The opinion of the court was delivered by: Judge Robert M. Dow, Jr.
Magistrate Judge Jeffrey Cole
MEMORANDUM OPINION AND ORDER
The United States has moved to revoke the bonds of defendants, Dr. Andrew Carr, a licensed chiropractor, and his wife, Wendy Carr. [Dkt. # 51]. Judge Dow has referred the matter here. [Dkt. # 64]. I have jurisdiction to decide the motion pursuant to 18 U.S.C. §§3041, 3142, 3145(b) and 3148.
An extended hearing was held July 12, 2012, at which a Special Agent of the Federal Bureau of Investigation testified and was cross-examined by defendants' counsel. The hearing was continued until July19. On the 19th, the defendants asked for a further continuance until August 8, 2012. [Dkt. # 63]. Then, on July 25, 2012, came the Government's Emergency Supplemental Motion to Revoke Dr. Carr's bond based upon his claimed suicide attempt. [Dkt. #64]. The evidence was clear that Dr. Carr told his Pretrial Services Officer from the hospital to which he had been taken that he had attempted to hang himself but the belt broke. He said he would have shot himself had he had access to a gun.*fn1 I granted the Government's emergency motion. [Dkt. # 66]. Thus, upon his release from the hospital, Dr. Carr was arrested and taken to the Kankakee County Jail and placed on suicide watch. He was taken off that status when the medical staff at the jail concluded there was no longer a danger that he would attempt to kill himself.
At a hearing on August 3, a psychiatrist from the Elgin State Mental Hospital and a nurse from the Kankakee County Jail testified that Dr. Carr was not suicidal and posed no present risk of physical harm to himself or others. I therefore ordered him released from custody on August 3 [Dkt. #71], pending the outcome of the Government's original motion to revoke his bond. On August 8, the hearing on that motion was concluded.
On February 15, 2011, Dr. Carr was charged by criminal complaint with health care fraud, in violation of 18 U.S.C. §1347. On February 17, 2011, Dr. Carr was arrested, and I ordered him released on a $10,000 own recognizance bond. The conditions of release prohibited Dr. Carr from violating any federal, state, or local law. [Dkt.#7-80]. On June 16, 2011, a grand jury returned an indictment charging Dr. Carr and his wife, Wendy Carr, with seven counts of health care fraud, in violation of 18 U.S.C. §1347. On June 30, 2011, she was arraigned, and I ordered her released on a $4,500 own recognizance bond, which, like the bond of her husband, included as a condition that she not violate any federal, state, or local law while on release. [Dkt. #28-29].
It is the Government's contention that beginning in early August 2011, Dr. and Mrs. Carr formulated and executed a scheme to defraud Blue Cross Blue Shield through the submission of claims for insurance reimbursement for medical and chiropractic services that had not been provided to the patient on whose behalf the bills were being submitted. It was a further part of the scheme, the Government contends, that in connection with chiropractic services that were being rendered by Dr. Carr, bills would be sent under the names of doctors who had no relationship with the Phoenix Medical Group, beyond allowing their names to be used for billing purposes.*fn2
During the period relevant to the instant Motion to Revoke Bonds some 600 claims were submitted on behalf of approximately 40 patients. The claims totaled $274,000, of which $94,000 was actually paid to a corporation set up by the Carrs. (Govt. Ex. D). The government has estimated that a very substantial percentage of these claims were totally fraudulent. The exact percentage is unclear but it is not insignificant. Had the scheme not been employed, the amount that would have been paid to Dr. Carr --assuming anything would--would have been approximately 25% less than what was realized since Dr. Carr was not a Blue Cross Blue Shield approved provider.
The alleged scheme was subtle. But, of course, the most successful schemes to defraud are those dressed in the garb of honesty and hedged about with all the appearances of legal and enforceable undertakings. If the intent and purpose are to deceive and defraud the unwary, it matters not what form the project is made to take. Cf. Brooks v United States, 146 F.223 (8th Cir.1906).
THE OUTLINES OF THE SCHEME
For some period prior to September 8, 2010, Dr. Carr had been operating under the umbrella of a company he formed called the Edgewater Rehab & Wellness Center. On the 8th, Blue Cross Blue Shield of Illinois terminated Dr. Carr's and Edgewater's participation in the Blue Cross PPO network for "documented abusive billing practices which [he] had not corrected after appropriate notification."(Govt. Ex. F).*fn3 A year later, on August 10, 2011-- two months after the defendants were indicated -- The Phoenix Medical Group, Inc. ("Phoenix Medical") submitted a Participating Provider Agreement to Blue Cross Blue Shield to permit Phoenix Medical to be a provider, thereby permitting patients carrying Blue Cross Blue Shield insurance to receive treatments by medical service providers at Phoenix Medical and for those treatments to be covered by Blue Cross Blue Shield in accordance with the PPO Agreement. In network providers were paid a greater percentage of the bill, thereby making it cheaper for the patient to use the services of that medical provider. The address for Phoenix Medical was listed on the Agreement as 650 E Terra Cotta Ave., Suite 100, Crystal Lake, Illinois. The Agreement was signed, "Lynn Jenson," which is a combination of Mrs. Carr's middle name and maiden name. (Government's Ex. A). The Provider Application shows Lynn Jenson as the "billing contact." (Govt. Ex. I).
It is the government's contention that this invented name was used in order to conceal Dr. Carr's and his wife's involvement in the Phoenix Medical Group in light of the prior cancellation of Edgewater Rehab & Wellness Center's provider agreement. On September 26, 2011, Phoenix Medical was registered as a corporation with the Illinois Secretary of State with the registered agent shown not as Lynn Jenson, but as Wendy Carr, 650 E Terra Cotta Ave., Suite 100, Crystal Lake, Illinois. (See Govt. Ex. B).
Contemporaneous with these events, beginning in about August 2011, Mrs. Carr began to advertise and hold fitness classes at her business, the "Fit Stop," at 650 E Terra Cotta Ave., Suite 101, Crystal Lake, Illinois, which is the same address as The Phoenix Medical Group, which operates out of Suite 100.*fn4 The Fit Stop was contiguous to the Phoenix Medical Group and shared a common wall, which the Carrs opened to allow free access between the two suites. (See Defendants' Response to Motion to revoke Defendants' Bonds at 2, ¶ 5).
It was an explicit condition of Dr. Carr's bond that he attempt to find work. Dr. Carr was under supervised release and thus was reporting to a pretrial services officer. He notified her that he was working with his wife, as well as identifying another person or entity with whom he was working. Significantly, he made no mention of the Phoenix Medical Group even though this was his chief source of income and the focus of all his time and energy.
In August 2011, a person identified by the Government as "Individual MS" signed up for a promotion for 12 fitness classes at the Fit Stop. According to MS, the Carrs taught the classes. After MS complained of some tightness in her back, Dr. Carr told her that he was a chiropractor and could provide her with an adjustment to ease the tightness. MS received chiropractic adjustments on three or four different occasions at the Fit Stop, typically before attending a fitness class. MS gave her Blue Cross Blue Shield insurance card to Andrew Carr, who made a photocopy before returning the card to her. He told her that the Explanation of Benefits forms she would receive from her insurance company for his services would list The Phoenix Medical Group as the provider. MS had never heard of Phoenix Medical, and Dr. Carr did not explain what it was or why he was submitting health care insurance claims under that name.
MS received three to four treatments from Dr. Carr in September and October 2011. According to Blue Cross Blue Shield records, Phoenix Medical submitted four claims for services provided to MS in September and October 2011, totaling $1,134. However, these four claims listed another doctor, Dr. GK, as the rendering provider. (Govt. Ex. D). When interviewed by law enforcement agents, MS stated she did not recognize Dr. GK's name. Nor did she recognize Dr. GK (this is not his real name) from ...