United States v. Tracy Brown
2017 U.S. App. LEXIS 17765
| 5th Cir. | 2017Background
- Tracy Brown co-owned Psalms 23, a DME (durable medical equipment) supplier billing Medicare primarily for power wheelchairs, accessories, and orthotics.
- Brown paid marketers on a per-piece commission basis and urged them to refer patients for the most profitable equipment, a practice banned by federal law.
- Many referrals used only two doctors; marketers sometimes filled out prescriptions and progress notes, and Psalms frequently upcoded equipment (e.g., billing L0631 while providing L0625).
- A 2007 consultant warned Brown of multiple Medicare compliance red flags (waived copays, billing patterns, lack of therapist fittings, commission-based marketers); Brown did not rectify practices.
- A 2008 audit revealed missing documentation and possible forgeries; Medicare payments were suspended, and Brown was criminally charged with health-care fraud, paying kickbacks, and conspiracy.
- At trial Brown conceded the kickback counts, denied knowledge of fraud for the fraud counts, was convicted on all counts, and was sentenced with a leadership enhancement; she appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a deliberate ignorance instruction was proper | Brown: instruction improper because she lacked actual knowledge | Court: evidence showed subjective awareness of high probability of fraud and purposeful avoidance | Instruction proper; no abuse of discretion |
| Sufficiency of evidence for fraud convictions | Brown: no proof she knew claims were false | Government: circumstantial evidence (commissions, upcoding, consultant warnings, practices) supports deliberate ignorance | Evidence sufficient; verdict affirmed |
| Admission of Medicare-practice expert testimony | Brown: expert may be unreliable or not qualified | Government: expert had relevant Medicare and supplier-practice experience | Expert admissible under Rule 702; district court did not abuse discretion |
| Application of §3B1.1(a) leadership enhancement | Brown: she was unaware of the fraud, so not an organizer/leader of criminal activity | Government: as owner who recruited marketers and oversaw operations, she led the conspiracy | Enhancement properly applied; no clear error |
Key Cases Cited
- United States v. Nguyen, 493 F.3d 613 (5th Cir.) (deliberate ignorance instruction explained)
- United States v. Miller, 588 F.3d 897 (5th Cir.) (test for deliberate ignorance)
- United States v. Kuhrt, 788 F.3d 403 (5th Cir.) (caution that deliberate ignorance instruction should be rare)
- United States v. Willett, 751 F.3d 335 (5th Cir.) (high profit margins as circumstantial evidence of fraud)
- United States v. Davis, 690 F.3d 330 (5th Cir.) (standard for overturning verdict; manifest miscarriage of justice)
- United States v. McDowell, 498 F.3d 308 (5th Cir.) (criteria for manifest miscarriage of justice review)
- United States v. Barson, 845 F.3d 159 (5th Cir.) (affirming deliberate ignorance instruction in Medicare context)
- United States v. Delgado, 668 F.3d 219 (5th Cir.) (deliberate ignorance instruction affirmation)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (expert-admissibility gatekeeping; relevance and reliability)
- Mike Hooks Dredging Co. v. Marquette Transp. Gulf-Inland, LLC, 716 F.3d 886 (5th Cir.) (admitting expert based on experience)
- United States v. West, 58 F.3d 133 (5th Cir.) (experience-based expert admission)
- Huval v. Offshore Pipelines, Inc., 86 F.3d 454 (5th Cir.) (expert qualification based on industry experience)
- United States v. Brown, 727 F.3d 329 (5th Cir.) (recruiting others supports leadership enhancement)
- United States v. Liu, 960 F.2d 449 (5th Cir.) (applying organizer/leader enhancement when defendant recruited participants)