Key deadlines near in Hertel & Brown case

On Nov. 9, 2021, a federal grand jury returned one of the most sweeping indictments ever filed in a white-collar case in U.S. District Court in Erie.

The grand jury charged that the Erie-based Hertel & Brown Physical & Aquatic Therapy, its founders and 18 of its employees conspired in a $22 million billing fraud scheme for 14 years, starting shortly after Hertel & Brown launched in January 2007 and ending in October 2021.

A year later, no trial date has been set in the case, but key deadlines are drawing closer.

The lead defendants — Hertel & Brown as a corporation and its founders, Aaron W. Hertel, 44, and Michael R. Brown, 46, as individuals — have less than a week to file their pretrial motions.

The deadline for Hertel & Brown and Hertel is Nov. 14, according to court records. The deadline for Brown is Nov. 15.

Like other defendants in the case, Hertel & Brown as a business and Hertel and Brown as individuals have repeatedly received extensions from U.S. District Judge Susan Paradise Baxter for the filing of pretrial motions.

Assistant U.S. Attorney Christian Trabold, the lead federal prosecutor in Erie, has not objected to the extensions, given the large amount of evidence the defense lawyers must review, according to court records.

Hertel & Brown as a business and Hertel and Brown could ask for another extension ahead of next week's deadlines, though the U.S. Attorney's Office at some point could challenge the requests and argue that the case needs to advance more swiftly.

As of Tuesday, 10 other defendants also have pretrial motions due by the end of this week or next week. The deadlines for the remaining defendants are in December or early 2023, according to court records.

Pretrial motions could offer insight into defense

Whenever Hertel & Brown as a business and Hertel and Brown as individuals file their pretrial motions, the documents are expected to provide a guide for how the three might approach the case as the lead defendants. They could ask Baxter to suppress evidence or make other rulings that would benefit all the defendants.

Trabold would get a chance to respond to the pretrial motions. And how Baxter rules on them will set the tenor of the case and likely help determine how many defendants will cooperate and plead guilty and how many will continue to declare their innocence and go to trial at the federal courthouse on Perry Square.

All the defendants have pleaded not guilty and are free on unsecured bonds.

At a hearing in court in March, Trabold said "a number" of the defendants are cooperating with the government and are prepared to testify at a possible trial. The defendants who are cooperating — Trabold did not name them — would not go to trial but would reach plea deals.

That hearing concerned a request from three of the defendants — but none of the lead defendants — that Baxter require the government to try them separately rather than at a joint trial with all 21 defendants.

Baxter in July rejected the request for separate trials in the first major decision she issued in the case. She ruled that the three defendants failed to show how a joint trial would prejudice them, and she said the federal courts generally favor joint trials to conserve resources.

Baxter in her decision mentioned the possibility of guilty pleas as she countered one of the defendants' arguments that a trial with 21 defendants would be too large.

"This line of argument is highly speculative," Baxter said in her ruling, "especially given the Government's representation that some Defendants have already begun to cooperate, raising the possibility that certain individuals charged in this case may ultimately enter guilty pleas and thereby reduce the number of Defendants that are ultimately tried together."

Hertel & Brown defendants accused of 2 felony counts

Of the 20 individual defendant in the Hertel & Brown case, 19 are either licensed physical therapists or licensed physical therapy assistants, according to the indictment. A billing specialist at Hertel & Brown was also indicted.

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 the defendants are accused of health care fraud and criminal conspiracy to commit wire fraud and health care fraud. The FBI used confidential informants to build a case, according to court records.

Hertel & Brown remains in business, though it has reduced the number of its offices to one: what had been its main office in the West Erie Plaza in Millcreek Township, according to its website.

Hertel & Brown had five offices — four in Erie County and one in Warren County — when the fraud investigation became public in February 2021 with the search of its offices by the FBI and other law enforcement agencies.

Hertel & Brown, according to the records and statements in court, has laid off employees, and some of the remaining physical therapists who still work for Hertel & Brown and are defendants cannot get insurance reimbursements for their services due to the indictment.

The indictment and a superseding indictment, issued in May, have put at risk the assets of Hertel & Brown and the personal residences of Aaron Hertel, who lives in North East, and Michael Brown, who lives in Millcreek Township.

The indictments seek forfeiture of assets and real estate that would have to be given up following convictions. According to the indictments, among the other assets at risk, in addition to Hertel and Brown's residences, are a condominium they own across the street from a beach in Sarasota, Florida.

Contact Ed Palattella at [email protected]. Follow him on Twitter @ETNpalattella.