. Escalona testified that the majority of the patients of Willsand did not need the services billed to Medicare.

Although Elbeblawy began to hold himself out as the chief executive officer of Willsand, Escalona refused to make him a full partner and instead agreed to become equal partners with him in a new firm, JEM Home Health. Elbeblawy managed the day-to-day operations of the new agency, which had "the same modus operand[i]" as Willsand and used many of the same sources for patient referrals. Around March 2009, Elbeblawy became the sole owner of JEM.

In November 2009, Medicare suspended payments to JEM in response to "reliable information that [JEM] billed Medicare and received payment for home health services provided to beneficiaries who are not, in fact, homebound and were not homebound during the time the services were rendered." Safeguard Services, a Medicare contractor responsible for investigating healthcare fraud, audited JEM. The audit revealed that almost 74 percent of claims submitted between July 2008 and July 2009, and almost 99 percent of claims submitted between August 2009 and February 2010, should never have been paid.

Elbeblawy then started yet another home health agency, this time in his ex-wife’s name, and failed to disclose that he was affiliated with a suspended agency. From the beginning, Elbeblawy ran Healthy Choice Home Health. And in 2013, he bought the company from his ex-wife for ten dollars in accordance with a "stock purchase option agreement" they entered in 2010. All told, Medicare paid $29.1 million for claims from Willsand, $8.7 million for claims from JEM, and $2.5 million for claims from Healthy Choice.

Elbeblawy later decided to "cooperate with the [g]overnment and accept responsibility." For approximately two years, Elbeblawy helped investigators obtain evidence against his former conspirators. For example, he provided the government with a handwritten list of the doctors, home health groups, and recruiters with whom he used to work. And he recorded more than 30 incriminating conversations about kickbacks with his former conspirators. He offered one physician "the same number [they] used to do." And he told another physician that he "remember[ed] what [he] used to do with [the physician] before," and he told the physician to "[l]et [him] know what [he] ha[d] in mind" for payment.

In June 2015, Elbeblawy and his attorney signed a plea agreement and, 14 days later, a written factual basis for the agreement.

The agreement provided that, "[i]n the event of ... a breach[,] ... the [d]efendant waives any protection[ ] afforded by ... Rule 11 of the Federal Rules of Criminal Procedure and Rule 410 of the Federal Rules of Evidence," both of which bar the admission of statements made during plea discussions. The agreement also stated that "the [g]overnment w[ould] be free to use against the [d]efendant, directly and indirectly, in any criminal or civil proceeding[,] any of the information, statements, and materials provided by him pursuant to th[e] [a]greement, including offering into evidence or otherwise using the attached Agreed Factual Basis for Guilty Plea." Elbeblawy’s attorney testified that he met with Elbeblawy at least twice to discuss the agreement, that he "literally read" the agreement to him, and that he "walk[ed] [Elbeblawy] through each paragraph separately."

After he signed the agreement, Elbeblawy "changed [his] mind" and refused to plead guilty, so the government prosecuted him for conspiracy to commit healthcare fraud and wire fraud, 18 U.S.C. § 1349, and conspiracy to defraud the United States and pay healthcare kickbacks, 18 U.S.C. § 371. Before the trial, the district court denied Elbeblawy’s motion to suppress the signed factual basis for the plea agreement on the ground that Elbeblawy did not knowingly and voluntarily waive the protections of Rule 410 and Rule 11. It held a two-day evidentiary hearing at which Elbeblawy, his attorney, and a government investigator testified. And it explained that Elbeblawy "has a college degree," that "[t]here were several meetings between [Elbeblawy] and [his] attorney," that Elbeblawy was "engaged" and "asked many questions" before he signed the agreement, and that "[h]is questions were answered." Based on this evidence, the district court found that Elbeblawy "made a free and deliberate choice to continue to cooperate" and that he "had full knowledge of [his] actions and [their] consequences."

At trial, the government introduced the factual basis for the plea agreement as well as the evidence Elbeblawy helped the government obtain. And it called Escalona and Kansky Delisma, one of the doctors who accepted kickbacks, to testify. Elbeblawy testified in his own defense and declared that he was completely "framed" by the government.

At the end of the trial, the district court instructed the jury on both conspiracy counts. It instructed the jury that "[t]o ... defraud the United States" under section 371"means to cheat the [g]overnment out...