Appeal of medical kickback case to begin in New Orleans

BATESVILLE — A case of bribery and kickbacks involving a north Mississippi hospital will be argued today before a federal appeals court in New Orleans.

Ray Shoemaker, a former administration at Tri-Lakes Medical Center in Batesville, Miss., was sentenced in 2012 to 55 months in federal prison on six counts. A judge ordered a new trial on two counts that alleged Shoemaker had authority over contracts entered into by the hospital.

The government alleges Shoemaker and Lee Garner, owner of Guardian Angel Nursing/On-Call Staffing, entered into a conspiracy to increase boost Garner’s nurse staffing business and pay Shoemaker for his assistance as a key executive at Tri-Lakes Medical Center in Batesville

The indictment alleged another conspiracy between Garner, Shoemaker and hospital board member and Panola County administrator David Chandler where Garner allegedly offered to pay Shoemaker $25,000 in exchange for Shoemaker’s influence over the ordering of nursing services for Garner’s company.

Court records show Chandler paid Shoemaker $12,000 in furtherance of the conspiracy.

The government is asking the 5th U.S. Circuit Court of Appeals to deny Shoemaker’s appeal of his conviction and restore the convictions on the other two counts.

The government is also asking the 5th Circuit to restore the verdicts against Garner. Garner is fighting the government’s request.

In August 2012, U.S. District Judge Neal Biggers ordered a new trial for Garner and ordered a new trial for Shoemaker on two of the 10 guilty verdicts.

Biggers said some jury instructions were prejudicial to both defendants.

Biggers said the government erred in relying on the alleged actions of Chandler to support allegations against Garner and Shoemaker.

Prosecutors had said Garner paid Chandler a kickback and bribe in the amount of $5 per hour for every hour of nursing services Garner’s nursing company billed and collected at Tri-Lakes.

As part of that scheme, prosecutors said Garner paid Chandler a total of $268,000 between May 2005 and July 2007. Court records say Chandler acted as a middleman between Shoemaker and Garner.

“It is undisputed that Garner’s company provided competent nursing services for each hour it got paid. Moreover, Tri-Lakes ended up owing Garner for provided nurses which Tri-Lake never paid for,” Biggers said in his ruling.

But Biggers said prosecutors had to show that the person receiving the alleged bribe — in this case Chandler — had authority to act for the institution in the business actions.

“It is undisputed that Chandler had no decision-making authority in regard to the actual procurement of nursing staff … and was not shown to have controlled those who were,” Biggers said.

In briefs filed with the 5th Circuit, prosecutors said it was not necessary for Chandler, as a hospital board member, to have authority over a specific activity at the hospital.

“Even the most narrow interpretation … would only require that Chandler have general authority to act with respect to the funds” of the hospital, prosecutors said.

Garner’s attorneys argued that the court record shows Chandler did not control the purse strings of the hospital. They said it is clear that the payments to Chandler were for his collection work and the payment ledger reflected that.

“Chandler didn’t get paid unless Garner was paid,” Garner’s attorneys argued.

Garner, Shoemaker and Batesville doctor Robert Corkern were indicted by a federal grand jury in September 2011 on allegations they carried out a conspiracy to wrongly reward Garner and enrich Shoemaker through a kickback-bribery scheme, as well as multiple lies to lending agencies funding Tri-Lakes.

Corkern and Chandler cut plea deals with the government for their cooperation.

Corkern was sentenced to two years’ house confinement and three years’ post-release supervision for his role in a scheme.

Chandler was sentenced to 14 months in prison.

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