All posts by : Andrew Feldman

In an upside-down world where prosecutorial recommendations for Draconian “low end” Guidelines sentences have become acceptable outcomes in many districts, it was encouraging when the U.S. district court in Pensacola Florida granted a 54 month downward variance from a 78 month “low end” sentence request from the government. What was even more encouraging was that the court imposed that sentence after the client had exercised his Sixth Amendment right to trial by jury.

The client was an owner of a compounding pharmacy in Pensacola who had recently begun the pharmacy. A marketer with an impressive history in medical device sales and with established relationships with a cadre of highly regarded surgeons had approached the client about marketing the pharmacy’s specialty compounded medications to those surgeons. Evidence at trial revealed that, prior to ever meeting the client, the marketer had enlisted the physician assistant at one of the surgeon’s offices to forge the surgeon’s signature on prescriptions for compounded medications that were dispended by a separate pharmacy outside of Pensacola. Evidence at trial showed that marketer also paid the physician assistant kickbacks for forging those prescriptions and that the scheme continued at the client’s pharmacy. Nonetheless, the government presented no evidence that the client had any knowledge of the forged prescriptions or that the client had any knowledge that the marketer was paying the physician assistant kickbacks. Instead, at trial the governments theory of the healthcare fraud was that our client, through his pharmacy, dispensed compounded medications even though he knew that the surgeon had not physically seen these patients, and therefore, any compounded medications ordered by that physician were derived from an “illegitimate doctor patient relationship” which constituted participation in the previously initiated health care fraud conspiracy. Unfortunately (although, respectfully), on this novel theory, the jury rendered verdicts of guilty.

Despite the verdict, at sentencing, the court varied downward significantly. Among other reasons, the court concluded that the client was not a participant in the forged prescriptions component of the scheme and that there was no evidence that the client (even as the owner of the pharmacy) recruited anyone else into the scheme. Further, the court emphasized that the pharmacy continued a legitimate business and dispensed thousands of valid prescriptions to patients during the period of the charged conspiracy and for several years, long after the conspiracy ended. And, the court found that the conduct for which the client was convicted constituted aberrant conduct committed by an otherwise law-abiding citizen. After hearing testimony from the CPA for the pharmacy and its related entities, the court also noted that the client’s personal gain from the convicted conduct paled in comparison to the enormous loss amount that the PSI had attributed to the client at sentencing. Finally, the court found that the client’s character, history of good deeds, generosity, and civic contributions supported a variance.

There are at least two significant takeaways from the result in this case. First, notwithstanding the guilty verdict, this is the rare case where the client (in our view) would have potentially received a much higher sentence had he not proceeded to trial and had simply pled guilty. The trial and the sentencing were opportunities to vigorously represent the client, to expose the weaknesses in the government’s theory of the case, and to place each of the relevant facts (not just what the PSI says at a stipulated hearing) before the jury and the judge. Second, where applicable, in fraud cases, it is incumbent upon attorneys to underscore the substantial discrepancies between the loss amount and a client’s gain. To do so, attorneys should seriously consider introducing a CPA or other financial professional familiar with the client’s books and records.

The client was represented at trial by the Firm and all-star Pensacola attorney John Beroset. This was the second time in less than 6 months that the Firm and John Beroset achieved what we believe were favorable results for our clients.

The Firm, in coordination with attorney John Beroset, recently obtained an official declination of prosecution in an investigation into government contractor fraud related to contracts with the Air Force.

The government contract fraud investigation was focused on, more broadly, rooting out fraud perpetrated by contractors conducting business with the Air Force. In this instance, the client’s contract contemplated the performance of services, with the assistance of a very capable sub-contractor at the Air Force base following the devastation caused by Hurricane Michael in the Panhandle.

After the contract was performed and completed, the client was approached by law enforcement twice in connection with the government contractor fraud investigation, including by special agents from the Air Force and the Small Business Administration (SBA). And, when they did, the client agreed to submit to lengthy interviews — without an attorney — with the federal agents related to the government contractor fraud investigation.

At a certain point, a felony charge seemed unavoidable.

Nonetheless, after the client retained the Firm and Mr. Beroset, and after coordinating with counsel for the sub-contractor and submitting our version of the events including the salient facts and the relevant legal authorities to the prosecutor, the government took the unusual (sadly) and eminently reasonable step of deciding not to move forward with any recommendation for criminal prosecution.

The Firm regularly represents corporate executives, health care professionals, contractors, and businesses ensnared in fraud investigations.