from the United States District Court for the Southern
District of Florida D.C. Docket No. 1:15-cr-20820-BB-1
WILLIAM PRYOR and MARTIN, Circuit Judges and WOOD, [*] District Judge.
WILLIAM PRYOR, Circuit Judge.
appeal from the convictions and sentence of Khalid Elbeblawy
for conspiracy to commit healthcare fraud and wire fraud, 18
U.S.C. § 1349, and conspiracy to defraud the United
States and pay healthcare kickbacks, 18 U.S.C. § 371,
calls to mind the familiar warning that anything you say to
the government can and will be used against you. While he
owned or managed three home health entities, Elbeblawy hired
patient recruiters and bribed doctors and staffing groups to
refer patients with Medicare coverage to his agencies; he
falsified medical records; and he billed Medicare for tens of
millions of dollars in unnecessary medical services. After he
had cooperated with the investigation of these crimes for two
years, Elbeblawy and his attorney signed a plea agreement and
a statement about its factual basis. The agreement waived two
evidentiary rules that would ordinarily bar the admission of
statements made during plea discussions. But before Elbeblawy
pleaded guilty in open court, he changed his mind and
demanded a jury trial. At trial, the district court admitted
the factual basis for the plea agreement as well as other
evidence that the government obtained as a result of
Elbeblawy's cooperation. The jury convicted Elbeblawy,
and the district court sentenced him to 240 months of
imprisonment and ordered him to forfeit approximately $36
million. We conclude that the district court did not err when
it admitted the factual basis for the plea agreement because
Elbeblawy knowingly and voluntarily signed a valid waiver.
And we reject Elbeblawy's arguments that the district
court committed other errors at his trial when it calculated
his Sentencing Guidelines range. But we vacate the forfeiture
order and remand for entry of a new order because the
district court impermissibly held Elbeblawy jointly and
severally liable for the proceeds of the conspiracy. We
affirm in part, vacate in part, and remand.
Elbeblawy owned or managed three home health agencies that
provided in-home medical nursing and other services to
homebound patients, and he used each to defraud Medicare of
millions of dollars. Elbeblawy began defrauding Medicare when
he was working as a billing agent at Willsand Home Health. He
and Eulises Escalona, the owner of Willsand and a cooperating
witness for the government, were "falsifying . . .
medical records, exaggerating the symptoms [of] . . .
patients in order to get paid [by] Medicare," and
billing for services that were never provided. Elbeblawy
quickly saw the potential to bilk Medicare for still more
money. He asked Escalona for a promotion to marketing
director and offered to "go out there [in] the community
and recruit doctors . . . [who would accept] kickbacks."
He told Escalona that if they "pa[id] kickback[s],"
and took "doctors to lunch or g[ave] them nice
gift[s]," the doctors would refer patients to them.
Escalona agreed, and they began to pay doctors between $400
and $800 per referral. They insisted on paying the doctors
only in "[c]ash because cash is the only way that nobody
can trace if you pay somebody or not."
also hired "[b]etween eight [and] ten"
"patient recruiters" and purchased referrals from
nurses and other home health entities or staffing groups that
lacked the authority to bill Medicare. Because the groups
required a "large amount of money," it was
impractical to pay them in cash. Elbeblawy and Escalona
consulted a lawyer who informed them that it was illegal to
pay for patient referrals. Undeterred, Elbeblawy and Escalona
disguised check payments to the groups by inflating the rate
they paid for staffing services. And they described checks to
the patient recruiters as payments for consulting and other
services. Escalona testified that 90 percent of the patients
of Willsand were referred because of a kickback of some kind.
and Escalona also paid the doctors to approve unnecessary
medical services. Elbeblawy would pick the most profitable
services, falsify the medical records, and pay the doctors in
cash-filled envelopes to sign the appropriate documents.
Escalona testified that the majority of the patients of
Willsand did not need the services billed to Medicare.
Elbeblawy began to hold himself out as the chief executive
officer of Willsand, Escalona refused to make him a full
partner and instead agreed to become equal partners with him
in a new firm, JEM Home Health. Elbeblawy managed the
day-to-day operations of the new agency, which had "the
same modus operand[i]" as Willsand and used many of the
same sources for patient referrals. Around March 2009,
Elbeblawy became the sole owner of JEM.
November 2009, Medicare suspended payments to JEM in response
to "reliable information that [JEM] billed Medicare and
received payment for home health services provided to
beneficiaries who are not, in fact, homebound and were not
homebound during the time the services were rendered."
Safeguard Services, a Medicare contractor responsible for
investigating healthcare fraud, audited JEM. The audit
revealed that almost 74 percent of claims submitted between
July 2008 and July 2009, and almost 99 percent of claims
submitted between August 2009 and February 2010, should never
have been paid.
then started yet another home health agency, this time in his
ex-wife's name, and failed to disclose that he was
affiliated with a suspended agency. From the beginning,
Elbeblawy ran Healthy Choice Home Health. And in 2013, he
bought the company from his ex-wife for ten dollars in
accordance with a "stock purchase option agreement"
they entered in 2010. All told, Medicare paid $29.1 million
for claims from Willsand, $8.7 million for claims from JEM,
and $2.5 million for claims from Healthy Choice.
later decided to "cooperate with the [g]overnment and
accept responsibility." For approximately two years,
Elbeblawy helped investigators obtain evidence against his
former conspirators. For example, he provided the government
with a handwritten list of the doctors, home health groups,
and recruiters with whom he used to work. And he recorded
more than 30 incriminating conversations about kickbacks with
his former conspirators. He offered one physician "the
same number [they] used to do." And he told another
physician that he "remember[ed] what [he] used to do
with [the physician] before," and he told the physician
to "[l]et [him] know what [he] ha[d] in mind" for
2015, Elbeblawy and his attorney signed a plea agreement and,
fourteen days later, a written factual basis for the
agreement. The agreement provided that, "[i]n the event
of . . . a breach[, ] . . . the [d]efendant waives any
protection afforded by . . . Rule 11 of the Federal Rules
of Criminal Procedure and Rule 410 of the Federal Rules of
Evidence," both of which bar the admission of statements
made during plea discussions. The agreement also stated that
"the [g]overnment w[ould] be free to use against the
[d]efendant, directly and indirectly, in any criminal or
civil proceeding[, ] any of the information, statements, and
materials provided by him pursuant to th[e] [a]greement,
including offering into evidence or otherwise using the
attached Agreed Factual Basis for Guilty Plea."
Elbeblawy's attorney testified that he met with Elbeblawy
at least twice to discuss the agreement, that he
"literally read" the agreement to him, and that he
"walk[ed] [Elbeblawy] through each paragraph
he signed the agreement, Elbeblawy "changed [his]
mind" and refused to plead guilty, so the government
prosecuted him for conspiracy to commit healthcare fraud and
wire fraud, 18 U.S.C. § 1349, and conspiracy to defraud
the United States and pay healthcare kickbacks, 18 U.S.C.
§ 371. Before the trial, the district court denied
Elbeblawy's motion to suppress the signed factual basis
for the plea agreement on the ground that Elbeblawy did not
knowingly and voluntarily waive the protections of Rule 410
and Rule 11. It held a two-day evidentiary hearing at which
Elbeblawy, his attorney, and a government investigator
testified. And it explained that Elbeblawy "has a
college degree," that "[t]here were several
meetings between [Elbeblawy] and [his] attorney," that
Elbeblawy was "engaged" and "asked many
questions" before he signed the agreement, and that
"[h]is questions were answered." Based on this
evidence, the district court found that Elbeblawy "made
a free and deliberate choice to continue to cooperate"
and that he "had full knowledge of [his] actions and
trial, the government introduced the factual basis for the
plea agreement as well as the evidence Elbeblawy helped the
government obtain. And it called Escalona and Kansky Delisma,
one of the doctors who accepted kickbacks, to testify.
Elbeblawy testified in his own defense and declared that he
was completely "framed" by the government.
end of the trial, the district court instructed the jury on
both conspiracy counts. It instructed the jury that
"[t]o . . . defraud the United States" under
section 371 "means to cheat the [g]overnment out of . .
. property or money or to interfere with any of its lawful
[g]overnment functions by deceit, craft, or trickery."
The wording of this instruction varied slightly from the
wording in the indictment, which alleged that Elbeblawy
conspired "to defraud the United States by impairing,
impeding, obstructing, and defeating through deceitful and
dishonest means, the lawful government functions of the
United States Department of Health and Human Services."
The jury found Elbeblawy guilty of each object on both
conspiracy counts: conspiracy to commit healthcare fraud and
wire fraud, and conspiracy to defraud the United States and
pay healthcare kickbacks.
district court denied Elbeblawy's motion for a new trial
based on an alleged violation of his right to due process
under Brady v. Maryland, 373 U.S. 83 (1963).
Elbeblawy argued that the government unconstitutionally
failed to disclose an exculpatory interview report that
revealed that Delisma originally denied working with
Elbeblawy. The district court reviewed the evidence at trial,
which included testimony by Delisma admitting that he knew
Elbeblawy as well as a video of Elbeblawy giving him a
kickback. And it concluded that the interview report did not
create a "reasonable probability that the outcome of
th[e] trial would have been different" had the report
district court imposed a forfeiture order of $36, 400, 957.
See 18 U.S.C. § 982(a)(7). Because Escalona
testified that about 90 percent of the patients of Willsand
and JEM were referred because of kickbacks, the district
court reduced the total amount Medicare paid to the three
clinics-$40, 445, 507-by 10 percent. This number represented
"the total amount of the gross proceeds traceable to the
commission of the conspiracy, not the amount that was
received directly by . . . Elbeblawy." The district
court also ruled that "Elbeblawy's convicted
co-conspirators [were] jointly and severally liable for th[e]
forfeiture money judgment up to the amount of their
respective forfeiture money judgments."
sentencing hearing, the district court ruled that the 2015
Sentencing Guidelines applied, that Elbeblawy used
"sophisticated means" to commit his crimes, and
that the loss amount from the conspiracy exceeded $25
million. Elbeblawy argued that an earlier, less-stringent
version of the Guidelines applied because his criminal
conduct occurred before November 2011. But the district court
ruled that the 2015 Guidelines applied because the
"continuing criminal conduct . . . began in 2006 and
ended in 2013." It also applied a sophisticated-means
role enhancement because the conspiracy "was a
sophisticated and very extensive and elaborate
operation." The district court explained that Elbeblawy
"recruited . . . patient recruiters" and
"directly paid the doctors . . . [and] made arrangements
for those meetings and those payments." And it stated
that Elbeblawy "was involved in the fraudulent contracts