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United States v. Dailey

United States Court of Appeals, Fifth Circuit

August 17, 2017

UNITED STATES OF AMERICA, Plaintiff - Appellee
WARREN DAILEY, Defendant-Appellant

         Appeal from the United States District Court for the Southern District of Texas

          Before REAVLEY, HAYNES, and COSTA, Circuit Judges.

          HAYNES, Circuit Judge

         Defendant Warren Dailey challenges his conviction for five counts relating to a scheme under which he certified individuals for home health care in exchange for $400 a month. We AFFIRM.[1]


         This case arises out of allegations that Dr. Warren Dailey engaged in a conspiracy to defraud Medicare relating to home health care services provided by Candid Home Health, Inc. ("Candid"). The Government alleged that Dailey, a physician specializing in family practice, signed documents indicating that patients required home health care when they did not need those services. The Government charged Dailey with (1) conspiracy to commit health care fraud; (2) two counts of aiding and abetting false statements relating to health care matters; (3) conspiracy to pay and receive health care kickbacks; and (4) aiding and abetting the payment and receipt of health care kickbacks.

         Prior to trial, the Government filed its notice of intent to call expert witnesses, which identified Lisa Garcia, a registered nurse, as an expert witness. The Government later supplemented this notice to provide additional information about the contents of Garcia's expected testimony. Dailey requested a continuance, arguing that the Government's supplemental notice failed to satisfy Federal Rule of Criminal Procedure 16(a)(1)(G) and that a previously-granted one-week continuance was insufficient for him to obtain a rebuttal expert. The district court denied the motion.

         At trial, Lisa Garcia testified as an expert for the Government about general information regarding Medicare and home health care. She testified that common fraud schemes involved home health agencies paying physicians to sign Form 485s[2] for patients with whom the physician had no relationship. She reviewed the billing data for Candid and testified that the data "indicated that there was some aberrant pattern on both the home health agency and the physician." Specifically, the significant amount of repeated home health episodes was a "red flag." She also noted that there was a significant number of referrals from one physician-Dailey. Indeed, his referrals made up almost twenty-four percent of Candid's billing. She testified that this large number of referrals from one physician is "cause for question." Moreover, Garcia noted that many of the patients that Dailey referred were hours away from the location of Candid and Dailey's practice, which cast doubt on whether the patient was actually being seen.

         The second witness at trial was Ebelenwa Chudy-Onwuugaje ("Chudy"), who started and operated Candid.[3] Chudy testified she used recruiters to get patients. Chudy paid the recruiters around $400 per patient that they brought to Chudy. The recruiters, in turn, paid the patients. She testified that, when a patient's primary care physician would not sign the Form 485 because the patient did not require home health services, she needed another doctor to sign the forms.

         Chudy testified that when she started her own home health agency, she made an appointment with Dailey and spoke to him for less than fifteen minutes. During this meeting, Dailey never questioned Chudy about her company or her educational background. According to Chudy, she and Dailey made an agreement whereby Dave Onuorah, a physician assistant, "would go out to see the patients and once he brings the paperwork, then [Dailey] w[ould] go ahead and sign the 485s and everything, " and for which Chudy would pay Dailey $400 a month. The Government entered evidence of monthly checks from Candid to Dailey for $400. This relationship lasted from 2009 until 2011, and during this time Dailey signed 305 Form 485s. For Dailey's certifications, Candid billed Medicare approximately $913, 000.

         Chudy also testified that if she did not pay him the monthly fee, Dailey would not give her the signed Form 485s. During this two-year period, Chudy never spoke to Dailey about any patient, and Dailey never refused to sign any form. Furthermore, Dailey never prescribed medicine for or conducted any kind of medical review on any of these patients.

         Andres Gomez, a federal agent with the Department of Health and Human Services, Office of Inspector General, also testified regarding Medicare and home health care. Gomez investigated Candid, and this process included reviewing their Medicare claims data and interviewing Dailey. In this interview, Dailey initially stated that he did not remember Candid. But Dailey recalled Candid after Gomez showed Dailey the checks he had received from Candid. When Gomez requested the patient charts for some of the patients that Dailey referred to Candid, Dailey responded that he did not have those records. In a subsequent fax, Dailey stated "I do not have custodianship of any of these patients." Gomez testified that it was "very unusual" for a physician not to have patient records.

         Several of the patients for whom Dailey signed Form 485s also testified to the effect that they did not require home health care and had no knowledge of Dailey. Some of the patients' primary care physicians also testified that their patients did not require home health care or that they had not prescribed home health care to these patients.

         In his requested jury instructions, Dailey requested a definition of "practicing medicine" and "providing care, " as well as an explanation of the scope of practice for physician assistants. The district court denied the request.

         Dailey also filed a motion for judgment notwithstanding the verdict, which was denied. The jury returned a guilty verdict on all five counts.[4]


         We review an Ex Post Facto challenge-an issue of law-de novo. See United States v. Young, 585 F.3d 199, 202 (5th Cir. 2009) (per curiam). "We review alleged errors in the administration of discovery rules under an abuse of discretion standard and will not reverse on that basis unless a defendant establishes prejudice to his substantial rights." United States v. Ellender, 947 F.2d 748, 756 (5th Cir. 1991).

         Where the issue is preserved, we review the sufficiency of the evidence de novo. United States v. Grant, 683 F.3d 639, 642 (5th Cir. 2012). When conducting this review, we consider all evidence in the light most favorable to the government, and all reasonable inferences and credibility choices are made to support the jury's verdict. United States v. Ford, 558 F.3d 371, 375 (5th Cir. 2009) (per curiam). We will affirm the conviction where a rational trier of fact could have found the elements of the crime beyond a reasonable doubt. Id.

         Finally, we review a district court's refusal to include a requested jury instruction for an abuse of discretion, and the district court is afforded substantial latitude in formulating jury ...

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