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United States v. Trotter

United States District Court, E.D. Michigan, Southern Division

January 19, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
D-1 JOHN TROTTER, II, M.D., D-3 ELAINE LOVETT Defendant.

          OPINION AND ORDER REGARDING THE GOVERNMENT'S NOTICES OF INTENT TO OFFER 404(B) EVIDENCE (DOC. 103).

          GEORGE CARAM STEEH UNITED STATES DISTRICT JUDGE

         Defendants John Trotter, II, M.D., and Elaine Lovett are charged with health care fraud conspiracy and three counts of health care fraud. This matter is before the Court on the Government's notice of intent to offer Rule 404(b) evidence at trial against Elaine Lovett. (Doc. 103). Lovett responded to this notice, to which the Government replied. The Court heard arguments on January 9, 2017. For the reasons stated below, the Court will permit this evidence.

         I. Background

         Count One of the superseding indictment charges Lovett and Trotter with conspiring with each other, Michelle Freeman, and Andrew Hardy, Jr., M.D., to knowingly and willfully execute a scheme to defraud Medicare and to obtain money by making materially false and fraudulent representations to Medicare while knowing them to be false. The conspiracy is alleged to have occurred from May 2008 to May 2014. The indictment specifies that the defendants conspired to unlawfully enrich themselves by submitting false claims to Medicare for physician visits that were not medically necessary, not provided, and/or not eligible for reimbursement; concealing the submission of false and fraudulent claims; and diverting proceeds of this fraud for their personal use and benefit. (Doc. 90 at ¶ 38).

         To achieve this end, the defendants and Freeman allegedly used and/or purchased existing Medicare providers numbers, submitted false claims using provider numbers without the permission of those providers, submitted false statements for services not provided as billed, submitted claims for services provided by an unlicensed doctor, and submitted false enrollment materials that did not disclose Trotter's ownership interest.

         Counts Two, Three, and Four allege that Trotter, Lovett, and Freeman executed a scheme to defraud Medicare by submitting false claims for services that were not rendered and were not medically necessary.

         The government alleges the following facts regarding the proposed other act evidence. Lovett was involved in a false billing scheme with Beth Jenkins, the owner of an adult day care center. Jenkins purchased Medicare beneficiary information from Glenn English and agreed to use Abix, LLC to process reimbursement claims. Abix was co-owned and controlled by Lovett and Freeman. Lovett instructed Jenkins to code Medicare claims in ways that resulted in larger payments, regardless of whether the claims were truthful or accurate. Knowing certain claims to be false and fraudulent, Lovett billed Medicare and retained a percentage of the reimbursements.

         Lovett also allegedly submitted Jenkin's claims to Medicare with the knowledge that Jenkins had failed to disclose her ownership of the adult day care center purportedly providing the claimed services. After Medicare determined that it had overpaid Quality Recreation and Rehab (QRR), Abix advised Jenkins to change WRR's name and to use a straw owner. Jenkins followed this advice, renaming QRR to Procare Rehabilitation (Procare) and falsely identifying her mother as the owner. Following the execution of a search warrant at Procare and on Abix's request, Jenkins opened another adult day care center, 2nd to None, and falsely listed her daughter as the owner. Lovett knew that Jenkins had fraudulently concealed her ownership of Procare and 2nd to None. Lovett nonetheless submitted claims to Medicare for services purportedly provided at these adult day care centers.

         II. Legal Standard

         Evidence is relevant “if it has any tendency to make a fact more or less probable than it would be without the evidence; and the fact is of consequence in determining the action.” Fed.R.Evid. 401. Even if evidence is relevant, it may be inadmissible under another Federal Rule of Evidence. Fed.R.Evid. 402.

         “Evidence of a crime, wrong, or other act” is prohibited at trial when used “to prove a person's character in order to show that on a particular occasion the person acted in accordance with the character.” Fed.R.Evid. 404(b)(1). But such “evidence may be admissible for another purpose, such as proving motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident.” Fed.R.Evid. 404(b)(2).

         The Court “must apply a three-step analysis to evaluate the admissibility of evidence under Rule 404(b).” United States v. Hardy, 228 F.3d 745, 750 (6th Cir. 2000). First, the party seeking to admit 404(b) evidence must demonstrate that the other bad acts occurred. Id. (citing United States v. Johnson, 27 F.3d 1186, 1190 (6th Cir. 1994)). Second, the offering party must cite a specific purpose for which the evidence is offered. Id. “[T]he government's purpose in introducing the evidence must be to prove a fact that the defendant has placed, or conceivably will place, in issue, or a fact that the statutory elements obligate the government to prove.” United States v. Bell, 516 F.3d 432, 442 (6th Cir. 2008). Essentially, the offering party “must show the evidence is probative of a material issue other than character.” Hardy, 228 F.3d at 750. Finally, the Court must find that the evidence's probative value is not substantially outweighed by the damage of unfair prejudice. Id.; see also Fed. R. Evid. 403.

         III. Analysis

         A. ...


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