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Hertel & Brown attacks search warrants in latest fraud case fight

An Erie-based physical therapy business and its owners, who were indicted nearly three years ago, claim the FBI exceeded its authority or used faulty information to obtain search warrants for emails and other records during the fraud investigation.

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  • In November 2021, a federal grand jury in Erie indicted Hertel & Brown Physical & Aquatic Therapy, its owners and 18 employees on charges of $22 million in billing fraud.
  • As the trial approaches in February, key defendants and others are attempting to dismiss key evidence on the basis of the Fourth Amendment.
  • The latest filings come as the judge is set to consider a separate defense motion to turn over testimony to the FBI

The main defendants in the nearly three-year-old Hertel & Brown invoice fraud case are seeking to suppress most of the evidence against them as the trial in U.S. District Court in Erie approaches.

The defendants claim the FBI used faulty information or went too far by using search warrants and subpoenas to obtain insurance records, emails and other evidence before filing charges in November 2021 against the Erie-based physical therapy business, its two owners and 18 other employees.

In a series of motions to suppress the proceedings, the main defendants – Hertel & Brown Physical & Aquatic Therapy and its owners and operators Aaron W. Hertel, 45, and Michael R. Brown, 47 – are asking U.S. District Judge Susan Paradise Baxter to find that the government violated their Fourth Amendment rights against unlawful searches and seizures.

The defendants want Baxter to prohibit the U.S. Attorney's Office from using the disputed evidence in the trial, which is tentatively scheduled to begin on February 18 in federal court in downtown Erie.

At the heart of the case are five search warrants. The warrants, the defendants claim in their motion to quash the evidence, “suffer from a fatal flaw: they were issued based on material omissions and misrepresentations in the supporting affidavits which the sworn person knowingly and with reckless disregard for the truth.”

Applications come after others want to reject declarations

The filing of the motions means that evidentiary issues will likely occupy the bulk of the court proceedings in the fall and before trial in the case – the largest criminal trial in a white collar fraud case in Erie. The defendants filed the motions Friday to meet Baxter's deadline for the defense to address suppression of evidence.

Baxter gave the U.S. Attorney's Office until October 4 to respond to the defense's motions and the defense until October 16 to respond to the government's filings. Baxter scheduled a hearing for October 24.

The defense filed the motions to suppress days before Baxter's hearing on another defense motion seeking to suppress incriminating statements the FBI says two of the defendants made to agents. The statements are the subject of a hearing before Baxter on Thursday.

In deciding those motions, Baxter will hear testimony regarding defense allegations that the FBI unlawfully detained the two defendants during a search of Hertel & Brown's offices in February 2021. The two defendants are physical therapists Jacqueline Renee Exley and Julie Ann Johnson.

Whether the two were ever in custody is a point of contention in their fight against oppression. Exley and Johnson claim they were in custody. The U.S. Attorney's Office argues they were in custody.

Suppression rulings are likely to impact potential guilty pleas

The outcome of any motions to dismiss is expected to affect the course of the Hertel & Brown case. 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 willing to testify in court.

None of the defendants have pleaded guilty. Confession negotiations are not expected to be finalized until Baxter decides whether to suppress the statements and evidence.

Not all 21 defendants filed motions to suppress the lawsuit, which also oppose the use of subpoenas. The motions were filed by Hertel & Brown as corporate defendants and by Hertel and Brown as individuals. According to court records, Exley, Johnson and defendants Jeremy R. Bowes, Marissa Sue Hull, Jessica Jeanne Morphy and Patricia Berchtold have moved to join them.

Berchtold was a billing specialist at Hertel & Brown. Morphy is a physical therapist. Bowes and Hull are physical therapy assistants.

The defendants are accused of conspiring to overbille Medicare, Medicaid, and private insurers for a total of $22 million over a 14-year period beginning shortly after Hertel & Brown was founded in January 2007 and ending in October 2021. The defendants are charged with one count each of felony health care fraud and criminal conspiracy to commit wire fraud and health care fraud.

Hertel & Brown is still in business. Of five offices, only one remains, in the plaza east of Pittsburgh Avenue at West 12th Street in Erie.

Carelessness or “pure sloppiness” in connection with arrest warrants?

In the motions to suppress the charge, the defense questions whether the FBI presented sufficient evidence or credible circumstantial evidence to establish reasonable suspicion for the search warrants.

The defense is attacking the FBI's affidavits regarding sufficient suspicion for the arrest warrants.

In a statement on their motion to suppress lead, Hertel & Brown attorneys Aaron Hertel and Michael Brown said they found that “the blatant falsehoods and omissions in these affidavits were so pervasive and so critical to the charge that a hearing is necessary to enable this Court to make its constitutional determination as to whether they were made in reckless disregard, with intent, or mere sloppiness.”

Contact [email protected] or 814-870-1813. Follow him on X @ETNpalatella.

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