USA v. Haney, et al

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
UNITED STATES OF AMERICA, 	)
)
Plaintiff, 	)
)
v. 	) 	No.: 	3:24-CR-113-TAV-JEM
)
TIFFANY HANEY, ANNE WARREN, 	)
and TINA ROPER 	)
)
Defendants. 	)
MEMORANDUM OPINION AND ORDER
This criminal matter is before the Court for consideration of the Report and
Recommendation (“R&R”) entered by United States Magistrate Judge Jill E. McCook on
October 21, 2025 [Doc. 204], recommending that the Court grant Defendant Anne
Warren’s and Defendant Tiffany Haney’s motions to join [Docs. 96, 172, 177], deny
Defendant Tina Roper’s motion to join [Doc. 138], and deny the motions to suppress
evidence [Docs. 89, 165]. 	The government filed objections to the R&R [Doc. 211].
Defendant Haney also filed objections to the R&R [Doc. 212], and Defendant Roper and
Defendant Warren have moved to adopt those objections [Docs. 215, 221]. 	The
government filed a response to Defendant Haney’s objections [Doc. 234]. Thus, the matter
is now ripe for review. See E.D. Tenn. L.R. 7.1(a).
As a preliminary matter, the Court GRANTS defendants’ motion to file documents
relating to their objections under seal [Doc. 213], and the proposed sealed documents
[Docs. 214, 214-1, 214-2] shall be filed under seal. Additionally, for the reasons below,
Defendant Warren and Defendant Roper’s motions to join Defendant Haney’s objections
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[Docs. 215, 221] are GRANTED, but both Defendant Haney’s and the government’s
objections to the R&R [Docs. 211, 212] are OVERRULED. The Court ACCEPTS and
ADOPTS the R&R [Doc. 204] in whole, GRANTS Defendant Warren’s and Defendant
Haney’s motions to join [Docs. 96, 172, 177], DENIES Defendant Roper’s motion to join
[Doc. 138], and DENIES the motions to suppress evidence [Docs. 89, 165].
I. 	Background
The Court presumes familiarity with the summary of the evidence and findings of
fact as set forth in the R&R. Accordingly, the Court incorporates the background contained
in the R&R [Doc. 204, pp. 4–36] into this memorandum opinion and order.
II. 	Standard of Review
The Court reviews de novo those portions of the R&R to which a party has objected.
28 U.S.C. § 636(b)(1); Fed. R. Crim. P. 59(b). 	Accordingly, the Court considers
defendants’ motions, the government’s responses, the R&R, the objections, and the
responses thereto, all in light of the applicable law.
Objections to any part of a magistrate judge’s disposition “must be clear enough to
enable the district court to discern those issues that are dispositive and contentious.” See
Miller v. Currie, 50 F.3d 373, 380 (6th Cir. 1995); see also Thomas v. Arn, 474 U.S. 140,
147 (1985) (stating that the purpose of the rule is to “focus attention on those issues . . . that
are at the heart of the parties’ dispute”). 	Each objection to a magistrate judge’s
recommendation should describe how the analysis is wrong, why it was wrong, and how
de novo review warrants a different result on a particular issue. 	See Howard v. Sec’y of
Health & Human Servs., 932 F.2d 505, 509 (6th Cir. 1991). 	A general objection that
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merely restates an argument previously presented or simply voices a disagreement with a
magistrate judge’s suggested resolution “has the same effect[] as would a failure to object.”
Austin v. Comm’r of Soc. Sec., No. 1:19-cv-2380, 2021 WL 1540389, at *4 (N.D. Ohio,
Apr. 19, 2021) (citation omitted); see also United States v. Dawson, No. 4:19-cr-206, 2020
WL 109137, at *1 (N.D. Ohio, Jan. 9, 2020) (citations omitted) (“[T]he Court is under no
obligation to review de novo objections that are merely an attempt to have the district court
reexamine the same arguments set forth in the petition and briefs.”).
III. 	Analysis
A. 	Franks Challenge
When a defendant “makes a substantial preliminary showing that a false statement
knowingly and intentionally, or with reckless disregard for the truth, was included by the
affiant in the warrant affidavit, and if the allegedly false statement is necessary to the
finding of probable cause, the Fourth Amendment requires that a hearing be held at the
defendant’s request.” Franks v. Delaware, 438 U.S. 154, 155–56 (1978). Under Franks,
the defendant must (1) make a substantial preliminary showing that specified portions of
the affiant’s statements are deliberately or recklessly false, and (2) demonstrate that the
challenged statements are necessary to a finding of probable cause. 	Id. at 171; United
States v. Graham, 275 F.3d 490, 505 (6th Cir. 2001). Allegations of deliberate falsehood
or reckless disregard for the truth must be accompanied by an offer of proof, and allegations
of negligence or innocent mistake are insufficient. Franks, 438 U.S. at 171.
1. 	“Intent to Mislead” Standard
In discussing the legal framework for analysis of Franks challenges, the R&R states:
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Omissions, too, can form the basis for a Franks challenge, but “an affidavit
which omits potentially exculpatory information is less likely to present a
question of impermissible official conduct than one which affirmatively
includes false information.” 	United States v. Adkins, 107 F.3d 1213, 1217
(6th Cir. 1997) (citation omitted). 	This is because an affidavit need not
include all facts gathered over the course of an investigation. 	Id. 	Thus,
“except in the very rare case where the defendant makes a strong preliminary
showing that the affiant with an intention to mislead excluded critical
information from the affidavit, and the omission is critical to the finding of
probable cause, Franks is inapplicable to the omission of disputed facts.”
Mays v. City of Dayton, 134 F.3d 809, 816 (6th Cir. 1998).
A heightened standard is necessary for omissions to foreclose “‘endless
conjecture about investigative leads, fragments of information, or other
matter that might, if included, have redounded to defendant’s benefit.’”
United States v. Martin, 920 F.2d 393, 398 (6th Cir. 1990) (quoting United
States v. Colkley, 899 F.2d 297, 301 (4th Cir. 1990)); see also United States
v. Hanna, 661 F.3d 271, 285 (6th Cir. 2011) (affirming the district judge’s
observation that when omissions are at issue, “‘additional hurdles must be
met’”). “If the defendant does succeed in making a preliminary showing that
the 	government 	affiant 	engaged 	in 	‘deliberate 	falsehood’ 	or 	‘reckless
disregard for the truth’ in omitting information from the affidavit, the court
must then consider the affidavit including the omitted portions and determine
whether probable cause still exists.” 	Adkins, 107 F.3d at 1217 (citation
omitted).
[Doc. 204, pp. 47–48]. Later in the analysis, the magistrate judge reiterated:
As discussed above, the bar is higher for a defendant to make a substantial
preliminary showing for an omission than for a false statement. Martin, 920
F.2d at 398. 	“[T]o . . . require that all potentially exculpatory evidence be
included in an affidavit, places an extraordinary burden on law enforcement
officers, compelling them to follow up and include in a warrant affidavit
every hunch and detail of an investigation in the futile attempt to prove the
negative proposition that no potentially exculpatory evidence had been
excluded.” 	Mays, 134 F.3d at 816. 	Thus, an affiant need not include “all
potentially exculpatory information . . . in the search warrant affidavit.”
United States v. Sample, No. 11–20386, 2012 WL 71588, at *5 (E.D. Mich.
Mar. 6, 2012).
[Id. at 53–54 (footnote omitted)].
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Defendants assert that the magistrate judge misinterpreted dicta in Mays, 134 F.3d
at 816, to hold that omissions require movants to satisfy a heightened “intent to mislead”
standard [Doc. 212, p. 1]. Defendants contend that this legal error in the Sixth Circuit finds
its genesis in Mays, but subsequent Sixth Circuit cases have openly questioned the
application of such a “higher” standard for omissions in the Franks context [Id. at 2–3
(citing United States v. Davis, 84 F.4th 672, 682 (6th Cir. 2023); United States v.
Hitchcock, No. 24-1377, 2025 WL 1136180 (6th Cir. 2025))]. 	Defendants argue that,
although the Sixth Circuit has not yet resolved this matter, a higher “intent to mislead”
standard is contrary to the “reckless disregard” standard established by Franks [Id. at 4].
Additionally, defendants argue that (1) there is no substantive difference in terms of the
effect on the issuing judge between a “half-truth” and a “falsehood”; (2) at the time Rule
12 pretrial motions are due, a movant will almost never have access to the information
necessary to demonstrate an officer’s intent; and (3) Mays was decided in the context of a
civil rights case, not a criminal case [Id.].
The government responds that the R&R’s quotation from Mays regarding an
intention to mislead is an accurate statement of the law [Doc. 234, p. 1]. The government
states that the Sixth Circuit has “repeatedly held that a defendant must meet a ‘higher’
standard to invalidate a warrant based on an omission (rather than a false statement)” [Id.
at 2 (quoting Davis, 84 F.4th at 681–82)]. 	And these precedents cannot be dismissed as
“dicta” [Id.]. The government acknowledges that there is some inconsistency in the case
law regarding how this higher standard has been described [Id.]. 	Nonetheless, the
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government asserts that the Sixth Circuit has already reconciled the two lines of precedent
[Id. (citing Hale v. Kart, 396 F.3d 721, 726 (6th Cir. 2005))].
The magistrate judge’s citation to Mays is an accurate statement of the Sixth Circuit
law. In Mays, the Sixth Circuit stated that “except in the very rare case where the defendant
makes a strong preliminary showing that the affiant with an intention to mislead excluded
critical information from the affidavit, and the omission is critical to the finding of probable
cause, Franks is inapplicable to the omission of disputed facts.” 134 F.3d at 816 (emphasis
in original). None of the cases defendants cite reject the application of a higher standard
for omissions. Specifically, in Hitchcock, the Sixth Circuit noted that “[s]ome of our cases
have suggested that a defendant must meet a ‘higher’ intent element when seeking to
challenge an affidavit through . . . omissions[,]” but concluded “we need not consider that
question here.” 2025 WL 1136180, at *4 (citing Davis, 84 F.4th at 681–82). 	Hitchcock
thus did not alter or reject the “intent to mislead standard,” and, indeed, did not even
analyze that standard beyond this single sentence of dicta in the opinion. Additionally, in
Davis, the Sixth Circuit explained:
Although we have not categorically excluded these types of omissions from
the Franks inquiry, we have repeatedly held that a defendant must meet a
“higher” standard to invalidate a warrant based on an omission (rather than
a false statement). 	United States v. Neal, 577 F. App’x 434, 450 (6th Cir.
2014) (quoting United States v. Fowler, 535 F.3d 408, 415 (6th Cir. 2008));
see, e.g., United States v. Fisher, 824 F. App’x 347, 353–54 (6th Cir. 2020);
United States v. Alford, 717 F. App’x 567, 570 (6th Cir. 2017); United States
v. Martin, 920 F.2d 393, 398 (6th Cir. 1990). When describing this higher
standard, we have sometimes noted that a defendant must prove that an
officer omitted the information “with an intention to mislead” (not just with
recklessness) and that the omission of the information was “critical to the
finding of probable cause[.]” Mays v. City of Dayton, 134 F.3d 809, 816 (6th
Cir. 1998); see Hale v. Kart, 396 F.3d 721, 726–27 (6th Cir. 2005). 	Other
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times, though, we have suggested that the defendant must show that the
officer omitted the information intentionally or with reckless disregard. See
United States v. Graham, 275 F.3d 490, 506 (6th Cir. 2001); United States v.
Atkin, 107 F.3d 1213, 1217 (6th Cir. 1997). 	If the latter rule applies, it is
unclear how we have set a “higher” standard for omissions than the one that
governs false statements (as we have said).
Davis, 84 F.4th at 681–82. While the Sixth Circuit here recognized some distinction in the
phrasing of the relevant standard for omissions, it at least implicated that the “intent to
mislead” standard was correct, by emphasizing that “we have repeatedly held that a
defendant must meet a ‘higher’ standard to invalidate a warrant based on an omission,” and
then noting that, if the “intent to mislead” standard is not the rule “it is unclear how we
have set a ‘higher’ standard for omissions than the one that governs false statements (as we
have said).” 	Id. 	Although the Davis Court ultimately declined to directly decide the
applicable standard, finding instead that the defendant had not made the requisite showing
under either standard, id. at 682, this dicta suggests that court believed that the “intent to
mislead” standard was the applicable standard for omissions. And, since it was decided,
the Sixth Circuit has cited Davis for the proposition that defendants must meet the “intent
to mislead” standard for omissions in the context of a Franks challenge. See United States
v. Higgins, 141 F.4th 811, 817 (6th Cir. 2025) (“[I]f a defendant is trying to show an
omission, he must meet an even higher standard: that the officer omitted the information
‘with an intention to mislead’ and that the omission was ‘critical to the finding of probable
cause.’” (citing Davis, 84 F.4th at 682)).
Additionally, as the government notes, the Sixth Circuit has addressed the different
phrasing of the applicable standard for omissions, stating that the “combined holdings” of
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Mays and Atkin “instruct district courts that plaintiffs must make a strong preliminary
showing that the affiant with an intention to mislead excluded critical information from the
affidavit, and the omission is critical to the finding of probable cause.” Hale, 396 F.3d at
726.
Moreover, the Sixth Circuit continues to rely on the “intent to mislead” standard for
omissions. 	Indeed, within this month, the Sixth Circuit has again noted, in a published
opinion, that the “bar is even higher for omissions” in the Franks context. United States v.
Richards, --- F.4th ---, 2026 WL 74037, at *5 (6th Cir. 2026). 	Specifically, the Sixth
Circuit again stated that a defendant “must show that the officer making the affidavit
omitted information with the intent to mislead and that those omissions were critical to the
finding of probable cause.” 	Id. (internal quotation marks omitted) (citing Higgins, 141
F.4th at 817). 	The Sixth Circuit also cited this standard in an unpublished opinion this
month. See United States v. Easter, No. 25-1248, 2026 WL 18812, at *4 (6th Cir. 2026)
(noting that the defendant provided no evidence suggesting that police had an “intention to
mislead,” and stating that such undercut his Franks challenge on the basis of an alleged
omission).
This Court is “bound by the controlling Sixth Circuit precedent in the absence of
any Supreme Court decision clearly overturning such precedent.” 	Hollis v. Erdos, 480
F. Supp. 3d 823, 831 (S.D. Ohio 2020) (internal quotation marks omitted). The application
of a higher “intent to mislead” standard to allegations of omissions when evaluating the
preliminary showing for a Franks hearing is the binding precedent in this circuit.
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Accordingly, the magistrate judge appropriately applied that standard, and defendants’
objections to such are OVERRULED.
2. 	OptumRx Audit
In the search warrant affidavit, Agent Joseph Valero, the affiant, stated that
OptumRx performed an audit of Rocky Hill Pharmacy (“RHP”) for prescriptions and refills
filled 	between 	January 	1, 	2020, 	and 	May 	29, 	2020, 	with 	claims 	submitted 	to
Medicaid/TennCare [Doc. 119-1 ¶ 52]. 	Agent Valero stated that, as part of the audit,
OptumRx mailed survey forms to prescribers to confirm whether they actually issued the
prescriptions as billed by RHP, and the majority of prescribers responded that they did not
authorize a prescription for Lidocaine/HC rectal kits [Id. ¶ 54]. As examples, Agent Valero
provided copies of the prescriber denial forms from Nurse Practitioner (“NP”) Courtney
Travis, NP Lindsey Smith, and NP Courtney Carroll [Id. at 17–22]. 1
In their motion to suppress, defendants first argue that the government knew from
years of investigation that Associated Pain Specialists (“APS”) was “non-compliant in
countless respects,” but Agent Valero affirmatively misled Judge Poplin to believe that
RHP was at fault [Doc. 89, p. 15]. 	Specifically, defendants allege that multiple APS
witnesses told the government that prescriptions were being written without providers’
authorization [Id.]. 	However, Agent Valero used limited and selective fragments from
OptumRx’s audit file to create the misimpression, based on prescriber denials, that RHP
had billed for medications that had not been prescribed, despite the information from the
1 Apparently, NP Travis, NP Smith, and NP Carroll were all practitioners at Associated
Pain Specialists [See Sealed Doc. 147, pp. 59–60].
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investigation of APS “contradict[ing]” those denials [Id. at 15–16]. 	Second, defendants
argue that the OptumRx audit file contained documents that showed the prescriber denials
were “completely unreliable,” specifically, copies of the actual prescriptions these
prescribers denied, which showed that the prescriptions had been faxed to RHP [Id. at 16].
The government responds that Agent Valero simply recited the facts outlined in
OptumRx’s report and included screenshots of the prescribers’ responses [Doc. 111, p. 11].
The government contends that defendants’ arguments about APS do not call into question
the truthfulness of Agent Valero’s affidavit [Id. at 12]. 	The government asserts that any
bad acts by APS do not have any bearing on the reliability of the providers who worked
there, nor do they negate the fact that RHP received financial benefit from the “apparent
bogus” prescriptions [Id.]. Additionally, the government argues that defendants’ argument
about the faxed copies of prescriptions in OptumRx’s file ignores other facts in the
affidavit, namely, that at least one faxed prescription was altered without the prescriber’s
permission [Id. (referencing a prescription by NP Ashley Manning that was included in the
search warrant affidavit)]. The government contends that the logical inference to be drawn
from these facts is that there was a fair probability other faxes had been altered, and the
most likely persons to have altered the prescriptions were those who benefited financially
from the pharmacy claims [Id.].
In reply, defendants reiterate that, by offering the prescriber denials but withholding
critical information that APS compliance failures were responsible for these denials, Agent
Valero misled Judge Poplin that the claims billed by RHP were fraudulent [Doc. 115, pp.
4–5]. Additionally, defendants highlight that Agent Valero never disclosed the existence
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of the prescriptions that the providers denied, and by deliberately omitting that the
prescriptions (1) existed, and (2) had been faxed to RHP, Agent Valero omitted critical
facts that would have “eviscerated” the prescriber denials [Id. at 5].2
At the first suppression hearing, the government stated that one of the fundamental
pieces of the affidavit was conveying to Judge Poplin that the providers said they did not
authorize a prescription that RHP billed for, and there is no challenge to the accuracy of
Agent Valero’s statements about what these providers said [Sealed Doc. 147, p. 34].
Additionally, as to defendants’ implication that the APS providers’ denials were not
reliable because APS office staff were doing things without the providers’ knowledge, such
does not account for the statements made by NP Manning, NP Felicia Bertram, and NP
Alicia Armstrong, none of whom were APS providers, and, as a practical matter, does not
make sense [Id. at 43]. 	Specifically, the government argued that nothing in that theory
made sense when looking at the motivation of the parties and who actually profited [Id. at
44].
Defendants responded that all of the prescriber denials came from APS, with the
exception of three: (1) NP Manning, whose prescription was altered in the affidavit, and
(2) NP Armstrong and NP Bertram, two providers from Alliance Pain that originally denied
prescriptions contained in the Humana audit, but later affirmed them [Id. at 59–60].
2 Defendants also raised, for the first time in their reply brief, and in direct response to the
government’s reliance on NP Manning’s statements about alterations to her prescription, that
Agent Valero made alterations to the copy of NP Manning’s prescription included in the search
warrant affidavit [Doc. 115, p. 6]. The Court will address these arguments separately, infra.
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Defendants stated that the government knew the prescriptions were being sent from APS
without the providers’ authorization, but did not tell the Court, instead, presenting only the
prescriber denials, for the purpose of supporting Agent Valero’s accusation that RHP was
billing based on fabricated claims and prescriptions that did not exist [Id. at 61–62].
In the R&R, the magistrate judge concluded that none of the statements in the
affidavit regarding the OptumRx audit were false, and defendants’ allegations amounted
to a claim that Agent Valero omitted information that investigators and providers suspected
that APS staff, particularly Felisha Livesay,3 were altering or forging prescriptions [Doc.
204, p. 52]. However, the magistrate judge noted that Agent Valero also had evidence that
RHP was involved in altering or forging prescriptions, namely, statements from NP
Manning, who was not an APS provider, that a prescription she wrote and her office faxed
to RHP was changed, and the changes were not in her handwriting [Id. at 52–53].
Additionally, Agent Valero had information linking RHP to Livesay [Id. at 53 and n.35].
The magistrate judge stated that defendants had arguably shown that Agent Valero was
uncertain of RHP’s involvement or the extent of RHP’s involvement in healthcare fraud
early in the investigation [Id. at 54]. 	But, later, Agent Valero had additional evidence
beyond the OptumRx and Humana audits, particularly, the information from the interview
of NP Manning [Id. (citing Doc. 123-1, FBI Report of March 2024 Manning Interview)].
Thus, the magistrate judge concluded that defendants failed to show that Agent Valero
3 Sometimes spelled “Felisha Livezey” [See Doc. 212, p. 7]. The Court will use “Livesay”
throughout this memorandum opinion and order for the sake of clarity and consistency.
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acted with the intent to mislead by omitting the investigation into APS or suspicions about
who was involved in forging prescriptions [Id.].
a. 	Prescriber Denials vs. Prescriptions
In their objections, defendants first argue that the magistrate judge did not address
their argument that the inclusion of the prescriber denials was false and misleading because
she misunderstood it to relate to the “omission” of exculpatory evidence, i.e., that
investigators and providers suspected that APS staff, particularly Livesay, were altering or
forging prescriptions [Doc. 212, p. 7]. But defendants assert that the actual prescriptions
included in the same audit file make the prescriber denials false and misleading [Id. at 5].
Specifically, copies of all the prescriptions that the prescribers denied were included in file,
as either faxed or phoned-in prescriptions [Id. at 6]. 	Defendants contend that the Court
should find, as the magistrate judge found regarding the Humana audit, that defendants
made a substantial preliminary showing that Agent Valero misrepresented the OptumRx
prescriber denials in its affidavit [Id.].
The government responds that the affidavit explained that in the course of the
OptumRx audit, providers had returned surveys stating that they did not authorize various
prescriptions for which RHP had billed and included screenshots of four such surveys
[Doc. 234, p. 4]. 	The government argues that the actual prescriptions do not make the
provider denials false, or even less suspicious [Id.]. To the contrary, such is evidence that
someone was altering or forging prescriptions [Id.]. Thus, the government contends that
the prescriptions are neither a material omission nor evidence that Agent Valero intended
to mislead the magistrate judge [Id.].
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It appears that defendants object to the magistrate judge’s conclusion that their
arguments raise allegations of “omission” rather than “false statements” for purposes of
the Franks analysis. 	But the information in the affidavit, that is, that the prescribers
returned survey forms denying that they had authorized the prescriptions at issue, is not
false. 	Defendants do not appear to contest that the prescriber denials exist and that they
deny authorizing the relevant prescriptions. What defendants actually seek to challenge is
the veracity of those prescriber denials. However, Franks does not provide an avenue to
challenge the veracity of evidence provided to law enforcement, but rather, permits a
defendant to challenge the affiant only. United States v. McCarley-Connin, 148 F.4th 808,
816 (6th Cir. 2025). Thus, “an ‘attack on the veracity’ of an informant’s statements [does
not] satisfy the burden to trigger a Franks hearing unless the defendant makes a ‘substantial
showing that the affiant’s statements were intentionally or recklessly false.” Id. (emphasis
in original) (quoting United States v. Rodriguez-Suazo, 346 F.3d 637, 648 (6th Cir. 2003)).
Again, the affiant’s statement here was that OptumRx mailed survey forms to prescribers,
the majority of those prescribers responded that they did not authorize prescriptions for the
Lidocaine/HC rectal kids, and the prescriber denial forms copied into the affidavit were
examples of such [Doc. 119-1 ¶ 54]. Even accepting as true defendants’ assertions about
other evidence in the OptumRx audit file, and even if the Court were to assume that such
undermined the veracity of the prescriber denials, defendants have not shown that Agent
Valero’s statement that the prescriber denial forms in the affidavit were returned as part of
the OptumRx audit and that the copies in the affidavit were examples of the returned forms
was false. Rather, defendants’ arguments are appropriately characterized, as the magistrate
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judge concluded, as a claim that the information provided in the affidavit was misleading
due to the omission of other information.
Turning to whether defendants have shown that Agent Valero acted with intent to
mislead in omitting copies of the actual prescriptions associated with the prescriber denials
from the search warrant affidavit, defendants suggest that the omission is the same as the
omission of evidence from the Humana audit file that the magistrate judge found to be, at
least arguably, made with intent to mislead [Doc. 212, p. 7; see Doc. 204, pp. 56–57]. But
the omissions regarding the Humana audit are distinct from the omissions from the
OptumRx audit.
Specifically, regarding the Humana audit, Agent Valero included prescriber denials
in the affidavit from three practitioners [Doc. 119-1, pp. 23–25]. 	However, the Humana
Special Investigations Unit summary of that audit noted that, of three prescribers who
denied services, RHP “was able to mitigate with 2 of the prescriber denials leaving only
denials from Courtney Travis” [Doc. 89-9, p. 3]. 	According to defendants, although NP
Bertram and NP Armstrong initially denied the services, they subsequently verified and
rewrote the prescriptions at issue [Doc. 89, p. 12]. 	But none of this information was
included in Agent Valero’s affidavit [See Doc. 119-1]. Judge McCook concluded that this
omission of the subsequent mitigation “deprive[d] the issuing judge of the complete import
of the denials by these two prescribers” [Doc. 204, p. 57]. And Judge McCook concluded
that, given that this mitigation was included in the Humana audit, there was at least
circumstantial evidence that Agent Valero intentionally left this later mitigation out of his
affidavit [Id.].
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By contrast, defendants do not suggest that the OptumRx audit specifically noted or
found that the prescriber denials were mitigated by the copies of the prescriptions at issue.
Instead, defendants argue that these prescriptions could have cast doubt on the veracity of
the prescriber denials. 	But, again, a Franks challenge is not the appropriate forum for
challenging 	the 	veracity 	of 	statements 	provided 	to 	law 	enforcement. 	See
McCarley-Connin, 148 F.4th at 816. 	And, as the Sixth Circuit has noted, “[a]n affiant
cannot be expected to include in an affidavit every piece of information gathered in the
course of an investigation.” 	Mays, 134 F.3d at 815 (citing United States v. Colkley, 899
F.2d 297, 302 (4th Cir. 1990)). Ultimately, the prescription copies from the OptumRx file
do not have the same clearly mitigating effect on the prescriber denials as the information
about NP Armstrong and NP Bertram’s mitigation of their own denials contained in the
Humana audit. 	The Court thus concludes that defendants have not made a substantial
preliminary showing that Agent Valero omitted these prescriptions with an intent to
mislead.
b. 	Investigation of APS
Defendants next contend that the Federal Bureau of Investigation (“FBI”) also had
extensive investigative information that made Agent Valero’s presentation of the OptumRx
prescriber denials false and misleading, specifically, information that APS office staff were
issuing prescriptions without the knowledge and authorization of APS providers [Doc. 212,
p. 7]. Defendants argue that no suspicious facts point to RHP [Id. at 9].
The government responds that the magistrate judge squarely addressed, and
rightfully rejected, this claim [Doc. 234, p. 4]. 	The government contends that the
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magistrate judge correctly stated that the possibility that alterations were happening at APS
did not contradict any of the statements in the affidavit [Id.]. Moreover, the government
states that the search warrant affidavit was not required to include all potentially
exculpatory evidence [Id.]. 	Further, the affidavit presented other suspicious facts that
pointed to RHP, including a statement from NP Manning, who was not an APS provider,
indicating that a prescription she wrote and her office faxed to RHP was changed and the
changes were not in her handwriting [Id.].4
Ultimately, defendants’ objections regarding the omission of suspicions about APS
providers amounts to a general objection, as defendants largely reiterate their prior
argument and do not point to any specific error in the R&R (with the exception of the issue
discussed in subsection (c), infra). See Austin, 2021 WL 1540389, at *4.
Regardless, the Court finds that the magistrate judge properly concluded that
defendants have not shown that Agent Valero excluded information regarding APS with
intent to mislead, as required for a Franks hearing. Contrary to defendants’ assertion [Doc.
89, pp. 15–16], the information about APS does not directly “contradict” the prescriber
denials. 	Instead, this information simply provides an alternate explanation for the
prescriber denials from APS providers. In other words, information from the investigation
of APS, as presented by defendants, provides one possible explanation for the prescriber
denials. But it does not entirely rule out the possibility that fraudulent behavior on the part
of RHP was a possible explanation for the prescriber denials. This is particularly true when
4 As noted previously, the Court will address the arguments regarding NP Manning’s
prescription in a subsequent section of this memorandum opinion and order.
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considering that a non-APS provider, NP Manning, also alleged that her prescription sent
to RHP was altered by someone other than herself.
Considering all of this, the Court concludes that defendants have not made a
substantial preliminary showing that Agent Valero omitted information regarding APS
from the affidavit with an intent to mislead. Defendants’ objections on this ground are thus
OVERRULED.
c. 	Reliance on Material Outside the Affidavit
Next, defendants argue that the magistrate judge relied on evidence outside the
search warrant affidavit to establish that Agent Valero had not acted with intent to mislead,
specifically citing a November 2021 interview memorandum of Livesay, and a September
2023 interview memorandum of Jimmy Cowden, APS’s business consultant [Doc. 212, p.
10]. Defendants contend that it was legal error for the magistrate judge to consider material
outside the four corners of the warrant application [Id. (citing McCarley-Connin, 148 F.4th
at 816)].
The government responds that McCarley-Connin merely held that the court’s
determination of probable cause is limited to the facts of the affidavit [Doc. 234, p. 5]. It
does not suggest that the court is limited to the four corners of the affidavit when
determining whether a Franks hearing is appropriate [Id.].
Nothing in McCarley-Connin indicates that a reviewing judge is limited to the four
corners of the search warrant affidavit when evaluating whether a defendant has established
that the affiant made false statements or omitted information with intention to mislead in
the affidavit for purposes of a Franks showing. 	Instead, McCarley-Connin holds that
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review of a probable cause finding is limited to the facts contained within the search
warrant affidavit. 148 F.4th at 815. And, in fact, McCarley-Connin characterizes Franks
challenges as an “exception” to the “four-corners principle,” stating that “[a] defendant
may rebut the presumption for a validly issued warrant by alleging that an affidavit was
perjured[.]” 	Id. at 816. 	Indeed, common sense dictates that a court must necessarily
consider information outside of the search warrant affidavit when analyzing whether a
defendant has made the preliminary showing required for a Franks hearing. 	How else
could a court determine that statements in the affidavit were false or information omitted
at all, much less with an intent to mislead? That common-sense principle plays out in this
case: in attempting to make the requisite showing for a Franks hearing, defendants have
asked the Court to consider information outside of the four corners of the affidavit, such as
the copies of prescriptions and other information about the FBI’s investigation of APS that
were omitted from the affidavit. 	The Court finds no error in the magistrate judge’s
consideration of evidence outside the search warrant affidavit in evaluating the Franks
challenge, and defendants’ objection is thus OVERRULED.
3. 	NP Manning
In his affidavit, Agent Valero stated that on February 20, 2024, agents interviewed
NP Manning and showed her a copy of one of the prescriptions for a topical pain cream
where she was listed as the prescriber [Doc. 119-1 ¶ 49]. 	NP Manning confirmed her
selection, item 1, included Diclofenac, Baclofen, Cyclobenzaprine, and Ketoprofen, but
clarified that the “add-ons” and “substitutions” written on the form were not done by her
and were not in her handwriting [Id.]. The affidavit then included a copy of the prescription
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at issue [Id. at 14]. 	The affidavit relayed that NP Manning told agents that she would
choose a pain cream option listed on the supplied form and her medical assistant would
then fax the prescription to RHP [Id. ¶ 50].
As noted previously, defendants argue in their reply brief, in response to the
government’s reliance on NP Manning’s prescription in its briefing, that NP Manning’s
prescription constitutes another ground for a Franks hearing [Doc. 115, p. 6]. Specifically,
defendants assert that “Agent Valero deliberately and intentionally DELETED the fax
transmission line from the prescription . . . that is depicted in his affidavit” [Id.
(emphasis in original)]. Thus, defendants contend that the FBI’s search warrant application
was based on documents Agent Valero “doctored and tampered with to conceal the truth”
[Id.]. 	Defendants note that the fax transmission line was included in the document RHP
produced to Humana as part of the audit, and was included on the copy of the prescription
the FBI showed NP Manning during her interview in February 2024, but was removed
from the version included in the search warrant affidavit [Id.]. Defendants also argue that
Agent Valero never mentioned in his affidavit that the prescription had been faxed to RHP
by Dr. Jack Scariano’s practice, but rather, Agent Valero falsified a new document that
would conceal any reference to that fact [Id. at 6–7].
At the suppression hearing, the government argued that defendants’ argument about
the fax header completely misses the point of what the evidence suggests and inclusion of
the fax header would not prove anything [Sealed Doc. 147, p. 41]. The government argued
that the point of including the prescription in the affidavit is that the prescriber said that
what was on that document was not authorized by her [Id. at 41–42].
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Defendants responded that the inclusion of an altered document was an “affirmative
misrepresentation” for which Agent Valero should be required to answer questions [Id. at
53]. 	Defendants state that the whole thrust of the affidavit was that RHP and associated
individuals were fraudulently billing “out of thin air,” thus, the omission of a fax
transmission line demonstrating that the prescription had in fact been faxed to RHP
undercuts the inference Agent Valero was asking Judge Poplin to draw [Id. at 55].
Defendants contend that this omission was deliberate and purposeful [Id.].
In the R&R, the magistrate judge concluded that, despite the omission of the fax
transmission line from the prescription copy submitted with the affidavit, the affidavit
makes clear that the prescription was faxed from NP Manning’s place of business to RHP
by a member of NP Manning’s staff [Doc. 204, p. 58]. Thus, Agent Valero did not falsely
represent that the prescription did not exist or was forged by RHP [Id. at 59]. 	The
magistrate judge also found that the omission of the fax transmission line was not material
to probable cause, given that the affidavit stated that NP Manning’s prescriptions were
faxed to RHP by her medical assistant [Id.].
In their objections, defendants reiterate that the affidavit contains a prescription
signed by NP Manning that was altered to remove the facsimile transmission line from that
document 	[Doc. 	212, 	pp. 	10–11]. 	Defendants 	contend 	that 	the 	magistrate 	judge
misunderstood the significance of the altered prescription [Id.]. First, defendants contend
that the magistrate judge did not realize that Agent Valero pulled the original prescription
from Humana’s 2020 audit file [Id. at 11]. Rather, the magistrate judge erroneously found
that “[l]ater in the investigation . . . Agent Valero had additional evidence beyond the two
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audits, particularly the information from NP Manning” [Id. (citing Doc. 204, p. 54)]. But,
contrary to the magistrate judge’s understanding, Humana had audited NP Manning’s
prescription four years earlier, resulting in no findings [Id.]. Second, defendants argue that
because Agent Valero obtained a copy of the faxed prescription from Humana’s audit file,
it was impossible to tell whether the notations in the “add on/substitution” section of the
prescription were made before or after the prescription was faxed [Id. at 11–12]. 	When
interviewed, NP Manning confirmed that she had initialed the prescriptions to authorize
RHP to “substitute based on insurance coverage or limitations” [Id. at 12]. 	Thus, rather
than establishing a “prescriber denial,” NP Manning’s interview confirmed that RHP was
authorized to dispense the medication and had done nothing wrong [Id.].5
5 In a footnote, defendants argued that the magistrate judge failed to acknowledge several
other ways in which NP Manning’s interview directly contradicted Agent Valero’s statements
[Doc. 212, p. 12 n. 10]. 	Specifically, defendants assert that NP Manning said that RHP’s
pre-printed prescriptions were “similar” to those used by another compounding pharmacy, MD
Pharmacy, contrary to Agent Valero’s conclusory statement that such forms are not common-place
in legitimate medicine [Id.]. Second, NP Manning told the FBI that she had been instrumental in
moving the pain cream prescriptions to RHP, contradicting the FBI’s suspicions of an improper
referral relationship between Dr. Scariano and RHP [Id.]. 	Third, NP Manning prescribed pain
creams as alternatives to opioids, often following other therapies [Id.]. Finally, NP Manning stated
that patients benefited from the therapies [Id.].
The government responds that the fact that RHP’s pre-printed prescriptions may have been
similar to those used by another pharmacy does not contradict Agent Valero’s statement that such
forms are not common-place in legitimate medicine [Doc. 234, p. 6]. The government argues that
defendants do not identify any specific statement in the affidavit contradicted by NP Manning’s
statement that she was “part of the decision makers in moving the pain cream prescriptions to
RHP,” but, regardless, that decision does not preclude “an improper referral relationship between
Dr. Scariano and RHP” [Id. at 7]. Finally, the government asserts that the fact that NP Manning
may have prescribed pain creams as an alternate to opioids or that patients may have benefited
from them is irrelevant to whether someone at RHP altered her prescriptions to add additional
high-reimbursement medications [Id.].
The Court notes that, to the extent that defendants seek to raise these arguments as
additional objections to the R&R, including them in a footnote to the objections is not procedurally
proper and does not sufficiently notice the Court of their objections. Moreover, despite a diligent
review of the entire record in this case, it does not appear that defendants raised these specific
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The government responds that there is no evidence that Agent Valero intended to
conceal the fact that the prescription had been faxed, nor does that fact have any bearing
on the probable cause analysis [Doc. 234, pp. 5–6]. As to defendant’s argument that the
prescription at issue was included in the Humana audit file, the “additional evidence” the
magistrate judge referred to was NP Manning’s 2024 statement to law enforcement that the
prescription had been altered by another hand [Id. at 6]. 	The government contends that
defendants have not shown that the magistrate judge “misunderstood” anything [Id.].
Third, the government disputes defendants’ assertion that NP Manning’s interview
confirmed RHP was authorized to dispense the medication and had done nothing wrong
and directly contradicted Agent Valero’s statements [Id.]. The government notes that the
portion of the prescription purporting to authorize RHP to “substitute based on insurance
coverage or limitations” was clearly depicted in the search warrant affidavit, not concealed
[Id.].
First, defendants misunderstand the magistrate judge’s statement that Agent Valero
later found evidence beyond the Humana and OptumRx audit files. 	Although the
magistrate judge says this new evidence was “the information from NP Manning” [Doc.
204, p. 54], the magistrate judge specifically cites to the FBI’s memorandum from an
interview of NP Manning in March 2024 in support of this statement [Id.]. Thus, it is clear
issues before the magistrate judge. Nonetheless, the Court agrees with the government’s position
as to each of these alleged inconsistencies and finds that defendants have not shown that the
affidavit was false or misleading in these respects. Therefore, any objections on these grounds are
OVERRULED.
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that the “additional evidence beyond the two audits” the magistrate judge was referencing
was NP Manning’s interview, not NP Manning’s prescription. 	As a result, that NP
Manning’s prescription was included in the Humana audit is of no import for purpose of
the Franks analysis.
Additionally, although defendants contend that, because this prescription was pulled
from the Humana audit file, it is impossible to determine whether the alterations to the
prescription were made before or after the prescription was faxed to RHP, such proof of
when the alterations were made is not necessary for the purposes of establishing probable
cause. 	See Kaley v. United States, 571 U.S. 320, 338 (2014) (“Probable cause, we have
often told litigants, is not a high bar: It requires only the kind of fair probability on which
reasonable and prudent people, not legal technicians, act.” (internal quotation marks and
alterations omitted)); United States v. Campbell, 486 F.3d 949, 955 (6th Cir. 2007)
(“Probable cause . . . does not require any showing that the officer’s suspicions prove to be
correct or that they are more likely true than false.” (internal quotation marks omitted)).
Moreover, that the Humana audit, containing NP Manning’s prescription, resulted
in no findings is not relevant to the Franks analysis. 	Defendants cite no support for the
idea that the federal government is somehow precluded from using evidence collected in a
private company’s audit simply because that private audit resulted in “no findings.”
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Further, the Court agrees that omission of the fax transmission line from NP
Manning’s prescription was not material. 	The following is a reproduction of NP
Manning’s prescription that was provided as part of the Humana audit:
[Doc. 123-1, p. 5].
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During her interview, NP Manning was shown the following version of the
prescription:
[Doc. 123-2, p. 6]. 	Of note, the blue markings on this version of the prescription were
made by NP Manning during the course of her interview [Id. at 3].
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The following version of the prescription was included in Agent Valero’s search
warrant affidavit:
[Doc. 119-1, p. 14].
Defendants correctly state that this version of the prescription does not include the
fax transmission line, which indicated that the prescription was faxed to RHP on
“02/25/2020” at “02:20PM” from “BETTER HEALTH” [Compare Doc. 123-1, p. 5; and
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Doc. 123-2, p. 6, with Doc. 119-1, p. 14]. But defendants have provided no evidence that
this omission was made with the intent to mislead. First, it appears most likely that the fax
transmission line was inadvertently omitted when the heading indicating that this was a
prescription for patient “VK” was added [See Doc. 119-1, p. 14]. And, despite defendants’
allegations that there is evidence of manipulation of the document from the fact that it is
“cock-eyed,” [Doc. 212, p. 11], the Court notes that all three versions of the prescription
appear to be “cock-eyed,” and this does not suggest any intent to mislead by Agent Valero.
Moreover, as Judge McCook concluded, there is no indication that Agent Valero intended
to mislead the issuing judge about the fact that this prescription was faxed to RHP, as, on
the same page of the affidavit as this copy of NP Manning’s prescription, Agent Valero
relayed NP Manning’s statement that her practice was to choose a pain cream listed on the
supplied form and her medical assistant “would then fax the prescription over to RHP”
[Doc. 119-1 ¶ 50].
Finally, to the extent defendants contend that the prescription is not a true prescriber
denial because NP Manning confirmed that she authorized substitutions based on insurance
coverage or limitations, that information was contained on the face of the prescription
included in the search warrant affidavit, and was therefore presented to the issuing
magistrate judge. 	To the extent that defendants are now asserting that NP Manning’s
prescription does not support a finding of probable cause for this reason, the Court
concludes that NP Manning’s statement that her prescription was altered by someone other
than herself, combined with the other evidence presented in the affidavit, was sufficient to
support a finding of probable cause.
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For these reasons, the Court finds that defendants have not shown that Agent Valero
acted with an intent to mislead in omitting the fax header from this prescription in the
search warrant affidavit. Accordingly, defendants’ objections regarding NP Manning are
OVERRULED.
4. 	Intent to Mislead as to Waiver of Patient Copays
In the search warrant affidavit, Agent Valero alleged, among other things, that there
was probable cause to believe that RHP had engaged in an unlawful scheme to waive
patient copays in violation of the Anti-Kickback Statute [Doc. 119-1 ¶ 6]. 	According to
Agent Valero, Medicare requires providers, including pharmacies, to collect copayments
from beneficiaries prior to or soon after the service or item is provided [Id. ¶ 27]. Agent
Valero stated that it is a felony for a provider to routinely waive copayments “absent
specific exceptions” [Id. ¶ 28 (citing 42 U.S.C. § 1320a-7b(b) and Medicare Claims
Processing Manual, Ch. 23, § 80.8.1)]. 	The affidavit states that RHP submitted 3,533
claims for keto10/1mit2/dico1% pain cream between August 27, 2019, and December 29,
2023, but did not collect a copayment on 2,191 of those claims [Id. ¶ 86]. Agent Valero
also stated that “[w]itnesses told agents that RHP did not collect copays from them” [Id.
¶ 88]. Specifically, patient A.B. said they “did not remember” paying a copay for the pain
cream [Id. ¶ 88(a)]. Additionally, patient D.N. said they “could not recall” paying a copay
for the pain creams [Id. ¶ 88(b)].
In their motion to suppress, defendants argue that, in hopes of finding evidence of
bribes paid by RHP to prescribers, the FBI “concocted a ‘kickback’ theory that would get
them in the door,” namely, the waiver of patient copays [Doc. 89, pp. 19–20]. 	First,
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defendants argue that Agent Valero claimed that, when patients incur a copay, Medicare
requires pharmacies to collect them, but this is an inaccurate statement of law [Id. at 20].
Instead, the U.S. Department of Health and Human Services, Office of Inspector General
(“OIG”) has long permitted providers to waive patient copays based on an individualized
assessment of financial need [Id.]. 	Second, defendants argue that Agent Valero claimed
that data from RHP’s internal payment system showed RHP had not collected patient
copays on 62% of its claims for a particular medication covered by a Medicare prescription
drug plan, but this is because no copayments were due, not because RHP waived collection
to bribe patients [Id.]. Defendants contend that Agent Valero “failed to articulate even the
most rudimentary understanding of how co-insurance for Medicare patients works” [Id.].
Defendants assert that Agent Valero stated that his allegations are based on a review of
RHP’s claims data from RHP’s pharmacy software, but that data shows that both A.B. and
D.N. paid copayments of $3.40 and $3.60, respectively, on various dates [Id. at 21].
Defendants assert that the FBI was clearly acting in bad faith [Id. at 22].
The government responds that defendants’ “hyper-technical” arguments are not a
proper basis for overturning a magistrate judge’s probable cause determination [Doc. 111,
p. 15].
In reply, defendants note that the government did not dispute that Agent Valero’s
sworn statements regarding RHP’s involvement in a scheme to violate the Anti-Kickback
Statute through co-pay waivers are, at minimum, inaccurate, which defendants contend is
dispositive of the suppression motion [Doc. 115, pp. 2, 4].
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At the first suppression hearing, the government asserted that a simple reading of
the paragraphs of the search warrant affidavit regarding copays shows that Agent Valero
did not make an untrue statement [Sealed Doc. 147, p. 45]. He recounted data about the
payment of copays but acknowledged that some patients paid copays [Id.]. Agent Valero
simply restated accurately what witnesses said and did not draw conclusions; defendants
have not shown any of that to be untrue [Id.].
Defendants replied that the FBI’s allegation is simply that there was not a collection
of copays but that is not the same as a waiver of copays [Id. at 57]. 	A waiver is an
affirmative action, and a simple failure to collect is not a violation [Id.].
In the R&R, the magistrate judge found that defendants failed to show that the
information in the affidavit regarding copays was false [Doc. 204, p. 61]. 	Agent Valero
acknowledged in the affidavit that RHP collected some copays [Id.]. The magistrate judge
determined that defendants’ citation to some copays paid by A.B. and D.N. did not negate
Agent Valero’s assertion that witnesses told agents that RHP did not collect copays from
them [Id.]. 	Additionally, data provided by defendants regarding copays collected from
A.B. and D.N. supports Agent Valero’s assertion that review of RHP’s payment system
shows RHP did not collect copays for two-thirds of prescriptions and refills for a pain
cream for patients with Medicare [Id.]. 	Specifically, the magistrate judge noted that
defendants’ own chart showed that A.B. did not pay a copay two-thirds of the time, and
D.N. did not pay a copay a little less than one-half of the time [Id. at 61–62]. 	Thus, the
magistrate judge concluded that the affidavit showed that RHP regularly, not occasionally,
waived copays for this pain cream [Id. at 62].
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Turning to defendants’ arguments regarding exceptions to Medicare’s requirement
to collect copays, the magistrate judge stated that, because Agent Valero alleged routine
waiver of copays, the exception to the copay requirement defendants cite would not apply
[Id.]. 	Moreover, the magistrate judge noted that courts must review probable cause
findings in a “commonsense” not “hypertechnical” manner, and defendants’ citation to the
exception permitting copay waivers did not persuade the magistrate judge that Agent
Valero’s statements were false, much less deliberately or recklessly so [Id.].
Finally, the magistrate judge concluded that the affidavit provided probable cause
for violation of the Anti-Kickback Statute by showing that RHP routinely did not collect
copays for Medicare patients [Id. at 63–64]. 	The magistrate judge noted that the Anti-
Kickback Statute expressly states actual knowledge or specific intent by the entity is not
required [Id. at 64].
a. 	Misinterpretation of Anti-Kickback Statute
In their objections, defendants argue that the magistrate judge misinterpreted the
law applicable to a violation of the Anti-Kickback Statute, finding that “actual knowledge
of specific intent by the entity is not required” [Doc. 212, p. 13 (citing Doc. 204, p. 64)].
Defendants argue that this is an incorrect statement of law, as the government must prove
that a defendant (1) knowingly and willfully offered or paid remuneration (2) to induce that
person to refer an individual (3) for the furnishing of any item or service for which payment
may be made under a federal healthcare program [Id.]. Agent Valero failed to allege any
facts that would give rise to probable cause to believe RHP violated the Anti-Kickback
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Statute [Id. at 14].6 The “remuneration” at issue, i.e., the copay, was not paid to a “person
to refer an individual” for anything [Id.]. In fact, the Anti-Kickback Statute requires that
the unlawful remuneration be paid to the physician, who is the healthcare decisionmaker
in a position to make a “referral” of the patient [Id. (citing United States v. Montgomery,
No. 20-5891, 2022 WL 2284387 (6th Cir. June 23, 2022))]. Defendants argue that research
has revealed no case law in which anyone has been criminally prosecuted for patient copay
waivers standing alone, likely because there are a number of scenarios in which the law
authorizes a provider to waive patient co-pays [Id.]. Further, the search warrant does not
allege any facts establishing that RHP violated the Anti-Kickback statute “knowingly and
willfully,” that is, telling a patient that RHP would waive the applicable copay if the patient
used the pharmacy to fill his or her prescription [Id.].
The government responds that defendants incorrectly assert that the magistrate
judge misinterpreted the applicable law, as the magistrate judge directly and accurately
quoted the Anti-Kickback Statute’s “knowingly and willfully” requirement, as well as
statutory language providing that “actual knowledge of this section or specific intent to
commit a violation” is not required [Doc. 234, p. 7]. The government also asserts that the
statute does not require that the unlawful remuneration be paid to the physician, and, in
fact, the case to which defendants cite specifically states that the statute can reach
non-physicians as well [Id. at 7–8 (citing United States v. Sorenson, 134 F.4th 493, 500
6 Defendants’ arguments in this regard are a challenge to probable cause, rather than a
Franks challenge. 	Nonetheless, the Court will address this argument here to follow the
organization of the objections [See Doc. 212, pp. 13–14].
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(7th Cir. 2025))]. Moreover, the statute does not require RHP to have told a patient RHP
would waive the applicable copay, but rather, covers offers of remuneration made directly
or indirectly [Id. at 8].
“To establish a violation of the anti-kickback statute, the government must prove
that a defendant (1) knowingly and willfully offered or paid remuneration (2) to induce that
person to refer an individual (3) for the furnishing of any item or service for which payment
may be made under a federal healthcare program, 42 U.S.C. § 1320a-7b(b)(2), or that a
defendant (1) knowingly and willfully solicited or received remuneration (2) in return for
referring an individual to a person (3) for the furnishing or arranging for the furnishing of
any item or service for which payment may be made under a federal healthcare program,
42 U.S.C. § 1320a-7b(b)(1).” Montgomery, 2022 WL 2284387, at *12.7
First, to the extent that defendants are asserting that the magistrate judge did not cite
these elements of an offense under the Anti-Kickback Statute, that assertion is belied by
the record. In the R&R, the magistrate judge specifically quoted the direct language of the
Anti-Kickback Statute, including the mens rea language, requiring that the acts be
committed 	“knowingly 	and 	willfully” 	[Doc. 	204, 	p. 	63 	(quoting 	42 	U.S.C.
§ 1320a-7b(b)(1)(A)-(B)). Additionally, to the extent that defendants contest the accuracy
of the magistrate judge’s statement that “the Anti-Kickback Statute expressly states the
7 Notably, defendants quote only the portion of this sentence relating to the elements of a
violation of § 1320a-7b(b)(2) [Doc. 212, p. 13]. But the affidavit generally alleges probable cause
of a violation of the Anti-Kickback Statute, citing § 1320a-7b, and no specific subsection [Doc.
119-1 ¶¶ 4, 6].
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actual knowledge or specific intent by the entity is not required,” [Doc. 204, p. 64], the
magistrate judge cites and accurately quotes subsection (h) of the Anti-Kickback Statute.
Compare Doc. 204, p. 64, with 42 U.S.C. § 1320a-7b(h) (both stating that “[w]ith respect
to violations of this section, a person need not have actual knowledge of this section or
specific intent to commit a violation of this section”). Defendants have not shown how the
magistrate judge’s quotation of a subsection of the Anti-Kickback Statute is an incorrect
statement of the law.
Defendants allege that the Anti-Kickback Statute requires that the unlawful
remuneration be paid to the physician, citing Montgomery, Sorenson, and United States v.
Khalil, No. 22-cr-20200, 2025 WL 1921758 (E.D. Mich. July 11, 2025) [Doc. 212, p. 14]. 8
First, nothing in the Montgomery decision stated that remuneration must be paid by
physicians, or, indeed, addressed remuneration at all beyond stating the elements of a
violation of the Anti-Kickback Statute. Montgomery, 2022 WL 2284387, at *12.9 Next,
8 	Notably, at the suppression hearing, defendants appeared to have taken a different
position, stating that “if there were a showing that Rocky Hill Pharmacy deliberately, knowingly
and intentionally waived patient co-pays for government program beneficiaries, that, in theory, is
sufficient to allege a crime under the anti-kickback statute” [Sealed Doc. 147, p. 107; see also id.
at 108 (“[I]f he had been able to support the allegations of waiver, deliberate and knowing waivers
of co-pay, arguably that does constitute a federal violation, a specified federal crime”)]. To the
extent that defendants now contest that copay waivers could not constitute a violation of the
Anti-Kickback Statute because the remuneration would not be paid to providers, any error in the
R&R could be deemed invited error. 	See United States v. Akridge, 62 F.4th 258, 264 (6th Cir.
2023) (“[A] party may not generally complain on appeal of errors that he himself invited or
provoked the court to commit” (internal quotation marks and alterations omitted). Nonetheless,
the Court finds no error in the R&R’s application of the Anti-Kickback Statute.
9 While defendants allege that they are aware of no case where “anyone has been criminally
prosecuted for patient copay waivers standing alone” [Doc. 212, p. 14], the Court does note that,
in Montgomery, the Sixth Circuit found ample mens rea to support a violation of the Anti-Kickback
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rather than supporting defendants’ assertion that remuneration must be paid by physicians,
the Sorenson court explicitly stated the opposite: “The statute can reach non-physicians, as
well, although such cases seem to be much less common among those prosecuted.” 	134
F.4th at 500.
In Khalil, the Eastern District of Michigan stated that, for purposes of the
Anti-Kickback Statute, “the person receiving the kickback must be the same person who
makes the referral[.]” 2025 WL 1921758, at *5. But that court also noted that “courts have
shown some flexibility in interpreting the language of the [Anti-Kickback Statute], to
ensure that the statute is not circumvented through a payment to a non-physician that
produces a referral where the ‘payee leverage[s] fluid, informal power and influence over
healthcare decisions.” Id. (citing Sorenson, 134 F.4th at 599). And “[s]everal cases have
endorsed that reading of the statute, to bring within its reach kickbacks that produce
referrals through the use of undue influence or other improper conduct over third parties.”
Id. The court then noted that this approach was recently endorsed by the Fifth Circuit in
United States v. Cockerell, 140 F.4th 213 (5th Cir. 2025). 	Id. at 6. 	The Khalil court
summarized Cockerell as follows:
There, the court affirmed an [Anti-Kickback Statute] conviction of a
marketer who was paid commissions based on medicinal cream prescriptions
that he secured from physicians, which were billed to a federal insurance
program. 	Although the defendant was a marketer who did not make
healthcare decisions, he was culpable because he intended to induce referrals
from physicians who prescribed the cream by “intend[ing] improperly to
influence those who make healthcare decisions on behalf of patients.” 	He
‘showered 	physicians 	with 	lavish 	vacations 	and 	expensive 	dinners 	to
Statute, 	citing, 	amongst 	other 	facts, 	that 	defendant 	was 	helping 	pay 	customers 	copays.
Montgomery, 2022 WL 2284387, at *12.
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encourage them to continue writing prescriptions . . .” – which ‘incentives
were crucial,” because if the doctors were not paid, the defendant’s company
“would have no business.”
Id. (internal citations omitted). In Khalil, the district court noted that the government had
eschewed any theory that the markets had improper influence over physicians, and thus,
the requirements of the Anti-Kickback Statute were not established. Id. at 7.
Ultimately, Khalil’s holding does not support a finding that there was insufficient
probable cause for a violation of the Anti-Kickback Statute in the search warrant affidavit
in this case. 	Notably, the search warrant affidavit does contain some allegations over
improper influence over physicians. 	The affidavit recounted that Sydney Goodson, a
former pharmacy technician at RHP, told law enforcement that RHP had a sales
representative that went to various doctor’s offices and took doctors to lunch to “talk about
the pain contracts” [Doc. 119-1 ¶¶ 73, 75]. The affidavit also recounted that RHP’s own
website advertised “Lunch & Learn for Providers,” in which they promised to “cater a nice
meal at [the provider’s] office” to “discuss ways that we can work together to help your
patients” [Id. ¶ 80]. 	Given this information, the Court finds that, at the search warrant
stage, there was sufficient evidence to find probable cause of a violation of the
Anti-Kickback Statute.
Accordingly, the Court finds that the magistrate judge did not misinterpret the
requirements 	of 	the 	Anti-Kickback 	Statute, 	and 	defendants’ 	objection 	is 	thus
OVERRULED.
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b. 	Failure to Establish Purported Waived Copays Were Due
Defendants next argue that, under Medicare, sometimes a patient is obligated to pay
a copay, and other times not [Doc. 212, p. 14]. But a copay must be due to be waived [Id.].
Nonetheless, Agent Valero’s affidavit never alleged that patient copays were due on any
of the 2,191 claims at issue [Id.]. Defendants allege that, in fact, Agent Valero knew, based
on his review of RHP’s pharmacy data, that none of the 2,191 claims had a copay obligation
[Id. at 15].
The government responds that defendants’ suggestion that a copay may not have
been due on the 2,191 claims mentioned in the affidavit is no more than a statement that
the facts set forth in the affidavit might have an innocent explanation [Doc. 234, p. 8]. And
probable cause does not require officers to rule out innocent explanations for suspicious
facts [Id. (citing United States v. Tagg, 886 F.3d 579, 586 (6th Cir. 2018))]. Further, for
purposes of the Franks inquiry, defendants have not identified any false statements in the
affidavit in this regard [Id.].
As an initial matter, defendants’ argument as to whether copays were due does not
appear to relate to their request for a Franks hearing, but rather, goes to probable cause
only, as defendants do not allege that Agent Valero’s statement that records showed RHP
did not collect a copayment on 2,191 claims is false or misleading. 	Rather, defendants
contest whether an inference of criminal conduct can be drawn from such statement.
Ultimately, the Court agrees with the government that defendants’ argument amounts to an
assertion that there was an innocent explanation for these suspicious facts—namely, that
copays were not collected on these claims because copays were not due, rather than because
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copays were waived. 	See United States v. Tagg, 886 F.3d 579, 586 (6th Cir. 2018)
(“[P]robable cause does not require officers to rule out a suspect’s innocent explanation for
suspicious facts.” (internal quotation marks omitted)). Accordingly, defendants’ objection
in this regard is OVERRULED.
c. 	Routine Waiving of Copays Based on Plan/Medication
Next, defendants argue that the magistrate judge erred in finding that the FBI had
shown that RHP “routinely” did not collect Medicare copays [Doc. 212, p. 15]. Instead,
Agent Valero’s allegations relate exclusively to a single Medicare Part D plan offered by
United Healthcare under the Secure Horizons brand [Id.]. Defendants suggest that if RHP
were “regularly” waiving copays for Medicare beneficiaries, it would not make sense to
limit that practice to one drug and one plan [Id. at 15]. Additionally, contrary to his false
waiver allegations, Agent Valero knew from the OptumRx and Humana audits that RHP
had not waived patient copays on any of the audited prescriptions [Id.]. 	Both audit files
contained the prescription labels with the patients’ insurance information, any applicable
copay, and cashier receipts with copay charges and methods of payment [Id.]. 	Neither
audit found copay waivers; to the contrary, Humana’s audit expressly found “[a]ll member
that had a copay, paid the copay” [Id.]. Finally, defendants contend that the non-collection
of 3% of copays is hardly evidence of a “routine” practice to support probable cause that
RHP violated the Anti-Kickback Statute [Id.].
The government responds that, while defendants attach screenshots from RHP’s
data system listing “$0” as the copay “paid” on various prescriptions for A.B. and D.N.,
this is not inconsistent with A.B. and D.N.’s representation that they did not pay copays
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[Doc. 234, p. 8]. 	Nor is it clear from those screenshots why no copay was collected,
whether it was that no copay was due or whether RHP waived it in some fashion [Id. at
8–9]. 	Moreover, even if the screenshots established that no copay was due for these
prescriptions, defendants have provided no reason to think that Agent Valero was aware of
that information [Id. at 9].
First, defendants have not shown that Agent Valero’s affidavit contained any false
statement regarding copay waivers. Defendants reference “false waiver allegations,” but,
beyond the title of the heading itself (“Co-pay Waivers”) nothing in the section of the
affidavit recounting non-collection of copays directly uses the phrase “waiver” [Doc.
119-1, p. 32]. Defendants seem to allege that Agent Valero’s inference of copay waivers
was inherently false because the OptumRx and Humana audits found no copay issues. But,
as discussed previously, defendants have provided no case law indicating that the federal
government is hamstrung by a private company’s audit findings in investigating potential
criminal violations. Moreover, it is not clear from defendants’ argument that all (or even
any) of the 2,191 claims referred to in the affidavit fell within the limited scope of the
OptumRx or Humana audits. 	Thus, defendants have not shown that Agent Valero knew
that none of the 2,191 claims for which no copay was collected had not been the subject of
a copay waiver, and thus, defendants have not made a substantial preliminary showing that
Agent Valero’s statements were false.
Turning to defendants’ challenge to probable cause, it is unclear how defendants’
assertion that the affidavit’s allegations relate only to a specific Medicare Part D plan
would affect the probable cause analysis. Defendants cite no law suggesting that routine
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waiver of copays would be permissible if limited to one specific Medicare plan. And, to
the extent defendants challenge this evidence by asserting that it would not make sense to
limit such “routine” behavior to a specific plan, this argument is well beyond the scope
when reviewing an issuing judge’s probable cause determination. 	See United States v.
Sanders, 106 F.4th 455, 461 (6th Cir. 2024) (“The district court must employ ‘great
deference’ when considering the issuing judge’s probable cause determination” and
“should ‘overturn that decision only if the [issuing judge] arbitrarily exercised’ the judge’s
authority.”); Tagg, 886 F.3d at 585–86 (noting that probable cause only requires a
probability or substantial chance of criminal activity, not an actual showing of such
activity, and officers are not required to rule out innocent explanations for suspicious facts).
Finally, as to defendants’ argument that the 2,191 claims are only approximately 3% of
their total claims, and therefore, any waiver is not “routine,” this argument misses the point
that the allegation forming probable cause is that defendants engaged in a scheme to waive
copays for a specific group, e.g., those covered by a specific Medicare plan.
For all these reasons, defendant’s objection is OVERRULED.
d. 	Misrepresented Claim Data10
Defendants contend that the magistrate judge’s finding that citation to some copays
paid by patients did not negate Agent Valero’s assertion that “witnesses told agents that
RHP did not collect copays from them” was clear error [Doc. 212, p. 16]. Defendants first
10 In this section of their objections, defendants also allege misrepresentative patient
information regarding patient M.U. 	However, because the discussion of patient M.U. does not
align with the other evidence regarding an alleged violation of the Anti-Kickback Statute,
discussed in this section, the Court will address it separately, infra.
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note that the patients only stated that they “did not remember” or “could not recall” paying
copays, not that “RHP did not collect copays” [Id.]. 	Second, defendants argue that the
data Agent Valero reviewed contains a summary of each claim and shows that the patients’
insurance required no copay on the dates in question [Id.]. Thus, defendants contend that
Agent Valero misrepresented that copays were “waived” even though he knew that no
copays were due on those claims [Id.].
The government responds that none of the statements pointed to by defendants
contradict what is in the affidavit, nor do they make the facts alleged any less suspicious
[Doc. 234, p. 9].
First, to the extent defendants point to language that patients A.B. and D.N. only
stated that they “did not [] remember” or “could not recall” paying copays to RHP, that
language from A.B. and D.N. is directly included on the face of the search warrant affidavit
[Doc. 119-1 ¶ 88]. Thus, there can be no allegation that Agent Valero intended to mislead
with these statements. Moreover, to the extent that defendants allege that Agent Valero’s
statement that “[w]itnesses told agents that RHP did not collect copays from them” is false,
because the examples provided are the statements from A.B. and D.N., even assuming this
discrepancy in phrasing could be deemed a “false statement,” the Court finds that Agent
Valero’s statement that witnesses said RHP did not collect copays is not necessary to a
finding of probable cause, as the direct statements of A.B. and D.N. would have supported
probable cause, regardless.
Second, as noted previously, Agent Valero did not state that A.B. and D.N.’s copays
were “waived.” He merely created such an inference by alleging that witnesses reported
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not paying copays to RHP. Accordingly, there is no false statement regarding waiver of
copays.
As 	to 	defendants’ 	argument 	regarding data 	showing 	copays 	were 	paid, 	the
magistrate judge directly addressed the documentation provided by defendants, finding that
it showed A.B. did not pay a copay two-thirds of the time, and D.N. did not pay a copay a
little less than one-half of the time [Doc. 204, pp. 61–62]. Defendants have not shown how
that assessment of the documentation was incorrect.
Moreover, Agent Valero never stated that A.B. and D.N. never paid copays.
Instead, Agent Valero merely repeats what A.B. and D.N. told law enforcement. 	And,
again, a Franks challenge cannot be used to contest the veracity of an informant’s
information. 	See McCarley-Connin, 148 F.4th at 816. 	Thus, the Court finds that
defendants 	have 	not 	made 	a 	substantial 	preliminary 	showing 	that 	Agent 	Valero’s
statements in this regard were false.
5. 	Misrepresentation of Patient Files Revealed After Briefing
Defendants contend that on June 24, 2025, after Defendant Haney filed her
supplemental brief, the government produced additional discovery that revealed further
misstatements by Agent Valero [Doc. 212, p. 17]. 	Specifically, in his affidavit, Agent
Valero claims that Dr. Scariano, through his attorney, produced the medical records of
certain patients and RHP submitted claims for a number of prescriptions for these patients,
but Dr. Scariano’s files did not include corresponding prescriptions for several claims [Id.].
The government’s June 24, 2025, production, however, clarified that Dr. Scariano did not
produce anything, and that, instead, an electronic medical records (“EMR”) service
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provider 	produced 	the 	files 	[Id.]. 	Defendants 	contend 	that 	this 	is 	a 	material
misrepresentation [Id. at 18]. Defendants suggest that it is possible Dr. Scariano switched
EMR providers, rendering the chart notes incomplete following the transition [Id.].
Additionally, the representation that Dr. Scariano had produced the records improperly
bolstered the reliability of those files [Id.]. Defendants suggest that, had the issuing judge
known that the production was not made by Dr. Scariano, she would have questioned
whether the FBI had access to the physical files, not simply whatever was uploaded to an
EMR [Id.].
The government responds that there is nothing inconsistent about the statements that
“Dr. Jack Scariano through his attorney . . . produced the medical records of some of his
patients, including patients M.U. and R.D.” and that medical charts were produced by
“Advanced MD, Jack E. Scariano, Jr. M.D.’s electronic medical records provider” [Doc.
234, pp. 9–10]. 	Moreover, aside from speculation that Dr. Scariano switched EMR
providers, defendants provide no reason to think that the source of Dr. Scariano’s records
would be material to the probable cause analysis [Id. at 10].
The two statements at issue are as follows. 	In the affidavit, Agent Valero stated:
“In relation to another case and in response to compulsory service, Dr. Jack Scariano,
through his attorney, D.E., produced the medical records of some of his patients” [Doc.
119-1 ¶ 59]. 	In a subsequent letter producing discovery, the government described the
discovery as: “the medical charts produced by AdvancedMD, Jack E. Scariano, Jr. M.D.’s
electronic medical records provider” [Doc. 212-5, p. 2]. 	Defendants essentially seem to
assert that Agent Valero’s statement that Dr. Scariano produced medical records was false
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because the medical records were actually produced by Dr. Scariano’s EMR provider. But
the statement in the affidavit is not “false” simply because it does not identify the EMR
service Dr. Scariano used to produce his patient files. And, regardless, even if the statement
was false, the Court finds that Agent Valero’s statement that Dr. Scariano produced the
files, versus a statement that an EMR provider produced the files, was not necessary to a
finding of probable cause. In other words, whether Dr. Scariano or Dr. Scariano’s EMR
provider produced the medical records is not material to the probable cause determination.
Accordingly, the Court finds that defendants have not shown that a Franks hearing is
warranted on this additional ground.
6. 	Patient M.U.
In the search warrant affidavit, Agent Valero noted that Dr. Jack Scariano produced
medical records of patients, including M.U. [Doc. 119-1 ¶ 59]. 	Agent Valero stated that
M.U.’s file contained visit date notes from February 28, 2018, to December 16, 2021 [Id.
¶ 60]. 	However, M.U.’s appointments scheduled for August 23, 2022, and January 10,
2023, were cancelled, and not attended by the patient, respectively [Id.]. 	M.U.’s patient
file also contained two RHP prescription sheets, one dated June 16, 2021, including
6 refills, and one undated, including 6 refills [Id. ¶ 61]. However, RHP submitted claims
for 6 separate prescriptions, each with a number of refills, for M.U. with Dr. Scariano listed
as the provider, including prescriptions on: (1) June 16, 2021, with 5 refills, (2) November
26, 2021, with 3 refills, (3) March 28, 2022, with 3 refills, (4) August 18, 2022, with
3 refills, (5) January 3, 2023, with 2 refills, and (6) April 13, 2023, with 5 refills [Id. ¶ 62].
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Agent Valero noted that these prescriptions were submitted by RHP despite the fact that
M.U. did not attend a patient appointment with Dr. Scariano after December 16, 2021 [Id.].
Agent Valero recounted that on January 23, 2024, the FBI interviewed M.U., who
stated that they had not been to an appointment with Dr. Scariano in 2 or 3 years [Id. ¶ 65].
M.U. stated that they had been prescribed a topical pain cream during a prior visit with
Dr. Scariano, and they received 2 or 3 bottles of the pain cream in the mail about every 30
days from RHP [Id.]. M.U. stated that the pain cream helped with cramps, but they did not
use it often, resulting in unused pain cream bottles [Id.]. Despite not needing all of the pain
cream received, the cream continued to arrive in the mail every 30 days through sometime
in 2023 [Id.].
In their objections, defendants argue that Agent Valero misrepresented the FBI’s
interview of patient M.U. by not disclosing that M.U. told the FBI that they were receiving
prescription “refills” and “never called RHP to cancel the prescription,” as well as that
M.U. “recently had the prescription transferred to Muncey’s Pharmacy,” which “helped
[them] sometimes when [they] would get cramps” [Doc. 212, pp. 16–17].
Notably, defendants did not raise these specific arguments in their motion to
suppress [Doc. 89]. 	However, at the first suppression hearing, defendants indicated that
they needed additional documentation regarding Dr. Scariano’s patient files [Sealed Doc.
147, p. 110]. 	The Court will presume that these arguments are based on subsequent
production of evidence and will address this argument in the first instance.
In support of their objections, defendants attached a copy of an FBI report from the
interview of M.U. on January 23, 2024 [Doc. 212-4]. That report contains four statements
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which defendants appear to allege were material omissions from the affidavit: (1) M.U.
stated that the pain creams “helped [them] sometimes when [they] would get cramps”;
(2) M.U. “recently had the prescription transferred to Muncey’s Pharmacy”; (3) M.U.
“never called RHP to cancel the prescription”; and (4) M.U. stated that their “refills
continued coming in the mail” [Id. at 2–3].
First, it is unclear how omission of the fact that M.U. believed the pain cream helped
with their cramps evidences any intent to mislead by Agent Valero. Indeed, it is unclear
how such information would be relevant to the probable cause determination at all. 	The
affidavit clearly indicates that Dr. Scariano’s file contained two prescriptions for the pain
cream for M.U. [Doc. 119-1 ¶ 62]. 	Accordingly, there appears to be no dispute that Dr.
Scariano did, at some point, find the pain cream appropriate for M.U., prescribed it to them,
and it would have been proper for RHP to dispense the pain cream to M.U. consistent with
that prescription. 	However, defendants cite no case law indicating that RHP would
somehow be authorized to submit additional claims for the pain cream for M.U., beyond
the refills authorized in those prescriptions, simply because M.U. benefitted from the pain
cream. Thus, M.U.’s statement that they benefitted from the pain cream is not material and
does not indicate that Agent Valero attempted to mislead the issuing judge.
Second, as to M.U.’s statement that they recently had the pain cream prescription
transferred to Muncey Pharmacy, this statement does appear to indicate that M.U. had an
ongoing prescription for the pain cream, beyond the two prescriptions contained in
Dr. Scariano’s file. But nothing in the report of M.U.’s interview indicates that the ongoing
prescription was from Dr. Scariano. Rather, the report simply reflects that M.U. “recently
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had the prescription transferred to Muncey’s Pharmacy” [Doc. 212-4, p. 2]. 	The Court
ultimately finds that the omission of M.U.’s statement that they had a prescription
transferred to another pharmacy does not evidence an intent to mislead on the part of Agent
Valero, nor is it material to probable cause.
Finally, to the extent that M.U. told the FBI that they never called RHP to cancel
the prescription, and that what they continued receiving in the mail were “refills,” these
statements do not undercut any of the information in the affidavit. The affidavit reflected
that RHP submitted six different prescriptions for M.U., each with a number of refills [Doc.
119-1 ¶ 62]. Accordingly, defendants have not shown any intent to mislead about the fact
that some of the pain creams M.U. received every 30 days were “refills.” 	Moreover,
defendants have not explained how the fact that M.U. did not call to cancel the prescription
would indicate any intent to mislead regarding the alleged discrepancy between the number
of prescriptions in Dr. Scariano’s file and the number of prescriptions submitted by RHP.
Accordingly, the Court finds that defendants have not made the required showing
for a Franks hearing as to these alleged omissions. Defendants’ objections are therefore
OVERRULED.
B. 	Probable Cause
The Court begins briefly with a reiteration of the legal framework set out by the
R&R regarding Fourth Amendment protection:
The Fourth Amendment protects individuals against unreasonable searches
or seizures of “their persons, houses, papers, and effects[.]” 	U.S. Const.
amend IV. It requires that law enforcement have probable cause and obtain
a search warrant before searching a residence or a cellular telephone. Collins
v. Virginia, 584 U.S. 586, 593 (2018) (“At the [Fourth] Amendment’s very
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core stands the right of a man to retreat into his own home and there be free
from unreasonable governmental intrusion.” (citation omitted & modified));
Riley v. California, 573 U.S. 373, 400 (2014) (holding the search of a cell
phone requires a search warrant). . . .
The Fourth Amendment protection against warrantless searches extends to
“commercial premises,” Mancusi v. DeForte, 392 U.S. 364, 367 (1968), but
“[a]n expectation of privacy in commercial premises . . . is different from,
and indeed less than, a similar expectation in an individual’s home,” New
York v. Burger, 482 U.S. 691, 700 (1987) (citation omitted). An individual
enjoys the protection of the Fourth Amendment in his or her place of business
if “the area was one in which there was a reasonable expectation of freedom
from governmental intrusion.” DeForte, 392 U.S. at 368 (citation omitted).
“The business[wo]man, like the occupant of a residence, has a constitutional
right to go about h[er] business free from unreasonable official entries upon
h[er] private commercial property.” See v. Seattle, 387 U.S. 541, 543 (1967);
see also Burger, 482 U.S. at 699 (holding that the owner of a business in a
closely-regulated industry has a reduced expectation of privacy); Dow Chem.
Co. v. United States, 476 U.S. 227, 236 (1986) (observing “Dow plainly has
a reasonable, legitimate, and objective expectation of privacy within the
interior of its covered buildings”); c.f., Autoworld Specialty Cars, Inc. v.
United States, 815 F.2d 385, 388–89 (6th Cir. 1987) (holding a defendant
had no expectation of privacy in an auto showroom open to the public to
browse and make purchases).
[Doc. 204, pp. 36–37].
As stated previously, when evaluating a search warrant, the Court “must employ
‘great deference’ when considering the issuing judge’s probable cause determination.”
Sanders, 106 F.4th at 461 (quoting United States v. Christian, 925 F.3d 305, 311–12 (6th
Cir. 2019) (en banc)). “[I]t is of no moment whether the district court would have likewise
issued the same warrant[;]” rather, “what matters is whether the issuing judge had a
‘substantial basis for concluding that a search would uncover evidence of wrongdoing.’”
Id. (quoting Illinois v. Gates, 462 U.S. 213, 236 (1983) (cleaned up)). And in making this
determination, the Court considers the information that was before the issuing judge, i.e.,
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“the four corners of the affidavit[.]” United States v. Brooks, 594 F.3d 488, 492 (6th Cir.
2010).
The 	supporting 	affidavit 	to 	a 	search 	warrant 	“should 	be 	reviewed 	in 	a
commonsense—rather than a hypertechnical—manner, and the court should consider
whether the totality of the circumstances supports a finding of probable cause, rather than
engaging in line-by-line scrutiny.” United States v. Woosley, 361 F.3d 924, 926 (6th Cir.
2004) (citing United States v. Greene, 250 F.3d 471, 479 (6th Cir. 2001)); accord Gates,
462 U.S. at 235–36. In District of Columbia v. Wesby, the Supreme Court further explained
that a “divide-and-conquer approach is improper” because “[a] factor viewed in isolation
is often more ‘readily susceptible to an innocent explanation’ than one viewed as part of a
totality.” 	583 U.S. 48, 62 (quoting United States v. Arvizu, 534 U.S. 266, 274 (2002));
accord Taggs, 886 F.3d at 585–86. Ultimately, the “‘totality of the circumstances’ requires
courts to consider ‘the whole picture.’” 	Wesby, 583 U.S. at 60 (quoting United States v.
Cortez, 449 U.S. 411, 417 (1981)); accord Christian, 925 F.3d at 312 (noting that courts
are required “to look holistically at what the affidavit does show, instead of focusing on
what the affidavit does not contain, or the flaws of each individual component of the
affidavit”).
The Court further notes that, time and time again, the Supreme Court has
emphasized that “[p]robable cause ‘is not a high bar’” to clear. 	Wesby, 583 U.S. at 57
(quoting Kaley, 571 U.S. at 338); accord Christian, 925 F.3d at 311 (describing the
character of the probable cause standard as “undemanding”). 	Probable cause “requires
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only a probability or substantial chance of criminal activity, not an actual showing of such
activity.” Gates, 462 U.S. at 243 n.13.
As a preliminary matter, defendants allege that the magistrate judge erroneously
relied on challenged portions of the warrant to uphold the probable cause determination
[Doc. 212, p. 22]. Defendants state that the magistrate judge was thus obligated to exclude
challenged materials from the probable cause analysis [Id. (citing United States v. Wright,
635 F. App’x 162, 169 (6th Cir. 2015); United States v. Knox, No. 3:19-cr-65, 2020 WL
7405796 (E.D. Tenn. Dec. 17, 2020))].
The government responds that the magistrate judge was not required to ignore every
portion of the affidavit that defendants challenged [Doc. 234, p. 12]. Rather, only after a
defendant makes a substantial preliminary showing that a false statement knowingly and
intentionally, or with reckless disregard for the truth, was included in the affidavit, that the
court must reconsider the affidavit without the disputed portions [Id.]. 	Absent a finding
that the affidavit included an intentional false statement or material omission, the mere fact
that defendants challenged certain evidence as false and misleading does not require the
Court to ignore those portions of the affidavit [Id.].
Defendants’ argument appears to presuppose that the Court will find that they have
made a substantial preliminary showing that false statements were made in the search
warrant affidavit. The case law that defendants cite specifically states that, under Franks,
a defendant is entitled to a hearing after making a substantial preliminary showing that a
false statement knowingly and intentionally, or with reckless disregard for the truth, was
included by the warrant in the affidavit, and that, “[i]f this burden is met, the court must
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reconsider the affidavit without the disputed portions and determine whether probable
cause still exists.” 	Wright, 635 F. App’x at 169 (emphasis added). 	Similarly, the
undersigned’s decision in Knox hinged on the fact that the magistrate judge had determined
that the defendant had met his burden on the first prong of Franks. 2020 WL 7405796, at
*4–5.
Here, the Court has now concluded that, with the exception of the prescriber denials
from NP Armstrong and NP Bertram, defendants have not made a substantial preliminary
showing of a false statement or an omission made with the intent to mislead. Accordingly,
the Court is not required to excluded all challenged evidence from the affidavit in
determining whether probable cause existed to support the search warrant.
Turning to the probable cause determination, defendants raise a slew of objections,
much of it highly technical, to each individual allegation in the search warrant affidavit
[Doc. 212, pp. 19–21].
The government responds that judges are not to engage in an excessively technical
dissection of the record when determining probable cause, and facts must be considered
together, not apart [Doc. 234, p. 11]. 	Additionally, the government argues that probable
cause only requires a probability or substantial chance of criminal activity, not an actual
showing of such activity [Id. at 11–12]. Thus, probable cause does not require ruling out
innocent explanations for suspicious facts, but rather, the inquiry involves the degree of
suspicion that attaches to particular types of noncriminal acts [Id. at 12].
First, the Court declines to engage in a line-by-line scrutiny of the search warrant
affidavit to determine whether each individual allegation supported a finding of probable
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cause. See Woosley, 361 F.3d at 926 (stating that the “court should consider whether the
totality of the circumstances supports a finding of probable cause, rather than engaging in
line-by-line scrutiny”). And even if some of the parts of the affidavit might be criticized,
the Court finds that, after considering the facts together and paying great deference to the
issuing judge, the search warrant for RHP was supported by probable cause. 	As Judge
McCook stated in the R&R:
Agent Valero’s affidavit . . . shows that multiple providers from multiple
practices denied writing prescriptions for compounded medications filled at
RHP. NP Manning stated that a prescription her practice faxed to RHP was
altered in someone else’s handwriting, and she did not authorize RHP to
modify her prescriptions. Dr. Scariano’s patient M.U. continued to receive
monthly refills of a pain cream from RHP years after M.U.’s last appointment
with Dr. Scariano. Agent Valero, based on his training and experience, stated
that pharmacies benefit financially from submitting forged prescriptions or
altering prescriptions to substitute higher-reimbursed drugs or to include
refills.
The affidavit also shows that former RHP employee Sydney Goodson stated
Defendants Haney, Warren, and Roper submitted test claims to discover
which ingredients afforded the maximum reimbursement. She also described
RHP’s marketing lunches with providers to promote their “pain contracts,”
and providers with pain contracts prescribed RHP’s pain creams regardless
of 	medical 	necessity. 	RHP’s 	website 	promoted 	“Lunch 	& 	Learn”
opportunities for providers. 	Ms. Goodson said RHP also used pre-printed
prescription forms to encourage physicians to send patients to RHP for pain
creams. Agent Valero stated that in his experience, pre-printed prescription
forms are not common in legitimate medicine. According to Ms. Goodson,
Defendant Roper would place patients on automatic refills for pain creams
even if not requested. 	Patient G.T. received monthly text messages from
RHP for refills for several years after Dr. Scariano stopped prescribing the
pain cream at his request and after he repeatedly declined the refills.
In addition, data analysis of RHP’s claims for Medicare reimbursement show
a large number of claims for a high-reimbursement pain creams for patients
with Medicare and only minimal claims for other payors for this same pain
cream. Similarly, RHP sought reimbursement from Medicaid/TennCare for
high-reimbursement rectal kits until Medicaid began rejecting those claims,
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and then RHP began submitting claims for a different high-reimbursement
pain cream. 	RHP failed to collect patient copays for two-thirds of the
prescriptions and refills for a pain cream for which it made Medicare claims
over . . . four years and four months.
[Doc. 204, pp. 66–67]. Considering all of these facts together, the Court agrees that this
evidence is sufficient to establish probable cause. 	Accordingly, defendants’ objection is
OVERRULED.
C. 	Search of Cell Phones
In their suppression motion, defendants also challenge the search of their personal
cell phones that was conducted during the execution of the search warrant for the RHP
premises [Doc. 185, p. 3].
1. 	Scope
In the R&R, Judge McCook concluded that the search warrant for RHP expressly
reached mobile phones of the owners or employees on the premises [Doc. 204, p. 73].
Attachment A to the search warrant permits the search of the premises of RHP, and
Attachment B permits the seizure and search of “all records” relating to violations of the
target offenses [Id.]. 	Attachment B specifies 11 categories of “records and information”
that agents can seize, including “records and information relating to the identity of persons
who . . . communicated with [RHP] and its owners and employees about matters related to
the Target Offenses” and “records and information related to communications with patients
regarding prescription refills” [Id.]. Attachment B defines “records” and “information” to
include “any form of computer or electronic storage,” and further defines “computer” to
include “mobile phones” [Id.]. 	Accordingly, Judge McCook concluded that the search
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warrant permitted the search of defendants’ cell phones for the 11 categories of records [Id.
at 73–74].
In 	their 	objections, 	defendants 	contend 	that 	the 	magistrate 	judge 	failed 	to
acknowledge that Attachment “A” to the search warrant limited the search to the RHP
premises, not cell phones in individuals’ pockets [Doc. 212, p. 23]. Moreover, to the extent
that the FBI wanted to search those phones, black letter law required a warrant [Id.].
The government responds that, while defendants argue that the seizure and search
of the phones “required a warrant,” the agents here had a warrant, and Attachment B of the
search warrant affidavit authorized the search and seizure of “[a]ll records” found on the
premises relating to the target offenses [Doc. 234, p. 13]. The term “records” was defined
to include “any form of computer or electronic storage,” and the term “computer” defined
to include “mobile phones” [Id. at 14]. The government contends that it does not matter
that the warrant was limited to RHP premises as there is no dispute the phones were seized
on those premises [Id.].
Defendants’ objection appears to misunderstand the R&R. 	Their assertion that
black letter law requires a warrant is inapposite. 	The point of the magistrate judge’s
analysis is that there was a search warrant, and defendants’ cell phones fell within the scope
of the warrant’s language. 	To the extent defendants argue that the search warrant was
limited to a search of RHP’s premises, based on Attachment A to the affidavit, several
issues arise. 	First, there is no dispute that the cell phones were seized and searched at
RHP’s premises, not any other location. 	Second, Attachment B to the search warrant is
labeled “Property to Be Searched and Seized” [Doc. 119-1, p. 43]. And, as the magistrate
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judge correctly pointed out, Attachment B references 11 categories of “[r]ecords and
information [Id. at 43–44], defines “records” and “information” to include “any form of
computer or electronic storage,” and defines “computer” as including “mobile phones” [Id.
at 44]. 	Thus, the Court is in agreement with the magistrate judge about the scope of the
search warrant. Defendant’s objection on this ground is OVERRULED.
2. 	Nexus
For a search warrant to issue, an affidavit must show a likelihood that (1) the items
sought are seizable by virtue of being connected with criminal activity and (2) the items
will be found in the place to be searched. United States v. O’Connor, 723 F. App’x 302,
307 (6th Cir. 2019) (internal citations omitted). 	A supporting affidavit must, therefore,
sufficiently demonstrate the existence of a “nexus between the place to be searched and the
evidence sought.” United States v. Carpenter, 360 F.3d 591, 594 (6th Cir. 2004) (quoting
United States v. Van Shutters, 163 F.3d 331, 336–37 (6th Cir. 1998)). 	Such connection
must be specific and concrete, and not “vague” or “generalized.” United States v. Brown,
828 F.3d 375, 382 (6th Cir. 2016) (citing Carpenter, 360 F.3d at 595). 	“Whether an
affidavit establishes a proper nexus is a fact-intensive question resolved by examining the
totality of circumstances presented.” Id.
In the R&R, the magistrate judge concluded that the search warrant affidavit did not
provide a sufficient nexus between defendants’ personal cell phones and healthcare fraud
or violations of the Anti-Kickback Statute [Doc. 204, p. 78]. The magistrate judge noted
that the affidavit contains no references of RHP owners or employees using personal cell
phones to conduct business at RHP [Id.]. 	The affidavit twice mentions communications
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by telephone call or text but provides no details that would suggest that these calls or text
messages were made by an owner or employee’s personal phone [Id. at 78–79]. 	The
magistrate judge noted that the affiant also did not state that, in his experience investigating
healthcare fraud, evidence was likely to be on personal cell phones [Id. at 79]. 	The
magistrate 	judge 	concluded 	that 	the 	affiant’s 	statement 	that 	RHP 	stores 	records
electronically does not create a fair probability that the personal cell phones of RHP owners
and employees would contain evidence of the alleged crimes [Id.].
The government objects to this finding regarding nexus [Doc. 211, p. 1]. 	The
government contends that the affidavit established a fair probability that fraud was
occurring at RHP [Id. at 1–2]. 	It also established a fair probability that evidence of the
fraud would be found on electronic media associated with the pharmacy [Id. at 2–3].
Finally, the affidavit established reasonable grounds to believe that the defendants’ phones
were the type of electronic media on which evidence was likely to be found, as the affidavit
explicitly stated that “computer” it sought to search included “mobile phones” [Id. at 3].
Further, the affidavit established a tight connection between the defendants, the pharmacy
and the alleged fraud [Id.]. 	The affidavit stated that Defendant Haney and Defendant
Warren were co-owners of the pharmacy, and Defendant Roper was a pharmacy employee
[Id.]. 	It also explained that Defendant Haney, Defendant Roper, and another pharmacy,
employee were not only colleagues, but sisters, which increased the likelihood they
communicated by phone [Id.]. The affidavit presented evidence that Defendant Haney and
Defendant Warren had also chartered private jet flights, purchased luxury lake-side
property, and generally lived outside the means of legitimate pharmacists [Id.]. 	Those
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interlinking connections between the fraud, the business, and each other established at least
a fair probability that the defendants’ phones would contain communications “with Rocky
Hill Pharmacy and its owners and employees about matters related to the Target Offenses”
[Id. at 3–4].11
As an initial matter, the R&R did not find that there was no probability of fraud at
RHP or that evidence of that fraud would be found on electronic media associated with the
pharmacy. 	Instead, the issue is whether the affidavit established a sufficient connection
between the alleged fraud occurring at the pharmacy and defendants’ personal cell phones.
Notably, the government does not point out any references to the defendants’ use of
personal cell phones in the search warrant affidavit. Instead, they ask the Court to infer the
nexus between the defendants’ cell phones and the alleged fraud based on facts regarding
the relationship between the defendants. But the government cites no case law indicating
that, without any mention of the use of personal cell phones in the affidavit, a court could
simply infer that defendants used their personal cell phones in connection with the target
offenses. To quote a sister district: “While probable cause involves a practical, common
sense decision, these arguments from the government rely on some generous inferences.”
United States v. Lavallis, 515 F. Supp. 3d 686, 692–93 (E.D. Mich. 2021) (declining to
determine whether a sufficient nexus was alleged, because the good faith exception applied
regardless, but stating that the affidavit which made “no mention of any communications
11 The government notes, however, that the Court need not reach this issue if it concludes
that the officers relied on the warrant in good faith, which is an independent ground for denying
suppression [Doc. 211, p. 4].
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involving [the] cell phone . . . is close to falling on the wrong side” such that the court
cautioned that “in the future, an affidavit should contain more”).
The Court agrees with the magistrate judge’s determination that a sufficient nexus
between the target offenses and defendant’s personal cell phones is not present in the
affidavit. Accordingly, the government’s objection to the R&R is OVERRULED.
3. 	Good Faith Doctrine
Under the good faith exception to the exclusionary rule, “[i]n the absence of an
allegation that the magistrate abandoned his detached and neutral role, suppression is
appropriate only if the officers were dishonest or reckless in preparing their affidavit or
could not have harbored an objectively reasonable belief in the existence of probable
cause.” 	United States v. Leon, 468 U.S. 897, 926 (1984). 	The Court thus must decide
“whether a reasonably well trained officer would have known that the search was illegal
despite the magistrate’s decision.” 	Id. at 923 n.23. 	The good faith exception does not
apply in four situations:
(1) when the affidavit supporting the search warrant contains a knowing or
reckless falsity; (2) when the magistrate who issued the search warrant
wholly abandoned his or her judicial role; (3) when the affidavit is so lacking
in indicia of probable cause that a belief in its existence is objectively
unreasonable; or (4) when the warrant is so facially deficient that it cannot
reasonably be presumed valid.
United States v. McPhearson, 469 F.3d 518, 525 (6th Cir. 2006) (citing Leon, 468 U.S. at
922–23 n.23).
Evidence may not be admitted at trial if it was seized under a warrant that was issued
on the basis of a “bare bones” affidavit, that is, an affidavit that merely “states suspicions,
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beliefs, 	or 	conclusions, 	without 	providing 	some 	underlying 	factual 	circumstances
regarding veracity, reliability, and basis of knowledge.” 	Id. at 525–26 (quoting United
States v. Weaver, 99 F.3d 1372, 1378 (6th Cir. 1996)). 	The Sixth Circuit has found the
good faith exception applicable in cases where the affidavit contained a minimally
sufficient nexus between the illegal activity and the place to be searched. Id. at 526.
Although the magistrate judge concluded that the search warrant affidavit did not
allege a sufficient nexus between the defendants’ personal cell phones and the target
offenses, she nonetheless concluded that the evidence from those cell phones was not
subject to suppression because the agents executed the search warrant in good faith [Doc.
204, p. 84]. 	First, Judge McCook noted that the affidavit is not “bare bones” as to the
search of the premises, but rather, is a 40-page affidavit that provides ample probable cause
to believe that evidence of healthcare fraud, making false statements in relation to
healthcare matters, and violations of the Anti-Kickback Statute would be in the records on
RHP’s premises, which include electronic records [Id. at 81]. The affidavit mentioned that
(1) an RHP pharmacy technician called patients to ask about refills and (2) a patient
received monthly texts from RHP regarding refills [Id.]. 	Judge McCook concluded that
these two references to the use of phones in procuring patient refills, in combination with
the affidavit’s request to search records on the premises, including “other storage media”
provided a slim “modicum” of evidence linking the evidence sought and the defendants’
cell phones on the premises [Id.]. As a result, the executing agents’ belief that defendants’
cell phones would contain evidence of the target offenses was more than a mere guess, and
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the executing officers thus seized and searched defendants’ cell phones in good faith [Id.
at 81–82].
Judge McCook also rejected defendants’ argument that Agent Valero assisted in the
execution of the search warrant and knew the affidavit did not authorize the search of
personal cell phones [Id. at 82–83]. Judge McCook noted that the inquiry is an objective
one, rather than a subjective one [Id. at 82]. 	Moreover, the record contains no evidence
that Agent Valero did not believe the search warrant authorized him to search employee
cell phones, but rather, he came with a CART unit prepared to extract data from cell phones
and electronic devices [Id. at 82–83].
Defendants object that the facts here do not make out a good faith mistake [Doc,
212, p. 24]. Instead, the FBI required individuals to not only hand over their personal cell
phones but also to provide their passwords to enable the FBI to gain access to that private
and confidential information without a warrant [Id.]. Defendants argue that there was no
probable cause to believe the personal phones at issue contained evidence of a crime, and
therefore, there is no basis to deem the unlawful searches within the “good faith” exception
[Id.].
The government responds that defendants assert that the seizure and search of the
phones “required a warrant,” but the agents here had a warrant [Doc. 234, p. 13]. 	As to
defendants’ argument that there was no probable cause to believe that the personal phones
at issue contained evidence of a crime, the government states that this conflates the
good-faith inquiry with the probable cause inquiry [Id. at 14]. 	The affidavit was not
“facially deficient” and suppression is unwarranted [Id.].
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Defendants’ objections do not truly address the good faith inquiry. 	First, to the
extent that defendants highlight that they were required to both turn over their phones and
provide their passwords “without a warrant,” as the Court discussed supra, a search warrant
did exist and the face of that warrant specifically covered mobile phones at the RHP
premises. Defendants present no argument as to why or how the executing officers could
not have relied on that language in the search warrant to, in good faith, believe the search
of defendants’ personal cell phones was authorized.
Moreover, defendants’ argument that there was no probable cause to believe that
their personal cell phones contained evidence of a crime does not support defendants’
conclusion that there is no basis to deem the search a “good faith” exception. The Court
has already determined, supra, that the search warrant affidavit did not contain a sufficient
nexus between defendants’ personal cell phones and the target offenses. 	But that
conclusion is not determinative of the good faith analysis. Rather, at this stage, the Court
is presented with the question of whether, objectively, a reasonably well-trained officer
would have known the search was illegal, despite the magistrate judge’s issuance of a
search warrant. See Leon, 468 U.S. at 923 n.23. Defendants have raised no argument as
to why a reasonably well-trained officer would have believed that the search of defendants’
personal cell phones was illegal, despite the issuance of a search warrant contemplating the
search of “mobile phones” on the RHP premises.
Further, as the magistrate judge stated, the affidavit is not bare bones and makes
some references to the use of phones in connection to the target offenses [Doc. 204, pp.
81–82], and the Court is in agreement that the search warrant affidavit was sufficient to
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provide a reasonably well-trained officer with the good faith belief that a search of
defendants’ personal cell phones was legal.
Accordingly, defendants’ objections are OVERRULED.
IV. 	Conclusion
For the reasons above, the Court ACCEPTS and ADOPTS the R&R [Doc. 204] in
whole and GRANTS Defendant Warren’s and Defendant Haney’s motions to join [Docs.
96, 172, 177], DENIES Defendant Roper’s motion to join [Doc. 138], and DENIES the
motions to suppress evidence [Docs. 89, 165]. Defendant Warren and Defendant Roper’s
motions to join Defendant Haney’s objections [Docs. 215, 221] are GRANTED, but both
Defendant Haney’s and the government’s objections to the R&R [Docs. 211, 212] are
OVERRULED. Defendants’ motion to file documents relating to their objections under
seal [Doc. 213] is GRANTED, and the proposed sealed documents [Docs. 214, 214-1,
214-2] shall be filed under seal.
IT IS SO ORDERED.
s/ Thomas A. Varlan
UNITED STATES DISTRICT JUDGE
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