United States v. Faux, 3:14–cr–28 SRU.

• Decision Date: 24 March 2015
• Docket Number: No. 3:14–cr–28 SRU.,3:14–cr–28 SRU.
• Citation: 94 F.Supp.3d 258
• Court: U.S. District Court — District of Connecticut
• Parties: UNITED STATES of America v. Danielle FAUX.

94 F.Supp.3d 258

UNITED STATES of America

v.Danielle FAUX.

No. 3:14–cr–28 SRU.

United States District Court, D. Connecticut.

Signed March 24, 2015.

David J. Sheldon, U.S. Attorney's Office, New Haven, CT, for United States of America.

RULING ON MOTIONS TO SUPPRESS

STEFAN R. UNDERHILL, District Judge.

Danielle Faux has been charged with health care fraud, in violation of 18 U.S.C. § 1347, obstruction of a federal audit, in violation of 18 U.S.C. § 1516, filing a false statement on a tax return, in violation of 26 U.S.C. § 7206, and aiding and abetting under 18 U.S.C. § 2. See Superseding Indictment (doc. # 21). On September 23, 2014, Faux filed a motion to suppress (doc. # 37), seeking suppression of evidence discovered as a result of a search of her home and business pursuant to warrants executed on December 8, 2011. In that motion, Faux also requested a Franks hearing, a bill of particulars, an order requiring the government to comply with its Brady obligations, and dismissal of the Superseding Indictment's forfeiture allegation. On January 7, 2015, I held oral argument and took that motion under advisement (doc. # 64).

On December 9, 2014, Faux filed a motion to suppress statements made during an interview with agents on December 8, 2011 (doc. # 58). On December 22, 2014, Faux filed a motion for in camera review of the grand jury minutes and dismissal of the Superseding Indictment (doc. # 59). I held oral argument on January 20, 2015 and took those motions under advisement (doc. # 73).¹ On March 16, 2015, I issued a ruling denying Faux's requests for a bill of particulars, an order requiring the government to comply with its Brady obligations, and dismissal of the Superseding Indictment's forfeiture allegation, as well as her motion for in camera review of the grand jury minutes and dismissal of the Superseding Indictment (doc. # 96). In that ruling, I indicated that a separate ruling would issue to address Faux's motion to suppress evidence and request for a Franks hearing (doc. # 37) and motion to suppress statements (doc. # 58). For the following reasons, the motion to suppress evidence and request for a Franks hearing is DENIED, and the motion to suppress statements is GRANTED.

I. Background²

Danielle Faux is a physical therapist licensed to practice in Connecticut. Since approximately August 2007, she has owned and operated Danielle Faux PT, LLC, a physical therapy practice located in Norwalk, Connecticut. At all times relevant to the Superseding Indictment, she was also a part owner of Achieve Rehab and Fitness, a gym located in the same building as her physical therapy practice. Faux was a participating provider in the Medicare program and a participating provider with Anthem Blue Cross Blue Shield and Aetna health care plans (collectively, “the insurance companies”).

As part of their treatment, Faux referred some of her physical therapy patients to personal trainers for personal training sessions at Achieve. If Faux referred a client to a personal trainer, the client would either purchase a personal training “package” through Achieve or pay Faux for the sessions and have Faux pay the trainer directly. Only physical therapy services provided by a licensed physical therapist are covered by Medicare and the insurance companies. Personal training services provided by non-licensed personal trainers are not covered by insurance.

A. Healthcare Fraud Investigation

In or about June 2010, a personal trainer who had worked extensively with Faux (hereinafter “CW–1”) voluntarily approached the government and met with agents from the Federal Bureau of Investigation (“FBI”) and U.S. Department of Health and Human Services, Office of the Inspector General (“HHS–OIG”). CW–1 informed the agents that Faux was engaging in a scheme to defraud Medicare and private insurance companies by billing personal training sessions as physical therapy services provided by a licensed physical therapist. CW–1 said that the services actually were rendered in the gym area at Achieve, not in Faux's physical therapy offices, and that the services were not supervised by Faux or her staff. See McPhillips Aff. ¶ 20 (doc. # 37–4).

At that time, CW–1 had worked with Faux for several years—as a business partner at Formula for Fitness from 2004 until 2007 and in a reduced capacity after Faux moved her physical therapy practice to Achieve.Id. ¶ 21. CW–1 claimed that Faux began billing personal training sessions as physical therapy while they were business partners at Formula for Fitness. Approximately six to eight months before she approached the government, CW–1 overheard a patient telling a trainer that she would have to stop training because her Medicare coverage was about to run out. Id. ¶¶ 22–24, 37. CW–1 knew that Medicare did not cover personal training sessions and believed that Medicare limits should not have affected the patient's ability to pay for personal training. Id.

CW–1 stated that personal trainers at Achieve typically were compensated in one of two ways. Achieve paid personal trainers approximately $20 per half-hour session ($40 per hour) to train clients who purchased packages through Achieve, and trainers would submit weekly “Request for Pay” sheets to Achieve in order to get paid. Alternatively, personal trainers could generate their own clients and charge those clients an amount that they deemed appropriate, but had to pay Achieve a $15 fee in order to do so. Id. ¶¶ 25–26.

CW–1 explained that trainers were paid differently for clients referred by Faux. Trainers tracked their sessions with those clients in a blue binder known as the “P.T. Log Book” kept in the training room at Achieve and submitted “Request for Pay” sheets directly to Faux—not Achieve. Faux would then send a check to the trainer from the bank account for Danielle Faux PT, LLC. Faux paid trainers between $35 and $45 per half-hour session—significantly more than Achieve paid trainers for the same services. Id. ¶¶ 25–32.

The agents did not perceive a legitimate reason for Faux to sell personal training packages to patients, because insurance did not cover personal training sessions.³ As a result, the government commenced an eighteen-month investigation into Faux's business and billing practices. Shortly after speaking with CW–1, the government began issuing grand jury subpoenas to obtain Faux's billing and financial records. The government also put a wire on CW–1 and recorded numerous conversations between CW–1 and Faux, and between CW–1 and several of Faux's patients. Finally, the government had an undercover agent obtain physical therapy services at Faux's practice in order to confirm CW–1's statements and glean additional information about Faux and the practice.

The government's investigation revealed several instances where Faux billed insurance for providing physical therapy on days when it appeared likely that the patient had not received physical therapy, but had seen a personal trainer. Id. ¶¶ 48, 70–71, 78–80. On December 7, 2011, FBI Special Agent Matthew McPhillips, a licensed attorney, submitted an application for search warrants for Faux's home and business, and Magistrate Judge Holly B. Fitzsimmons issued the warrants.

B. Execution of the Search Warrant and Interrogation at Faux's Residence

Agents executed the warrants at Faux's home and business on the morning of December 8, 2011. Approximately ten to fifteen agents from three agencies—the FBI, HHS–OIG and the Criminal Investigations Division of the Internal Revenue Service (“IRS–CID”)—arrived at Faux's home early that morning, just as the sun was coming up. Hr'g Tr. 11, 51–52, Jan. 20, 2015 (doc. # 84). Upon arriving at the house, they observed Faux's husband, Nicholas Corwin, in the driveway putting suitcases in the car. Id. at 11, 53. Faux and Corwin were about to leave for a vacation to Mexico with Corwin's son and his family. Faux Aff. ¶ 4. The agents approached Corwin, identified themselves and told Corwin that they were there to execute a search warrant. Hr'g Tr. 12.

The agents entered the house through a door between the garage and the main front door. Id. at 13. Faux was at the end of the hallway, fully dressed and carrying luggage. Id. at 14, 54. McPhillips and HHS–OIG Special Agent Lucille Fontes, who were designated to interrogate Faux during the search, approached Faux and informed her that they had warrants to search her residence and her physical therapy practice. Id. at 8, 19. McPhillips and Fontes told Faux that they wanted to speak with her about the use of personal trainers in the operation of her physical therapy practice. Id.; Faux Aff. ¶ 5. Faux replied that the use of trainers was entirely separate from her physical therapy practice. Hr'g Tr. 15. McPhillips “responded very bluntly, very directly, back to her in a manner in which she would understand that I didn't believe what she was telling me.” Id.

Faux informed the agents that she was about to leave for vacation. Id. at 16, 75. According to Faux, McPhillips replied that she was “not going anywhere.” Faux Aff. ¶ 6. McPhillips denied making that statement, and testified that he did not tell Faux to cancel her plans or make any such threats. Hr'g Tr. 15–17. But it is undisputed that both agents heard Faux inform Corwin that their vacation would be cancelled, because the agents were there to discuss the “crossover” of the businesses, and neither agent informed Faux that there was no need to cancel or postpone her trip. See id. at 16, 55.

McPhillips and Fontes were dressed in business attire, but many of the agents executing the warrant were wearing jackets that identified them as law enforcement. Id. at 9–10, 52. McPhillips and Fontes were both carrying a weapon, but neither had occasion to draw their weapon while at Faux's residence. Id. Nevertheless, Faux knew or believed that most, if not all of the agents present at her home were armed. Faux Aff. ¶ 5.

The agents questioned Faux in the dining room. Hr'g Tr. 55. Faux asserts that they...