The fate of seven imprisoned co-conspirators in one of the largest medical kickback cases ever now rests with the judges of the Fifth U.S. Circuit Court of Appeals.
A three-judge panel of the court heard arguments earlier this month on appeals by the seven people, including four physicians, who were convicted in 2019 by a federal jury in Dallas of an array of charges stemming from the operation of Forest Park Medical Center, a defunct surgical hospital that was at the center of a far-ranging insurance scam.
According to the government, the physician-owned North Dallas hospital took in $200 million in questionable insurance benefits from early 2009 through 2012 by bribing doctors and others to steer well-insured patients its way. Investigators said the bribes totaled $40 million, much of it disguised – poorly, it turned out – as consultant fees or marketing subsidies.
Those found guilty at trial and now in prison are:
- Mac Burt, Forest Park’s million-dollar-a-year co-administrator;
- Dr. Douglas Won, spinal surgeon and co-founder of the Minimally Invasive Spine Institute of Dallas;
- Dr. Michael Rimlawi, spinal surgeon and Won’s onetime partner at MISI;
- Dr. Shawn Henry, Fort Worth spinal surgeon and Forest Park investor;
- Dr. Mike Shah, pain-management physician;
- Jackson Jacob, owner of a company Forest Park used to channel payments to physicians; and
- Iris Forrest, nurse and workers’ compensation insurance consultant.
Among the sometimes overlapping arguments raised in the appellants’ briefs and arguments were:
- Some convicted doctors relied on the advice of counsel that their financial arrangements with Forest Park – at least as described in written contracts – were legal;
- Prosecutors overreached in applying anti-kickback and commercial bribery statutes and in their interpretation of “interstate commerce”;
- There was insufficient evidence to show some defendants had “knowingly and willfully” committed crimes;
- The trial judge erred in instructing the jury and in the use of a proffer made by one defendant who’d tried, unsuccessfully, to cop a plea; and
- One of the prosecutors wrongly implied in closing arguments that the majority of defendants, by choosing not to testify, signaled the weakness of their cases.
Initially, 21 people, including eight doctors, were indicted in the Forest Park case. Many of them plea-bargained and agreed to cooperate with the government. Nine went to trial in 2019 in Dallas before U.S. District Judge Jack Zouhary, a visiting judge from Ohio.
One defendant at trial, a weight-loss surgeon, was acquitted. The jury could not reach a verdict in the case against another defendant, a midlevel manager at Forest Park. Rather than undergo a retrial, she pled guilty to one misdemeanor.
The Fifth Circuit appellate arguments took place Aug. 1 before a panel consisting of Chief Judge Priscilla Richman and judges Don Willett and Jacques L. Wiener Jr. Lawyers for the seven appellants were each given five minutes to make their case, then, assistant U.S. attorneys Gail Hayworth and Stephen Gilstrap of the Northern District of Texas got 30 minutes, combined, to respond.
Audio of the full arguments is here. Following are highlights regarding each appellant:
CONVICTIONS: Ten of 12 counts: conspiracy, paying kickbacks, commercial bribery, money laundering
SENTENCE: 12 years, 6 months
APPELLATE LAWYER Richard W. Westling, Epstein Becker & Green, Nashville and Washington, D.C.
FROM APPELLANT’S ARGUMENT: Judge Zouhary was wrong to find that Burt breached a pretrial agreement with prosecutors under which Burt made a proffer; and, the judge was wrong to read a statement to the jury in which he said Burt “made an incriminating statement during an interview.” Further, the government “characterized the statement as a confession,” which was prejudicial.
GOVERNMENT RESPONSE: “The record confirms that Burt breached his proffer agreement … and the district court’s limited cure for this breach was appropriate.” According to evidence entered at trial by his attorney, Burt in 2011 “was purportedly unaware of fraud” at Forest Park. That assertion contradicted his proffer, in which “he made it clear that he knew from the outset – 2009, when Forest Park started – that… bribes and kickbacks were being paid to doctors.”
DR. DOUGLAS WON
CONVICTION: One of two counts: conspiracy
SENTENCE: 5 years
APPELLATE LAWYER: Daniel L. Geyser, Haynes and Boone, Dallas and Denver
FROM APPELLANT’S ARGUMENT: The federal anti-kickback statute applies only to cases in which patient are federally insured, such as Medicare or Medicaid patients, and Won went out of his way not to treat federally insured patients. “There wasn’t a dime of federal money that paid for any of those patients.” Furthermore, Won heeded the advice of attorneys who told him, “if you stay clear of federal programs, you avoid the gray area under the anti-kickback statutes.”
GOVERNMENT RESPONSE: “Taking money for patient referrals, regardless of what kind of insurance they have, is wrongful.” And attorneys with whom Won consulted before signing an agreement with Forest Park told him so.
DR. MICHAEL RIMLAWI
CONVICTIONS: Three of four counts: conspiracy, receiving kickbacks
SENTENCE: 8 years, 6 months
APPELLATE LAWYER: David Gerger, Gerger Hennessy & Martin, Houston
FROM APPELLANT’S ARGUMENT: The court improperly failed to give an advice-of-counsel instruction to the jury. “Rimlawi testified how he consulted attorneys way back to 2009 at the very beginning of this Forest Park arrangement. … Rimlawi testified how he relied on the attorneys’ advice … that if it’s paid for marketing to a third-party company that he does not own, that this [money from Forest Park] would not be a remuneration as defined in the anti-kickback statute.”
Then, “there was insult added to injury that was quite severe. After the government persuaded the district court not to give the [advice-of-counsel] instruction, … the government in rebuttal closing argument [said] ‘Why would they spend money on lawyers? They want to get credit for going to a lawyer?’”
GOVERNMENT RESPONSE: “The advice-of-counsel defense wasn’t warranted here. … The defendants cannot show that any advice of counsel negated willfulness on their part.” Two lawyers, one who’d advised Rimlawi and Won, one who’d advised just Won, “testified that taking money, whether it be marketing payments or any other type, in exchange for patient referrals was illegal, and they advised their clients not to do it.”
DR. SHAWN HENRY
CONVICTIONS: Three of three counts: conspiracy, commercial bribery, money laundering
SENTENCE: 7 years, 6 months
APPELLATE LAWYER: Mick Mickelsen, Broden & Mickelsen, Dallas
FROM APPELLANT’S ARGUMENT: The only evidence of “interstate commerce” that would justify federal prosecution of the Texas commercial bribery statute under the federal Travel Act “was simply the interstate transmission of a check,” which was “an insufficient nexus for the use of the Travel Act” and an “extremely attenuated assertion of federal jurisdiction.”
GOVERNMENT RESPONSE: “Transmitting a check electronically [online] … is sufficient to show the use of a facility of interstate commerce.” Also, Henry signed and deposited at least one check into his account at a bank that operates across state lines – further evidence of interstate commerce.
DR. MIKE SHAH
CONVICTIONS: Four of four counts: conspiracy, paying kickbacks, commercial bribery
SENTENCE: 3 years, 6 months
APPELLATE LAWYER: Christopher Man, Winston & Strawn, Washington, D.C.
FROM APPELLANT’S ARGUMENT: “There is no direct evidence that he was aware that his clients … were subject to the anti-kickback statute.” Furthermore, Andrew Wirmani, the lead prosecutor (now a partner with Reese Marketos in Dallas), erred by saying in his closing argument, “The only person who took the stand and tried to tell you a different story was defendant Rimlawi. … That’s the best that these 20 [defense] lawyers could bring you after seven weeks. That’s the best representation of their case.” This was a patently improper suggestion to jurors that other defendants’ not taking the stand was evidence of guilt.
GOVERNMENT RESPONSE: “Shah concedes that he was paid for patient referrals, but he claims that he didn’t know it was unlawful to take money for patient referrals. But numerous witnesses testified that it’s a well-known, basic concept understood by doctors,” and Shah was “an intelligent and well-educated doctor.” Also, “despite knowing that he was paid for his patient referrals, he provided sham invoices falsely stating that he was being paid for consulting work.”
“Defendants want you to believe that attacking Rimlawi’s credibility means that the prosecutor was commenting on the other defendants’ silence. But the problem with that argument is that Rimlawi was not the only defendant to testify at trial. Carli Hempel [the Forest Park manager on whose case the jury hung] testified, and the jury heard Mac Burt’s proffer statement. So, in context, the point being made, and the one that the jury would reasonably understand, is that Rimlawi was the only defendant … the only witness, period … who stuck by his story that Forest Park was not paying bribes and kickbacks.” Wirmani was not suggesting other defendants should have testified.
CONVICTIONS: Four of 14 counts: conspiracy, paying kickbacks
SENTENCE: 8 years
APPELLATE LAWYER: Sara A. Johnson, New Orleans
FROM APPELLANT’S ARGUMENT: Jacob was denied the right to confront a witness against him, namely, co-defendant Burt. Judge Zouhary erred by not informing the jury that the incriminating statements in Burt’s proffer were “admitted against Burt only.”
Also, the government did not present sufficient evidence that Jacob had “knowledge and intent” to commit a crime. “Mr. Jacob believed that these payments [which he conveyed from Forest Park to doctors] were for marketing,” which was what he was told by Forest Park executives.
GOVERNMENT RESPONSE: The judge, in addressing the jury about Burt’s proffer, said, “You may consider this evidence as to defendant Burt.” He mentioned no other trial defendant. While it’s true he did not add the word “only” – as in, “You may consider this evidence as to defendant Burt only” – that point was made by Jacob’s trial counsel in her closing argument.
“There was more than enough evidence to show that he knew he was funneling money for patient referrals … and that he took a cut of their bribe money.” Alan Beauchamp, who ran Forest Park with Burt, testified that when Jacob wrote monthly checks to doctors from his “pass-through company” using Forest Park funds provided by Beauchamp, Jacob knew “the doctors were being paid for their surgeries.”
CONVICTIONS: Two of two counts: conspiracy, paying kickbacks
SENTENCE: 3 years
APPELLATE LAWYER: Angela Laughlin Brown, Gray Reed & McGraw, Dallas
FROM APPELLANT’S ARGUMENT: Forrest, a licensed vocational nurse, was a hard-working, “good old country girl” who was just doing her job – pre-authorizing workers’ comp patients for care at Forest Park. “She’s not a physician. She didn’t graduate from college. … How does a woman like this get caught up in one of the largest healthcare fraud cases?”
Since both the state and federal governments pay “a set fee” for care under workers’ comp, it cost taxpayers no more to have patients treated at Forest Park. “This was a victimless crime, because the government would have paid the same amount no matter where these patients went.”
GOVERNMENT RESPONSE: “Forrest argues that there was insufficient evidence to support her conviction because she was just doing her job, that she didn’t know that she was being paid for patient referrals. … But, again, there was more than enough evidence for a reasonable jury to find that she was being paid for her patient referrals, and that she knew that.”