By George Basharis, J.D.
The court determined that the factors outlined in Platt weighed against the transfer of the case.
The motion to transfer a case based on charges of health and wire fraud from Connecticut to California was denied by the U.S. District Court of Connecticut. The court denied defendant’s motion to transfer the case after considering the factors discussed in the Supreme Court case of Platt v. Minnesota Mining & Manufacturing Co. On balance, the Platt factors weighed against transferring the case. Defendant did not meet the burden of showing that the considerations under Rule 21(b) support transfer of the case to the Central District of California. The location of the events likely to be at issue, the potential for disruption of Defendant’s business, the relative accessibility of the location of trial, the effect of the coronavirus pandemic on the travel of the parties, and Defendant’s diagnosis of Diabetes Mellitus Type 2 in light of the coronavirus pandemic did not favor transfer, the court determined (United States v. Yates, June 18, 2020, Thompson, A.).
Defendant was charged with fraudulently enrolling patients in plans under the Patient Protection and Affordable Care Act (ACA). Defendant held an ownership interest in and operated Morningside Recovery (Morningside) as the CEO beginning in November 2013. Morningside had its headquarters in Irvine, Calif., and operated substance-abuse treatment facilities in the vicinity of Orange County, Calif. Defendant’s alleged co-conspirators, residents of Twin Peaks, Calif., identified prospective patients for Morningside and enrolled the patients in ACA Plans that offered the highest possible reimbursement for residential substance-abuse treatment services. Defendant and co-conspirators made false representations to the ACA plans regarding patients’ places of residences to gain eligibility in the highest-reimbursing plans. The Superseding Indictment against Defendant names two patients who were fraudulently enrolled in Connecticut ACA plans offered by Anthem Blue Cross Blue Shield.
With respect to the wire fraud counts, the Superseding Indictment charged that five communications were sent over the wires from Anthem Blue Cross Blue Shield in Connecticut to Morningside in California.
Defendant claimed that only one Connecticut-based insurance company is alleged to have been affected by the fraud, while insurance plans from other states account for over ninety-eight percent of the reimbursements paid to Morningside. Defendant also stated that almost forty percent of the alleged losses were attributable to California-based insurers.
When assessing a motion to transfer under Rule 21(b), which allows for the transfer of a proceeding, the court considers the factors set out by the Supreme Court in Platt. The court found that the first Platt factor, the location of the defendant, weighed in favor of transfer because Connecticut is a significant distance from Defendant’s residence in California. The second Platt factor, the location of possible witnesses, weighed slightly against transfer. In addition to employees and management of Morningside and the co-conspirators, many other possible government witnesses reside in Connecticut, the court noted.
Another factor that was considered was the estimated trial time. Based on what the court knew at the time of the motion, the trial time would not be insignificant. The location of witnesses, another factor, weighed against transfer, the court said, because many possible witnesses resided in Connecticut or traveled to Connecticut in relation to the case. An additional factor, location of the victims, weighed against transfer because alleged victims were located across the country. The location of the events favored neither side, the court determined. Defendant sent fraudulent medical claims to ACA Plans across the United States.
The fourth Platt factor, the location of relevant documents and records, weighed against transfer. According to the court, the government argued persuasively that special considerations exist with respect to documents and records in this case. The discovery material consisted of approximately five terabytes of information, much of which was in Connecticut.
The fifth Platt factor, the potential for disruption of the defendant’s business, did not favor either side, the court determined, while the sixth Platt factor, the expenses to be incurred by the parties if transfer is denied, weighed slightly against transfer. However, on balance, the court decided that a transfer would result in the government incurring significantly greater expenses. The seventh Platt factor, the location of defense counsel, also weighed against transfer because both of Defendant’s court-appointed counsel were located in Connecticut and had represented Defendant since 2019, and transfer of the case likely would require appointment of new defense counsel in California. The docket conditions of each potential district, another factor, also weighed against transfer because dated for jury selection and trial had already been set, the court said.
The final consideration for the court was special circumstances. First, the court disagreed with Defendant’s argument that his treatment for drug and alcohol addiction would be disrupted if the case were not moved. Second, transferring the case to California because of the coronavirus pandemic would not be in the interest of justice. The court did not buy the argument that moving the case would cut down on traveling because of the many possible witnesses residing in Connecticut. The court also dismissed Defendant’s argument that because of his Diabetes Mellitus Type 2, and consequently, high risk of severe complications should he contract COVID-19, traveling would be "unconscionable," finding that the coronavirus situation is "rapidly evolving" and trial was months away. Finally, the court noted that the court is currently presiding over the cases of Defendant’s co-conspirators, both of whom have pleaded guilty. This supports keeping the case in Connecticut.
The case is No. 3:19-cr-266(AWT).
Attorneys: David J. Sheldon, U.S. Attorney's Office, for the United State. Joseph W. Martini (Spears Manning & Martini LLC) for R. Jeffrey Yates.
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