from the United States District Court for the Southern
District of Florida D.C. Docket No. 1:15-cr-20436-DPG-8
HULL, JORDAN, and BOGGS, [*] Circuit Judges.
direct criminal appeal, defendant Carlos Rodriguez Nerey
appeals both his convictions and total sentence related to
his role as a patient recruiter and his receipt of kickbacks
in a complex health care fraud scheme. Following a five-day
trial, a jury found defendant Nerey guilty on the two charges
against him in the indictment. After thorough review of the
briefs and extensive trial record, and with the benefit of
oral argument, we affirm.
September 29, 2015, defendant Nerey and several other
individuals- including Milka Alvarez, Jesus Perez, Joel
Alvarez, Sandra Jaramillo, Adolfo Larrea, and Maria Teresa
Pupo-were charged in a thirteen-count superseding indictment.
All of Nerey's co-defendants eventually pled guilty while
he proceeded to trial. Nerey was charged on two counts: (1)
conspiracy to defraud the United States under 18 U.S.C.
§ 371 by paying and receiving health care kickbacks, in
violation of 42 U.S.C. § 1320a-7b(b)(1)(A), (b)(1)(B),
and (b)(2)(A) (Count 2) and (2) knowingly soliciting and
receiving kickbacks in connection with a federal health care
program, in violation of 42 U.S.C. § 1320-7b(b)(1)(A)
April 1, 2016, a jury found Nerey guilty on both counts. The
district court denied Nerey's motion for judgment of
acquittal before the verdict was rendered and denied his
renewed motion thereafter. On May 27, 2016, the district
court sentenced Nerey to sixty months' imprisonment on
each count to run concurrently, three years of supervised
release, and restitution in the amount of $2, 366, 746.
defendant Nerey challenges the sufficiency of the evidence
supporting his convictions, we outline the trial evidence
about the Medicare program, the various home health care
agencies engaged in the fraud and kickbacks, and Nerey's
is a health insurance program overseen by the federal
government and is intended for people of age 65 or older or
people with a qualifying disability. Medicare is funded
through taxpayer contributions and small recipient premiums.
Patients who qualify for Medicare benefits have services
furnished by a Medicare provider like a doctor, hospital, or
home health agency. Once a service is performed, that
provider can bill Medicare and claim payment. Medicare
contractors designated by the respective states will then
review claims submitted for payment. Some claims take two
weeks to process, while others may take up to a month.
reviewers look to the following five components for the
legitimacy of claims: (1) the patient's entitlement to
Medicare; (2) proper enrollment of the provider; (3) the
provision of services; (4) compliance with coverage rules;
and (5) proper reporting of records. Because Medicare
receives such a high volume of claims, however, rarely do all
claims receive a complete and thorough review. Categorically,
Medicare does not pay for claims based on kickbacks or
bribes. See 42 U.S.C. § 1320-7b(b).
Home Health Care
Medicare, "home health care" refers to medical
services for patients who require special treatment because
they are "homebound." Homebound patients suffer
from a physical or mental limitation that prohibits them from
leaving home on a routine basis without the assistance of a
wheelchair, walker, or another individual.
status must be determined and documented by a physician. For
home health care agencies to properly bill Medicare, their
patients must have a prescription for home health care.
Patients must meet with a physician and establish a plan of
care in order to legitimately receive a prescription.
Thereafter, the treating physician is required to provide
progress notes once treatment begins.
treatment provided in home health care is by skilled
professionals- licensed doctors, nurses, and therapists. With
respect to therapy, Medicare covers physical therapy,
occupational therapy, and speech language pathology. Massage
therapy is not covered under home health care. Likewise,
therapy notes taken after a session must be recorded by, and
come from, a licensed physical therapist.
to our review is the fact that home health care agencies
engage in fraud when they, inter alia, (1) submit
claims for a patient who does not qualify for treatment, (2)
fail to perform the work billed to Medicare, or (3) pay a
kickback to a patient recruiter. As the name suggests, a
patient recruiter procures eligible Medicare beneficiaries
and exchanges their information with providers for a kickback
on any claims paid by Medicare.
Jesus Perez and Mercy Home Care, Inc.
fraud perpetrated in this case, including Nerey's
involvement, centers on Jesus Perez, one of Nerey's
co-defendants. Perez had a long history with home health care
agencies, starting with his work at Wong Home Health Care in
2006 and then La Caridad in 2013 or 2014. At trial, Perez
admitted to engaging in Medicare fraud and paying patient
recruiters as far back as his work at La Caridad.
in late 2014, Perez transitioned to working for Mercy Home
Care, Inc. ("Mercy HC"), where he continued these
illegal practices. Before he became the owner of Mercy HC,
Perez complained to Nerey, one of his previous acquaintances,
about the salary Perez was receiving there as an employee.
Nerey responded by suggesting that Perez begin inflating
later became the owner of Mercy HC in October 2014 and
enlisted the assistance of close friends and family,
including Jesus Garcia and Adolfo Larrea, to help run his
operation. At trial, Joel Alvarez described Adolfo Larrea as
Perez's "right hand." Several individuals,
including Perez's then-wife, Anelys Ayala, were used to
cash checks for the payment of illegal kickbacks to
recruiters. Another patient recruiter at Mercy HC was Yovani
Suarez, who went by the nickname "Tito." As the
group would later discover, Suarez was a confidential
informant for the Federal Bureau of Investigation
testimony suggested that he obtained ownership of Mercy HC
from its actual owner, Contrado Pineida, through falsified
documents. Perez insisted that the transfer was nonetheless
done at Pineida's instruction. Under Perez's
leadership, Mercy HC submitted fraudulent claims to Medicare
and negotiated extensive kickbacks for patient recruiters.
Leon served as the manager at Mercy HC and kept a book of
patient recruiters and payoffs. Leon's logbook was used
to keep track of which recruiters held claim to recruiting
which patients. It included patient information along with a
column coded by letters to mask kickback recipients. To keep
track of his patients, Nerey would cross-reference this
logbook with his own records. While each recruiter had his or
her own letter or letters, entries containing the letter G
stood for "gordo, " or "fat guy" in
Spanish, which was Nerey's nickname. When paying their
recruiters, Perez and Leon utilized inflated invoices, which
were later submitted to Medicare, to mask payoffs and made
special notations on the memo lines in checks to
recruiters-such as "SS" or "special
service"-to identify recruiting payments.
Nerey, Sweet Life Staffing, and Nerey Professional Services,
November 2014, Nerey became associated with Mercy HC. Nerey
was active in Mercy HC's operation by recruiting patients
through an established book of patients and purchasing
prescriptions, both real and forged, for home health care.
Sandra Jaramillo and Karla Garcia, two other co-defendants,
both testified that defendant Nerey carried around a small
notebook full of patient names and information. At Mercy HC,
Nerey was Perez's top source of patients, all of whom
were eligible Medicare beneficiaries. Perez paid Nerey
between $1, 800 and $2, 200 per patient recruited.
used several companies-the two most relevant being Sweet Life
Staffing ("Sweet Life") and Nerey Professional
Services, Inc. ("NPS")-to funnel kickback money.
Mercy HC would split payments to Nerey between cash to him,
which he requested, and checks to Sweet Life and NPS, which
eventually became necessary due to the amount of money
involved in the conspiracy.
Life was a therapy-staffing company used by Nerey to process
his recruiting kickbacks. While several witnesses testified
that Nerey claimed ownership of Sweet Life, the registered
owner was actually Daylin Cabrera. Nonetheless, Nerey
required that all of the patients he recruited be assigned to
Sweet Life for "therapy." Nerey processed kickbacks
through Sweet Life using inflated and falsified invoices for
fraudulent therapy services. Invoices were handled in several
ways, but often broken into smaller $30 amounts per therapy
session to cover up larger kickback amounts.
was not a licensed physical therapist or nurse, but nearly
every fact witness testified that he regularly wore medical
scrubs when they encountered him. Likewise, witnesses
reported that patients received massages from Nerey and
others he employed in the place of prescribed physical
therapy. Karla Garcia described Nerey's therapy office as
a "very little" building with two small rooms and a
lobby located inside a shopping center.
Nerey also owned and created NPS as a shell corporation to
deposit and process kickback payments. NPS observed no
formalities of an established business and paid no taxes,
wages, or licensing fees during its existence. The company
itself provided no services other than processing payments
related to Nerey's patient-recruiting activities, and it
enjoyed a 60% profit margin. Nerey also used NPS to pay for
fraudulent and forged home health prescriptions, which he
obtained mostly through Dr. Hugo Espinosa at Yava Medical
Office, Inc. ("Yava Medical") and Karla Garcia at
Larkin Community Hospital ("Larkin Hospital").
Recruiting Karla Garcia
Garcia worked as a medical assistant at Larkin Hospital. She
was introduced to defendant Nerey through another patient
recruiter identified only as "Alexis." Around
October or November 2014, Karla and Nerey met for the first
time in a Wendy's parking lot to discuss patient
recruiting. At this meeting, Nerey told Karla that he
received recruiting kickbacks from Mercy HC and a company
called Holistic Home Health. Nerey agreed to pay Karla $150
per prescription and $600 per patient. He explained an
approach for recruiting and instructed her on exactly how to
forge prescriptions. Nerey later told Karla that it was also
necessary to pay patients to keep them quiet.
point, Karla's husband also became involved in paying off
patients and processing funds through a shell company he
created for Karla, Kb Health Consultants, LLC. Karla
testified that defendant Nerey offered her husband a job as a
"physical therapist" at Sweet Life even though he
had no formal training.
Karla and Nerey had a falling out over kickback payments, she
began recruiting patients independently for Perez. Karla was
fired from Larkin Hospital in April 2015, but she continued
working as a patient recruiter. The operation at Mercy HC was
becoming so successful that, in an effort to slow the amount
of money funneled out, the agency had to lower patient
admission rates to only those patients who were truly
homebound. Around the same time that Karla entered the
business, Perez decided that it was time to expand.
Joel Alvarez and D&D&D Home Health Care,
Alvarez became involved in the conspiracy through Jesus
Garcia, an above-mentioned associate whose son went to school
with Alvarez's daughter. Garcia introduced Alvarez to
Perez in a meeting at Mercy HC in November 2014. Nerey was
also present at that meeting. Perez explained aspects of home
health services and patient recruiting to Alvarez and asked
him to enter the business.
December 2014, at the behest of Perez, Alvarez provided a
capital investment in the amount of $80, 000 for the purchase
of a new home health agency, D&D&D Home Health Care,
Inc. ("D&D&D"), to be owned jointly with
Perez and Garcia. Due to his relative experience and contacts
in the field, Perez established the operation and negotiated
kickback rates for patient recruiting. At the beginning,
D&D&D did not have a sufficient patient volume to be
the business off the ground, D&D&D immediately began
providing kickbacks to patient recruiters, specifically
defendant Nerey. In fact, the initial efforts to drum up
business were facilitated entirely through Nerey.
D&D&D paid kickbacks to Nerey at the same rate
negotiated at Mercy HC. Because of his established book of
patients, Nerey was able to negotiate favorable rates with
Perez. Like Mercy HC, all of D&D&D's patients had
to be eligible Medicare beneficiaries because the agency was
not approved by any other health maintenance organization
January 2015, Alvarez's wife, Sandra Jaramillo, also
became involved in the scheme. Her role at D&D&D was
to manage kickbacks. Raciel Leon, the manager at Mercy HC,
trained Jaramillo to track kickback payments in a logbook.
Jaramillo copied Leon's system, and Alvarez later
digitized the results in a chart. Nerey described his
recruiting efforts to Jaramillo as "filling the
nest" for D&D&D.
trial, Alvarez explained that recruiter kickbacks, a primary
illegal aspect of the operation, were often referred to among
the group as the "parte negra, " which translates
from Spanish as the "black part." Alvarez claims he
later discovered that not only were patient recruiters being
paid in kickbacks but so were the patients themselves.
Patients involved in the scheme would regularly call
D&D&D asking for "flowers, " which referred
to a promised kickback. Nerey and others would also use code