Wednesday, July 21, 2010

Los Angeles Attorney Pleads No Contest To Attempting To Dissuade A Witness To Testify -- Where Is The Line In Using Civil Lawsuits In Criminal Cases?

Where is the line in obtaining a civil settlement to have a criminal case dismissed? It is not uncommon for attorneys, including myself, to use the fact of a civil lawsuit or a settlement in that lawsuit to help persuade a prosecutor that the case is more "civil" than criminal and that there is good cause for dismissing the criminal case.

When these matters are handled, however, there is a line.  In one case here in Los Angeles County an attorney lost his State Bar license and obtained a criminal conviction in going too far in seeking to have a witness not testify in a criminal case in the hope of getting the criminal case dismissed.

On January 6, 2010, a Los Angeles attorney Sean Erenstoft (age 42) was indicted on three felony counts including bribing a witness and attempting to dissuade a witness.  The case was handled by the Justice System Integrity Division of the Los Angeles County District Attorney's Office.

The indictment alleged that Mr. Erenstoft was representing a client in a criminal stalking case.  As part of his tactics, it was further alleged that Mr. Erenstoft filed a civil case against the victim to dissuade her from testifying against Mr. Erenstoft's client (the defendant in the stalking case) at his preliminary hearing.  It was also alleged that Mr Erenstoft approached the victim and offered to drop the civil case in exchange for favorable testimony at his client's sentencing.

On June 14, 2010, Mr. Erenstoft pleaded no contest to one felony count of attempting to dissuade a witness. Sentencing is scheduled on September 15 before Los Angeles Superior Court Judge David Wesley. As part of the plea agreement, the State Bar of California will immediately disbar Mr. Erenstoft.

Mr. Erenstoft is expected to be sentenced to three years of formal probation and will be ordered to do 100 hours of community service. There will be no jail time. Mr. Erenstoft additionally will be expected to pay $9,074.30 in restitution to the victim.

With respect to his State Bar license, Mr. Erenstoft will be disbarred but can apply for reinstatement in five years. This is an unfortunate result and is an example of what "hardball" tactics can lead to in a case. I have had clients and victims reach civil settlements but it is important to never make part of any agreement a request that a victim not testify or not comply with any court order or subpoena. There can be confidentiality agreements but those clauses do not usually preclude testifying pursuant to a court order or subpoena.

Clients can get afraid and worried about leaving their fate to the jury system.  I recall when the Anthony Pellicano case was in the news and it was alleged that there was taping of conversations between opposing counsel and their clients -- I had more than one client who wished they could hire someone to tap phones and obtain an advantage in the lawsuit or case. At that point, I have to remind the clients not to make matters worse and that apart from being illegal, it is not worth the risk. I will tell the client that this is not a matter of not being "aggressive enough" but about being smart. Evidence of asking witnesses not to testify can be used to show guilt, among other things.

Posted by Tracy Green, Esq.  Any additional questions or comments should be directed to tgreen@greenassoc.com.  Tracy Green is a principal at Green and Associates. The firm focuses its practice on the representation of licensed professionals, including attorneys and health care professionals.

Tracy Green is a  dedicated Los Angeles professional license defense attorneys and is committed to excellence.  You can email her at tgreen@greenassoc.com or call her at 213-233-2261.  Green and Associates is located at 801 South Figueroa Street #1200, Los Angeles, CA 90017.  Their website is: http://www.greenassoc.com/

Thursday, July 15, 2010

Beverly Hills Radiology Clinic Pays $647,000 to Resolve Qui Tam Lawsuit Alleging It Billed Medicare for Unneeded Tests

On July 2, 2010, Beverly Hills radiology clinic The Oaks Diagnostics, Inc., dba Advanced Radiology, agreed to pay the federal government $647,000 to settle allegations that it filed false claims with Medicare for unnecessary radiological tests. These allegations and the civil lawsuit had been initiated in 2003 and took approximately seven years to resolve.

The payment prompted the government to ask a federal judge this morning to dismiss a civil lawsuit that alleged Advanced Radiology performed unnecessary diagnostic tests and billed Medicare for the procedures.The United States alleged in the civil lawsuit that Advanced Radiology and its owner, Dr. Ronald Grusd, engaged in a scheme to bill Medicare for unnecessary tests performed at Advanced Radiology from 1999 through 2002.

As part of the alleged scheme, an Advanced Radiology contractor recruited Medicare beneficiaries to undergo diagnostic tests such as CT scans and MRIs, even though the beneficiaries did not need the tests. That contractor—Nordelyn Lowder—pleaded guilty to one count of health care fraud in connection with the scheme. Lowder was sentenced in June 2008 to 20 months in federal prison and was ordered to pay $426,455 in restitution.

The settlement resolves allegations initially made against Advanced Radiology in a “whistleblower” lawsuit filed pursuant to the qui tam provisions of the False Claims Act, which allow a private party to file a civil action on behalf of the United States and receive a portion of the recovery. The whistleblower lawsuit was originally filed in 2003 by a former Advanced Radiology employee. The United States intervened and took over prosecution of the case in February 2008.

Advanced Radiology paid the settlement without admitting any wrongdoing. Dr. Grusd is not a party to the settlement, but in light of the settlement with Advanced Radiology the government has opted to dismiss the lawsuit against him. This case was investigated by the Office of Inspector General of the Department of Health and Human Services and the Federal Bureau of Investigation.

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  Ms. Green's office at Green and Associates is located at 801 South Figueroa Street #1200, Los Angeles, CA 90017.

Any questions or comments  should be directed to Tracy Green, a very experienced California health care fraud attorney, radiology fraud attorney, California Medicare fraud attorney, and California Medi-Cal fraud attorney at tgreen@greenassoc.com.

The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers and in health care fraud related matters in California and throughout the country. Their website is: http://www.greenassoc.com/

Thursday, July 8, 2010

Supreme Court Recent Decision On Honest Services Fraud - Enron & Jeffery Skilling Case Goes To Supreme Court


In a decision dated June 24, 2010, the Supreme Court significantly narrowed the scope of the honest-services statute, 18 U.S.C. § 1346, finding that it only applies to schemes involving bribery or kickbacks.  The Court further held that undisclosed self-dealing or conflicts of interest by a public official or a private employee is not criminalized by the honest-services statute.

"Honest-Services" Statute

Section 1346 of Title 18, United States Code, commonly referred to as the honest-services statute, expands fraud offenses such as wire and mail fraud under Sections 1341 and 1343 to include cases where victims were not deprived of money or property.  It provides, "[f]or the purposes of this chapter, the term 'scheme or artifice to defraud' includes a scheme or artifice to deprive another of the intangible right of honest services."  The theory -- broadly stated -- is that public officials, private employees and other fiduciaries owe a duty to act only in the best interests of their constituents and employers.

A deprivation of "honest services" in a fraud prosecution does not require proof of loss of money or property, making it easier for prosecutors to use.  Section 1346 has been used as a "catch all" charge, enabling the government to allege criminal liability where there is no direct tangible loss.


The Case

Jeffrey Skilling steadily rose through the ranks of the Enron Corporation, one of the world's leading energy companies.  His career culminated with a six-month stint as chief executive officer, after which he left Enron.  Less than four months after Mr. Skilling's departure, Enron declared bankruptcy. The government investigated Enron's collapse and concluded that officers, employees and others were part of a vast conspiracy to inflate Enron's stock prices by overstating the company's financial well-being.

The government prosecuted numerous individuals who allegedly participated in the scheme, including Mr. Skilling, who was indicted in July of 2004. Count One of the indictment charged Mr. Skilling with conspiracy to commit securities and wire fraud. In particular, it alleged that one objective of the conspiracy was to "deprive[e] Enron and its shareholders of the intangible right of [his] honest services."  The indictment included over 25 counts charging violations of securities fraud, wire fraud, making false representations to Enron's auditors and insider trading. The jury found Mr. Skilling guilty of 19 counts, including the conspiracy charge.

On appeal, Mr. Skilling raised a host of challenges, including a challenge to his conspiracy conviction based on honest-services fraud.  The U.S. Court of Appeals for the Fifth Circuit found that the jury was entitled to convict Mr. Skilling of honest-services fraud because: 1) Mr. Skilling materially breached his fiduciary duty to his employer and 2) the breach resulted in a detriment to his employer.

Mr. Skilling sought relief from the Supreme Court, which granted certiorari. One of his arguments for reversing his conviction was based on the honest-services objective of the conspiracy count. Mr. Skilling maintained that the honest-services statute is unconstitutionally vague. Alternatively, he argued that his conduct did not fall within the statute's ambit.

In considering Mr. Skilling's challenge, the Court first reviewed the origin and subsequent application of the honest-services statute.  In a series of decisions beginning in the 1940s, the Courts of Appeal around the country interpreted the prohibition of "any scheme or artifice to defraud" in the mail and wire fraud statutes to include deprivations of intangible rights. The honest-services doctrine was used to target corruption where an offender profited, the betrayed party suffered no deprivation, and a third party, who had not been deceived, provided the enrichment.  While these cases most often involved public officials, courts also applied the doctrine to private sector employees, particularly those who breached allegiance to their employers by accepting bribes or kickbacks.

In 1987, the Supreme Court halted the development of the honest-services doctrine with its decision in McNally v. United States. In that decision, the Court limited the scope of the mail fraud statute to deprivations of tangible property rights.  The following year, Congress enacted Section 1346 designed specifically to overturn McNally and broaden the scope of the fraud statutes to cover intangible rights.

While recognizing that the Courts of Appeal have divided on their interpretation of the honest-services statute, the Supreme Court declined to invalidate the statute as irremediably vague.  Ruling that the honest-services statute should be construed narrowly instead, the Court surveyed the honest-services decisions of the Courts of Appeal before McNally to determine Congress' intent in enacting Section 1346. Rejecting Mr. Skilling's argument that pre-McNally case law is a "hodgepodge of oft-conflicting holdings," the Court identified what it referred to as the "core" of those cases -- schemes involving bribes or kickbacks.

The Court rejected the government's contention that undisclosed self-dealing by a public official or private employee also was at the "core" of honest-services fraud.  The Court acknowledged that reading the statute to proscribe a wider range of offensive conduct would raise due process concerns under the vagueness doctrine.  Thus, to preserve the statute, the Court held that Section 1346 criminalizes only the bribery and kickback core of the pre-McNally case law.

Finally, the Court turned to whether Mr. Skilling's conduct violated Section 1346.  Since the government did not allege or prove that Mr. Skilling solicited or accepted side payments from a third party in exchange for misrepresenting Enron's financial condition, the Court found that Mr. Skilling did not commit honest-services fraud.  In other words, even if he took actions against the company and its shareholders for his own benefit, he was not liable because he did not receive a bribe or a kickback for his actions. 

The Court remanded the case to the Court of Appeals to determine whether charging honest-services fraud as one object of the conspiracy was harmless error.  The Fifth Circuit must also address Mr. Skilling's contention that all of his other convictions hinged on the conspiracy count and, therefore, must be vacated.  Unless Mr. Skilling prevails on this challenging point, he will continue to serve his twenty-four year sentence.    

The Lessons  

Current prosecutions based on the application of the honest-services statute may be weakened or subject to dismissal if the allegations or proof do not include bribes or kickbacks;

Others who have been prosecuted under the honest-services statute may have grounds for review.  Indeed, the Supreme Court remanded the cases of media mogul Conrad Black, former Alaskan state representative Bruce Weyhrauch,  former Intercounty Title executive Jack Hargrove, Bosna Truck Driving School owner Mustafa Redzic, HealthSouth Corporation founder Richard Scrushy, former Alabama Governor Don Siegelman, and former Californian Mayor Paul Richards and his sister Paula Harris on account of the Court's decision in Mr. Skilling's case; and

The honest-services statute does not encompass undisclosed self-dealing or conflicts of interest.  It remains to be seen whether lower courts will permit defendants to challenge prior convictions based on these theories and whether Congress will amend Section 1346 with sufficient specificity to permit such prosecutions and satisfy the requirements of due process.

Posted by Tracy Green, Esq.  Any questions should be directed to Tracy Green, a very experienced Los Angeles white collar criminal attorney and Los Angeles fraud attorney. You can email her at tgreen@greenassoc.com or call her at 213-233-2261.  Green and Associates is located at
801 South Figueroa Street #1200, Los Angeles, CA 90017.


The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing professionals in criminal matters, including fraud and other financial crimes in California and throughout the country. Their website is: http://www.greenassoc.com/

Tuesday, July 6, 2010

California Board And Bureau Investigations: Frequently Asked Questions by Licensed Professionals During Board Investigations And Requests For Records

In our practice, we represent a variety of professions before the California administrative boards and bureaus. Here are nine frequently asked questions and answers:

1.  I have received a request for a patient or client file from my licensing board. What should I do?

This is the time to be the most proactive. The earlier you can prevent an investigation from going forward, the better. Once an Accusation or disciplinary charge is filed, it is difficult to unwind it. We find that often charges were filed because the professional did not adequately address the investigation at an early stage.

Each case is different and varies upon the facts. No one strategy works for each case. However, an experienced objective attorney can help you prevent complaint from turning into disciplinary charges or mitigating the problem.

One important piece of advice that applies to most cases (but not all): do not simply produce the file and nothing else. Here are some of the things, among many, that can be done at this early stage:

(1) Take the opportunity to ensure the board has full access to all relevant information.

(2) If there were problems with this particular client or patient, a letter or memorandum summarizing the history, facts and issues will help the investigator evaluate the case.

(3) Have an experienced attorney or other objective party review any submissions since you will have to live with them for several years if the case is investigated further and/or is the subject of disciplinary proceedings. Remember that everything you do is evidence.

(4) If there is significant handwriting in the file, dictate the notes so the handwriting is easy to read. Have your attorney or other objective party ensure that the records are easy to understand.

(5) If this case had a bad or poor outcome (even if that is part of the risk that was disclosed to the client or patient), it may be useful to have your attorney hire an expert and evaluate the file in order to help prepare a thorough response explaining the case or matter.

(6) The board can be contacted to determine what stage the investigation is at so that the appropriate response. This is often easier for your attorney to do since the investigator may be open with him or her. In addition, anything you say is evidence and even impromptu comments like "I didn't do anything wrong" or "I don't remember this person" can be used against you later in ways that are difficult to anticipate when they are said.

(7) Do not alter, backdate or create any records unless such records are properly created and dated.

(8) Once you hire an attorney, have him or her send a letter of representation so the board contacts the attorney and does not show up at your office for a surprise interview.

2.  My licensing board is accusing me of misconduct. What should I do?

A governing board will often state that it is investigating suspected fraud, abuse or other misconduct, but not tell you specifically why. You need to find out the facts supporting the board's accusation. An experienced attorney can help you immeasurably with this process. Once the board is notified that you have hired an attorney, it is not permitted to contact you directly. The attorney can speak with the agency's investigators to learn the factual basis of the allegations. The attorney can then direct you to take specific steps to protect your license.

3.  Why can't I (or shouldn't I) talk to the licensing board myself?

You do not need an attorney to communicate with your licensing board, but it is an excellent idea. An attorney can speak on your behalf and obtain information without making any admissions that might hurt you. Anything you say to a board, even though it may seem innocent, might be used against you later. In addition, it is difficult for you to be objective and create an intelligent and forward thinking strategy.

4.  I already spoke to the licensing board. Is it too late to hire an attorney?

No. Licensing boards do not always act quickly. An attorney can help you find out what the board is intending to do. The attorney may be able to help you submit additional information or documents for the board to consider. The attorney may also be able to negotiate a settlement that would allow you to keep your license.

5.  The licensing board has presented me with a proposed disciplinary order. Do I have to sign it?

No. You can reject it and try to negotiate other terms. If you and the licensing board cannot agree on terms, the board will likely bring formal disciplinary proceedings.

Having an attorney advise you is important. Attorneys who specialize in administrative law understand both the board's concerns and the nature of your profession. This insight often enables them to negotiate settlements that satisfy the board's need for oversight as well as your need to maintain profitability.

A settlement enables you to avoid formal disciplinary proceedings. When a settlement is not possible, you want representation by an attorney who is familiar with procedural rules as well as the laws and regulations governing your profession.

6.  I have an administrative hearing scheduled before a licensing board or regulatory agency. Do I need an attorney?

You are not required to have legal counsel, but it is an excellent idea. The agency will be represented by an attorney and, in fact, you will be at a disadvantage without one.

Many procedural and evidentiary rules must be followed in presenting a defense. Even if you feel you have a good defense, you might not be permitted to present it if you don't follow the rules. An attorney who specializes in administrative proceedings will be able to present your defense in the proper manner.

7.  I have been charged with or convicted of a crime. Will this affect my license?

It likely will. Many regulatory agencies require that you report a criminal charge or conviction, even if it seems unrelated to your practice. Certain charges or convictions may result in the suspension or revocation of your license. This is one reason why it is critical to coordinate any criminal defense with an attorney specializing in administrative law and board defense at the earliest possible stage.

An attorney specializing in administrative law will help you determine the reporting requirements relevant to your profession. If reporting is required, the attorney will help you present the facts in the best light possible. If you fail to report, this can be considered unprofessional conduct and can be used against you later. Honesty is the hallmark of professionalism and a subsequent dishonesty (or even lack of forthrightness) while you are defending your criminal charge can harm your professional license. If you have negative facts in your criminal case, you can win your criminal case and still face discipline from your board in many circumstances. We advise a global strategy that looks forward to the next several years and includes all criminal, civil, and administrative consequences.

8.  Can I apply for a license if I have a criminal record?

It is difficult, although not impossible, for an applicant with a criminal record to obtain a professional license. An attorney skilled in licensing law can help you submit evidence of your character and rehabilitation, so as to present your application in the best light possible. In short, you will need to have a thorough application, numerous support letters, and significant documentation to explain the charges and why you have changed and what you have done to warrant you being granted a professional license. It helps to have an objective attorney who can help you build the best administrative record possible.

9.  I want to avoid problems with my licensing board. How can I make sure I operate my business in compliance with the law?


Many professionals retain a law firm to review their business structure and office policies to ensure they are in compliance with the laws and regulations governing their business. An attorney skilled in administrative law will have knowledge of the common pitfalls for your particular business and can show you where your practice might be vulnerable to administrative scrutiny. The attorney can assist in educating your staff about the law relevant to your practice through in-office presentations or the preparation of formal office policy and procedure handbooks. It is also common for professionals to retain a law firm on an ongoing basis for a monthly fee to have access to an attorney to questions as they arise.

Posted by Tracy Green, Esq.  Any additional questions or comments should be directed to tgreen@greenassoc.com.  Tracy Green is a principal at Green and Associates. The firm focuses its practice on the representation of professionals, particularly health care professionals including individual physicians, corporate providers and group practices.

Tracy Green is one of the best Los Angeles Board attorneys, one of the best Los Angeles professional license defense attorneys and is committed to excellence.  You can email her at tgreen@greenassoc.com or call her at 213-233-2261.  Green and Associates is located at 801 South Figueroa Street #1200, Los Angeles, CA 90017.  Their website is: http://www.greenassoc.com/


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