After months of inactivity, the docket is coming to life again in the $22 million federal fraud case against the Erie-based Hertel & Brown physical therapy practice.

A judge has scheduled a long-awaited evidentiary hearing in the case, which started with an indictment in November 2021 against Hertel & Brown Physical & Aquatic Therapy as a business, its two owners and 18 other employees.

U.S. District Judge Susan Paradise Baxter has scheduled the evidentiary hearing for Aug. 29 at the federal courthouse in Erie. It is over a request of two defendants, both physical therapists, that Baxter suppress statements the FBI said the two gave agents.

The hearing will occur a year after it was originally supposed to happen, on Aug. 23, 2023.

Defense scheduling conflicts led Baxter to postpone the August 2023 hearing. She kept it on hold as she resolved other requests from the same two defendants, including a request that she toss the indictment. Baxter denied the dismissal request in early October 2023, and closed another issue with an order filed about three weeks later.

With those issues taken care of, the defense and the U.S. Attorney's Office have been waiting for Baxter to reschedule the suppression hearing. The office on Feb. 6 filed a motion that asked Baxter to set a hearing date.

Baxter responded by setting the new date of Aug. 29 in a one-paragraph order filed on Thursday. That order was docketed a day after Baxter issued an order that scheduled a video status conference with all the lawyers in the case for June 4.

Both orders signal that the pace is quickening in the Hertel & Brown case — the largest-ever white-collar criminal prosecution in Erie.

Defendants accused of overbilling Medicare, Medicaid, insurance

The case concerns medical billing.

The U.S. Attorney's Office is alleging Hertel & Brown; its founders and owners, Aaron W. Hertel, 45, and Michael R. Brown, 47; and the 18 other employees conspired to overcharge Medicare, Medicaid and private insurers $22 million over 14 years, starting shortly after Hertel & Brown launched in January 2007 and ending in October 2021.

The November 2021 indictment — and a superseding indictment, returned in May 2022 — charge 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.

All the defendants have pleaded not guilty and are free on unsecured bonds of $10,000. Hertel & Brown remains in operation, though it is down to one office, in a plaza on West 12th Street, just east of Pittsburgh Avenue, down from five offices overall.

Ruling on suppression likely to affect outcome

Two of the 21 defendants requested the suppression hearing: Jacqueline Renee Exley and Julie Ann Johnson. But the hearing's outcome will be critical to all the defendants.

How Baxter rules on the evidence will likely influence the kinds of pretrial motions the other defendants file — and whether any guilty pleas will occur before a trial. No trial date has been set.

In court in March 2022 — four months after the indictment — Assistant U.S. Attorney Christian Trabold, the lead federal prosecutor in Erie, said an unspecified number of defendants were cooperating and were ready to testify at trial. His statement signaled plea deals were in the works.

Any plea talks are not expected to intensify until after Baxter rules on whether to suppress evidence for Exley and Johnson. Many of the other defendants are still deciding whether will file their own suppression motions, according to court records.

Exley and Johnson and their lawyers want Baxter to toss statements the FBI said the two gave to agents during a search of Hertel & Brown's offices in February 2021. The lawyers, all from Pittsburgh, are Jennifer Bouriat for Exley and Efram Grail and Julia Gitelman for Johnson.

Exley and Johnson are claiming the FBI agents violated their Miranda rights, about warnings that interview subjects must receive when they are in custody.

Whether Exley and Johnson were ever in custody is the major issue in their suppression fight. Exley and Johnson claim they were. Trabold is arguing they were not.

Did 2 physical therapists make 'incriminating statements'?

The statements — as the U.S. Attorney's Office characterizes them — bolster the fraud allegations. As Baxter said in her October ruling in which she refused to dismiss the indictment: "The Government has maintained that both Exley and Johnson made incriminating statements..., an allegation which Exley and Johnson strenuously deny."

The statements were not taped. They are based on the notes of the FBI agents.

The U.S. Attorney's Office said in a court filing that Exley and Johnson told the agents that they and other employees at Hertel & Brown regularly overbilled for services at the direction of the business' owners.

Also according to the filing, Exley and Johnson reported to the FBI that Hertel and Brown told the employees how to bill for services in an improper manner. Johnson, according to the filing, told the FBI "that at Hertel & Brown that is the way it has always been done and we turned a blind eye."

Contact Ed Palattella at epalattella@timesnews.com or 814-870-1813. Follow him on X @ETNpalattella.

This article originally appeared on Erie Times-News: After long wait, major hearing scheduled in Hertel & Brown fraud case