'Hard deadline' set in Hertel & Brown fraud case; trial inches closer in Erie federal court

Shortly after a federal grand jury returned the sweeping indictment against Hertel & Brown Physical & Aquatic Therapy, several of the 21 defendants pushed for a trial to occur as swiftly as possible.

The judge presiding over the case is of the same mind.

U.S. District Judge Susan Paradise Baxter has moved the case to a faster track after a year of granting lengthy extensions for the defense lawyers to review the FBI's evidence in the probe over allegations of healthcare fraud.

Baxter set Feb. 13 as the "hard deadline" for the defense lawyers to file pretrial motions, she said in video conferences on Monday with the U.S. Attorney's Office and the lawyers for all the defendants.

She said she would set a trial date for sometime in 2023, and that she wants the case — one of the largest white-collar prosecutions ever in U.S. District Court in Erie — to proceed quickly.

"We are going to get it teed up for trial," Baxter said at one of the status conferences. "My plan is to get the case to trial sooner rather than later in 2023."

In the months after the indictment was returned on Nov. 9, 2021, Baxter said, a number of the defendants' lawyers declared their clients wanted trials to occur soon to "clear their names." Baxter said she is honoring those wishes by moving ahead with a trial after giving the defense months to go through the voluminous amount of evidence, including billing records.

"We are going to get in the mindset that we are going to trial," Baxter said at one conference. At another conference, she said of the case, "it has been languishing a bit."

In pretrial motions, the defense can ask for the suppression of evidence and make other challenges to the government's case.

Prosecutor, defense raise no objections to Hertel & Brown deadlines

Baxter said she would entertain defense requests for extensions beyond Feb. 13, but she said those requests must be specific and for a limited time period. After Feb. 13, she will no longer give "blanket extensions" of 60 or 90 days, Baxter said.

She had been granting months-long extensions with no objections from the U.S. Attorney's Office, which had agreed that the defense needed the additional time to complete the evidence-gathering process known as discovery.

On Monday, the prosecutor, Assistant U.S. Attorney Christian Trabold, had no objection to the Feb. 13 deadline. None of the defense attorneys had problems with the new pace of the case. Baxter held minutes-long individual sessions with the lawyers and Trabold over a total of 90 minutes with no defendants present.

"I hear you loud and clear," said Colin J. Callahan, of Pittsburgh, the lawyer for defendant Aaron W. Hertel, a co-founder of Hertel & Brown.

The grand jury indicted Hertel & Brown as a corporation; Aaron Hertel and Michael R. Brown, the other co-founder; and 18 employees. They are accused of conspiring in a $22 million billing fraud scheme for 14 years, starting shortly after Hertel & Brown launched in January 2007 and ending in October 2021.

The indictment charges all the defendants with one count each of the felonies of health care fraud and criminal conspiracy to commit wire fraud and health care fraud.

Hertel & Brown, as the business, and Hertel and Brown and the other individual defendants are accused of defrauding Medicare, Medicaid and private insurers by billing them for services performed by unlicensed technicians and aides as if that work had been performed by licensed physical therapists or physical therapy assistants. The defendants are also accused of overbilling in other areas.

All of the defendants have pleaded not guilty and are free on unsecured bonds. Of the 20 individual defendants, 19 are either licensed physical therapists or licensed physical therapy assistants, according to the indictment. A billing specialist at Hertel & Brown was also indicted.

Will any Hertel & Brown defendants plead guilty?

Hertel & Brown continues to operate an office in the West Erie Plaza in Millcreek Township. It once had five offices — four in Erie County and one in Warren County.

Baxter held Monday's conferences in response to a number of defendants seeking extensions three weeks ago. The conferences were the first Baxter held in the case.

Baxter had not set a trial date as of Monday afternoon. Whenever it occurs, a trial is expected to last six weeks, according to proposed timelines the government and defense presented at the defendants' arraignments following the indictment in late 2021.

How many defendants will go to trial remains uncertain. At a hearing in March, Trabold, the prosecutor, told Baxter that a "number" of defendants were cooperating with the U.S. Attorney's Office and were not expected to go to trial.

On Monday, none of the defense lawyers said their clients had reached plea deals. But one lawyer, D. Robert Marion, said he has been in talks with Trabold about his client, Steven Michael Bauer, who was an unlicensed technician and then a licensed physical therapist at Hertel & Brown.

"We are negotiating with the government as far as a plea is concerned," but nothing is final, Marion told Baxter.

Bauer is the ninth-highest defendant listed on the indictment. Higher-level defendants are typically listed at the top of federal indictments.

Farther down on the indictment is defendant Marissa Sue Hull, a licensed physical therapy assistant. She is listed 19th out of 21st.

Hull is the only other defendant whose lawyer on Monday mentioned the possibility of resolving the case without going to trial. Her lawyer, Elliot Segel, said "my client is way down on the totem pole." Segel said he hoped the U.S. Attorney's Office was open to giving Hull what is known as pretrial diversion.

Pretrial diversion is a federal program in which a defendant's case is removed from prosecution after the defendant completes a period of supervision, like probation. The arrangement is similar to the Accelerated Rehabilitative Disposition program in Erie County Common Pleas Court.

Baxter told Segel that, as a judge, she cannot be involved in plea negotiations. Segel said, with a smile, that he was bringing up pretrial diversion in "a telepathic motion" to Trabold at the status conference.

Trabold did not comment.

Contact Ed Palattella at epalattella@timesnews.com. Follow him on Twitter @ETNpalattella

This article originally appeared on Erie Times-News: Judge sets 'hard deadline' for defense in Hertel & Brown fraud case