Petition for Writ of Certiorari — Serge Francois, Petitioner v. United States

Supreme Court briefApr 30, 2022

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IN THE SUPREME COURT

OF THE UNITED STATES

OCTOBER TERM 2021

CASE NO. ____________________

SERGE FRANCOIS,

Petitioner,

vs.

THE UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

Revised on June 12, 2022

Deletions only – no change in content

SHERYL J. LOWENTHAL

CJA Counsel on Appeal

for SERGE FRANCOIS

9130 S. Dadeland Blvd. Suite 1511

Miami, Florida 33156-7851

Phone: 305-670-3360

The Florida Bar No. 163475

E-Mail: sjlowenthal@appeals.net

North Florida Office: 221 East Government Street

Pensacola, Florida 32502-6018 Phone: 850-912-6710

QUESTIONS PRESENTED

Whether this Court should exercise its supervisory power over the

Courts of the United States where the Eleventh Circuit reversibly

erred in affirming the conviction where the pharmacist’s

completion of applications to join a pharmacy network, that

provided accurate answers, no false information, and no intent to

commit fraud, was found to violate 18 U.S.C. 1035(a) and

843(a)(4)(A)?

Whether this Court should exercise its supervisory power over the

Courts of the United States where the Eleventh Circuit reversibly

erred in affirming the conviction where the pharmacist complied

with the managed care utilization review process mandated in the

Pharmacy-benefit management-provider-agreement with Express

Scripts, Inc., and was that was a deviation from standards of

pharmacy practice at the time of the alleged illegal conduct; or

was this conviction a violation 17 U.S.C. 1347, an unconstitutional

Ex Post Facto violation that deprived Francois of the rights

conferred pursuant to Article 1, Section 9, Clause 3 and

Amendment V of the United States Constitution?

TABLE OF CONTENTS AND CITATIONS

QUESTIONS PRESENTED

PARTIES TO THE PROCEEDINGS

OPINION BELOW

STATEMENT OF JURISDICTIONAL GROUNDS

CONSTITUTIONAL PROVISIONS

(See the Attached Appendix at Page 1)

STATEMENT OF THE CASE AND FACTS

Francois’ Answers to Application Questions

Were Not False

Kazarian’s Testimony – Inadmissible and

Erroneously Admitted

REASONS FOR GRANTING THE WRIT

Reason 1

Francois’ application to join the ESI pharmacy

network, provided valid, accurate answers, no false

information, no intent to commit fraud, and did not

violate 18 U.S.C. 1035(a) or 843(a)(4)(A), yet the jury

convicted him, and the Eleventh Circuit erroneously

affirmed the conviction and sentence, violating

essential requirements of law.

Reason II

Kazarian’s testimony should have been excluded.

Complying with the managed care utilization review

process mandated in the Pharmacy benefit

management provider agreement with ESI did not

deviate from standards of pharmacy practice at the

time of the alleged illegal conduct; nor was it perjury;

allowing an erroneous Ex Post Facto violation that

deprived Francois of the rights conferred pursuant to

Amendment V and Article 1, Section 9, Clause 3 of the

United States Constitution.

Index to the Appendix

The United States Constitution

Article 1, Section 9, Clause 3

Appendix Page 1

The Fifth Amendment

Appendix Page 1

The appellate decision

The order denying petition for rehearing

The final judgment, Southern District of Florida

iii

TABLE OF CITATIONS

Cases:

Ex Parte Bain, 121 U.S. 1 (1887)

Darden v. Wainwright, 477 U.S 168 (1986)

14, 38

Gonzalez v. Oregon, 546 U.S. 243, 126 S.Ct. 904 (2006)

12, 35

Liberty Mutual Insurance v. Friedman,

639 F.2d 153 (4th Cir. 1981)

Rogers v. Tennessee, 532 U.S. 451, 12 S.Ct. 1693 (2001)

13, 38

Watson v. Philip Morris Companies, 551 U.S. 142 (2007)

The County Board of Arlington County v. Express Scripts

Pharmacy, Inc., 996 F.3d 243 (4th Cir. 2021)

2, 19, 24

United States ex rel. Lutz v. United States,

853 F.3d 131 (4th Cir. 2017)

United States v. Tonge and Francois, No. 18-11165

(11th Cir. Nov. 22, 2021)

OFFC v. Mongahela Railroad Company, 1985 OFFC-ACI

Recommended decsn. and ord. April 2, 2086

Other Authorities:

The United States Constitution

Article I, Section 9, Clause 3

Fifth Amendment

10, 21

Sixth Amendment

Fourteenth Amendment

The United States Code

Title 10 USC 1103(a)

Title 11 USC 521(a)(10)

9, 31

Title 18 USC 843(a)(4)(A)

20, 26, 40

Title 18 USC 1035

Title 18 USC 1035(a)(1)(2)

9, 23, 40

Title 18 USC 1347

11, 19, 40

Title 28, USC 1254

Title 28, USC 1291

Federal Rule of Evidence 701

11, 12

Code of Federal Regulations

32 CFR 199.17

41 CFR 60.13

United States Supreme Court Rules

Rules 10.1(a) and (c)

Rule 13

Florida Statutes

Section 465.003

Section 456.014 s119.01(1)

Section 456.014 s.119.07(1)

Section 456.016

Section 456.072(1)(k)

Section 499.003

8, 28

Florida Administrative Code

Sec. 64b16-27.4001

Tricia Lee Wilkins, Prior Authorization and Utilization

Management Concepts in Management Care,

Pharmacy 25 J. Managed Care and Specialty

Pharmacies, 641 (2019)

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM 2021

Serge Francois, Petitioner,

vs.

The United States of America, Respondent.

Petition for a Writ of Certiorari

PARTIES TO THE PROCEEDINGS

The United States was the prosecution, FLSD No.1:16-cr-20399DPG-2.

There were six defendants including Serge Francois and Patrick

Tonge. Francois and Tonge went to trial.

In the Eleventh Circuit No. 18-11165, Francois and Tonge were the

Appellants. The Eleventh Circuit affirmed. Francois petitions for a writ of

certiorari to review the judgment of the Eleventh Circuit in U.S. v. Tonge

and Francois, 32-pages, non-published, November 22, 2021.

OPINION BELOW

A copy of the judgment is in the Appendix pp.2-33. A copy of the

judgment of the district court, February 7, 2022, is in the Appendix pp34-39.

STATEMENT OF JURISDICTIONAL GROUNDS

The opinion of the Eleventh Circuit was issued November 22, 2021.

A timely Petition for Rehearing was denied on February 7, 2022. Ap 40.

This Petition is timely filed under Supreme Court Rule 13.1. This Court has

jurisdiction under 28 U.S.C. 1254 and U.S. Supreme Court Rules 10.1(a),

(c), and 13. The Eleventh Circuit had jurisdiction under 28 U.S.C. 1291.

STATEMENT OF THE CASE AND FACTS

The prosecution alleged the fraud commenced in 2009 when Francois

completed an application to process prescription medication claims for TRICARE on behalf of Atlantic Pharmacy.

A simple application process

evolved into a complicated healthcare issue.

The facts and evidence

warranted only one outcome, with or without Francois’s testimony.

Express Scripts Inc. (ESI) operates the TRICARE Mail Order

Program (TMOP) and is subcontractor in a contract between ESI and the

Department of Defense (DOD). ESI “acted under” DOD, operating the

TMOP in accordance with its DOD contract. See, The County Board of

Arlington County v. Express Scripts Pharmacy, Inc., 996 F.3d 243 (4th Cir.

2021). ESI operates mail-order pharmacies that distribute medications to

patients nationally. They would have been aware of fraud if there were an

oversupply of compounded prescription medications discovered while

performing their internal utilization review of clinical information that they

developed and maintained, before determining medical necessity, which was

required before a pharmacy could dispense medication. ESI holds the

contract with the DOD to provide services to members of TRICARE, DOD’s

nationwide healthcare program.

TRICARE is federal health insurance administered by DOD to

“provide[] medical care to current and retired service members” and families. United States ex rel. Lutz v. United States, 853 F.3d 131, 140 n.2

(4th Cir. 2017), citing 32 C.F.R.199.17.

TRICARE is governed by federal

statutes and regulations (ie 10 U.S.C.1071), providing “improved and

uniform medical and dental care for members and certain former members

of [the armed] services, and for their dependents;” The Code of Federal

Regulations, 32 C.F.R. 199.17 establishes TRICARE’s operating regulations.

ESI operates a mail-order program as a subcontractor for corporate affiliates.

ESI administers the TRICARE mail-order pharmacy under requirements

specified in the contract. ESI maintained formularies and authorized

Atlantic Pharmacy to dispense medication, a service provided in their DOD

contract.

Atlantic acted under ESI and DOD-directed conduct. See, 10

U.S.C.1103(a). ESI administered TMOP using the DOD formulary, served

as a fiscal intermediary for DOD drug purchases and could not modify the

could not modify the contract without authorization from the DOD. Absent

ESI’s services, the DOD would have to administer TMOP itself.

Questions: (1) did the panel err in finding that Atlantic Pharmacy was

not acting under the usual course of pharmacy practice; (2) was it structural

error to affirm when Kazarian testified outside specific parameters set by the

court; (3) did non-legal facts and misrepresentations of law create harmful

errors violating Francois’ rights, resulting in a criminal conviction for a law

that was not in effect at the time charged by indictment; (4) did

misrepresentations about bankruptcy filings, a suspended DEA number, and

false representations of discipline create an illusion of lies to application

questions, alleged to be fraud?

Francois’ Answers to Application Questions Were Not False

The trial commenced with testimony about an ESI application. The

facts showed that so-called untruthful answers were not related to Atlantic

Pharmacy, but rather a previous pharmacy owned by Francois that was

investigated and indicted.

In 2007, following trial, the court found

Francois and ConceptRX Pharmacy not guilty.

All charges were

dropped. The case was dismissed with prejudice.

This case was based on responses to questions on an application, con4

cerning no sanction, conviction, or actions against Francois related to the

present investigation. The prosecution's theory that Atlantic Pharmacy

would not have been accepted into the ESI network “had they known” about

the previous case was wrong, but it became the feature of the prosecution,

repeated throughout the lengthy trial, beginning in opening statement.

Bonnie Roberts, senior director of compliance for ESI, testified that

she worked with retail pharmacies to ensure they were properly

credentialed. Her primary duty was credentialing pharmacies for qualification to join the network (DE-564: 83). Francois submitted all licensure and

credentials.

He had no hidden agenda.

In opening statement, the government attacked Francois’ character,

misleading the jury by repeating that Francois lied on his application for

failing to disclose information about his professional license and the previous complaint. In the original ESI Network Application (April 20, 2010),

there is a license verification dated April 28, 2010; for discipline on file. For

public complaint? “yes” is circled. The pharmacist license status was

“clear” and “active.” The information was reviewed by ESI on May 3,

2010, with the authorized signature, “OK” above the signature, and a timestamp at the bottom of the page showing the sender’s fax received on April

28, 2010.

Francois did not check the box on the application page 1 asking if

he sent the report with the

there had been any discipline, but

application, demonstrating that if he was required to check the box, it was

an oversight, not deliberate healthcare fraud.

During a background check, there was a query for licensure records

for the Division of Medical Quality Assurance. After certifying that the

background-check documents were correct, the license records officer

noted that some records are exempt and must be withheld from disclosure

under Florida Statute 456.014, s.119.01(1): public inspection of information

required from applicants, exceptions, all information required by the

Department of any applicant shall be public record, open to public

inspection pursuant s.119.07, except financial and medical information,

school transcripts, and other such matters that are confidential and exempt

and shall not be discussed or accessible to anyone (DE-417: GX3).

In Government Exhibit 3, Francois disclosed a minor dispensing error

which Bonnie Roberts agreed did not exclude him from being a provider for

ESI’s network. Bankruptcy information, she said, was provided only after

the pharmacy was no longer in the ESI network (DE-564:113-14). Roberts

testified that the query about discipline was answered untruthfully. She was

asked whether there had been discipline because there was a suspension

which “in her mind” was a discipline matter (DE-564:116). But neither she

nor the application defined “discipline” to clarify what they wanted.

Atlantic had an active DEA license when the ESI application was

completed and granted (DE-564: 117).

At trial, the prosecution asked Bonnie Roberts about the DEA

suspension. She mistakenly testified that “DEA information is not made

available to us” and that Francois disclosed the information to ESI only upon

their request.

Defense counsel showed Roberts a letter faxed on April 30, 2010,

requesting information for GX3 showing that Francois already sent the

information to ESI on April 29, 2010, before ESI sent its letter to the

pharmacy (DE-564: 112-113). There was no action or intent to conceal or

misrepresent information.

The prosecution asserted that Roberts was unaware that Francois was

a registered owner of another pharmacy. From Government Exhibit 6,

Roberts read: Serge Francois is the registered agent and owner of Concept

RX; and also is licensed as a pharmacist in Florida (giving license number).

Roberts misrepresented to the jury that pharmacists have DEA regis7

trations.

not.

No, Pharmacies have DEA registrations.

Pharmacists do

Although the application indicated no discipline against Francois,

according to his interpretation, that information was disclosed to ESI before

it was requested in Exhibit 3.

The Code of Federal Regulations provides guidance for the definition of

“subcontract.” There is a two-part test. First, to be considered a “subcontractor” under federal statute or regulation, there must be a reasonable nexus

between the efficiency and economy criteria of the Federal Property and

Administrative Service Act, the key procurement statute underlying

EO11246, and expectations imposed on federal contractors. A “subcontractor under any federal government contract…also must [show]…that the

products or services acquired by the prime contractor ultimately will be used

in the performance of a government contract;” and products or services

procured are “necessary” to the performance of a federal government

contract.

Referring to Fla.Stat.499.003(2013), the contract provider and

subcontractor must maintain and produce immediately for inspection, movement, or transfer, all prescription drugs belonging to the agency or entity,

and records of receipt and disposition of prescription drugs. Atlantic did not

subcontract with any other business or person to dispense, process, or

perform tasks related to prescription services agreed in the contract signed

between Atlantic and ESI. There was no failure to disclose a subcontractor

on the ESI recertification. Atlantic provided services exclusively.

There was no record of discipline in any DEA report, Board of

Pharmacy report, or license for ConceptRX or Atlantic. There was never a

conclusion or finding of misconduct. The ConceptRX case was dismissed.

There was no misrepresentation of fact or law under any rules.

The prosecution alleged a false response about bankruptcy, arguing

that Francois falsely answered that he had not filed for bankruptcy in the last

five years when he filed in 2009 and 2010 (violating 18 U.S.C.1035(a)(1)(2).

A 2009 bankruptcy petition and a July 2010 petition were dismissed in 2010

in January and September, respectively. If a voluntary petition is filed under

Section 7 or 13 and the debtor does not timely file all required information

(11 USC 521(a)(10)) the petition automatically is dismissed.

The Fifth Amendment provides that no person shall be in jeopardy for

the same offense twice. The court failed to acknowledge the 2007 acquittals.

The testimony of government witness Kazarian exceeded limits set by the

court, which abused its discretion by allowing that testimony to be elicited.

The Eleventh Circuit affirmed nonetheless.

Kazarian’s Testimony – Inadmissible but Erroneously Admitted

Structural-error reversal was required. The opinion erroneously focused

on Kazarian’s improper testimony and misstatements about applicable

pharmacy law and procedures. His professional judgment and opinion were

incorrect.

Due process is the core of the Fifth, Sixth, and Fourteenth

Amendments. Courts should protect defendants’ rights and reverse when

rights are violated. The district court structurally erred in allowing

Kazarian’s testimony.

It abused its discretion rather than finding the

opinion testimony to be expert in nature and outside the scope of what was

permitted. Further it was an Ex Post Facto violation of U.S. Constitution,

Article 1, Section 9, Clause 3 (Appendix p.1).

The jury was invited to draw unwarranted inferences based on

unconnected bits of opinion testimony and evidence. They drew unwarranted inferences from evidence of different pharmacy methods of filling

prescriptions, to reach a guilty verdict on healthcare fraud. They determined

that Atlantic’s pharmacist failed to follow protocols under a statute that was

nonexistent at the time of the alleged offense.

Evidence of compliance with professional norms at the time of the

alleged offense, pertinent to elements of healthcare fraud.

Extent and

severity of departure from professional norms and pharmacist discretion,

should have been (but were not) the foundation for the jury finding of criminal violation of 18 U.S.C. 1347 and 1349. Francois’ healthcare utilization

process was not a breach of professional conduct and did not support

conviction.

The prosecution improperly elicited legal opinions from Kazarian that

were neither within limitations set by the court nor permissible under

Federal Rules of Evidence. Kazarian was unqualified to opine on the law,

yet the district court allowed it. The appellate court affirmed. Kazarian

based his standard of practice, actions, and experience on a statute not in

existence until December 2015. He testified: “That’s my pharmacy

[procedure].” His opinion was not the only permissible standard of

practice, merely how he conducted business. His statements were neither

credible nor reliable under Federal Rule of Evid. 701.

Pursuant to government objection during Kazarian’s cross, defense

counsel said (DE-572: 165):

… we are talking about the practice of pharmacy. He mentioned how his

pharmacy operated…as if it were the only way a pharmacist and a pharmacy

can operate. In other words, this is how I [Kazarian] interpret things, so this

is the only way it could be.

There was not A specific procedure for prescription validation before

December 2015. The guidelines were open to interpretation, based on the

pharmacy’s policies and procedures. On cross Kazarian acknowledged that

pharmacists have discretion to dispense according to their independent

professional judgement. The court erroneously allowed the prosecution

to elicit Kazarian’s own pharmacy procedures based on a law enacted

after dates charged. Congress never intended to impose criminal sanctions

based on completely standardless federal regulations. See Gonzalez, v.

Oregon, 546 U.S. 243, 126 S.Ct. 904, 163 L.Ed.2d 784 (2006).

Kazarian’s testimony should have been restricted in scope. It was unsupported by the record. It is axiomatic that a party must lay a sufficient

foundation. Kazarian’s testimony was supposed to be subject matter and

background. Francois objected to his testimony pretrial. The court ruled

that it would allow the testimony as opinion with restrictions. Defense

counsel responded to the objection on cross, that Kazarian could not reliably

testify about how pharmacists should check prescriptions. It was precluded

by Rule 701 and the Ex Post Facto Clause.

Presumably, the government presented a flawed theory to the grand

jury. Kazarian touted his personal standard of practice as the law even

though pharmacists could follow many standards or protocols under Florida

Statutes 64b16-27.4001, “Delegation to and Supervision of Pharmacy.” He

said “we cannot renew our pharmacy license without taking a two-hour class

where they talk about red flags and what things should be questioned

regarding prescriptions;” and that it was a standard of practice and “it’s the

law” (DE-572-117-18); but it was not enacted until December 2015.

Kazarian was supposed to provide specialized pharmacy knowledge,

skill, experience, training, and education on the subject and background to

help the jury understand pharmacy practice. Instead, he made unwarranted

inferences from a statute not in effect at the time of the charged offenses.

The jurors rendered a verdict based on Kazazian’s opinion testimony, not on

valid law or procedure. They found Francois’ procedures unreasonable,

based on incorrect statements from the prosecutor and a witness apparently

lacking background in acceptable pharmacy practices.

In Rogers v. Tennessee, 532 U.S. 451, 12 S.Ct. 1693, 1699, 149

L.Ed.2d 697 (2001), this Court explained that due process encompasses Ex

Post Facto principles of fair notice, fair warning, and foreseeability, in the

context of criminal penalties. On the dates alleged, policies were different.

The statute did not require assessment of a prescription for appropriate thera13

peutic value, and communication with physician, provider, patient, or

caregiver in validation; nor were there required continuing education courses

for “Red Flags.” DOD contracted with ESI to perform such tasks.

Atlantic used other validation methods for claims-processing. The prosecutor said, “I guess TRICARE trusted you guys?” (DE-568:155), a snarky,

misleading comment to impact the jury decision process. Throughout trial,

the prosecution made ambiguous and inaccurate statements. The district

court erred in allowing those impermissible references. Officers of the

court have a special duty to avoid conduct that undermines the integrity of

the adjudicative process.

In closing, the prosecutor said at DE-576: 47, that

Francois was trusted to ensure that

…medication went to soldiers in need, family members in need, not

sent out the door to line his pockets. That’s the trust. They do it

when people need it. That’s the trust.

Prosecutorial comments infected the trial with unfairness resulting in deprivation of due process. See, Darden v. Wainwright, 477 U.S. 168, 181, 106

S.Ct. 2464, 91 L.Ed.2d 144 (1986).

Francois and all Atlantic employees followed proper procedures for

individualized utilization review and authorization according to ESI guidelines. “Medical necessity” was reviewed and validated for each patient recei14

ving medication from Atlantic via ESI’s internal utilization review.

According to TRICARE’s contract with ESI, each claim for

compounded medication of $500 or more automatically triggered an internal

utilization review following DOD guidelines. Rigorous prior authorization

was mandatory to validate medical necessity for specialty compounded

medications. Prior authorization by ESI included review of each patient’s

medication profile, clinical information, and medical details provided to ESI

by TRICARE Medical Claims and the treating doctor’s medical records.

After ESI’s internal medical criteria were reviewed, each patient who met

the requirements received an individualized authorization number. Pharmacy staff received the authorization number as an okay to dispense

medication to the patient.

ESI’s Utilization Review process was reliable, thorough, and the method used to prove medical necessity and validity for prescriptions.

Diagnosing and prescribing medication is outside the scope of a pharmacy’s

abilities. ESI’s internal validation methods superseded Atlantic’s validation

processes due to ESI access to patients’ protected health information under

HIPAA guidelines. Atlantic lacked legal authority to inquire. ESI was the

only Pharmacy Benefit Manager (PBM) that followed this validation pro15

cess for compounded specialty medication claims. Each patient received a

specific number granting authority to fill the prescription as written.

Prosecution witness Amanda Lee discussed the protocols in her testimony,

confirming the process. The government had no rebuttal. It was true.

ESI was contractually responsible for providing utilization review and

authorization to verify the treatment and ensure medical necessity by

following a robust verification process before authorizing medication. Pharmacists do

not

have

the consent required under 1996’s HIPAA law

addressing health care issues and health insurance privacy requirements.

Without patient-signed consent to disclose information to Atlantic, neither

pharmacists nor pharmacy technicians are permitted to receive information

about special medical conditions, diagnostic tests, or other privacy-protected

health information from a doctor or any third party.

Regarding telephonic communications, DOD’s Captain Norton said

there must “be some safeguards for the two-way video audio security

protocols to ensure…the communication is–to the extent possible…not able

to be hacked…by other parties” (DE-564-68).

Due to complexity and misrepresentations, the jury must have overlooked or forgotten the testimony of Norton, Chief Pharmacist for the DOD,

explaining that ESI was responsible for reviewing several factors and

adjudicating the claims (DE-564: 67). ESI was contracted to ensure that the

beneficiary was eligible for TRICARE benefits, matching them up, ensuring

that the claim submitted for medication was a covered benefit, making sure

that the claim fell within various rules for valid prescriptions by an authorized provider, and for cost-charged (DE-564: 67). The government asked

whether a valid prescription was required for TRICARE to pay for a

prescription (DE-564: 67). Captain Norton said yes, re-affirming that ESI

validated each prescription when TRICARE paid.

The defense objected when the government elicited an incorrect legal

conclusion from Edward Deharde about the definition of kickbacks in

reference to copays and utilization; misleading the jury to believe that

utilization and validity explained by Norton and Deharde was the

responsibility of Atlantic Pharmacy. “That the benefit, ensuring … the claim

being submitted, the medication was part of the covered benefit, making sure

that it fell under the various rules for valid prescriptions written by an

authorized provider, that the cost is being charged” was the sole

responsibility of ESI (DE-564:67).

Amanda Lee, Atlantic Pharmacy technician, was asked whether

copays were routinely collected at Atlantic. She said no, payments could be

submitted automatically online; sometimes there was no copay (DE-417:

GX3/section 2.4). The government twisted her words. Randesha testified

that Francois never told her to tell anyone they did not have to pay their

copay (DE-566: 72).

The government also made a feature of medications prescribed for

children. This prosecution was for fraud, not malpractice. The government

asserted matters contradicting their experts. The industry standard is not the

same for all pharmacies despite Kazarian saying that his was the only way.

REASONS FOR GRANTING THE WRIT

Reason 1

Francois’ application to join the ESI pharmacy network provided valid,

accurate answers, no false information, no intent to commit fraud, and

did not violate 18 U.S.C. 1035(a) or 843(a)(4)(A), yet the jury convicted

him, and the Eleventh Circuit erroneously affirmed the conviction and

sentence, violating essential requirements of law.

Throughout this lengthy trial, the prosecution repeatedly made

suggestions and inferences that Francois made false statements on applications and recertifications (when his answers were correct and actions were

innocent), creating an illusion of lies by misrepresenting facts. In support of

the prosecution’s theory, instances of patients not receiving or not wanting

medications were validated by ex-post facto application of standards of practice allegedly violating 18 U.S.C. 1347 and 1349 not yet enacted at the

time of the charged offenses.

Express Scripts’ agreement (DE-417-GX3) required Atlantic Pharmacy to participate in the utilization review of all covered compounded

medication claims and to “abide by, comply with and carry out all determinations resulting from such processes or procedures.” (GX3/Sec.2.12) Once

ESI validated medical necessity, an authorization was rendered. This process

was required and could not be changed unless the DOD changes its rules and

regulations under the Statement of Work (SOW). Arlington v. ESI, Supra.

The Eleventh Circuit erroneously affirmed a finding that Atlantic

Pharmacy failed to follow Standards of Pharmacy Practice, a conclusion

reached echoing the prosecution’s numerous misleading remarks to the jury

alleging that Atlantic did not check prescriptions according to guidelines in

the Florida Administrative Code and Statutes.

GX3 the signed subcontractor agreement between Atlantic and ESI,

defined the relationship, belying the prosecutor’s comments. Atlantic and its

pharmacist would have acted outside the scope of professional practice

because a pharmacist is neither licensed to diagnose medical conditions, nor

permitted to prescribe medications. Fla.Stat.Sec.465.003, entitled “Practice

of the Profession of Pharmacy,” states: ”Nothing in this subsection may be

interpreted to permit an alteration of a prescriber’s directions, the diagnosis

or treatment of any disease, initiation of any drug therapy or practice of

medicine or osteopathic medicine unless permitted by law.”

The government’s suggestions would violate the Atlantic subcontracttor contract and DOD-ESI contract requirements in DOD’s Statement of

Work explained by DOD Captain Norton. The ESI Assurance Utilization

followed Florida’s Administrative Code(DE-417:GX3/Section2.12)(p.1)

Francois was charged with lying on the ESI provider certification in

violation of 18 U.S.C. 843(a)(4)(A) by stating falsely that (1) he never

owned another pharmacy; (2)&(3) had not filed bankruptcy in the previous

ten years, and (4) Atlantic had no transactions with subcontractors

totaling more than $25,000 in the past 12 months. The indictment was not

amended. The court should not speculate whether the grand jury intended

other offenses to stand independently. Ex parte Bain, 121 U.S. 1, 7 S.Ct.

781 (1887).

Responses on the GX3, the ESI application,

were alleged to be

untruthful. The alleged lies were about ConceptRX, Francois’ previously

owned pharmacy. There was an investigation, indictment, and trial in 2007.

Francois was found not guilty; no discipline, fine, or action against the pharmacy or Francois. All charges were dismissed with prejudice.

The Fifth Amendment prohibits double jeopardy. The prosecution

focused on allegedly inaccurate responses on an application: have any of

your pharmacists ever been disciplined by the pharmacy board, state or

federal, DEA, or the state Medicaid service? (DE-564:87) The government’s theory was that Atlantic would not have been allowed into ESI’s

provider network if they knew about the previous matter. That was wrong,

yet it became a feature of the case, drilled into jurors’ minds throughout the

trial. Bonnie Roberts, ESI Senior Director for Compliance, tasked with

credentialing pharmacies, testified that she worked with retail pharmacies to

ensure they were properly credentialed to join the network (DE-564-83).

Francois had no hidden agenda. He submitted all licenses and

credentials. Roberts said it was common to request additional information

from pharmacies. She conceded that at times there were inaccurate answers

on applications(DE-565:111). Fla.Stat.456.072(1)(k) provides that failing

to perform any statutory or legal obligation on a license constitutes grounds

for disciplinary action.

Fla.Stat.456.016 states that any a regulatory agency public complaint

or discipline will be on the licensee’s permit. Neither Francois nor Concept

RX had DEA discipline on file to disclose. Yet from opening statement, the

prosecution attacked Francois’ character, misleading the jury, repeating that

he lied on the application by failing to disclose information about his professional license and previous complaint. Francois had a minor dispensing

complaint on his pharmacist license when the application was completed and

submitted to ESI, that was dismissed. The DEA letter submitted into evidence had no conclusion, conviction, or finding of misconduct. There was

no record of discipline in any DEA report, file, Board of Pharmacy report, or

license for ConceptRX or Atlantic to report. Bonnie Roberts DE-564:92:

No, we didn’t receive any information regarding the DEA license

issue. [Francois’s] issue was a dispensing error. There…wasn’t any

action taken against the pharmacist in charge.

The original ESI Network Application was April 30, 2010. There was a

license verification dated April 28, 2010. Question 15:

Have any of the owners, officers, or directors of the pharmacy owned

any other pharmacy that has participated in an Express

Scripts,Inc.Network?

Francois truthfully answered “no.” ConceptRX did not participate in

an ESI Network(DE-417: GX3)(DE-564:102). The prosecution misled to

jury to believe that the recertification of ESI provider credentials in 2013

should have included ConceptRX, Inc., but Francois correctly answered

“no.” That was only for the time from the initial certification (2010) until

recertification in 2013. Roberts testified:

Part of the contract requirement is that a pharmacy let us know any

time something has changed. We feel it’s necessary that we” touch

base with the pharmacy, getting updated information at least every

three years, which is a routine industry requirement.

She confirmed that the 2013 recertification question was meant for

pharmacies that participated in the ESI Network, as asked in the initial

application. Since he already was credentialed with ESI, Francois could

have owned another pharmacy that participated in the ESI Network between

2010 and 2013(DE-417:GX3) without violating 18 U.S.C.1035(a) (4th

Superseding Indictment Count 44).

GX3 showed that Francois disclosed his Board of Pharmacy records,

including a minor dispensing error. Roberts agreed that would not exclude

him from being an ESI-TRICARE Network provider. She said the query

about discipline was answered untruthfully because Francois had a suspen23

sion which “in her mind” was a discipline matter. Neither she nor the

application defined “discipline” to clarify what information they wanted.

“There is no definition…available to an applicant.”(DE-564:116).

ESI’s 2014 recertification application defined “suspended” as

meaning “items or services furnished by a specific provider who has been

CONVICTED of a program-related offense in a federal, state,or local court.”

Neither ConceptRX nor Atlantic had been (DE-419:GX5).

DOD Chief of Pharmacy Operations Captain Edward Norton, testified

that ESI conducts background checks on entities who service their

members(DE-564:69). The prosecution and Roberts said they trusted Francois to send all information; ESI’s contract is based on trust. This misprepresented the facts. The DOD (p4) contracted with ESI to complete the

process of background checks and verification of their network pharmacies.

Program terms cannot be changed unless the DOD changes its procedures

under the Statement of Work (SOW). Arlington v. ESI, Supra.

Roberts misled the jury when she testified that Francois did not

provide everything including DEA information, even though no DEA

discipline was filed against Francois. Atlantic had an active DEA registration when the ESI application was completed and granted (DE-564:117)

When asked about the DEA suspension, Roberts mistakenly said that

DEA information “is not available to us” and misstated that Francois disclosed it to ESI only after a request. She was asked if Francois sent the

information after Atlantic received a notice(DE-564:92):

Q: Did you see anywhere in the correspondence that showed that they

sent something alerting ESI about the DEA suspension?”

A: No, we didn’t receive any information regarding the DEA license

issue. (DE-564: 92).

On cross, the defense showed Roberts a letter faxed to Atlantic Pharmacy on

4/30/2010, seeking information in GX3. Roberts conceded that Francois

sent ESI the Florida Board of Pharmacy report on April 29th before their

letter was sent to the pharmacy, including DEA action, even though ESI

requested Francois' pharmacy records from the Department of Quality

Assurance and the Officer of Inspector General website pursuant to DOD

policy procedures (https://oig.hhs.gov/exclusions/exclusions_list.asp) pursuant to DOD policy procedures showing the same (DE-564:112)

The online database contained the name of the excluded person at the

time of exclusion, their provider type, the authority under which they were

excluded, the state where the excluded individual resided at the time of the

exclusion, or the state where the entity was doing business. An excluded per25

son may not provide services payable by Federal health care programs,

regardless of whether they are employee, contractor, volunteer, or have any

other relationship with the provider. Neither Francois, ConceptRx, nor

Atlantic Pharmacy was excluded (SeeDE-417:GX3/OIG Report). Roberts’

statement “[that information] is not available to us” was false. Francois did

nothing, and lacked intent, to conceal information.

The prosecution alleged that a question on a DEA registration form for

Atlantic was answered falsely, violating 18 U.S.C.843(a)(4)(A):

Has any officer, owner, stockholder, or proprietor

had their DEA registration suspended or revoked?

DEA registration of the previous pharmacy owned by Francois

was suspended temporarily. Francois personally did not have a DEA Registration. The answer to the question on the DEA application was correct.

The prosecutor agreed the question was poorly-worded(DE-571:43-44).

The government applied incorrect definitions to queries on

applications, compounding errors produced by its witnesses.

Roberts

misrepresented pharmacists as having DEA registrations (DE-564:110):

Q: Do pharmacists have DEA registrations?

A: Pharmacists. Yes. A pharmacy may have a DEA registration, and a

pharmacist may have a DEA registration as I understand.

Wrong. Pharmacies have DEA registrations.

Pharmacists do not. The

prosecution misled the jury, implying that for ConceptRX, the pharmacy

previously owned by Francois, DEA registration was for Francois the

pharmacist, not the pharmacy(4th Superseding, Count48). Francois did not

answer incorrectly. The jury got it wrong.

The government alleged that Francois gave false material answers on

a recertification application by failing to disclose agreements with marketing

groups to advertise pharmacy services. Francois did not subcontract with

any businesses or individuals to dispense, process, or perform any tasks

related to prescription services agreed to and stated in the contract with ESI

(DE-417:GX3). The relevant definition for subcontractor, Sec.7.19 states

that services provided by the provider (and its pharmacies if applicable) are

unique to the provider and may be performed only by the provider. Unless

otherwise agreed to in writing by the parties (p5), the provider may not

subcontract all or any portion of services it provides hereunder, unless the

parties agree in writing that a provider may subcontract services it performs

hereunder.

The Code of Federal Regulations, 41 C.F.R. 60.13, provides guidance

for interpreting the definition of “subcontractor” using a two-part test. First,

to be considered a subcontractor under any federal statute or regulation,

there must be some reachable close nexus between the efficiency and

economy criteria of the Federal Property and Administrative Service Act (the

key procurement statute underlying EO11246), and any expectation on

federal contractors. See, Liberty Mutual Insurance Co., v. Friedman, 639

F.2d 153, 170-71 (4th Cir.1981), finding no “reasonably close nexus” between the purpose of the federal property and imposition of the Executive

Order’s requirements on insurance companies.

To be considered a subcontractor under a federal government contract,

there also must be a showing that products or services acquired by the prime

contractor ultimately will be used in the performance of a government

contract. See, OFFC v. Monongahela Railroad Company, 1985-OFC-2,

ALI, recommended decision and order, April 2,1986.

If the products or services procured are “necessary” to the performance of a government contract, the vendor is a subcontractor regardless of

the number of products services supplied. Fla.Stat..499.003(2013):

The

contract provider and subcontractor must maintain and immediately produce

for inspection all records of movement or transfer of all prescription drugs

belonging to the agency or entity, including but not limited to the records of

receipt and disposition of prescription drugs.

Each contractor and

subcontractor dispensing or administering drugs must maintain and produce

records documenting dispensing or administration. Required records include

perpetual inventory of itemized drugs received and dispensed by prescription

numbers with patient identifiers, submitted to the agency quarterly. Atlantic

provided all prescription dispensing and pharmacy services exclusively and

did not subcontract with any other business or individual to dispense,

process, or perform any tasks related to prescription services as agreed and

stated in the contract with ESI and TRICARE. There was no failure to

disclose subcontractors for ESI recertification.

The prosecution and Ms. Roberts misled the jury to believe that

marketers were subcontractors who provided dispensing or prescription dispensing services. It was neither false nor violative of 18 U.S.C.1035(a) to

omit them from the application (4th Supersed. Ct. 47).

In opening statement, the prosecution said that Francois stole $20

million from the government and TRICARE. Paraphrasing: Francois lied to

the people who run TRICARE; Francois lied about his background and

qualifications to get the right to submit claims to TRICARE; and submitted

millions of dollars in false (p.6) claims for medications that people did not

need or want, were not properly prescribed, and many were not delivered.

With all that money at stake, they want to make sure they are dealing with

reputable people. They want to make sure they are not dealing with a flyby-night pharmacy that closes in the middle of the night when people need

their medication. They want to know the background of people they are

dealing with. They asked pharmacy-owner Francois to fill out a document

about his qualifications.

What do they ask? Have you ever had a

bankruptcy (financial stability)? Have you had problems with the DEA?

Have you owned another pharmacy? They want answers. The form says

“be truthful.” They need the truth before giving access to a huge pot of

Government money. You will hear that in 2010 one of the questions was

whether Francois had been suspended by the DEA. At that time, his sister

was the owner, Francois was the pharmacist in charge. The forms were

updated every couple of years. TRICARE and ESI want to make sure the

qualifications are the same, and changes updated. Did any owner file for

bankruptcy? Serge Francois said no. That was a lie. He filed twice 2009

and 2010.

Ambiguous misstatements alleged false statements creating an illusion of lying when the answers were neither false nor intended to commit

healthcare fraud. They claimed that Francois falsely answered that he had

not filed for bankruptcy in the last 5 years, but he did in 2009 and 2010.

Bankruptcy files must be completed. The 2009 and 2010 cases were

dismissed in January and September 2010. Pursuant to 11 U.S.C. 521(a)(10),

if a debtor under Chapter 7 or 13 fails to file all required information within

45 days from the filing the petition, it shall be dismissed automatically.

The Eleventh Circuit affirmed even though both were dismissed for

incomplete filing without a determination of a creditor in either case. The

inference misled the jury to believe that Francois knowingly lied on the 2010

application. The failure to disclose the initial completion of two bankruptcy

applications when there was no discharge of debt, judgment, or

determination in favor of any creditor was not a criminal offense (4th

Supersed.Cts. 45-46).

Reason II

Kazarian’s testimony should have been excluded. Complying with the

managed care utilization review process mandated in the Pharmacy

benefit management provider agreement with ESI did not deviate from

standards of pharmacy practice at the time of the alleged illegal

conduct; nor was it perjury; allowing an erroneous Ex Post Facto

violation that deprived Francois of the rights conferred pursuant to

Amendment V and The Constitution, Art. 1, Sec. 9, Cl. 3.

ESI’s quality assurance ensures prior authorization through ESI and

Atlantic’s contractual agreement (GX3/Sec.2.12). To ensure the clinically

appropriate, safe, affordable medications, pharmacy benefit plans may, based

on evidence-based processes, including evaluation of clinical trials, peerreviewed literature, and consensus guidelines provide that certain medications are covered only if the patient has prior authorization for those drugs.

The plan may require that healthcare providers certify the patient’s unique

clinical needs and therapeutic rationale to support the use of medications that

are high-risks or costly, rather than other less-risky or cheaper alternatives. See, Tricia Lee Wilkins, Prior Authorization and Utilization

Management Concepts in Managed Care Pharmacy, 25 J. Managed Care

and Specialty Pharmacy, 641, (2019).

ESI pharmacy benefit manager administers prescription drug benefits

for health plans such as TRICARE and FEHBP. They contract with the

DOD through ESI’s Military Health Statement of Work (SOW). The

government anticipates that ESI will use subcontractors such as Atlantic to

operate retail pharmacy services for its programs. Atlantic’s contract with

ESI for TRICARE contained utilization reviews and pharmacy audits directed by DOD requirements (GX3/Sec2.17). Arlington County v. ESI, supra.

DOD designates a contracting officer responsible for reviewing phar32

macies and ensuring contractual compliance with the SOW.

ESI

representatives are in regular contact with the contracting officer, including

weekly briefings and formal program reviews three times annually. ESI in

turn regularly interacts with pharmacies and communicates guidance and

instructions from the contracting officer or other government representative

to pharmacies to “execute the SOW.” Arlington, supra.

In GX3, Sec.2.12, subcontractor Atlantic, and ESI under the DOD

contract must comply with ESI quality assurance program formularies in the

manual and the subcontractor agreement. The provider causes pharmacies

to comply with and carry out all determinations resulting from such processses or procedures without limiting the generality thereof. The provider shall

cause each pharmacy to cooperate with ESI procedure rules for utilization

and generic substitution and for compliance with the provider manual.

“Acting under” is the relationship between a private entity and a federal

officer. This Court has emphasized that this phrase is “broad, but not

limitless.” With a private entity, the “acting under” relationship requires at

least some exertion of guidance or control by the federal government.

The private entity must help carry out the duties of the federal superior. A

private contractor may act when the relationship is unusually close involving

involving detailed regulation or supervision. Watson v. Philip Morris Cos.

551 U.S. 142, 149-153 (2007).

Edward Deharde, DOD Office of Person-

nel Management, explained that if there is “over-utilization” they contact

ESI, the PBM, contracted under the DOD (DE-564: 80-81).

Dr. Haimon testified that he learned from patients that his assistant

authorized compounded medications without his consent. Patients received

compounded medications for two months.

When Dr. Haimon notified

Atlantic, they gave him a list of patients who received medication. The

doctor identified the unauthorized prescriptions.

Those claims were

reversed. No compounded medications were sent to his patients after that.

The appellate decision strangely focused on Kazarian’s misstatements

about applicable law and procedures. Due process is the core of the Fifth,

Sixth, and Fourteenth Amendments. Allowing Kazarian to testify to

standards and procedures not in effect at the time of the charged offenses

was erroneous, violating the agreed limits of his testimony. Kazarian’s

testimony was about about ex post facto regulations.

The Eleventh Circuit structurally erred in affirming the district court

allowing Kazarian to testify, and exercising discretion to admit his opinion

testimony outside the scope of what was allowed; an ex post facto violation.

Courts should protect defendants’ rights and reverse for structural

error. The verdict relied on “Kazarian’s methods,” and regulations not in

effect when the alleged offenses occurred. The jury was urged to draw

baseless conclusions based on opinion testimony, unjustified assumptions

from evidence about methods pharmacists use to fill and verify

prescriptions. Francois’ convictions were affirmed, even as to incorrect

requirements for checking prescriptions.

Kazarian’s methods did not meet the contract standards. Atlantic’s

protocols neither breached professional standards, nor supported a

conviction. The law in effect at the relevant time was the only foundation to

support a verdict. Kazarian’s personal pharmacy procedures were based on

law enacted after the time charged in the indictment. Congress never

intended

impose

criminal

sanctions

for

standardless

regulations. Gonzalez v. Oregon, 546 U.S. 243 (2006).

federal

Kazarian’s

testimony was supposed to be restricted. It was unsupported by the record,

lacking sufficient foundation. The defense objected to his testimony pretrial

and at trial. His testimony was permitted with restrictions that were

ignored. Defense counsel responded to an objection lodged during his cross:

Kazarian failed to explain or give a reliable statement of how a pharmacist

should check prescriptions, testimony precluded by Rule 701. Kazarian

said, “we cannot renew our pharmacy license without taking a two-hour

class where they talk about Red Flags and what things should be questioned

regarding prescriptions;” and it was standard practice and “it is the

law.” But it was not enacted until December 2015.

Kazarian’s testimony was not based on applicable law, but rather on

continuing education courses required by statute only after the dates

charged, exceeding what he was permitted, violating the Ex Post Facto

clause with inapplicable legal standards. Responding to an objection during

cross of Kazarian, defense counsel stated (DE-572:165):

I had asked him whether a pharmacist - we are talking about the

practice of pharmacy. He mentioned the way his pharmacy

operated…as if it were the only way a pharmacist can operate. In

other words, this is how I [Kazarian] interpret things, so this is the

only way it could be.

Atlantic’s verification of prescriptions pre-December 2015, was

based on existing policies and procedures in the Florida Administrative

Code, including ESI and DOD procedures at that time. The last prescription

billed for a TRICARE claim was in May 2015(p.10). The government must

have presented a flawed theory to the grand jury. Kazarian mistakenly said

that his standard of practice was the law. But pharmacists could use alterna36

tive protocols (Fla.Stat.Sec.64B16-27.4001, Delegation and Supervision of

Pharmacy).

The prosecution improperly elicited legal opinions from

Kazarian neither within the court’s limitations, nor permissible under

Federal Rules of Evidence. Kazarian based his standard of practice, actions,

and experience on ex post facto law. And that was allowed and affirmed. He

gave unwarranted inferences from a new and inapplicable law. The jury

rendered

a verdict based on flawed opinion testimony unrelated to

applicable law or procedure.

The prosecutor asked if a valid prescription was required for

TRICARE to pay. Norton said yes. ESI validated each prescription before

TRICARE paid, as contracted with the DOD. Atlantic used their validation

methods to verify medical necessity of claims as contractually required in

the provider agreement. The prosecution said, “I guess Tricare trusted you

guys?” That comment was misleading, infringing on the jury decision

process, and was incorrect under ESI policy. The court erred in affirming.

Officers of the court have a special duty to avoid conduct that

undermines the integrity of the adjudicative process. In closing, the

prosecutor stated that Francois was trusted to make sure that medication

went to soldiers in need, family members in need, not to line his pockets.

That’s the trust, he said.

This closing argument infected the trial with

unfairness rendering the conviction a denial of due process. See Darden v.

Wainwright, supra, 477 U.S at 181. In Rogers v. Tennessee, 532 U.S. 451,

(2001) this Court explained that due process encompasses Ex Post Facto

principles of fair notice, fair warning, and foreseeability, core due process

requirements in the context of criminal penalties. On the dates alleged,

policies were different. The law did not require assessment of a prescription

for appropriate therapeutic value or communication with the physician,

provider, patient, or caregiver to validate. Nor was there a required

continuing education course on “red flags.”

Atlantic employees, including

Francois, followed proper procedures for individualized utilization review

and authorization of compounded prescription medication claims of $500 or

more. Medical necessity was reviewed and validated for each patient who

received medication from Atlantic. According to TRICARE’s contract with

ESI, each claim for a compounded medication $500 or more automatically

triggered internal utilization review. ESI conducted review following the

DOD guidelines.

The pharmacy staff received the authorization to dispense medication

to patients. The utilization review process for validity and verification fol38

lowed Florida Administrative Code Compliance and superseded Atlantic’s

processes. Further, ESI was the only PBM that followed this validation

process for compounded medication claimed.

Amanda Lee discussed these

protocols in her testimony about the process. The government never

disputed her accuracy (DE-568:111,116) (DE-564:63-64).

The government elicited an incorrect legal conclusion from Edward

Deharde about the definition of kickbacks regarding copays and utilization.

The defense objected. The jury was misled to believe that utilization and

copays discussed by Norton, Roberts, and Deharde were Atlantic Pharmacy’s duty.

Actually it was ESI’s responsibility under the contract to

ensure that the claim submitted for medication were a covered benefit and

complied with the rules: a valid prescription written by an authorized

provider, and the costs. Pharmacy tech Amanda Lee was asked if copays

were routinely collected at Atlantic. She said no, sometimes there were no

copays. The government twisted her words.

The contract provided that payment may be submitted automatically

through ESI’s online portal (GX3 Sec.2.4a). The pharmacy sent invoices

with the label and receipt for each prescription mailed to a patient.

Randesha testified that Francois never told her to say that a patient did not

have to pay a copay.

The government also focused on topical compounds prescribed for

children. A pharmacist does not prescribe medications. The prosecution

inferred fraud because a child received that same medication as an adult.

This case was not for malpractice. Pharmacies filled prescriptions approved

by ESI. The government created an illusion of fraud that did not exist. The

government suggested the prescriptions were fraudulent, irrespective of

pharmacy law and practice.

State pharmacy boards regulate pharmacies. Codefendants may have

been involved in fraud. Francois was not. Prosecution witnesses misled

jurors and the court into believing that Francois’ actions were designed to

deceive and commit fraud. The facts showed the opposite. (1) Answers on

the applications were neither false, nor intended to commit fraud. There was

no violation of 18 U.S.C.1035 or 843; and (2) using a managed care

utilization review process under its DOD contract, ESI directed the

procedures. There was no deviation from standard practice and no violation

of 18 U.S.C. 1347or49.

Serge Francois respectfully asks that the

Court GRANT its gracious writ, VACATE his conviction and sentence on

all counts, and REMAND with instructions.

June 12, 2022

Words: 7,809

Respectfully submitted,

/s/ Sheryl J. Lowenthal

SHERYL J. LOWENTHAL

CJACounsel on Appeal for Mr. Francois

APPENDIX TO THE PETITION

CONSTITUTIONAL PROVISIONS

Article 1, Section 9, Clause 3

Page 1

Fifth Amendment

Page 1

OPINION OF THE COURT

UNITED STATES v. SERGE FRANCOIS

Eleventh Circuit No. 18-11165

November 22, 2021

32 pages (2-33)

ORDER DENYING PETITION FOR REHAERING

February 7, 2022

2 pages (34-35)

JUDGMENT OF THE SOUTHERN DISTRICT OF FLORIDA

No. 1:16-cr-20399 DPG

March 15, 2018

6 pages (36-41)

Constitutional Provisions

Article 1, Section 9, Clause 3

No Bill of Attainder or ex post facto law shall be passed

Fifth Amendment

No person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or

indictment of a Grand Jury … nor shall any person be

subject for the same offence to be twice put in jeopardy

of life or limb; nor shall be compelled in any criminal case

to be a witness against himself, nor deprived of life,

liberty, or property, without due process of law …

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[DO NOT PUBLISH]

In the

United States Court of Appeals

For the Eleventh Circuit

____________________

No. 18-11165

____________________

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

PATRICK TONGE,

SERGE FRANCOIS,

Defendants-Appellants.

____________________

Appeals from the United States District Court

for the Southern District of Florida

D.C. Docket No. 1:16-cr-20399-DPG-2

____________________

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Opinion of the Court

18-11165

Before BRANCH, GRANT, and BRASHER, Circuit Judges.

PER CURIAM:

Patrick Tonge and Serge Francois were convicted of federal

crimes arising out of their work at Atlantic Pharmacy & Compounding, a Florida pharmacy that collected over thirty-one million dollars in fraudulent claims from federal insurance programs.

Both men challenge their convictions on direct appeal. After careful consideration and with the benefit of oral argument, we affirm

their convictions and sentences.

Background

The defendants’ convictions, and thus these appeals, begin

and end with Atlantic Pharmacy, a pharmaceutical business that

manufactured and sold custom medications. Serge Francois

opened Atlantic in 2009, owned the business, and was the pharmacist-in-charge. Atlantic’s business operations largely involved nonsterile compounding, specifically the creation of compound prescription creams (“CPCs”) from scratch using various raw materials. Francois hired Patrick Tonge, his former used car dealer and

personal trainer, to manage Atlantic’s CPC business, despite Tonge

having no pharmaceutical training. In total, Atlantic collected over

thirty-one million dollars in claims for CPCs from TRICARE and

the Federal Employee Health Benefits Program (“FEHBP”), two

federal insurance programs.

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In 2017, Tonge and Francois were indicted on federal

charges including conspiracy, healthcare fraud, paying illegal

healthcare kickbacks, introducing misbranded drugs into interstate

commerce, money laundering, obstruction, and making false statements. The government alleged that Tonge and Francois stole millions of dollars from federal healthcare programs by (1) making

misrepresentations about Atlantic that allowed the pharmacy to

obtain access to federal insurance networks; (2) filing fraudulent

claims based on invalid CPC prescriptions; and (3) paying illegal

kickbacks to “marketers” who then paid doctors and patients to

fuel Atlantic’s CPC business.

After a lengthy trial in the Miami federal courthouse, jury

deliberations began on Thursday, August 31. By Tuesday, September 5, Hurricane Irma had formed in the Gulf of Mexico. That afternoon, the district court informed the parties, outside the hearing

of the jury, that one juror would have difficulties returning the next

day due to the need to make storm-related preparations. Another

juror needed to return a rental car by 6:00 PM that evening. The

lawyers agreed to allow the jury to continue deliberating as long as

possible on Tuesday, even going so far as to pay for an extra day of

the juror’s rental car to allow deliberations to continue past 6:00

PM. The jury returned a verdict that evening at or around 9:50 PM

convicting Tonge and Francois of many of the charged offenses

while acquitting each defendant of at least some counts.

Below, we describe the background of Atlantic’s CPC business as it relates to the convictions at issue in this appeal. Because

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Francois and Tonge were convicted, we take the evidence in the

light most favorable to the government.

A. Atlantic’s Misrepresentations to Gain Admission to a

Federal Insurance Network and Obtain a DEA Registration

TRICARE and the FEHBP contracted with a pharmacy benefit manager, Express Scripts International, to establish a network

of healthcare providers for use by the programs’ beneficiaries.

Membership in Express Scripts’s network was an ex ante requirement for submitting a claim to either TRICARE or the FEHBP.

Any pharmacy that wanted to submit claims for CPCs would also

have been required to possess a Drug Enforcement Administration

(“DEA”) registration to dispense or handle controlled substances in

the pharmaceutical context. Atlantic was admitted to Express

Scripts’s network and received a DEA registration, allowing it to

submit claims to TRICARE and the FEHBP and work with CPCs

containing controlled substances.

In obtaining these privileges for Atlantic, Francois made substantial misrepresentations to Express Scripts and the DEA. First,

Francois lied about himself and Atlantic throughout the pharmacy’s interactions with Express Scripts. Francois submitted Atlantic’s initial application in 2010 and made subsequent recertifications

in 2013 and 2014. As part of these interactions, Francois stated that

his sister Rosemary owned Atlantic, that his DEA license had never

been suspended, that he had never been arrested, that he had never

filed for bankruptcy, and that Atlantic had never paid more than

twenty-five thousand dollars to any subcontractor. Each of those

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representations was false. If Francois had been truthful, Express

Scripts would never have credentialed Atlantic as an in-network

provider, walling it off from TRICARE and FEHBP claims. And

second, Francois lied during Atlantic’s DEA registration by asserting that his DEA license had never been suspended when in fact, it

had been. Were it not for this lie, the DEA would have never

granted Atlantic a registration allowing the pharmacy to fill and

dispense CPC prescriptions involving controlled substances.

B. Atlantic’s Fraudulent CPC Business

The problems at Atlantic Pharmacy did not end with Francois’s misrepresentations to Express Scripts and the DEA. To receive payment from Express Scripts on any given claim, an in-network pharmacy had to satisfy two requirements: (1) the prescription underlying the claim had to be valid and (2) the patient had to

have been charged a co-payment. For a prescription to be valid, a

physician had to have examined the patient, the prescription

needed to have been medically necessary, and the pharmacy

needed to have been licensed in the patient’s home state. Although

Francois and Tonge processed, certified, and submitted Atlantic’s

CPC claims to Express Scripts, those claims systematically failed to

meet either requirement.

Atlantic’s CPC operations proceeded as follows. First, a physician would send a prescription to Atlantic where it would be processed and entered into a computer system. The employee entering this information was required to be a licensed pharmacist or

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pharmacy technician. Then, the processing employee submitted

the file to Express Scripts for approval, and Atlantic filled the prescription if the claim was eventually approved. Despite his complete lack of pharmaceutical training, Tonge processed many of Atlantic’s CPC prescriptions and submitted many of its claims. Next,

after Express Scripts approved a prescription, a pharmacy technician manufactured the CPC, and a pharmacist, usually Francois,

reviewed and certified it as valid. Finally, Atlantic would dispense

the CPC to a patient, often mailing prescriptions to patients living

in states where Atlantic was not licensed to do business.

The fraudulent nature of Atlantic’s CPC business was due

just as much to its marketing, which relied on paying doctors and

patients to generate prescriptions, as its fulfillment practices. Over

the life of the business, Atlantic contracted with several different

“marketers” to promote its CPCs: DIRIV, PGRX, and RX. In each

case, Atlantic agreed to pay a percentage of the profits earned on

every CPC back to the marketer that referred the prescription. In

turn, Atlantic’s marketers paid doctors, patients, and other parties

to obtain access to the physician signatures and federal insurance

beneficiary identities required to submit fraudulent claims to

TRICARE and the FEHBP. Atlantic maintained close ties with its

marketers, oftentimes directly involving itself in the scheme by (1)

engaging in detailed negotiations with marketers and doctors concerning the kickback percentage that Atlantic would pay; (2) changing the chemical formulas that it requested marketers write prescriptions for; (3) ignoring credible reports that at least some CPC

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prescriptions were being written using forged physician signatures;

and (4) attempting to hire away marketers’ physicians to work directly for Atlantic

C. Atlantic’s Attempts to Conceal its Fraud

Perhaps unsurprisingly, many patients contacted Atlantic to

try to return medications that they knew nothing about and neither

needed nor wanted. To minimize losses from repayment obligations and conceal the number of attempted returns, Francois and

Tonge adopted a policy to try to convince reluctant patients to

keep their CPCs. Francois directed Tonge and another Atlantic employee, Amanda Lee, to tell patients that their medications were

free because Atlantic was not charging any co-payment. But Tonge

knew that co-payment reduction policies violated federal law because he had written himself an email explaining as much. Francois

also lied to investigators during their search of Atlantic’s offices to

prevent the discovery of equipment used to conduct the CPC business, was present on an email chain where Tonge asked the owners

of RX, Celep and Sonsoles Simsir, to destroy physical and electronic

evidence, and traveled to Lee’s home to demand that she not incriminate him in the fraud. Tonge deleted emails from an account

he used to conduct pharmacy business when it became clear that

Atlantic was under suspicion.

Although Tonge and Francois attempted to conceal the

fraudulent nature of Atlantic’s operations, that fraud was nevertheless open and obvious. One of Atlantic’s pharmacists quit three

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months after being hired due to his perception of rampant fraud,

and other employees believed fraud was occurring based on daily

calls from customers complaining about unwanted CPCs. Despite

these events, Francois certified CPC prescriptions as valid that his

former employee had rejected as fraudulent.

II.

Standards of Review

We review prosecutorial misconduct claims and the sufficiency of the evidence de novo. United States v. Eckhardt, 466 F.3d

938, 947 (11th Cir. 2006); United States v. Mendez, 528 F.3d 811,

814 (11th Cir. 2008). Evidentiary rulings and refusals to give a requested jury instruction are reviewed for abuse of discretion.

United States v. Tokars, 95 F.3d 1520, 1530–31 (11th Cir. 1996). And

although “[w]e review de novo the legal question of whether an

indictment sufficiently alleges a statutorily proscribed offense . . . a

district court’s denial of a motion to dismiss an indictment is reviewed for abuse of discretion.” United States v. Seher, 562 F.3d

1344, 1356 (11th Cir. 2009). Claims not preserved at trial are reviewed only for plain error, meaning the defendant bears the burden of establishing an error that was plain, affected his substantial

rights, and seriously affected “the fairness, integrity, or public reputation of judicial proceedings.” United States v. Gonzalez, 834

F.3d 1206, 1218 (11th Cir. 2016). Non-constitutional error is harmless when it does not affect the substantial rights of the parties.

United States v. Gallegos-Aguero, 409 F.3d 1274, 1277 (11th Cir.

2005).

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Discussion

Tonge and Francois challenge their convictions on a number of grounds, some raised by both defendants and some only by

Francois. We discuss each issue in turn below, specifying the applicable defendant or defendants.

A. Sufficiency of the Indictment

Francois begins by challenging the sufficiency of Counts

One through Nineteen of the Fourth Superseding Indictment. Because the indictment’s text mirrored the relevant statutes and in

several cases was nearly identical to language we have expressly

approved, the challenged counts were legally sufficient on de novo

review. Thus, we conclude that the district court did not abuse its

discretion in denying Francois’s motion to dismiss.

As an initial matter, Francois has waived any challenge as to

the sufficiency of Count Fourteen. Rule 12(b)(3)(B) of the Federal

Rules of Criminal Procedure requires that any claim of defect in an

indictment “be raised by pretrial motion if the basis for the motion

is then reasonably available and the motion can be determined

without a trial on the merits.” FED. R. CRIM. P. 12(b)(3)(B). When a

criminal defendant fails to properly raise a defense based on a defect in the indictment “that was clear from the face of the indictment and that does not satisfy any of the exceptions set forth in

[Rule 12]” he “waive[s] this issue by failing to raise it in a pretrial

motion.” United States v. Ramirez, 324 F.3d 1225, 1227 (11th Cir.

2003). Because Francois’s motion to dismiss did not cover Count

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Fourteen and there has been no argument that either of Rule 12’s

exceptions apply, Francois has abandoned any sufficiency challenge

as to that count.

Francois’s properly raised challenges to Counts One

through Thirteen and Fifteen through Nineteen fare no better. A

legally sufficient indictment must “contain[] the elements of the offense charged and fairly inform [the] defendant of the charge

against which he must defend.” Hamling v. United States, 418 U.S.

87, 117 (1974). It must also “enable[] him to plead an acquittal or

conviction in bar of future prosecutions for the same offense.” Id.

We have explained that “we need not find an indictment defective

simply because it fails to allege mens rea so long as the allegation

that the crime was committed with the requisite state of mind may

be inferred from other allegations in the indictment.” Seher, 562

F.3d at 1356. And generally, “practical, rather than technical, considerations govern.” Id. (quoting United States v. Hooshmand, 931

F.2d 725, 735 (11th Cir. 1991)).

Counts One through Thirteen of the indictment were legally sufficient because they mirrored the relevant statutes, charging Francois with knowingly and willfully conspiring “to knowingly and willfully execute a scheme and artifice to defraud a health

care program . . . by means of materially false and fraudulent pretenses, representations, and promises.” To begin with, the conspiracy statute is almost identical to the indictment, criminalizing “attempt[ing] or conspir[ing] to commit any offense under [Chapter

63],” including healthcare fraud, which is defined as “knowingly

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and willfully execut[ing], or attempt[ing] to execute, a scheme or

artifice . . . in connection with the delivery of or payment for health

care benefits, items, or services . . . to defraud any health care benefit program; or . . . obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property

owned by, or under the custody or control of, any health care benefit program[.]” 18 U.S.C. §§ 1347, 1349. The indictment also identified the manner and means of the charged conspiracy and alleged

that Francois “knowingly caused Atlantic to submit $37,263,519 in

false and fraudulent claims to TRICARE and [the] FEHBP for compounded medications which were not medically necessary, not

properly prescribed by a licensed medical professional and often

not provided to TRICARE and FEHBP beneficiaries.” Thus, Count

One of the indictment took pains to “fairly inform [Francois] of the

charge[s] against which he must defend.” Hamling, 418 U.S. at 117.

Counts Two through Thirteen, which charged specific acts of

healthcare fraud, contained the same mirroring language and description of the alleged scheme to defraud. And like Count One,

Counts Two through Thirteen charted relevant information for

each count, including the TRICARE beneficiary, the date of the

claim, the prescription number, the amount claimed by Atlantic,

and the first ingredient in each prescription.

In addition, Counts One through Thirteen were sufficient as

a matter of law in the light of our recent decision upholding an indictment for healthcare fraud and conspiracy using language nearly

identical to that used in this case. See United States v. Chalker, 966

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F.3d 1177, 1190–91 (11th Cir. 2020). We held in Chalker that the

indictment, far from being “too vague to pass muster,” instead

“specifically referred to and tracked the language of the statute on

which it was based” and “provided notice to the defendant of the

charges to be defended.” Id. at 1191 (cleaned up). What we said of

the language in Chalker holds true for the nearly identical language

at issue today.

Francois’s argument regarding Counts Fifteen through

Nineteen, which charged the payment of healthcare kickbacks in

violation of 42 U.S.C. § 1320a-7b(b)(2)(A), fails for the same reasons: namely that the indictment mirrored the statutory text and

provided Francois sufficient notice of the charges to be defended.

Counts Fifteen through Nineteen charged that Francois “did knowingly and willfully offer and pay any remuneration, that is, kickbacks and bribes . . . to a person to induce such person to refer an

individual to a person for the furnishing and arranging for the furnishing of any item and service for which payment may be made

in whole and in part by . . . TRICARE.” The anti-kickback statute

criminalizes “knowingly and willfully offer[ing] or pay[ing] any remuneration (including any kickback, bribe, or rebate) . . . to any

person to induce such person . . . to refer an individual to a person

for the furnishing or arranging for the furnishing of any item or

service for which payment may be made in whole or in part under

a Federal health care program.” 42 U.S.C. § 1320a-7b(b). The indictment tracked the anti-kickback statute almost word for word.

In addition, Counts Fifteen through Nineteen charted relevant

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information for each Count, including the approximate date and

amount of the charged kickback payments. Just as we said of the

healthcare fraud indictment in Chalker, Counts Fifteen through

Nineteen “specifically referred to and tracked the language” of the

anti-kickback statute and “provided notice to [Francois] of the

charges to be defended.” Chalker, 966 F.3d at 1191 (cleaned up).

Thus, we conclude that the indictment was legally sufficient

and that the district court did not abuse its discretion by declining

to grant Francois’s motion to dismiss.

B. Evidentiary Issues

1. Kazarian’s Testimony

Tonge and Francois each challenge the testimony of David

Kazarian, the government’s expert witness on pharmacy practices.

Both defendants argue that Kazarian’s testimony exceeded the

scope of the government’s expert notice, while Francois separately

claims that he gave improper lay witness testimony under Federal

Rule of Evidence 701. Because Kazarian testified as an expert and

did so within the scope of the government’s notice, the district

court did not err in admitting his testimony.

First, Francois’s challenge to Kazarian as having presented

improper lay witness testimony fails as a matter of fact. Kazarian

was properly qualified as an expert, testified as an expert at trial,

and was the subject of several objections by defense counsel based

on his testimony being constrained by the government’s expert notice. At trial, Francois never objected to Kazarian’s testimony as

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being improper lay opinion, instead focusing on evidentiary issues

only relevant to expert testimony. While the prosecution did plan

to elicit lay opinion from former Atlantic employees under Rule

701, it had nothing to do with Kazarian.

Second, Tonge and Francois’s joint challenge to Kazarian’s

testimony as outside the scope of the government’s expert notice

also fails. “We review for abuse of discretion the district court’s decisions regarding the admissibility of expert testimony and the reliability of an expert opinion.” United States v. Barton, 909 F.3d 1323,

1330 (11th Cir. 2018) (quoting United States v. Frazier, 387 F.3d

1244, 1258 (11th Cir. 2004)). “[W]hen employing an abuse-of-discretion standard, we must affirm unless we find that the district

court has made a clear error of judgment, or has applied the wrong

legal standard.” Frazier, 387 F.3d at 1259. Specifically, we “will not

overturn an evidentiary ruling and order a new trial unless the objecting party has shown a substantial prejudicial effect from the ruling.” Maiz v. Virani, 253 F.3d 641, 667 (11th Cir. 2001). “Substantial

prejudice goes to the outcome of the trial; where an error had no

substantial influence on the outcome, and sufficient evidence uninfected by error supports the verdict, reversal is not warranted.” Barton, 909 F.3d at 1331 (cleaned up). If a defendant does not object,

we review only for plain error. Frazier, 387 F.3d at 1268 n.21.

The government’s expert notice provided that Kazarian

would testify on the standard practices of pharmacies like Atlantic.

Specifically, the notice highlighted two topics: (1) whether automatic refilling and dispensation-by-mail without notification to or

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request by a patient was standard practice; and (2) whether pharmacists were obligated to investigate certain “red flags” that indicate a potentially invalid prescription. The government stated that

“[Kazarian] will not be opining on highly technical issues, such as

causation, medical procedures, or damages” and agreed not to ask

him to discuss “the quality or usefulness of the medications [that

Atlantic] sold.”

On abuse of discretion review, there is no evidence that the

district court “made a clear error of judgment” or “applied the

wrong legal standard” by allowing Kazarian to explain that it would

be a red flag for a large number of differently situated patients to

receive prescriptions for the exact same dosage. See id. at 1259. At

trial, Kazarian testified over objection that an 85-year-old and 11year-old receiving the exact same dosage would have been a red

flag. During the remainder of Kazarian’s testimony, the defense

made only one additional overruled objection based on the scope

of the expert notice, this time dealing with Kazarian’s explanation

that the surface area-to-weight ratio differences between adults and

children would have made it unusual to see an adult and a child

receive the same dosage. In fact, the district court actually sustained a defense objection preventing Kazarian from “getting into

the minutia of efficacy and the dangers to an 11-year-old girl from

having certain creams with steroids.” Each time the defense’s objection was overruled, the district court did so to allow Kazarian to

testify that a substantial similarity in dosage between patients of

different ages would have been unusual based on the general

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principle that differently situated patients have different medical

needs. Because Kazarian never discussed the specific “quality or

usefulness” of the medications that Atlantic sold, his testimony on

red flags was not improperly admitted.

Although Tonge and Francois do challenge other elements

of Kazarian’s testimony, in the absence of a contemporaneous objection we review the remainder of that testimony only for plain

error. Id. at 1268 n.21. Nothing about what was left of Kazarian’s

testimony, which explained the concept of red flags and applied it

to the facts of Atlantic’s CPC business, was plainly outside the government’s expert notice As such, the district court did not err in

admitting that testimony.

2. Francois’s Prior Arrest

Francois separately argues that the district court abused its

discretion in admitting a stipulation between Francois and the government concerning a prior arrest. He claims that the evidence was

inadmissible under Federal Rule of Evidence 404(b), but the government argues that any error was invited by stipulation and that

the evidence was admissible to prove Francois’s knowledge and

lack of mistake.

Assuming for the sake of argument that Francois did not invite the error, we cannot say the district court abused its discretion

in admitting Francois’s prior misrepresentation to an insurance network about his arrest record. This evidence pertained directly to

Francois’s knowledge and lack of mistake when he made similar

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misrepresentations to the government. FED R. EVID. 404(b)(2);

United States v. Delgado, 56 F.3d 1357, 1366 (11th Cir. 1995). The

government had to prove that Francois’s misrepresentations were

knowing and willful rather than the result of simple mistake or

poor management. See 18 U.S.C. § 1347; United States v. Medina,

485 F.3d 1291, 1297 (11th Cir. 2007). And the government sought

to argue that Francois acted knowingly because he had made similar misrepresentations before and had been terminated because of

it. The district court did not abuse its discretion in weighing the

probative value of this evidence against its potential prejudice.

C. Prosecutorial Misconduct

Francois next argues that the district court plainly erred

when it declined to sua sponte find prosecutorial misconduct over

the course of the trial, claiming that misconduct took two forms:

(1) various remarks by the prosecution regarding Francois’s real estate purchases, nickname at Atlantic Pharmacy, and communications with his wife about his work at Atlantic; and (2) government

intimidation of Jason Perlman, an attorney for one of Atlantic’s

marketers. As Francois did not object to the challenged remarks as

misconduct at trial, we review only for plain error. United States v.

Goldstein, 989 F.3d 1178, 1199 (11th Cir. 2021). On plain error review, we will only reverse “when prosecutorial misconduct was so

pronounced and persistent that it permeated the entire atmosphere

of the trial.” United States v. Mueller, 74 F.3d 1152, 1157 (11th Cir.

1996). Because none of the challenged remarks were misconduct

and the district court properly addressed Francois’s witness

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intimidation allegations, we conclude that the district court did not

plainly err.

1. Prosecutorial Remarks

To establish prosecutorial misconduct, a defendant must

show that the prosecution’s remarks were improper and that they

prejudicially affected the defendant’s substantial rights. United

States v. Lopez, 590 F.3d 1238, 1256 (11th Cir. 2009). “A defendant's

substantial rights are prejudicially affected when a reasonable probability arises that, but for the remarks, the outcome of the trial

would have been different. When the record contains sufficient independent evidence of guilt, any error is harmless.” Id.

Four factors guide our analysis of whether prosecutorial remarks had a reasonable probability of changing the outcome of a

trial: “(1) the degree to which the challenged remarks have a tendency to mislead the jury and to prejudice the accused; (2) whether

they are isolated or extensive; (3) whether they were deliberately

or accidentally placed before the jury; and (4) the strength of the

competent proof to establish the guilt of the accused.” Davis v.

Zant, 36 F.3d 1538, 1546 (11th Cir. 1994). When making this inquiry, we must consider “the context of the entire trial.” Lopez, 590

F.3d at 1256.

Here, Francois challenges the government’s references to

the fact that he purchased a three-point-six million dollar home formerly owned by a celebrity, that his nickname at Atlantic was

“POTUS,” and that he sent a confrontational text message to his

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wife that discussed his work at Atlantic. None of these statements

constituted misconduct because each concerned relevant evidence

for the government’s case and did not prejudice Francois’s substantial rights.

First, the government’s references were relevant. The prosecution told the jury in its opening statement that it would learn

that “Francois lived like a celebrity. . . . spent $3.6 million to buy a

home that used to be owned by Dwayne, ‘The Rock’ Johnson,” and

“was called POTUS, for President of the United States.” On crossexamination of Francois, the government reemphasized these

facts. The prosecution also read a text message from Francois to his

wife that stated in part: “I am here with four doctors that bring me

money so go take your talk somewhere else.” Each remark was directly relevant to the criminal conduct that the government was

required to prove beyond a reasonable doubt. The fact that Francois spent millions of dollars drawn from Atlantic’s accounts to purchase a home bore directly on Count Twenty-Seven (money laundering) and circumstantially on fraud. Similarly, Francois’s nickname being “POTUS” was directly relevant to his leadership role

and knowledge of events occurring at the pharmacy, which were

essential to the prosecution’s allegations of fraudulent conduct and

conspiracy. Likewise, Francois’s message to his wife was relevant

to show that he had met directly with the doctors that generated

Atlantic’s fraudulent CPC prescriptions. That meeting bore on

Francois’s knowledge that the prescriptions Atlantic was filling,

and thus the insurance claims that it was filing, were categorically

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false, which we have held to be a required element of a healthcare

fraud prosecution under Section 1347. Medina, 485 F.3d at 1297.

Even if the prosecution’s remarks had been improper, they

would not have been reversible error because they did not prejudice Francois’s substantial rights. Francois testified on direct examination that his nickname was “POTUS” because he “used to snoop

around with the cameras in the pharmacy.” Another Atlantic employee testified that Francois was nicknamed “POTUS” because he

was Atlantic’s leader and that Francois bragged about purchasing a

house “that the Rock used to live in.” And Francois had the opportunity to explain his version of the facts to the jury. Lastly, the government used Francois’s text messages with his wife to rebut his

earlier testimony that he had “left [the promotion of Atlantic’s

CPCs to doctors and patients] all to the marketers.” On balance,

three isolated remarks, largely cumulative of other properly admitted evidence, cannot be said to have “permeated the entire atmosphere” of a lengthy jury trial on plain error review. See Mueller, 74

F.3d at 1157.

2. Witness Intimidation

Francois’s second argument for misconduct—witness intimidation—is also meritless. “Where defendants present evidence to

the district court that the government intimidated a defense witness a trial court must grant a hearing to determine whether the

allegations of intimidation are true.” United States v. Schlei, 122

F.3d 944, 992 (11th Cir. 1997). Here, Francois made such allegations

after Perlman retained counsel and informed Francois that he

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would assert his Fifth Amendment privilege if called as a witness.

The district court set an evidentiary hearing to address the issue,

but Francois withdrew his allegations before the hearing occurred,

stating that “[w]e are now withdrawing anything involving the

Perlman issue” and “in terms of other issues with Mr. Perlman, including any allegations or anything, they are all withdrawn.” Because Francois produced no evidence, declined the district court’s

scheduled evidentiary hearing, and expressly disclaimed any previous allegations, the district court did not err. See Schlei, 122 F.3d at

991–92.

D. The Jury Instructions

Tonge and Francois argue that the district court erred by

giving essentially the pattern jury instruction on healthcare fraud.

Specifically, the defendants contend that our recent decision in

United States v. Medina obligated the district court to accept a proposed modification to the pattern instruction inserting a requirement that the government prove that “the defendant[s] knew the

claims, bills to TRICARE, identified in the indictment were, in fact,

false or fraudulent.” See 485 F.3d 1291. We disagree.

“Reviewed for abuse of discretion, failure to give a requested

instruction is reversible only where the instruction (1) was correct,

(2) was not substantially covered by a charge actually given, and (3)

dealt with some point in the trial so important that failure to give

the requested instruction seriously impaired the defendant’s ability

to conduct his defense.” United States v. Dohan, 508 F.3d 989, 993

(11th Cir. 2007). “We will not reverse a conviction based on a jury

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instruction challenge unless we are left with a substantial and ineradicable doubt as to whether the jury was properly guided in its

deliberations.” United States v. Clay, 832 F.3d 1259, 1310 (11th Cir.

2016) (cleaned up). A conviction will stand “when the jury instructions, taken together, accurately express the law applicable to the

case without confusing or prejudicing the jury . . . even though isolated clauses may, in fact, be confusing, technically imperfect, or

otherwise subject to criticism.” Id. (cleaned up). And the Supreme

Court has explained that “in reviewing jury instructions, our task

is . . . to view the charge itself as part of the whole trial.” United

States v. Park, 421 U.S. 658, 675 (1975).

We believe the district court’s jury instruction accurately

conveyed the requisite criminal state of mind under our healthcare

fraud precedents. Although we have held that “in a health care

fraud case, the defendant must be shown to have known that the

claims submitted were, in fact, false,” our decision in Medina stands

only for the proposition that “on the facts of [that] case . . . paying

kickbacks alone [was] not sufficient to establish health care fraud.”

Medina, 485 F.3d at 1297–98. That is, Medina required that the government prove a defendant’s knowledge of falsity but remained

largely silent as to the methods by which that knowledge could be

proven. Here, the court’s instruction sufficiently informed the jury

that it could convict only if it determined that Francois and Tonge

knew that their statements were false. It said that the defendants

had to act “knowingly and willfully” and “intend[] to defraud” by

making “false or fraudulent” “representations . . . about a material

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fact that the speaker knows is untrue or makes with reckless indifference as to the truth and makes with intend to defraud.”

In United States v. Clay, we made explicit the implicit limitation in

Medina, concluding that “although the government must prove

the defendant’s knowledge of falsity, a defendant’s knowledge can

be proven in more than one way.” Clay, 832 F.3d at 1311 (cleaned

up). There, we held that a district court did not reversibly err by

giving a healthcare fraud instruction substantially identical to the

pattern instruction. Id. The Clay instruction differed from the pattern only by replacing “reckless indifference” with “deliberate indifference,” a modification that neither Francois nor Tonge requested. The district court did not abuse its discretion in denying

Tonge and Francois’s proposed modifications to the pattern jury

instruction.

E. Jury Coercion

Next, Tonge and Francois argue that their jury was coerced

by an impending natural disaster. Both defendants argue that the

district court plainly erred by allowing the jury to deliberate as

Hurricane Irma approached Miami. The court did not. It allowed

the jury to continue deliberating in the face of a projected severe

weather event that was several days away. But it did not rush the

jury’s verdict, instruct the jury that they had to return a verdict before the hurricane landed, or otherwise coerce a verdict.

Tonge and Francois argue that our decision in Lucas v.

American Manufacturing Co., 630 F.2d 291 (5th Cir. 1980),

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supports their position. We disagree. In Lucas, a jury began deliberating with a hurricane expected to impact the courthouse within

the hour, and the judge instructed the jury that its deliberations

could last no longer than 15 minutes. Unsurprisingly, the jury

quickly returned with an incomprehensible split verdict. In remanding for a new trial, we explained that “[t]he imminence of [a]

hurricane might . . . require[] that the jury be sent home” but held

that “concern for the jurors’ well-being . . . does not excuse . . .

efforts to coerce a verdict.” Id. at 293.

Tonge and Francois’s case is readily distinguishable. First,

unlike in Lucas, the jury had plenty of time to deliberate. Hurricane

Irma struck Miami several days after the verdict and more than a

week after the start of deliberations, whereas the hurricane’s arrival

in Lucas was imminent and left the jury with about forty-five

minutes for deliberations. Second, unlike in Lucas, the district

court did not charge the jury to rush to a verdict to avoid the hurricane. Third, Tonge and Francois’s convictions lack the anomalies

we identified as indicia of coercion in Lucas. Id. at 293. Although

the defendants were convicted of some charges and acquitted of

others, there is no reason to believe that the court “pressure[ed] a

minority of the jurors to sacrifice their conscientious scruples for

the sake of reaching agreement.” Green v. United States, 309 F.2d

852, 854 (5th Cir. 1962). Finally, although Tonge and Francois argue that the mere act of allowing the jury to deliberate was per se

coercion, there is nothing inherently coercive about allowing a jury

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to begin deliberations at the close of a trial or to continue deliberations that had begun a week before.

F. Sufficiency of the Evidence

Lastly, both Tonge and Francois argue that the district court

erred by declining to grant a motion for judgment of acquittal under Federal Rule of Criminal Procedure 29 based on the insufficiency of the evidence. Because the government presented overwhelming evidence that both defendants were knowing and willful

participants in a complex scheme to defraud federal insurance programs by paying healthcare kickbacks, we disagree.

As an initial matter, Tonge and Francois have waived sufficiency arguments regarding several counts of their convictions.

Although Tonge correctly notes that his Rule 29 motion covered

every count, his briefing completely ignores many of those counts,

instead focusing only on whether there was sufficient evidence to

convict on Counts One and Three through Thirteen. We have consistently held that an appellant abandons an argument when his

briefing merely references the argument in passing and contains no

substantive discussion of the issue. Zhou Hua Zhu v. U.S. Att’y

Gen., 703 F.3d 1303, 1316 n.3 (11th Cir. 2013); Sapuppo v. Allstate

Floridian Ins. Co., 739 F.3d 678, 681–83 (11th Cir. 2014). By presenting argument on sufficiency only as to certain counts, Tonge

has abandoned any sufficiency challenges to all others. The same

result obtains to Francois, who only argues that there was insufficient evidence to convict on Counts One through Nineteen. On

review of the properly challenged counts, we conclude that the

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government presented evidence more than sufficient to allow a

reasonable jury to convict.

To support a conviction under the healthcare fraud statute,

the government must prove that a defendant “knowingly and willfully execute[d] . . . a scheme or artifice . . . (1) to defraud any health

care benefit program; or (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or

property owned by, or under the custody or control of, any health

care benefit program, in connection with the delivery of or payment for health care benefits, items, or services.” 18 U.S.C. § 1347.

We have explained that “in a health care fraud case, the defendant

must be shown to have known that the claims submitted were, in

fact, false.” Medina, 485 F.3d at 1297.

To convict the defendants of paying healthcare kickbacks,

the government had to prove that they “knowingly and willfully

offer[ed] or pa[id] any remuneration (including any kickback, bribe,

or rebate) directly or indirectly, overtly or covertly, in case or in

kind to any person to induce such person . . . to refer an individual

to a person for the furnishing or arranging for the furnishing of any

item or service for which payment may be made in whole or in part

under a Federal healthcare program.” 42 U.S.C. § 1320a7b(b)(2)(A). “Willful conduct under the Anti-Kickback statute

means that the act was committed voluntarily and purposely, with

the specific intent to do something the law forbids, that is with a

bad purpose, either to disobey or disregard the law.” United States

v. Nerey, 877 F.3d 956, 969 (11th Cir. 2017) (explaining that

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“attempts to hide . . . illegal kickbacks” were evidence of willfulness). But a defendant “need not have known that a specific referral

arrangement violated the law” to be properly convicted. United

States v. Sosa, 777 F.3d 1279, 1293 (11th Cir. 2015).

To support a conviction for conspiracy, the government had

to prove: “(1) that a conspiracy existed; (2) that the defendant knew

of it; and (3) that the defendant, with knowledge, voluntarily joined

it.” United States v. Vernon, 723 F.3d 1234, 1273 (11th Cir. 2013).

Circumstantial evidence alone can prove agreement, including

“where the circumstances surrounding a person’s presence at the

scene of conspiratorial activity are so obvious that knowledge of its

character can fairly be attributed to him” and the defendant commits acts in furtherance of the conspiracy. Id. at 1273–74.

The government’s theory of Counts One through Nineteen

was that Atlantic stole millions of dollars from TRICARE and the

FEHBP by knowingly and willfully conspiring to pay illegal kickbacks and submit fraudulent insurance claims. Each claim to

TRICARE or the FEHBP had to satisfy three requirements: (1) the

claim had to come from an in-network pharmacy; (2) the beneficiary had to be charged a co-payment; and (3) the underlying prescription had to be valid, meaning that the prescribing physician

must have examined the patient, the prescription must have been

medically necessary, and the patient must have received the prescription in a state where the pharmacy was licensed to do business.

Although none of Atlantic’s CPC claims satisfied these requirements, Francois and Tonge’s misrepresentations enabled it to

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collect over thirty-one million dollars in claims based on fraudulent

prescriptions.

First, the prosecution produced evidence that Atlantic was

admitted to Express Scripts’s network and received a DEA registration solely based on Francois’s misrepresentations about himself

and his pharmacy. Were those misrepresentations never made, Atlantic would have been foreclosed from filing a single fraudulent

CPC claim. Francois told the government that his sister owned Atlantic, that his DEA license had never been suspended, that he had

never filed for bankruptcy or been arrested, and that Atlantic had

never paid more than $25,000 to a subcontractor. Every one of

these representations was false. In fact, Francois owned Atlantic,

his DEA license had been suspended, he had previously been arrested and filed for bankruptcy, and Atlantic had paid millions of

dollars to subcontractors as part of its efforts to market its products.

Francois knew that these misrepresentations were material because he had previously been terminated by Humana after it discovered evidence of the same misrepresentations underlying its relationship with Atlantic. Humana’s termination letter described

Francois’s lies in excruciating detail, yet Francois repeated them to

the DEA and Express Scripts in order to gain access to TRICARE

and the FEHBP.

Second, the jury was presented sufficient evidence to conclude that Tonge and Francois knew the prescriptions underlying

Atlantic’s CPC claims were invalid and the fruit of a complex system of healthcare kickbacks. Atlantic’s CPC business relied on

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marketing contracts that exchanged kickbacks for fraudulent prescriptions. The jury could find that Tonge and Francois knew about

those contracts because their co-conspirators testified extensively

that both men negotiated them and were intimately involved in

their performance. See United States v. Broadwell, 870 F.2d 594,

601 (11th Cir. 1989) (“Testimony of a co-conspirator, even if uncorroborated, is sufficient to support a conviction.”). Tonge changed

the chemical formula of the CPCs that Atlantic asked PGRX to prescribe to maximize profits, modified PGRX prescriptions after they

were delivered, and sent PGRX pre-filled prescriptions for its doctors to sign and return. Tonge asked Mark Messenger, one of

PGRX’s doctors, to leave the company and work directly for Atlantic, promising an improved kickback as an incentive. He also encouraged Messenger to bring his colleagues with him in exchange

for even more money. Meanwhile, Francois knew that at least

some of DIRIV’s prescriptions were fraudulent because a doctor

personally called to explain that an assistant had forged his signature. Yet Francois continued to do business with DIRIV and fill

forged prescriptions from the same physician’s office. During negotiations with RX, Tonge stated that Atlantic would not pay more

than forty percent in kickbacks, even for a “high volume” marketer

that promised that its business was “all TRICARE.” Everyone involved in the RX negotiations understood that the arrangement relied on the Simsirs having “a doctor who would write just about

anything.” Once the fruit of these negotiations—hundreds of fraudulent CPC prescriptions—arrived at the pharmacy, Tonge processed them and submitted claims to Express Scripts despite lacking

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the required pharmaceutical training. And after Express Scripts approved a claim, Francois certified the prescriptions and Atlantic improperly dispensed the CPCs, oftentimes by mailing medications

to states where it was not licensed to do business.

Throughout their time at Atlantic, Tonge and Francois took

numerous steps to minimize their losses and conceal their fraud.

Atlantic implemented a policy to convince troubled patients that

they should keep the medications Atlantic had sent them by waiving mandatory co-payments. Tonge knew that this practice was illegal and made a written record memorializing that knowledge but

participated in the scheme regardless. Sonsoles Simsir testified that

Francois requested that RX pay kickbacks in cash, and another coconspirator testified to repeated conversations where he was admonished to stop a doctor from publicly saying that Atlantic owed

him money. Later, Francois would lie to investigators in an effort

to prevent evidence from being collected, work with Tonge to ask

the Simsirs to destroy evidence outside of Atlantic’s direct control,

and demand that Lee lie to protect him. At the same time, Tonge

was deleting emails from an account that he used to conduct pharmacy business.

Despite the defendants’ attempts at concealment, the fraud

at Atlantic was open and obvious. Multiple employees understood

that something was rotten in South Florida, and at least one pharmacist quit rather than be party to what he viewed as obviously

criminal conduct. Throughout, Francois led the pharmacy as if this

was business as usual, including making the decision to certify CPC

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prescriptions as valid that a former employee had refused to sign

off on. At trial, Kazarian explained that the whole of Atlantic’s CPC

business was one giant red flag, such that any reasonable pharmacist would have assumed that the prescriptions were invalid and

that someone was being paid. Francois, the owner and pharmacistin-charge, saw all of this and knew exactly what it meant, admitting

that Atlantic’s CPC business was “all show.” See Sosa, 777 F.3d at

1293 (explaining that “the giving or taking of kickbacks for medical

referrals is hardly the sort of activity a person might expect to be

legal”); Vernon, 723 F.3d at 1267 (stating that the jury “could have

inferred that [the defendant’s] position as CEO of Medfusion required that he familiarize himself with significant statutes regulating the pharmaceutical industry, including the Anti–Kickback statute”) And finally, Francois testified that he did not know that the

claims were false or that Atlantic was paying kickbacks. The jury

was within its rights to disbelieve his testimony as to both assertions. See United States v. Mateos, 623 F.3d 1350, 1362 (11th Cir.

2010) (explaining that “a defendant who chooses to testify runs the

risk that the jury will disbelieve her testimony, and runs the risk

that if disbelieved the jury might conclude the opposite of her testimony is true”) (cleaned up).

We conclude that the jury received sufficient evidence to

convict Tonge and Francois on each of the challenged counts.

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Conclusion

For the foregoing reasons, Tonge and Francois’s convictions

and sentences are AFFIRMED.

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UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

ELBERT PARR TUTTLE COURT OF APPEALS BUILDING

56 Forsyth Street, N.W.

Atlanta, Georgia 30303

David J. Smith

Clerk of Court

For rules and forms visit

www.ca11.uscourts.gov

November 22, 2021

MEMORANDUM TO COUNSEL OR PARTIES

Appeal Number: 18-11165-HH

Case Style: USA v. Patrick Tonge

District Court Docket No: 1:16-cr-20399-DPG-2

This Court requires all counsel to file documents electronically using the Electronic Case

Files ("ECF") system, unless exempted for good cause. Non-incarcerated pro se parties

are permitted to use the ECF system by registering for an account at www.pacer.gov.

Information and training materials related to electronic filing, are available at

www.ca11.uscourts.gov. Enclosed is a copy of the court's decision filed today in this appeal.

Judgment has this day been entered pursuant to FRAP 36. The court's mandate will issue at a

later date in accordance with FRAP 41(b).

The time for filing a petition for rehearing is governed by 11th Cir. R. 40-3, and the time for

filing a petition for rehearing en banc is governed by 11th Cir. R. 35-2. Except as otherwise

provided by FRAP 25(a) for inmate filings, a petition for rehearing or for rehearing en banc is

timely only if received in the clerk's office within the time specified in the rules. Costs are

governed by FRAP 39 and 11th Cir.R. 39-1. The timing, format, and content of a motion for

attorney's fees and an objection thereto is governed by 11th Cir. R. 39-2 and 39-3.

Please note that a petition for rehearing en banc must include in the Certificate of Interested

Persons a complete list of all persons and entities listed on all certificates previously filed by

any party in the appeal. See 11th Cir. R. 26.1-1. In addition, a copy of the opinion sought to be

reheard must be included in any petition for rehearing or petition for rehearing en banc. See

11th Cir. R. 35-5(k) and 40-1 .

Counsel appointed under the Criminal Justice Act (CJA) must submit a voucher claiming

compensation for time spent on the appeal no later than 60 days after either issuance of mandate

or filing with the U.S. Supreme Court of a petition for writ of certiorari (whichever is later) via

the eVoucher system. Please contact the CJA Team at (404) 335-6167 or

cja_evoucher@ca11.uscourts.gov for questions regarding CJA vouchers or the eVoucher

system.

For questions concerning the issuance of the decision of this court, please call the number

referenced in the signature block below. For all other questions, please call Christopher

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Bergquist, HH at 404-335-6169.

Sincerely,

DAVID J. SMITH, Clerk of Court

Reply to: Jeff R. Patch

Phone #: 404-335-6151

OPIN-1 Ntc of Issuance of Opinion

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.