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United States v. Bertram

United States District Court, E.D. Kentucky, Central Division, Frankfort

September 29, 2017

ROBERT L. BERTRAM, M.D., et al., Defendants.

          OPINION & ORDER


         Trial by jury is a hallmark of the American justice system. At a time when our nation's founders could agree on little else, they at least collectively emphasized the importance of the jury trial. A man's legal fate should not be decided at the hands of a king, a judge, or some other trained mind, so they thought, but by a group of one's peers.[1] Unsurprisingly, then, they guaranteed the right to a trial by jury for future generations by way of the Sixth Amendment.[2]And to this day, despite increasing criticism, trial by jury remains our nation's method of choice when it comes to seeking a just and true resolution of claims.[3]

         In the present case, five men were tried for conspiring to commit, as well as substantively committing, health care fraud, and a jury returned a verdict finding them guilty in part. The five Defendants now seek a judgment of acquittal or, alternatively, a new trial. According to the Defendants, the jury based its verdict on insufficient evidence. See Fed. R. Crim. P. 29. Further, they contend the jury's verdict is manifestly unjust. See Fed. R. Crim. P. 33. While courts do have the power to take a verdict from a jury when presented with appropriate circumstances, the Court does not find this case to warrant such extraordinary relief. Accordingly, for the reasons that follow, the Court DENIES the Defendants' motions.


         Dr. Robert Bertram, Jr., Mr. Wes Bottom, Dr. Robin Peavler, Mr. Brian Walters, and Dr. Bryan Wood were jointly charged in November 2015 with conspiracy to commit health care fraud and substantively committing health care fraud on ninety-nine occasions. [R. 1.] The factual background behind the charges is set forth in the Indictment and numerous prior opinions of this Court. [See, e.g., R. 1; R. 82; R. 178.] But, to summarize, two of the five Defendants Dr. Robin Peavler and Dr. Bryan Wood co-owned a chain of substance abuse treatment clinics headquartered in Danville, Kentucky, known as SelfRefind. As part of the substance abuse treatment taking place at SelfRefind, physicians utilized urine drug testing to check for the presence or absence of illicit substances in patients. Drs. Peavler and Wood also became co-owners and operators of PremierTox, Inc., a clinical laboratory located in Russell Springs, Kentucky, alongside Defendants Wes Bottom, Brian Walters, and Dr. Robert Bertram, Jr.

         According to the allegations set forth in the Indictment, Dr. Peavler and Dr. Wood began referring all urine samples from SelfRefind to PremierTox for quantitative drug testing, despite the fact that PremierTox was not yet capable of performing the tests and regardless of whether SelfRefind's initial qualitative drug screens indicated a need for a quantitative confirmation test. The SelfRefind urine samples were transported to freezers at PremierTox, and thousands of urine samples were ultimately stored there. Once the equipment at PremierTox was properly functioning, PremierTox prioritized the testing of fresh urine samples but still tested and ultimately billed insurance payors for the frozen samples, even if many months had passed since the samples' initial collection.

         Based on this activity, the Defendants were charged with one count of conspiracy to commit health care fraud in violation of 18 U.S.C. § 1349, as well as ninety-nine counts of knowingly and willingly executing a scheme to defraud a health care benefit program in violation of 18 U.S.C. § 1347. Of those ninety-nine counts, thirty-six involved claims submitted to Medicaid and/or Medicare, fifteen involved claims submitted to Bluegrass Family Health, and forty-eight stemmed from claims submitted to Anthem BlueCross BlueShield (“Anthem”). [See R. 1 at 10-12.]

         Over the course of a two and a half week trial, the Government presented evidence from PremierTox employees; SelfRefind treating physicians, employees, and patients; and expert witnesses. At the conclusion of the Government's case-in-chief, the Defendants moved for a judgment of acquittal pursuant to Federal Rule of Criminal Procedure 29(a), but the Court reserved its ruling on the matter. The jury then returned its verdict, which was identical as to each of the five Defendants. [See R. 283 through R. 287.] The jury acquitted each Defendant of the conspiracy charge and of eighty-two substantive health care fraud counts. However, the jury found each Defendant guilty of seventeen out of the forty-eight total Anthem counts. The seventeen counts of conviction represent urine samples collected on or before February 17, 2011, or samples more than six months old at the time of their testing and billing. [See R. 1 at 10-12.]

         Following the jury's verdict, the Defendants filed post-trial motions for a judgment of acquittal pursuant to Rule 29, as well as motions for a new trial pursuant to Federal Rule of Criminal Procedure 33. After holding oral argument and carefully considering the parties' arguments, the Court upholds the jury's verdict and denies the requests for post-trial relief.



         As articulated at the outset, our justice system relies on juries, not judges, to determine guilt or innocence in a particular criminal prosecution. This practice, though sometimes puzzling, is crucial when it comes to protecting the constitutional rights and liberties of the American people-including the rights and liberties of the five Defendants.[4] Nevertheless, a judge does have the authority to vacate a jury's finding of guilt if the evidence presented during trial was insufficient under the law to support such a conviction. The Defendants ask the Court to take this action in their case.

         Following the conclusion of the Government's case, the Defendants moved for acquittal and now, following the verdict, they have supplemented their motions in support of acquittal pursuant to Federal Rule of Criminal Procedure 29. Rule 29 requires this Court to enter a judgment of acquittal on “any offense for which the evidence is insufficient to sustain a conviction.” Fed. R. Crim. P. 29(a).

         When considering a Rule 29 motion based on an alleged insufficiency of the evidence, the Court may not reweigh the evidence, reevaluate the credibility of witnesses, or substitute its judgment for that of the jury. See United States v. Callahan, 801 F.3d 606, 616 (6th Cir. 2015). Instead, the Court views all of the evidence in the light most favorable to the Government, and then it considers whether any rational trier of fact could find the elements of the counts of conviction beyond a reasonable doubt. See, e.g., United States v. Vichitvongsa, 819 F.3d 260, 270 (6th Cir. 2016); United States v. Villarce, 323 F.3d 435, 438 (6th Cir. 2003). “In sum, a defendant claiming insufficiency of the evidence bears a very heavy burden.” Callahan, 801 F.3d at 616 (quoting United States v. Jackson, 473 F.3d 660, 669 (6th Cir. 2007)). Because the Defendants have failed to sustain this burden, the Rule 29 motions are properly denied.


         A review of the trial evidence demonstrates that a rational trier of fact could, indeed, conclude each of the five Defendants were guilty beyond a reasonable doubt of the seventeen counts of conviction. In order to convict the Defendants as they did, the jury was required to find that the Defendants “knowingly devised a scheme or artifice to defraud a health-care benefit program in connection with delivery of or payment for health-care benefits, that they executed the same, and that they did so with an intent to defraud.” United States v. Medlock, 792 F.3d 700, 711 (6th Cir. 2015). The circumstantial evidence presented by the United States sufficiently allowed the jury to find so.


         First, the Government introduced a variety of evidence tending to show the five Defendants knowingly devised a scheme to commit health care fraud. See Id. The trial evidence showed that all five Defendants worked together closely to own and operate PremierTox, sometimes including other employees in their meetings but sometimes meeting and traveling alone as a group of five. [R. 313 at 52; R. 315 at 49; R. 321 at 103, 107-08.] The trial evidence showed that Defendant Wood directed the SelfRefind clinics to implement a pre-checked order form, causing physicians to order confirmation drug tests on all patient urine samples by default. [R. 254 at 33.] The trial evidence showed that the five Defendants arranged for SelfRefind-and only SelfRefind-urine samples to be frozen and stored in a location nicknamed “the Pee Palace.” [R. 254 at 33; R. 320 at 10-14; R. 321 at 100.] And the trial evidence showed that, once PremierTox's equipment was properly functioning, the Defendants directed employees to prioritize testing of the frozen SelfRefind urine samples based on reimbursability. [R. 313 at 25; R. 315 at 41; R. 321 at 109, 119.]

         While the Court agrees with the Defendants that this general evidence does lend itself more logically to a conspiracy, rather than substantive, conviction, a rational trier of fact could still consider the evidence and conclude that each of the five Defendants, acting individually, knowingly devised a scheme to commit health care fraud. The jury could have inferred that Dr. Bertram knowingly devised such a scheme by virtue of Kristine Kaiser's testimony that Bertram was one of two Defendants “making most of the decisions for the group of five” early on, as well as the testimony of various witnesses suggesting all five Defendants “were involved in everything” going on at PremierTox. [See R. 315 at 49; R. 321 at 103.] The same holds true for Dr. Wood, who was responsible for making the company's early decisions alongside Dr. Bertram. [R. 315 at 49.] Dr. Wood drafted an email to the other four Defendants outlining a plan to gross more than two billion dollars per month, which the jury could have easily equated with devising a scheme to defraud insurers, and he is the one who personally directed use of the pre-checked order form at SelfRefind. [See Govt. Exhibit 101C; R. 254 at 33.]

         The Government put on less proof about Defendants Peavler, Bottom, and Walters's roles in creating a plan for operating PremierTox. But because so much of the trial testimony indicated all five Defendants were involved in running the company, a rational jury could have inferred that those three Defendants made individual choices to defraud insurers like Anthem. [See, e.g., R. 315 at 49 (explaining that all five owners eventually “made every decision” about how PremierTox operated); R. 321 at 103 (explaining all five owners were “involved in everything, ” that they “ran the company, ” and that they met together on a regular basis); R. 255 at 81-82 (noting the five owners were ultimately responsible for making decisions at PremierTox).] This is particularly true for Brian Walters, in light of the testimony elicited from witness Howard Claussen that Walters described PremierTox to him as a “get-rich scheme” that worked. [R. 321 at 53.]

         Further, an email sent from Dr. Wood to PremierTox CEO Eric Duncan and copied to the other four Defendants, serves as evidence that all five owners were privy to the knowledge that PremierTox was delaying the testing of any urine samples that were not immediately reimbursable. [See Govt. Exhibit 101K (listing Dr. Bertram, Dr. Peavler, Mr. Bottom, and Mr. Walters as recipients).] Drawing all inferences in favor of the Government, a rational jury could conclude that these pieces of circumstantial evidence prove beyond a reasonable doubt that the five Defendants each knowingly devised a scheme to defraud Anthem, or, at least, that they knowingly devised a scheme that was likely to result in defrauding Anthem in this way.


         Next, the Government introduced evidence that allowed a rational jury to find that all five Defendants executed a scheme to defraud Anthem in connection with the delivery of or payment for claims. See Medlock, 792 F.3d at 711. The trial evidence suggests that all five Defendants, as members of the Board, directed PremierTox employees to carry out a scheme to bill insurers for tests that they knew were not medically necessary. For example, Allen Sellars testified that the decision to test frozen urine samples “was a directive [the employees] were given by the owners of the organization.” [R. 313 at 25.] Billing employee Kristine Kaiser testified that all five Defendants directed her, Lisa Johnson, and Liberty Billing regarding which substances to test and bill for, and that all five Defendants always had to approve the chargemaster. [R. 315 at 34-36.] Specifically, the five Defendants approved the chargemaster to ensure it contained enough CPT or other billing codes to equal a targeted dollar amount to bill insurers, rather than including only those codes that were medically necessary. [Id. at 36.]

         A number of emails serve as further proof that each Defendant could be found individually liable for executing a scheme to defraud. The Government introduced evidence that Defendant Bertram told Ms. Kaiser the PremierTox owners wished her to begin pursuing quantitative drug testing, and Defendants Bottom, Wood, and Walters were copied on that email. [See Govt. Exhibit 101B.] Although Dr. Peavler was not copied on the message to Ms. Kaiser, he (along with Dr. Bertram, Bottom, and Walters) was a recipient of Dr. Wood's email to Eric Duncan directing Duncan not to test any urine samples that were not reimbursable. [Govt. Exhibit 101K.] In light of this and other evidence, a rational jury could infer that each of the five Defendants executed a scheme to defraud, or that they allowed such a scheme to be executed.


         Finally, the Government introduced evidence from which a rational jury could conclude the five Defendants each had an individual intent to defraud. See Medlock, 792 F.3d at 711. A number of witnesses testified about the Defendants' general emphasis on pursuing profits. [R. 321 at 108; R. 321 at 53; R. 313 at 35-36.] While the Defendants correctly point out that becoming rich on its own is not a crime [see R. 340 at 10-11], a jury is entitled to infer intent to defraud based on proof of profits. See United States v. Davis, 490 F.3d 541, 549 (6th Cir. 2007) ...

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