A cautionary tale: Billing for services not rendered and having unqualified people render services

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Reading sentencing memorandums is not typically part of my daily reading; however, the underlying counts which led to the plea in United States of America v. Yvette Hardy, Case No. 2:24-cr-20321 (E.D. Mich.) along with both the Defendant’s Sentencing Memorandum (ECF No. 23 (Feb. 24, 2025)) and the Government’s Memorandum Filed in Aid of Sentencing (ECF No. 22 (Feb. 24, 2025)) piqued my interest. The Defendant pleaded guilty to Count I on November 6, 2024 after being charged on June 20, 2024 with one count of health care fraud (18 U.S.C. §§ 1347 and 2).

First, a couple of basics. A “sentencing memorandum” is filed by the defendant’s attorney to request a more lenient sentence from the court. It often contains character letters and references to past “good deeds”. By way of contrast, when the Government files a “Memorandum in Aid of Sentencing” is the Government’s “ask” for a sentence that is within the Federal Sentencing Guidelines, which a Judge must consult but need not adhere to.

The facts of this particular case are notable because they may also form the basis of a civil case under the False Claims Act (FCA), which can be brought by the Government on its own accord or through the FCA’s qui tam provision, which enables a whistleblower, who is represented by counsel, to file a case on behalf of the Government. Notably, the Government always remains the main party in interest and the relator’s role is limited.

Here, the Defendant owned and operated Pebble Brooke Care Agency, LLC (“Pebble Brook”) – an adult day care facility. Between the period of January 2018 and at least November 2023, billed for and submitted claims for alleged group and individual “psychotherapy” services that were either never rendered or were provided by an unqualified and/or non-licensed individual. In turn, making the Medicare reimbursement ineligible. These types of violations have consistently been deemed material to payment by the Government for seemingly obvious reasons – the care has to actually be provided and having an unqualified person provide care can lead to adverse patient outcomes, including death.

The Government’s filing highlights the following:

Between approximately January 8, 2018, and at least November 2023, Pebble Brook submitted claims for 60 minutes of individual therapy and group therapy to Medicare totaling $3,456,235, and was paid $1,587,374.42. The seriousness of this offense, the critical importance of deterrence, and the need for just punishment warrant a custodial sentence.

Accordingly, the Government respectfully requests that the Court (1) impose a custodial sentence of 37 months; (2) impose a special assessment of $100; (3) impose a restitution judgment in the amount of $1,587,374.42; (4) impose a forfeiture money judgment in the amount of $1,587,374; and (5) impose a three-year term of supervised release.

In sum, what the Government relayed to the Court was that the Defendant, through her company, sought to enrich herself unlawfully, certified to Medicare that the services were provided and were provided in a lawful manner. In reality, the claims were not provided as represented and medical necessity was not met. Moreover, “Defendant also submitted, and caused the submission of, claims purporting that beneficiaries were receiving individual and group psychotherapy, when in fact, the beneficiaries attending Pebble Brooke participated in arts and crafts, Bingo games, field trips, and watched television. These activities, under the Medicare regulations, are not eligible for reimbursement from Medicare.” (emphasis added). The Government essentially provides additional support for its “ask” and places it in the context of the U.S. Sentencing Guidelines and 18 U.S.C. § 3553 (Imposition of a Sentence). Before transitioning to the Defendant’s side, I’ll highlight this portion by the Government:

The Sixth Circuit has also emphasized that ‘economic and fraud-based crimes … are prime candidates for general deterrence’ because these crimes ‘are more rational, cool, and calculated than sudden crimes of passion or opportunity.’ United States v. Peppel, 707 F.3d 627, 637 (6^th Cir. 2013) (quoting United States v. Martin, 455 F.3d 1227, 1240 (11^th Cir. 2006)). (emphasis added).

By way of contrast, the Defendant’s Sentencing Memorandum seeks to provide the “Court with a more in depth understanding of her history, aspirations, motivations, and conduct such that this Honorable Court can reasonably render the most appropriate sentence given the totality of the circumstances underlying Mrs. Hardy’s conviction.” While addressing the Sentencing Reform Act, Defense Counsel, whose signature block actually states “Attorney for Plaintiff” seeks to significantly reduce what the Government proposes to “impose a sentence of either not more than twelve (12) to eighteen (18) months with the option of a split sentence, or most preferably twelve months which would be satisfied by home detention or community service.” (emphasis added).

What is troubling about the Defendant’s request is that it references her diabetic condition, lack of education, “exceptional contributions and service to charitable and civil life of her community” and Pebble Brook’s relocation to her brother-in-law’s church, Messiah Missionary Baptist Church before relocating yet again to her personal residence.

What is undisputed is that the Defendant pled guilty to fraud. It also placed individuals at increased risk for an adverse outcome, which could have resulted in death. The take-aways for providers are to be forthright in billing and the services/goods that are rendered. Perform background checks through HHS-OIG’s exclusion list, as well as relevant state licensing boards to ensure that quality and legitimate care is being provided. Lastly, train and have policies and procedures in place to ensure that clinicians are acting within the scope of their respective licenses and meeting medical necessity or if Medicare Part C, medical substantiation, for claims that are being submitted to the federal and state government for payment.

Rachel V. Rose, JD, MBA, advises clients on compliance, transactions, government administrative actions, and litigation involving healthcare, cybersecurity, corporate and securities law, as well as False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her website, www.rvrose.com.