Court Opinion

ID: 6326611
Source: CourtListenerOpinion
Date Created: 2022-03-24 18:00:23.054259+00
Date Added: 2024-06-11T09:22:14.392956
License: Public Domain

Case: 20-40869     Document: 00516252163         Page: 1     Date Filed: 03/24/2022

           United States Court of Appeals
                for the Fifth Circuit                           United States Court of Appeals
                                                                         Fifth Circuit

                                                                       FILED
                                                                 March 24, 2022
                                  No. 20-40869
                                                                  Lyle W. Cayce
                                                                       Clerk

   United States of America,

                                                             Plaintiff—Appellee,

                                       versus

   Rodney Mesquias; Henry McInnis,

                                                        Defendants—Appellants.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                            USDC No. 1:18-CR-8-1

   Before Jones, Haynes, and Costa, Circuit Judges.
   Gregg Costa, Circuit Judge:
          For close to a decade, Rodney Mesquias and Henry McInnis ran a
   network of home health and hospice centers in Texas. A federal grand jury
   alleged that Mesquias and McInnis, along with others not parties to this
   appeal, engaged in a scheme to falsely certify that patients were eligible for
   home health or hospice services. The indictment charged them with six
   counts of health care fraud and one count each of conspiracy to commit
   health care fraud, conspiracy to launder money, and conspiracy to obstruct
   justice. Mesquias faced an additional charge—conspiracy to pay kickbacks.
   After a twelve-day trial, a jury convicted Mesquias and McInnis on all counts.
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                                       No. 20-40869

   The district court sentenced them to prison terms of twenty and fifteen years
   respectively. We consider whether: (1) sufficient evidence supports the fraud
   convictions and (2) the district court properly calculated loss when
   sentencing defendants.
                                              I
          Defendants challenge the sufficiency of the evidence to support their
   convictions for health care fraud and conspiracy to commit that fraud. 1 Our
   sufficiency review is highly deferential to the jury’s verdict. We will reverse
   only if no rational jury could have found defendants guilty beyond a
   reasonable doubt. United States v. Bowen, 818 F.3d 179, 186 (5th Cir. 2016).
   As a result, the recounting of the evidence that follows is in the light most
   favorable to the jury’s verdict. United States v. Moreno-Gonzales, 662 F.3d
   369, 372 (5th Cir. 2011).
                                             A
          Medicare, the multibillion dollar federal health care program,
   reimburses certain home health and hospice treatments. Home health care
   includes nursing and therapy for patients who, owing to their medical
   problems, find it difficult to leave their home without assistance. Hospice is
   holistic end-of-life care for patients who are dying. It is palliative—focused
   on making the patient comfortable in their dying days—rather than curative.
          A web of statutes and regulations governs whether Medicare will pay
   for these services. Medicare covers home health services when a doctor

          1
              Defendants’ opening briefs challenge only the substantive health care fraud
   convictions. McInnis’s reply brief belatedly tries to challenge the convictions for
   conspiracy to commit health care fraud, arguing that they are “predicated on the same
   purported fraud” as the substantive fraud counts. Even if we were to consider McInnis’s
   argument, however, the evidence supporting the substantive counts would be more than
   sufficient to support the conspiracy counts.

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   certifies that the patient is confined at home and needs skilled nursing or
   therapy. 42 U.S.C. § 1395f(a)(2)(C). Hospice care is reimbursed when both
   the patient’s primary-care physician and the medical director of the hospice
   certify that the patient has a life expectancy of six months or less. Id.
   §§ 1395f(a)(7), 1395x(dd)(3)(A). The hospice certification lasts ninety days,
   id. § 1395f(a)(7), but Medicare acknowledges that estimating life expectancy
   is an inexact science and allows for periodic renewal of hospice lasting beyond
   six months upon recertification by either the primary-care physician or
   medical director. See id.; 79 Fed. Reg. 50452, 50470 (Aug. 22, 2014).
          Given the millions of claims that it handles, Medicare cannot
   scrutinize every claim that comes through the door. So the front end of its
   reimbursement system is based on trust. If a provider submits a claim with
   all   the   information   Medicare      asks     for—including   the   required
   certifications—Medicare pays the claim without verifying the accuracy of the
   underlying information. On the back end, after Medicare reimburses the
   providers, auditors review suspicious claims.
                                           B
          A person commits health care fraud by “knowingly and willfully
   execut[ing] a scheme to defraud a government health care program like
   Medicare.” United States v. Sanjar, 876 F.3d 725, 745 (5th Cir. 2017) (citing
   18 U.S.C. § 1347). A person is guilty of conspiring to commit health care
   fraud when he knowingly agrees to execute the fraud scheme with the intent
   to further its unlawful purpose. United States v. Njoku, 737 F.3d 55, 63 (5th
   Cir. 2013) (citing 18 U.S.C. § 1349).
          Overwhelming evidence established that Mesquias and McInnis
   committed health care fraud by abusing Medicare’s reimburse-first-verify-
   later system from 2009 to 2018. That evidence, sampled below, is more than
   sufficient to support the guilty verdicts.

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          Through their respective positions as owner-president and CEO of
   the Merida Group—the umbrella company for several businesses
   purportedly offering home health and hospice care—Mesquias and McInnis
   orchestrated a scheme of certifying patients for home health and hospice care
   regardless of their eligibility. They certified all patients who came to their
   facilities, regardless of eligibility. After the patients were certified once,
   defendants recertified them indefinitely, again without consideration of their
   eligibility. An estimated 70 to 85 percent of the Merida Group’s patients
   were ineligible for the care they received.
          A few examples show that many certifications were not borderline
   cases. One hospice patient had a regular job at Walmart, even though having
   employment disqualifies patients from hospice. Another, who supposedly
   had terminal-level dementia, recounted to his nurse a days-old memory of
   twisting his knee while dancing the Macarena at a family celebration. And
   one home health patient was actually a boxing instructor at a local gym; he
   was spotted drinking a beer while driving when he was supposed to be stuck
   at home with a disability.
          To facilitate the fraudulent certification, Mesquias and McInnis built
   a roster of compliant in-house medical directors at Merida Group. The
   medical directors routinely lied about having seen patients face-to-face as
   Medicare requires, exaggerated how sick the patients were and made up
   diagnoses so that the patients would appear eligible for hospice, and
   fabricated medical records to cover their tracks.         The directors also
   circumvented the patients’ primary-care physicians and often referred
   patients to hospice at one of the Merida Group’s entities over the objections
   of those physicians.
          The carrot-and-stick approach defendants used to control the actors
   in their scheme reveals their fraudulent intent. The carrots were financial

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   incentives like raises and bonuses to participate in the fraud. The sticks were
   harsh. Defendants intimidated their employees into submission. When
   employees pushed back against his excesses, Mesquias warned them not to
   “f*** with his money.” McInnis was the enforcer. He “cuss[ed] out”
   skeptical nurses and “yell[ed] at the staff” if patients were not certified. For
   those who failed to go along, consequences were severe.           One medical
   director lost his job for refusing to refer patients to hospice.         Other
   employees, like nurses, who raised questions were also fired or threatened
   with termination.
           Taxpayers were not the only victims of defendants’ scheme; patients
   suffered too. Defendants lied to patients and families about the eligibility
   requirements for home health and hospice care and roped them in by
   exaggerating potential benefits. They targeted poor and elderly non-English
   speakers in San Antonio housing projects and used the language barrier to
   trick them into signing up for hospice care. Defendants also told patients that
   they had terminal illnesses when they did not. Those lies took a psychological
   toll. To take an example, one patient who was told that she had less than six
   months to live began thinking about ending her life so that her family would
   not have to watch her die slowly. She lost her appetite, cried incessantly,
   confined herself at home because she did not want to burden her family, and
   stopped sleeping out of the fear that she would never wake up. Five years
   after the diagnosis telling her that she had six months to live, that patient
   testified at trial.
           The scale of the scheme matched its cruelty. By the time they were
   caught, defendants had submitted over 47,000 claims for over 9000 patients.
   They billed over $152 million to Medicare and received $124 million.
           To prove this fraud at trial, the government called nineteen
   witnesses—fourteen of whom were involved with Merida Group and three

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   of whom were also charged in the conspiracy 2—who established the facts just
   discussed. This evidence, which is only a sampling, is more than enough to
   show an overall conspiracy and scheme to engage in health care fraud.
   Indeed, it is more damning evidence than that in other cases in which we have
   upheld health care fraud convictions. See, e.g., United States v. Veasey, 843 F.
   App’x 555, 561–65 (5th Cir. 2021); United States v. Ezukanma, 756 F. App’x
   360, 364–69 (5th Cir. 2018); Sanjar, 876 F.3d at 746; United States v. Barson,
   845 F.3d 159, 163–65 (5th Cir. 2016); United States v. Willett, 751 F.3d 335,
   340–43 (5th Cir. 2014).
                                                C
           Defendants do not address most of this evidence. Instead, they
   advance two arguments in the effort to overturn their convictions. First, they
   assert that the government offered no proof that they knew the patients were
   ineligible for home health and hospice. Mesquias argues that he could not
   have had the requisite intent to defraud because the government offered no
   evidence that he played a role in the false certifications. McInnis separately
   portrays himself as an innocent office worker with no power to question the
   certifications.
           The evidence belies their claims of ignorance. Mesquias was the
   driving force behind the false certifications and doctored medical records.
   He established the rule of admitting every patient and not discharging them.
   He ordered that medical directors spend multiple days creating “boxes” of
   falsified medical records. McInnis enforced Mesquias’s rules. He ran the
   day-to-day operations of the organization from its “nerve center” in

           2
             The government charged four others: an administrator named Jose Garza and
   three medical directors, Jesus Virlar, Eduardo Carrillo, and Francisco Pena. Garza, Virlar,
   and Carillo pleaded guilty and testified at trial. Pena faced trial with Mesquias and McInnis
   and was convicted on all counts but died before sentencing.

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   Harlingen, issuing directives on how to circumvent objecting physicians,
   falsify medical records, dupe auditors, and lie to patients.                     And he
   aggressively confronted employees who questioned the scheme. Unlike
   cases in which we have found insufficient evidence to support health care
   fraud convictions, see United States v. Nora, 988 F.3d 823, 833–34 (5th Cir.
   2021) (reversing an officer manager’s conviction because he did not know
   that his work was unlawful); United States v. Ganji, 880 F.3d 760, 773–78 (5th
   Cir. 2018) (reversing doctors’ convictions because the government offered
   no proof that they were involved in the fraud scheme), Mesquias and McInnis
   were intimately involved with the fraud. See Sanjar, 876 F.3d at 746
   (affirming the convictions of two doctors who orchestrated a fraud scheme).
           Second, defendants argue that the government did not prove the
   ineligibility of the six patients whose claims were listed as the substantive
   fraud counts. Again, the record tells a different story. Merida Group medical
   directors testified that the certifications for all six patients were either
   outright lies or based on fabricated medical records. Such testimony of a co-
   conspirator, as long as it is not incredible, is alone sufficient to support a
   conviction. United States v. McClaren, 13 F.4th 386, 399 (5th Cir. 2021)
   (explaining that such testimony is incredible only if it defies the laws of nature
   or involves matters the witness could not have observed). Although
   corroboration of these damaging admissions was not required for the jury to
   convict, ample circumstantial evidence backed up the co-conspirators’
   testimony. The named patients were in hospice for an average of three years,
   a far cry from Medicare’s six-months-to-live eligibility requirement. 3 Some

           3
            As we have noted, Medicare allows for recertification beyond six months because
   medical predictions are not always accurate. Still, the length of the lives at issue support
   the co-conspirators’ testimony.

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   patients were alive when they were discharged; one even testified at trial five
   years after being certified.
          Defendants also point us to a pair of cases—one from a different
   circuit, one from a district court, both involving the civil False Claims Act—
   declining to find that certain claims submitted to Medicare were fraudulent.
   See United States v. AseraCare, Inc., 938 F.3d 1278, 1285 (11th Cir. 2019);
   United States ex rel. Wall v. Vista Hospice Care, Inc., 2016 WL 3449833, at *19
   (N.D. Tex. June 20, 2016). But in those cases, there was no evidence of fraud
   beyond (1) after-the-fact expert testimony that the initial determinations of
   hospice eligibility were inaccurate, and (2) unrelated anecdotes of lax
   business practices. AseraCare, 938 F.3d at 1285; Wall, 2016 WL 3449833, at
   *19. Both cases recognized that stronger evidence, like facts inconsistent
   with doctors’ proper exercise of their clinical judgment, could change the
   outcome. See AseraCare, 938 F.3d at 1297; Wall, 2016 WL 3449833, at *17.
   That stronger evidence—of lies, kickbacks, and fabrication—is present here.
          From AseraCare and Wall, defendants derive an “objective falsity”
   theory. Under this theory, clinical judgments, like the ones underlying
   hospice and home health certifications, cannot be the basis of a fraud
   prosecution unless the government offers expert testimony to prove them
   objectively false. But health care providers cannot immunize themselves
   from prosecution by cloaking fraud with a doctor’s note. See United States v.
   Veasey, 843 F. App’x 555, 561–62 (5th Cir. 2021) (rejecting the argument that
   a factual determination that a patient is “homebound” is a medical opinion
   that cannot establish intent to commit fraud).         Categorical evidentiary
   requirements are at odds with a jury’s ability to consider a broad array of
   direct and circumstantial evidence. See Sanjar, 876 F.3d at 745 (rejecting a
   categorical rule requiring expert testimony in health care fraud cases); see also
   Fifth Circuit Pattern Jury Instructions (Criminal) 1.07
   (2015) (“The law makes no distinction between the weight to be given either

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   direct or circumstantial evidence.”). What is more compelling: a doctor’s
   testimony that he lied when certifying a patient or an expert’s testimony that
   he would have made a different clinical determination than the certifying
   doctor? Common sense suggests the former, which is in abundance here.
          Defendants’ arguments do not show that the jury lacked evidence to
   find them guilty. We therefore affirm their convictions.
                                         II
          That brings us to sentencing.        The district court found that
   defendants’ fraud was pervasive and thus treated the entire amount that they
   billed to Medicare as the intended loss. That enhanced their offense levels
   by 24 points, resulting in an advisory Sentencing Guidelines range of life in
   prison. U.S.S.G. § 2B1.1. The district court then sentenced Mesquias to 240
   months and McInnis to 180 months.
          Before imposing those sentences, the district court rejected the
   defense’s request for testimony at the sentencing hearing. We are troubled
   by that refusal. The momentousness of any sentencing, combined with the
   complexity of this $100 million-plus fraud scheme, would seem to have
   warranted allowing testimony absent some compelling reason to the contrary.
   But defendants’ briefs do not raise the denial of testimony as reason to
   remand or vacate their convictions. Nor did defendants specify in district
   court the testimony that they planned to elicit.
          We thus turn to the argument that defendants do raise: that the court
   erred in calculating loss. In defendants’ view, because the government did
   not prove that the fraud was pervasive, the district court should have limited
   the intended loss to the roughly $20,000 billed for the six patients associated
   with the substantive health care fraud counts.

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          The government ordinarily has the burden to prove loss at sentencing.
   United States v. Hebron, 684 F.3d 554, 563 (5th Cir. 2012). But when fraud is
   pervasive—that is, when it becomes impractical to separate legitimate claims
   from fraudulent ones—the burden shifts to the defendant to show legitimate
   instances of billing. Id. If a district court finds pervasive fraud, it can then
   use the entire amount billed to Medicare as intended loss. See United States
   v. Barnes, 979 F.3d 283, 309, 312 (5th Cir. 2020). That crucial finding of
   pervasive fraud is reviewed for clear error. Id. at 312.
          The same evidence that supported defendants’ convictions also
   allowed the district court to find that the fraud was pervasive. Defendants’
   fraud seeped through every nook of their operation. According to former
   Merida Group medical directors, none of the organization’s medical records
   were trustworthy. Nurses echoed the medical directors, testifying that 70 to
   85 percent of their patients were ineligible for hospice. Given this
   comprehensive fraud, the district court was not required to sift through
   thousands of claims of dubious reliability to sort the fraudulent from the
   nonfraudulent. We have upheld pervasive fraud findings on less. See United
   States v. Mazkouri, 945 F.3d 293, 304 (5th Cir. 2019) (finding pervasive fraud
   when defendant provided unnecessary services over six years); Ezukanma,
   756 F. App’x at 373 (finding pervasive fraud of overbilling in case involving
   over 90,000 claims); United States v. Dubor, 821 F. App’x 327, 329 (5th Cir.
   2020) (finding pervasive fraud of kickbacks over five years). And defendants
   identified no legitimate billings to reduce the loss amount.
                                        * * *
          The convictions and sentences are AFFIRMED.

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