United States v. Shah

84 F.4th 190

UNITED STATES of America, Plaintiff-Appellee, v. Mrugeshkumar Kumar SHAH; Iris Kathleen Forrest; Douglas Sung Won; Shawn Mark Henry; Michael Bassem Rimlawi; Wilton McPherson Burt; Jackson Jacob, Defendants-Appellants.

No. 21-10292

United States Court of Appeals, Fifth Circuit

FILED October 2, 2023

Appeal from the United States District Court for the Northern District of Texas, USDC No. 3:16-CR-516-14, Jack Zouhary, U.S. District Judge

Gail A. Hayworth, Brian W. McKay, Esq., Assistant U.S. Attorney, Stephen S. Gilstrap, U.S. Attorney's Office, Northern District of Texas, Dallas, TX, for Plaintiff-Appellee.

Abbe David Lowell, Christopher Dowden Man, Winston & Strawn, L.L.P., Washington, DC, for Defendant-Appellant Mrugeshkumar Kumar Shah.

Angela Laughlin Brown, Gray Reed & McGraw, Dallas, TX, for Defendant-Appellant Iris Kathleen Forrest.

Daniel Luke Geyser, Esq., Haynes & Boone, L.L.P., Dallas, TX, Kevin Blake Ross, Law Office of Kevin B. Ross, P.C., Dallas, TX, for Defendant-Appellant Douglas Sung Won.

Franklyn Ray Mickelsen, Jr., Broden & Mickelsen, Dallas, TX, for Defendant-Appellant Shawn Mark Henry.

David Benjamin Gerger, Attorney, Gerger Hennessy & Martin, L.L.P., Houston, TX, for Defendant-Appellant Michael Bassem Rimlawi.

Richard W. Westling, Esq., Epstein Becker & Green, P.C., Washington, DC, Edward J. Loya, Jr., Epstein Becker & Green, P.C., Dallas, TX, for Defendant-Appellant Wilton McPherson Burt.

Sara A. Johnson, New Orleans, LA, for Defendant-Appellant Jackson Jacob.

Before Richman, Chief Judge, and Wiener and Willett, Circuit Judges.

Priscilla Richman, Chief Judge:

Seven codefendants appeal their various convictions stemming from a multi-million-dollar healthcare conspiracy involving surgery-referral kickbacks at Forest Park Medical Center in Dallas, Texas. They challenge convictions under the Anti-Kickback Statute (which will sometimes be referred to as AKS),¹ the Travel Act,² and for money laundering.³ Finding no reversible error, we affirm the district court's judgment.

I

The seven codefendants on appeal were all convicted of engaging in a $40 million healthcare conspiracy in Dallas, Texas. Our initial discussion of the facts is limited to the general outline of the conspiracy: its origins, its major players, and its operation. We reserve a more detailed discussion of the evidence against the defendants for the sections of this opinion that deal with those facts more directly.⁴

There are three main sets of actors in this case: the staff at Forest Park Medical Center (Forest Park or the hospital), surgeons Forest Park paid to perform surgeries at its hospital, and pass-through entities affiliated with both Forest Park and the surgeons. The defendants in this case are, with three exceptions, the surgeons whom Forest Park paid to direct surgeries to the hospital—Won, Rimlawi, Shah, and Henry. One exception is Forrest—she is a nurse. Another is Jacob—he ran Adelaide Business Solutions (Adelaide), a pass-through entity. The other is Burt—he was part of the hospital's staff.

But this case begins with three men who are not parties to the current appeal—Alan Beauchamp, Wade Barker, and Richard Toussaint. They decided to open a hospital together—Forest Park. Forest Park was to be an "out-of-network" hospital, meaning that it was not affiliated with any insurance carrier and any surgeries performed there would be considered out-of-network for the patients. They planned for their hospital to be out-of-network because insurers were reimbursing out-of-network facilities at very high rates. But they faced a difficulty: how to convince patients to pay out-of-network costs when they could have the surgery performed at an in-network facility? Their answer: pay surgeons to refer patients to Forest Park and then waive the patient's financial responsibility beyond what the surgery would cost in-network.

In creating such a structure, the Government asserts that Forest Park engaged in illegal conduct. First, the hospital was "buying surgeries," i.e., it paid surgeons to perform a surgery at the hospital. It is well established that buying surgeries is illegal, as many witnesses testified.⁵ Second, the hospital's formal internal policy was not to waive patient financial responsibility. So, the Government argues, Forest Park's upper management had to cover its tracks. It did this by creating or partnering with a number of pass-through entities to create sham marketing or consulting contracts with the surgeons. One such entity was Adelaide, overseen by defendant Jacob. Another was Unique, which was operated by Beauchamp, Andrea Smith (a longtime aid to Beauchamp), and defendant Burt.

The Government argued that the conspiracy was as follows: The hospital and surgeons reached an agreement whereby the hospital would pay the surgeons to refer patients to Forest Park; the hospital would then contract with a pass-through entity for sham marketing or consulting services; the surgeons would contract with the same pass-through entity for sham marketing or consulting services as well; the surgeons would then direct their patients to Forest Park for surgery; Forest Park would obtain reimbursements from insurers at the out-of-network rate; the hospital would pay the pass-through entities some of those profits; and then the pass-through entities would pass along those profits to the surgeons for marketing and consulting services the surgeons never rendered.

Although Forest Park employed legitimate hospital staff, it also employed a number of individuals in roles relating directly to the conspiracy. Andrea Smith's role was to keep track of all the surgeries that the hospital "bought" and make sure that the surgeons were reimbursed according to the rates they had agreed to. She created detailed spreadsheets to keep track of this, and those spreadsheets became a major part of the Government's case. Burt's job was to assist Beauchamp in recruiting surgeons and patients. Along with Beauchamp and Smith, Burt formed an organization called Unique that was a pass-through entity. Eventually the controller for Forest Park began to resist doing business with Unique. The hospital's leadership team decided to create an outside group.

Jacob owned a radiology company near the hospital. He and Beauchamp were friends. Beauchamp approached Jacob to join the enterprise, and Jacob agreed. Jacob formed Adelaide, which assumed the role of the pass-through entity formerly occupied by Unique. Forest Park paid Adelaide monthly for services that Adelaide never rendered to the hospital. Instead, Beauchamp sent a monthly check to Adelaide with specific instructions as to how Jacob was to pay the surgeons he "contracted" with for marketing or consulting services. Often, the surgeons would complain they had not been reimbursed at their agreed-upon rate.

Won, Rimlawi, Shah, and Henry are surgeons who contracted with a pass-through entity for marketing or consulting services and who directed some of their patients to Forest Park. Most of these patients had private insurance, but some of them were covered by a federal healthcare program including Medicare, TRICARE, or DOL/FECA. Forest Park then paid the surgeons with checks issued through the pass-through entity. Forrest is a nurse who was involved in the scheme, who at the time persuaded patients to have their surgery performed at Forest Park.

The district court's description is apt: "[O]nce you separate all the 'noise,' the trial involved a single pyramid conspiracy with a number of participants.... Attempts were made to paper their dishonest conduct—to hide behind sham contracts—which ultimately proved unsuccessful."

The defendants who are parties to this appeal were tried together. The jury convicted all but Burt for engaging in a conspiracy that violated the Anti-Kickback Statute.⁶ The jury convicted Jacob, Shah, Burt, Rimlawi, and Forrest of substantive violations of that statute. It convicted Henry and Burt on substantive violations of the Travel Act⁷ as well as conspiring to commit money laundering. The jury acquitted a surgeon who is not a party to this appeal and failed to reach a verdict as to another. Shah was sentenced to 42 months of imprisonment; Rimlawi was sentenced to 90 months; Jacob to 96 months; Burt to 150 months; Henry to 90 months; Won to 60 months; and Forrest to 36 months. The defendants timely appealed.

The defendants raise many of the same issues on appeal, often adopting each other's arguments. We have organized this opinion into eighteen Parts following this one. This reflects the lowest combined count of the defendants' various issues. In each part, we address the various arguments each defendant makes regarding a particular issue, including closely related sub-issues where appropriate. We begin with the defendants' sufficiency of the evidence challenges. Then we address the remaining issues: whether the Texas Commercial Bribery Statute⁸ is a proper predicate offense to a violation of the Travel Act; potential Speedy Trial Act⁹ and Court Reporter Act¹⁰ violations; purported violations of Burt's proffer agreement and any Bruton¹¹ error stemming therefrom; various challenges to district court evidentiary rulings, jury instructions, and prosecutor arguments; and finally, challenges to sentencing and restitution.

II

Six defendants (all but Burt) challenge the sufficiency of the evidence supporting their respective convictions of conspiring to violate the AKS. The AKS provides, in relevant part, that:

(1) [w]hoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind ... in return for referring an individual to a person for furnishing ... of any item or service for which payment may be made in whole or in part under a Federal health care program, ... shall be guilty of a felony ...

(2) [w]hoever knowingly and willfully offers or pays any [such]

...