Justia Government Contracts Opinion Summaries

Jarigese was the vice president of Castle Construction and the president of its successor, Tower, when he signed three contracts for public construction projects. Each contract was designated by Markham’s mayor, Webb, as “design-build” projects, not subject to a public bidding process. Webb invited only one company to submit a proposal for a new city hall, a senior living facility, and the renovation and expansion of a park district building. Webb signed each contract on behalf of Markham. Webb solicited bribes, which were paid to KAT Remodeling. Webb later testified that he had formed KAT years earlier and used its bank account as a repository for bribes. KAT never performed work of any kind. Jarigese hand-delivered bribes, by check and by cash. Webb understood that Jarigese had created an invoice from KAT to disguise the nature of the payment. Evidence at trial showed that Webb solicited bribes from others, using the same pattern.The Seventh Circuit affirmed Jarigese’s convictions for nine counts of wire fraud, 18 U.S.C. 1343 and 1346, and one count of bribery, 18 U.S.C. 666(a)(2). Evidence of Webb’s solicitation of other bribes was not evidence of “other bad acts” but rather was directly relevant to proving the charged scheme. The evidence was sufficient to support the convictions and there was no evidence of unwarranted discrepancy with respect to Jarigese’s 41-month sentence. View "United States v. Jarigese" on Justia Law

A jury convicted Sandra, Calvin, and their son Bryan Bailey of conspiring to commit healthcare fraud and other related crimes (18 U.S.C. 371, 1343, 1347; 42 U.S.C. 1320a-7b). The three, working for medical equipment companies, used fraud, forgery, and bribery to sell power wheelchairs and other equipment that was not medically necessary. The district court sentenced Sandra to 120 months’, Calvin to 45 months, and Bryan to 84 months’ imprisonment.The Sixth Circuit affirmed the convictions and the sentence imposed on Bryan. The court rejected challenges to the sufficiency of the evidence and to various evidentiary rulings and upheld the admission of certain out of court statements made in furtherance of the conspiracy. The district court miscalculated Sandra’s Guidelines-range sentence when it erroneously imposed a two-level increase in her offense level for using “mass marketing” in her scheme and incorrectly calculated the loss amount for which Calvin was responsible—and by extension, his Guidelines-range sentence—by holding him responsible for losses beyond those he agreed to jointly undertake. View "United States v. Bailey" on Justia Law

Kozerski owned two construction companies in Detroit. He formed the second one, CA, to bid on Veterans Administration contracts set aside for small businesses owned by service-disabled veterans. Kozerski does not have a service-related disability. He convinced J.R., a service-disabled veteran, to pretend to be the company’s owner. CA handled six contracts. Kozerski forged J.R.’s signature and sent the government emails supposedly from J.R.. For five contracts, Kozerski did not pay J.R. anything, lying to him that CA did not receive any contracts after the first one.The government eventually discovered the scheme and charged Kozerski with wire fraud, 18 U.S.C. 1343. Kozerski pleaded guilty. The PSR recommended a loss amount of $9.5 million to $25 million, calculated by adding the amounts the government paid CA on all six contracts without crediting the value of the work performed on the contracts: $11,891,243.45, resulting in a Guidelines range of 37-46 months. Kozerski argued the loss should be the amount of profit a qualifying veteran-owned business would receive from the contract, yielding a guidelines range of eight-14 months. The district court adopted Kozerski’s formula and sentenced him to a year and a day. The Sixth Circuit affirmed, upholding the district court’s calculation of the loss as the aggregate difference between Kozerski’s bids and the next-lowest bids, about $250,000. View "United States v. Kozerski" on Justia Law

Charte (relator) filed a False Claims Act (FCA), 31 U.S.C. 3729–3733, "qui tam" suit alleging that defendants, including Wegeler, submitted false reimbursement claims to the Department of Education. Relators are entitled to part of the amount recovered. As required to allow the government to make an informed decision as to whether to intervene, Charte cooperated with the government. Her information led to Wegeler’s prosecution. Wegeler entered into a plea agreement and paid $1.5 million in restitution. The government declined to intervene in the FCA action. If the government elects to pursue an “alternate remedy,” the statute provides that the relator retains the same rights she would have had in the FCA action. Charte tried to intervene in the criminal proceeding to secure a share of the restitution. The Third Circuit affirmed the denial of the motion. A criminal proceeding does not constitute an “alternate remedy” to a civil qui tam action, entitling a relator to intervene and recover a share of the proceeds. Allowing intervention would be tantamount to an interest in participating as a co-prosecutor in a criminal case. Even considering only her alleged interest in some of the restitution, nothing in the FCA suggests that a relator may intervene in the government’s alternative-remedy proceeding to assert that interest. The text and legislative history regarding the provision indicate that the court overseeing the FCA suit determines whether and to what extent a relator is entitled to an award. View "United States v. Wegeler" on Justia Law

Medicare pays for doctors’ home visits if a patient is homebound. Mobile Doctors offered physician services to homebound Medicare beneficiaries, hiring doctors who assigned their Medicare billing rights to the company. Upon receipt of payment, Mobile would pay the physician-employee a percentage of what Mobile received from billing Medicare. Many of Mobile’s patients did not actually qualify as homebound. Some doctors signed certifications for additional unneeded treatment from companies that provided at-home nursing or physical therapy services—companies that had referred the patients to Mobile. Mobile submitted Medicare codes for more serious and more expensive diagnoses or procedures than the provider actually diagnosed or performed. Mobile instructed physicians to list at least three diagnoses in the patient file; if the doctors did not list enough, a staff member added more. Mobile only paid the physicians if they checked at least one of the top two billing codes. Doctors who billed for the higher of the top two codes were paid more. Mobile also paid for “standing orders” for testing, although Medicare prohibits testing done under standing orders. Daneshvar joined Mobile as a physician in 2012. After following Mobile’s policies Daneshvar was convicted of conspiracy to commit healthcare fraud but found not guilty of healthcare fraud; he was sentenced to 24 months' imprisonment. The Sixth Circuit affirmed. Daneshvar’s trial was fair; none of the district court’s rulings during that proceeding should be reversed. There was no reversible error with his sentencing. View "United States v. Daneshvar" on Justia Law

Nita and her husband, Kirtish, pled guilty to defrauding Medicare (18 U.S.C. 1347), based on having forged physicians’ signatures on diagnostic reports and having conducted diagnostic testing without the required physician supervision. The government then brought this civil action for the same fraudulent schemes against Nita, Nita’s healthcare company (Heart Solution), Kirtish, and Kirtish’s healthcare company (Biosound). The district court granted the government summary judgment, relying on the convictions and plea colloquies in the criminal case, essentially concluding that Nita had admitted to all elements and issues relevant to her civil liability. Nita and Heart Solution appealed. The Third Circuit affirmed Nita’s liability under the False Claims Act, 31 U.S.C. 3729(a)(1)(A) and for common law fraud but vacated findings that Heart Solution is estopped from contesting liability and damages for all claims and Nita is estopped from contesting liability and damages for the remaining common law claims. The district court failed to dissect the issues that were determined in the criminal case from those that were not, lumping together Nita and Heart Solution, even though Heart Solution was not involved in the criminal case. It also failed to disaggregate claims Medicare paid to Nita and Heart Solution from those paid to Kirtish and Biosound. The plea colloquy did not clarify ownership interests in the companies; who, specifically, made certain misrepresentations; nor whether one company was paid the entire amount or whether the payments were divided between the companies. View "Doe v. Heart Solution PC" on Justia Law

Bradley worked as the general contractor on Ingersoll’s project converting an old Michigan church into a charter school, Bay City Academy (BCA). Ingersoll had previously misappropriated state funding meant for a charter school he already ran, Grand Traverse Academy, and used the funding for the new charter school project to cover his tracks. At trial, Bradley was shown to have conducted fraudulent transfers of the newly misappropriated money, failed to report the resulting sizeable deposits into his accounts in his 2011 tax filing and underpaid his taxes, and failed to file W-2s reporting his BCA employees’ wages to the IRS and to provide them with 1099s. Bradley was convicted of conspiring to defraud the United States, 18 U.S.C. 371. The Sixth Circuit affirmed, rejecting Bradley’s arguments that testimony that he underpaid his 2011 taxes constituted a prejudicial constructive amendment or variance to the indictment; that the government made improper arguments during its opening statement and rebuttal, and that the court improperly refused to instruct the jury on a lesser-included offense. The evidence of his tax filing constituted a presentation of additional evidence to substantiate charged offenses, which did not include facts materially different from those charged. The prosecutor’s statements were improper but did not constitute flagrant prosecutorial misconduct. View "United States v. Bradley" on Justia Law

Brookdale employed Prather to review Medicare claims before their submission for payment. Many of these claims were missing required certifications from physicians attesting to the need for the medical services provided. Certifications must “be obtained at the time the plan of care is established or as soon thereafter as possible.” 42 C.F.R. 424.22(a)(2).Prather filed a complaint under the False Claims Act, 31 U.S.C. 3729, alleging an implied false certification theory. The district court dismissed her complaint. The Sixth Circuit reversed in part, holding that Prather had pleaded two claims with the required particularity and that the claims submitted were false. On remand, the district court dismissed Prather's Third Amended Complaint in light of the Supreme Court’s 2016 clarification of the materiality element of an FCA claim. The Sixth Circuit reversed. Prather sufficiently alleged the required materiality element; the timing requirement in section 424.22(a)(2) is an express condition of payment and Prather alleges that the government paid the claims submitted by the defendants without knowledge of the non-compliance, making those payments irrelevant to the question of materiality. Section 424.22(a)(2) is a mechanism of fraud prevention, which the government has consistently emphasized in guidance regarding physician certifications and Prather adequately alleged “reckless disregard” of compliance and whether this requirement was material. View "Prather v. Brookdale Senior Living Community" on Justia Law

Brookdale employed Prather to review Medicare claims before their submission for payment. Many of these claims were missing required certifications from physicians attesting to the need for the medical services provided. Certifications must “be obtained at the time the plan of care is established or as soon thereafter as possible.” 42 C.F.R. 424.22(a)(2).Prather filed a complaint under the False Claims Act, 31 U.S.C. 3729, alleging an implied false certification theory. The district court dismissed her complaint. The Sixth Circuit reversed in part, holding that Prather had pleaded two claims with the required particularity and that the claims submitted were false. On remand, the district court dismissed Prather's Third Amended Complaint in light of the Supreme Court’s 2016 clarification of the materiality element of an FCA claim. The Sixth Circuit reversed. Prather sufficiently alleged the required materiality element; the timing requirement in section 424.22(a)(2) is an express condition of payment and Prather alleges that the government paid the claims submitted by the defendants without knowledge of the non-compliance, making those payments irrelevant to the question of materiality. Section 424.22(a)(2) is a mechanism of fraud prevention, which the government has consistently emphasized in guidance regarding physician certifications and Prather adequately alleged “reckless disregard” of compliance and whether this requirement was material. View "Prather v. Brookdale Senior Living Community" on Justia Law

As a school principal, Buendia took kickbacks from Shy. Detroit Public Schools (DPS) paid Shy for supplies he never delivered. Some of the money came from the federal government. The FBI searched Shy’s home and found a ledger of kickbacks Shy owed Buendia. Buendia was convicted of federal-programs bribery, 18 U.S.C. 666(a)(1)(B), and sentenced to 24 months’ imprisonment. The Sixth Circuit affirmed, rejecting her argument that the district court violated her constitutional right to present a complete defense when it excluded evidence of her kickback expenditures and the alleged receipts of expenditures for school purposes. The right to present a complete defense yields to reasonable evidentiary restrictions. The court correctly excluded as irrelevant evidence of how Buendia spent the kickback money and correctly excluded the receipts of school expenditures as hearsay. Regardless of how Buendia eventually spent the money, she “corruptly solicit[ed]” it because, by awarding contracts to Shy in exchange for kickbacks, she subverted the normal bidding process in a manner inconsistent with her duty to obtain goods and services for her school at the best value. Nor did the government open the door" by introducing testimony that Buendia bought massages using a gift card from Shy to show that she accepted kickbacks. View "United States v. Buendia" on Justia Law