The ringleader in a single of the most important corporate-fraud instances in Indiana in recent times is asking a decide to throw out his felony convictions on the grounds that his authorized group on the Indianapolis regulation agency Barnes & Thornburg did not disclose a “profound conflict of interest.”
A federal decide final summer time sentenced James Burkhart, the previous CEO of nursing home big American Senior Communities, to just about 10 years in jail after he admitted to orchestrating what prosecutors referred to as a $19 million overbilling and kickback scheme involving firm distributors.
However late final yr Burkhart lined up new counsel—the Florida litigation agency Leon Cosgrove—which on Dec. 20 filed a movement blasting Barnes & Thornburg for failing to reveal that one of the alleged victims of the fraud was a longtime authorized and lobbying shopper. That shopper is Well being & Hospital Company of Marion County, which owns greater than 70 nursing houses run by American Senior Communities.
Within the movement, Burkhart contends he received wind after his sentencing that Barnes & Thornburg lobbied for HHC—which operates Eskenazi Well being, the state’s largest safety-net hospital—and confirmed that info by way of on-line searches.
The movement states Leon Cosgrove later discovered that the connection dates again at the least to 2003 and has been in depth, starting from lobbying to representing Well being & Hospital towards allegations of Medicare and Medicaid fraud.
Leon Cosgrove asserts these ties assist clarify why Burkhart’s lead lawyer, Barnes & Thornburg companion Larry Mackey, and his colleagues persistently suggested Burkhart to take a pleasant strategy and “wrap his arms around” HHC. Additional, they inspired Burkhart to plead responsible, partially because HHC can be a sympathetic sufferer at trial, based on the submitting.
The movement additionally incorporates this zinger: “All the while, Barnes & Thornburg sat on potentially case-winning impeachment evidence that could destroy not only the hospital’s credibility as a victim-witness, but to implicate it in state and federal crimes” associated to a spread of monetary transactions Burkhart deems doubtful.
The submitting added: “Barnes & Thornburg’s conflict—its simultaneous representation of both accused and victim of accused—infected the entire representation of Mr. Burkhart.”
The submitting states Barnes & Thornburg, the state’s largest regulation agency, acquired greater than $6 million in charges for representing Burkhart, 54, who’s now an inmate at a minimum-security jail camp in Alabama.
Barnes & Thornburg’s outdoors counsel, Donald Lundberg, a former government secretary of the Indiana Supreme Courtroom Disciplinary Fee, stated in an e-mail: “Convicted criminals typically assault their legal professionals after dealing with the truth of their punishment. Barnes & Thornburg is required to respect Mr. Burkhart’s confidentiality rights even within the face of his unwarranted assault.
“Mr. Burkhart pleaded guilty and was sentenced after Barnes & Thornburg vigorously represented him, at all times acting exclusively in Mr. Burkhart’s interest,” Lundberg wrote.
The U.S. Lawyer’s Workplace, which prosecuted Burkhart, has till Feb. 14 to file a response to the movement in courtroom. First assistant U.S. lawyer Jennifer Ross stated the workplace wouldn’t remark earlier than that submitting.
Jeff Nickloy, an Indianapolis lawyer whose apply consists of authorized ethics, reviewed the movement at IBJ’s request. In an e mail, he stated his quick response “is that the representation of Mr. Burkhart by anyone at Barnes and Thornburg, in the criminal action identified …, seems problematic. But I cannot reach any further conclusions because I doubt I know all the relevant facts.”
The American Senior Communities investigation splashed into the headlines in September 2015, when greater than 100 regulation enforcement personnel fanned out throughout the Indianapolis space to execute search warrants at American Senior Communities’ Grey Street headquarters, Burkhart’s Carmel home and different places.
Burkhart’s movement says on the day of the raids, he contacted Faegre Baker Daniels associate Brian Fennerty about representing him. However in a gathering at Burkhart’s home, Fennerty and J.P. Hanlon (on the time a Faegre associate and now a federal decide) stated that they had a conflict of curiosity—the agency represented Well being & Hospital—and recommended Mackey.
One yr later, prosecutors unveiled expenses towards Burkhart; former American Senior Communities Chief Working Officer Dan Benson; David Mazanowski, founder of the Fishers-based landscaping firm Mainscape Inc.; Burkhart’s youthful brother, Joshua; and one of Burkhart’s enterprise associates, Steven Ganote.
Indictments charged that the lads carried out the fraud from 2009 till the day of the 2015 raids. All 5 defendants had their very own attorneys and pleaded responsible. Their jail sentences collectively totaled almost 20 years.
In all, Burkhart took half in additional than two dozen overbilling and kickback preparations, based on prosecutors. The kickbacks coated all types of bought items and providers, from landscaping and nurse name lights to American flags and hospice providers.
Burkhart’s new authorized staff asserts Barnes & Thornburg’s conflicts prompted it to not pursue an apparent protection—that he had each purpose to consider he was on strong authorized floor in not disclosing monetary pursuits in distributors.
That’s because the Jackson household of Indianapolis—which owned American Senior Communities—additionally owned distributors that offered items and providers to HHC nursing houses and hadn’t disclosed no less than some of these ties, based on the movement. Amongst these distributors have been Midwest Radiology and Design Aesthetics.
In accordance with a sworn assertion from Burkhart included with the movement, Frank Jackson had informed him and one other American Senior Communities government that the household’s pursuits in distributors weren’t an issue and didn’t have to be disclosed.
Burkhart’s movement notes the administration agreements between American Senior Communities and HHC obligated Burkhart to proceed with “past management practices,” which had included the Jacksons’ personal distributors servicing the HHC nursing houses.
“Stated another way, Mr. Burkhart is in jail today for following practices that Health and Hospital contractually permitted or obligated Mr. Burkhart to adopt,” the submitting stated.
In an interview with the FBI that’s summarized in an exhibit to Burkhart’s movement, Well being & Hospital CEO Matt Gutwein acknowledged he had not recognized concerning the Jacksons’ possession in some distributors previous to the FBI raids.
Nevertheless, in accordance with the abstract, Gutwein stated “the difference between Burkhart’s side businesses and the companies owned by the Jacksons is that Burkhart’s businesses received inflated” funds.
In response to the movement, Burkhart doesn’t agree with that characterization. It says earlier than his sentencing final July, Burkhart requested to satisfy with Gutwein and informed him “that, overall, the vendors with which he was connected had provided goods and services below market.”
After that assembly, David Hensel, an lawyer for HHC, contacted Mackey and stated it was necessary for Burkhart to confess that he harm HHC. Mackey persuaded Burkhart to take action, “despite Mr. Burkhart not believing that to be true,” in response to the movement.
Sherri Davies, a spokeswoman for the Jacksons, stated in an e mail that “there is nothing that the Jacksons have done that is improper in any way.”
The assertion stated it’s well-accepted for house owners of nursing home operations to furnish providers or merchandise to their properties. The Jacksons have owned pursuits in solely 4 distributors—among the many hundreds they’ve employed—and people “provided valuable services at fair prices, with full transparency to all involved,” the assertion stated.
She stated the state of affairs with Burkhart was completely totally different. He was merely an worker of American Senior Communities, not an proprietor. And relatively than function precise distributors, he and co-conspirators created secret shell corporations whose objective was to hide fraud.
Nursing home enlargement
The Well being & Hospital Company of Marion County determined to leap into the nursing-home enterprise in an enormous means within the early 2000s as half of a technique to regain its monetary footing as its flagship hospital hemorrhaged $10 million a month.
Different county-owned hospitals throughout Indiana have adopted go well with, capitalizing on the so-called “upper payment limit” program, which permits them to seize hundreds of thousands of dollars extra in income from the state-federal Medicaid program than different nursing houses obtain.
The primary case cited by Leon Cosgrove by which Barnes & Thornburg served as lead counsel for HHC was filed in 2003 beneath a federal whistleblower regulation. It asserted HHC and Gutwein had lied to the federal authorities to extend funds underneath this system.
In that case, Barnes & Thornburg’s Harold Bickham served as lead lawyer and referred to as the allegations “utterly without merit.” A decide dismissed the case three years later.
Every of the central members of Burkhart’sdefense group—Bickham, Mackey, David Frazee and Katie Matsoukas—knew about or participated within the agency’s protection of HHC within the 2003 case, based on Burkhart’s movement.
As well as, Barnes & Thornburg has lobbied for Well being & Hospital on the native, state and nationwide ranges from 2003 to the current, amassing greater than $1 million alongside the best way, in line with the movement.
And a yr after Barnes & Thornburg started representing Burkhart, the regulation agency started representing HHC in a fraud go well with introduced by HHC’s former compliance auditor. The plaintiff, who alleged double billing for sure remedies, charged she was fired in retaliation for making an attempt to cease the fraud. HHC says it fired her for falsifying her resume. The events settled in 2017.
Leon Cosgrove famous Barnes & Thornburg additionally served as co-bond counsel on a 2010 HHC bond providing. It stated it believes the attorney-client relationship between Barnes & Thornburg and HHC “is even more extensive” than it has documented and wants to study extra via discovery.
The Florida regulation agency argues these ties brought on Barnes & Thornburg to not need to increase questions on numerous monetary transactions involving HHC that Burkhart might have used to his benefit.
For instance, Leon Cosgrove questions Gutwein’s position in a 2015 deal that may have allowed HHC to dump nursing houses to Burkhart if the favorable Medicaid reimbursements disappeared.
The so-called “put agreements” required HHC to pay Burkhart an $850,000 charge, in response to the submitting. However Leon Cosgrove contends the actual payment was $four.95 million, with $four.1 million to be paid to Burkhart over time by means of artificially inflated rents. Leon Cosgrove referred to as the association a “facially deceptive scheme.”
HHC spokesman Curt Brantingham stated HHC’s use of put agreements has been correct and that they shield Marion County taxpayers from the danger of monetary losses within the occasion of a radical change in federal reimbursement.
He additionally stated federal and state officers have reviewed HHC’s participation within the higher cost restrict Medicaid program on a number of events and located it to be correct.•