United States v. Sanders

• Decision Date: 02 March 2020
• Docket Number: No. 17-20492,17-20492
• Citation: 952 F.3d 263
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Frankie Lee SANDERS; Pamela Annette Rose, also known as Pamela Annette Archbald, Defendants–Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

952 F.3d 263

UNITED STATES of America, Plaintiff–Appellee,

v.Frankie Lee SANDERS; Pamela Annette Rose, also known as Pamela Annette Archbald, Defendants–Appellants.

No. 17-20492

United States Court of Appeals, Fifth Circuit.

FILED March 2, 2020

Amy Howell Alaniz, Carmen Castillo Mitchell, Assistant U.S. Attorneys, U.S. Attorney's Office, for Plaintiff-Appellee.

Kimberly S. Keller, Keller Stolarczyk P.L.L.C, Boerne, TX, for Defendant-Appellant Frankie Lee Sanders.

Yolanda Evette Jarmon, Esq., Law Office of Yolanda Jarmon, Houston, TX, for Defendant-Appellant Pamela Annette Rose.

Before DAVIS, SMITH, and STEWART, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

Pamela Rose ("Rose" or "Mrs. Rose") and Frankie Sanders ("Sanders") were executives at a company that provided rehabilitative services to injured federal employees. A jury convicted Rose and Sanders of conspiracy and fraud for participating in a plot to defraud the federal workers’ compensation fund. Both challenge the sufficiency of the evidence and the district court’s handling of a recalcitrant witness. Rose also protests the criminal forfeiture of several properties. We affirm.

I. INTRODUCTION

A.

Federal Work Ready ("FWR"¹ ) was a health care business based in Houston. FWR marketed itself to federal patients whose physical therapy ("PT") was reimbursable under the Federal Employees’ Compensation Act ("FECA"), 5 U.S.C. § 8101 et seq . FWR served hundreds of federal workers and received millions of dollars in reimbursements from the federal government. It had PT clinics in several states, including Texas and Louisiana.

Mrs. Rose and Sanders co-owned FWR along with Jeffrey Rose ("Mr. Rose"), the defendant Rose’s husband. Mrs. Rose served as chief financial officer ("CFO"). Sanders was Vice President of Clinical Operations. Mr. Rose was the chief executive officer ("CEO"). Other key personnel included John Cruise, the former chief operating officer ("COO"), and Dr. Hugo Jaime, a licensed chiropractor who oversaw PT and the medical professionals at FWR.

B.

Health care providers such as FWR can receive payments for treating federal employees. See id. §§ 10.800–10.826. The overwhelming majority of FWR’s revenues came from reimbursements under FECA’s workers’ compensation program. FECA benefits for injured workers include pay for up to forty-five days and, relevant to this case, certain medical expenses and rehabilitation services. See 5 U.S.C. §§ 8103 – 04, 8118(b)(2) ; 20 C.F.R. § 10.0(b). Those benefits are administered by the Department of Labor’s ("DOL’s") Office of Workers’ Compensation Programs ("OWCP"). 20 C.F.R. § 10.1.

An intricate web of rules governs the submission of FECA claims. Providers such as FWR must itemize the claims using, inter alia , the Physician’s Current Procedural Terminology codes, see id. § 10.801(b), a system created to provide a uniform and accurate description of health care services. Medical evidence must support every claim. Id. § 10.801(a). And when a provider submits one, it certifies "that the service ... was performed as described, necessary, appropriate and properly billed in accordance with accepted industry standards." Id. § 10.801(d).

Prohibitions abound. Providers understandably cannot "upcod[e] billed services for extended medical appointments when the employee actually had a brief routine appointment." Id. Nor can they "charg[e] for the services of a professional when a paraprofessional or aide performed the service." Id. And, since FECA claims must be submitted "in accordance with accepted industry standards," id. , claims filed under codes for one-on-one treatment must have been performed one-on-one.

C.

By 2013, FWR’s business was cooking. But the government smelled something foul. It started an investigation of impressive scope, involving undercover agents, confidential informants, audio and video surveillance, subpoenaed bank and business records, and more than two hundred interviews. What investigators uncovered was a scheme to defraud DOL of FECA funds. Evidence at trial suggested that the following practices regularly occurred at FWR’s various clinics. Sanders and Rose largely do not contest that these practices existed.

First, despite regulations restricting aides from providing the reimbursed care, see 20 C.F.R. §§ 10.5(o), 10.801(d), unlicensed and untrained technicians supervised PT. Several employees testified that they never saw a licensed professional provide treatment.

Second, activities were regularly billed using one-on-one codes, but employees never saw patients receive individual attention. Indeed, FWR did not employ enough staff to provide the billed PT, even if the staff had possessed the required medical credentials.

Third, patients often did no therapy at all, even though FWR was billing their time. Instead, patients sat around, text messaged, played video games, watched TV, and self-performed unnecessary exercises.

Fourth, treatment plans were based not on individual patient needs, but instead on a "cheat sheet" that management created. The sheet categorized what would maximize OWCP billings by exercise type and time allotted. Patients were thus alternated among different codes based on what was most profitable. Often, medical documents were mere copies of old ones reused on new patients. One doctor testified that, as a result, patients’ health routinely deteriorated.

Finally, technicians were ordered to falsify treatment records so as to increase revenue. Sometimes, records were changed to reflect that a patient received therapy for longer than actually occurred. Other times, forms were altered to make it appear that FWR was complying with federal regulations.

D.

There was extensive trial testimony about Sanders and Rose’s alleged involvement in the fraudulent scheme. We explain in detail.

1. Mrs. Rose

Mrs. Rose, as CFO, was number three in rank and oversaw FWR’s financial affairs. Mr. Rose was the CEO and main protagonist² of the deceitful business practices.

Mrs. Rose "was very involved" in discussions about how much money was being collected at FWR clinics. She attended the weekly executive-team meeting along with Mr. Rose, Sanders, and others. The participants regularly discussed how to inflate billings on existing clients, and Mr. Rose would often become very upset when he learned that a clinic wasn’t hitting its numbers.

Despite Mrs. Rose’s steep involvement with the finances, she didn’t interact much with FWR’s clinical side, and she didn’t submit the OWCP bills for reimbursement. When Mrs. Rose gave one of FWR’s doctors, Andrea Smith, an oral evaluation, Rose told Smith that one of "her objectives must be tied to profit" and that, going forward, she would be evaluated on how much billing revenue she brought in. Mrs. Rose informed Smith that Smith would still get a raise, but that, in the future, her salary would be tied to her clinic’s numbers. Rose acknowledged that Sanders had already spoken with Smith about increasing billings. Rose also signed the written evaluation that admonished Smith for "not maximiz[ing] patient treatments."

On July 11, 2013, the government served search warrants at some of the clinics. Immediately, Rose called Cruise (the COO at the time) at his home and ordered him to go to the office. Once he arrived, investigators questioned him. Cruise called Mrs. Rose after leaving the office and filled her in. Wasting no time, Mrs. Rose told Cruise to meet her and Mr. Rose at the bank where they stashed FWR’s money in various accounts. Mrs. Rose wanted the team "to pull all the money out ... and put those funds in another account" so as "to hide the money from the federal government so it wouldn’t be seized." Twelve transfers later, and the Roses had moved $700,000 from the FWR accounts into a brand new Chase account, held in the name of Pure Vanity Boutique, Inc. ("Pure Vanity"), a corporation newly created by the Roses.³ That same night, the Roses, Sanders, and others met at a restaurant to discuss the warrants. The Roses didn’t mention the money transfers.

A formal executive meeting was also called following the warrants, and Mrs. Rose attended. The meeting was secretly recorded. Mr. Rose had instructed Cruise to find a company to sweep the executive office for listening devices, and, at the meeting, Cruise reported that no bugs had been found. In unison, Mrs. Rose and her husband exclaimed, "praise the Lord."

2. Sanders

Sanders, as the VP of Clinical Operations, was intimately involved with FWR’s clinical matters. He worked closely with the staff and doctors, helped open OWCP claims, and was the company’s expert on compliance with the federal rules governing FECA.

Sanders was also occupied with OWCP billings. He went to the billing department with Mr. Rose several times a day, and billing information was daily sent to him. He also attended the weekly meetings where the executives discussed how to maximize billings.

Sanders had a sharp focus on boosting revenue per patient. He repeatedly told doctors at FWR that maximizing billing was of paramount importance. When one doctor, Melissa Hoffman, objected to the quantity of PT ordered for some patients, Sanders told her to order it anyway. He gave a doctor a flowchart describing how to perform intake of a new patient, and the form stressed the importance of focusing on "compensable area[s]" of treatment. Sanders submitted agenda items for meetings about "maximizing treatment for patients." He fired one employee because she refused to "follow directions" by lying about patients’ exam results.

Sanders’s comments during Dr. Smith’s oral evaluation were particularly revealing. He told her that "[w]e literally have to maximize whatever is available to the patient" and admonished that Smith needed to do better on that front. Apparently aware that his comments pushed boundaries, Sanders clarified that he didn’t want Smith to do something "unethical or immoral." When Smith replied by suggesting that FWR was providing unnecessary therapy, Sanders argued...