Richard "Nate" Schott's Plea Agreement
Richard "Nate" Schott's Plea Agreement
No. 3:18-cr-00304
V. ) Chief Judge Crenshaw
RICHARD N. SCHOTT )
PLEA AGREEMENT
The United States of America, through Donald Q. Cochran, United States Attorney for the
Middle District of Tennessee, and Assistant United States Attorneys Kathryn W. Booth and Byron
Jones, and defendant, Richard N. Schott, through defendant's counsel, David Rabin and Matthew
Curley, pursuant to Rule I I (c)(1)(B) of the Federal Rules of Criminal Procedure, have entered into
1. Defendant acknowledges that he has been charged in the Information in this case
with conspiracy to defraud a health care benefit program, in violation of 18 U.S.C. § 1349 and §
1347, and forfeiture, in violation of Title 18 U.S.C. § 982(a)(7) and 21 U.S.C. § 853(p).
2. Defendant has read the charge against him contained in the Information, and that
charge has been fully explained to him by his attorney. Defendant fully understands the nature
Count One of the Information, charging conspiracy to defraud a health care benefit program. In
addition, as further provided below, defendant agrees to the entry of a forfeiture judgment.
4. The parties understand and agree that the offense to which defendant will enter a
plea of guilty carries the following maximum penalties: A term of ten years' imprisonment, a fine
of $250,000, and a $100 special assessment. Defendant further understands that the Court must
order restitution to the victims of the offense in an amount determined by the Court.
5. This Plea Agreement is entirely voluntary and represents the entire agreement
between the United States Attorney and defendant regarding defendant's criminal liability in case
3:18-cr-00304.
would have the right to a public and speedy trial. Defendant has a right to a jury trial, and the trial
would be by a judge rather than a jury only if defendant, the government, and the Court all agreed
to have no jury.
b. If the trial were a jury trial, the jury would be composed of twelve
laypersons selected at random. Defendant and his attorney would have a say in who the jurors
would be by removing prospective jurors for cause, or without cause by exercising so-called
peremptory challenges. The jury would have to agree unanimously before it could return a verdict
of either guilty or not guilty. The jury would be instructed that defendant is presumed innocent;
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that the government bears the burden of proving defendant guilty of the charge(s) beyond a
reasonable doubt; and that it must consider each count of the information against defendant
separately.
G. If the trial were held by the judge without a jury, the judge would find the
facts and determine, after hearing all the evidence, whether or not the judge was persuaded of
to present its witnesses and other evidence against defendant. Defendant would be able to confront
those government witnesses and his attorney would be able to cross-examine them. In turn,
defendant could present witnesses and other evidence on his own behalf. If the witnesses for
defendant would not appear voluntarily, he could require their attendance through the subpoena
that he could testify or decline to testify, and no inference of guilt could be drawn from his refusal
to testify.
7. Defendant understands that by pleading guilty he is waiving all of the trial rights
set forth in the prior paragraph. Defendant's attorney has explained those rights to him, and the
Factual Basis
8. Defendant will plead guilty because he is in fact guilty of the charge contained in
the information. In pleading guilty, defendant admits the following facts and that those facts
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At all times material to the Information, defendant was a licensed dentist who owned and
operated a dental practice, which had four office locations in and around Murfreesboro, Tennessee,
collectively referred to as "Dental Excellence"). Dental Excellence had a billing office location in
Murfreesboro, Tennessee, which was referred to as "the Pod." Defendant was the sole owner of
Dental Excellence, and a resident of Murfreesboro, Tennessee, in the Middle District of Tennessee.
From in or about November, 2013 through February, 2017, Employee 1 was the Practice
The Bureau of TennCare, the state of Tennessee's Medicaid program ("TennCare"), was a
health care benefit program jointly funded by the State of Tennessee and the United States
Tennessee. TennCare services were offered through managed care organizations ("MCOs"),
DentaQuest, Delta Dental Association ("Delta Dental"), and Cigna Corporation ("Cigna"),
were health insurance companies billed by Dental Excellence for dental services. TennCare,
DentaQuest, Delta Dental, and Cigna were "health care benefit programs," as defined by Title 18,
United States Code, Section 24(b), in that they were public and private plans affecting commerce
under which medical benefits, items, and services were provided to individuals and under which
individuals and entities who provided medical benefits, items, or services obtained payments.
Beginning on October 1, 2013, and continuing through the date of this Information,
DentaQuest was under contract with TennCare to be the administrator of the TennCare dental
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benefits program. In order to obtain approval to participate in TennCare, the dentist submitted an
If the dentist met certain qualifications, DentaQuest approved the application and entered
into a written contract with the dentist. To be reimbursed by DentaQuest for services provided to
dentists were not permitted to use their own National Provider Identification number ("NPI
Only a credentialed dentist could bill for services he or she provided to TennCare patients.
Further, prior to billing DentaQuest for treatment provided to TennCare patients, the dentist was
required to receive approval from DentaQuest to treat TennCare patients at a specific location.
Dentists who had been credentialed by DentaQuest to treat patients at one location were not
permitted to bill for services provided to TennCare patients at another location without the express
approval of DentaQuest.
In many instances, DentaQuest required credentialed dentists to seek, and receive, pre-
authorization for services to be provided to TennCare recipients before the services were provided.
For most services, including crowns, fillings, and root canals, among other procedures, DentaQuest
required the credentialed dentist to treat the TennCare recipient prior to submitting an insurance
From March 10, 2014 through March 9, 2017, defendant was approved by DentaQuest to
submit bills to DentaQuest for dental work he personally performed on TennCare patients at the
office of Lebanon Dental Excellence. Defendant was not approved by DentaQuest to submit bills
for work performed on TennCare patients at other Dental Excellence locations, nor was he
permitted to use his own provider number to DentaQuest for work performed by other dentists. In
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fact, during the relevant time periods alleged in this Information, there were no dentists who were
Accordingly, Dental Excellence was not permitted to be reimbursed for services provided to
The Conspiracy
From in or around November, 2013, and continuing through in or around January, 2018,
in the Middle District of Tennessee and elsewhere, defendant and Employee 1 did willfully and
knowingly combine, conspire, confederate, and agree with each other to commit certain offenses
against the United States, that is, to knowingly and willfully execute a scheme and artifice to
defraud health care benefit programs affecting commerce, as defined in Title 18, United States
Code, Section 24(b), that is, TennCare, DentaQuest, Delta Dental, and Cigna, and to obtain, by
means of materially false and fraudulent pretenses, representations, and promises, money and
property owned by, and under the custody and control of, said health care benefit programs, in
connection with the delivery of and payment for health care benefits, items, and services, in
From in or about November, 2013, until in or about January, 2018, defendant and
Employee 1 conspired to submit, and cause employees of Dental Excellence to submit, false and
fraudulent claims to health care benefit programs. At the direction of defendant and Employee 1,
employees submitted to various health care benefit programs claims for dental work that was never
completed and claims that contained other falsified information, such as the office where the work
was purportedly performed, the date on which work was purportedly completed, and the dentist
purportedly completing the work. Additionally, at the direction of defendant and Employee One,
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employees falsified the "narratives" that accompanied dental claims and falsified accompanying
documents, such as X-Rays, that were submitted along with the claims.
Defendant and Employee 1 took steps to conceal the fraud. Defendant and Employee 1
discouraged employees from asking questions about whether the billing practices were legal by
disciplining or firing employees who questioned the fraudulent billing practices or refused to
submit fraudulent claims. Defendant and Employee 1 directed Dental Excellence employees to
tell patients and representatives from insurance companies that if Dental Excellence had billed for
work that had not been done, it was simply a billing error and would be corrected, when, in fact,
Defendant and Employee 1 carried out this scheme in order to financially enrich
themselves. Defendant owned Dental Excellence and controlled the proceeds, which he used for
his personal use. In addition to her salary, Employee 1 earned bonuses based on the amount of
Defendant and Employee 1 carried out this scheme, notwithstanding the fact that they were
repeatedly advised that the billing practices of Dental Excellence were unlawful. First, Dental
Excellence received numerous complaints from employees, insurance companies, and patients or
their guardians, that work had been billed for but not completed. Further, during the scheme,
Dental Excellence was subject to two separate audits and an investigation by the Tennessee Bureau
of Investigation ("TBI"). From in or about December, 2014, through in or about August, 2015,
DentaQuest conducted an audit of Dental Excellence based on allegations that Dental Excellence
was billing for crowns at an unusually high rate and that Dental Excellence was impermissibly
billing DentaQuest for services provided by non-credentialed dentists. Further, from in or about
May, 2016, through in or about December, 2016, Delta Dental conducted an audit of Dental
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Excellence based on allegations that Dental Excellence had billed for services that were not
provided. Additionally, in August, 2016, the TBI began an investigation concerning the billing
practices of Dental Excellence. Defendant and Employee 1 were aware of these audits and
allegations, as well as the TBI investigation, and yet did not alter their fraudulent billing practices.
The conspiracy described above resulted in fraudulent claims to TennCare in the amount
of $932,839. The conspiracy described above was in violation of 18 U.S.C. § 1349 and § 1347.
This statement of facts is provided to assist the Court in determining whether a factual basis
exists for defendant's plea of guilty and criminal forfeiture and to assess relevant conduct for
purposes of the United States Sentencing Guidelines. The statement of facts does not contain each
and every fact known to defendant and to the United States concerning defendant's and/or others'
9. The parties understand that the Court will take account of the United States
Sentencing Guidelines (hereinafter "U.S.S.G."), together with the other sentencing factors set forth
at 18 U.S.C. § 3553(a), and will consider the U.S.S.G. advisory sentencing range in imposing
defendant's sentence. The parties agree that the U.S.S.G. to be considered in this case are those
10. For purposes of determining the U.S.S.G. advisory sentencing range, the United
States and defendant agree to recommend to the Court, pursuant to Rule I I (c)(1)(B), the following:
i. The base offense level for the count of conviction and relevant
iii. The base offense level is increased by two (2) levels, pursuant to
to the satisfaction of the government, through his allocution and subsequent conduct
described in the previous sentence, the United States will move for an additional one-
level reduction pursuant to U.S.S.G § 3E1.1(b), because defendant will have given
timely notice of his intention to enter a plea of guilty, thereby permitting the
government to avoid preparing for trial and permitting the government and the Court
defendant's criminal history category, but anticipate that his criminal history will be Category
I.
to the Court a final offense level of 23 (the "Recommended Offense Level"). Defendant
understands that the offense level as ultimately determined by the Court (the "court-
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determined offense level") may be different from the Recommended Offense Level.
Defendant likewise understands that the guidelines range as ultimately determined by the
a promise, and is not binding on the Probation Office or the Court. Defendant understands that
the Probation Office will conduct its own investigation and make its own recommendations,
that the Court ultimately determines the facts and law relevant to sentencing, that the Court's
determinations govern the final guidelines calculations, and that the Court determines both the
final offense level and the final guidelines range. Accordingly, the validity of this agreement
is not contingent upon the Probation Officer's or the Court's concurrence with the above
calculations. In the event that the Probation Office or the Court contemplates any U.S.S.G.
adjustments, departures, or calculations different from those recommended above, the parties
reserve the right to answer any inquiries and to make all appropriate arguments concerning
the same. Defendant further acknowledges that if the Court does not accept the U.S.S.G.
recommendations of the parties, defendant will have no right to withdraw his guilty plea.
12. It is understood by the parties that the Court is neither a party to nor bound by this
Plea Agreement and, after consideration of the U.S.S.G., may impose the maximum penalties as
set forth above. Defendant further acknowledges that if the Court does not accept the sentencing
recommendation of the parties, defendant will have no right to withdraw his guilty plea. Similarly,
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defendant understands that any recommendation by the Court related to location of imprisonment
13. Regarding restitution, the parties acknowledge that the amount of restitution owed to
victims is $932,839, and that pursuant to Title 18, United States Code, Section 3663A, the Court must
order defendant to make restitution in this amount, minus any credit for funds repaid prior to
sentencing. Unless the Court orders otherwise, restitution shall be due immediately.
14. Defendant agrees to pay the special assessment of $100 at the time of sentencing to
15. The Information charges that defendant is liable to the United States in the
minimum amount of $932,839, which funds are subject to forfeiture because these funds constitute
proceeds of the violations alleged in the Information. By entry of a guilty plea to the Information,
16. Defendant agrees that the amount of proceeds of the offense of conviction as
alleged in the Information is $932,839. This dollar value represents the value of funds paid to
Judgment in the amount of $932,839 in that this property is subject to forfeiture as proceeds
18. Defendant and the United States agree that every effort will be made to credit any
payment toward forfeiture against both the Order of Forfeiture and any restitution order via the
remission and restoration process. However, the parties acknowledge that the ultimate discretion
lies with the Money Laundering and Asset Recovery Section of the U.S. Department of Justice
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regarding whether to grant or deny any request related to the remission or restoration process.
19. Defendant will cooperate and assist the United States in its efforts to recover the
20. Defendant understands that with the exception of restitution as set forth
previously — forfeiture of this property shall not be treated as satisfaction of any fine, cost of
imprisonment, or any other penalty the Court may impose upon defendant in addition to the Order
of Forfeiture.
21. Defendant acknowledges that as a result of his act or omission, the proceeds of his
e. has been commingled with other property, which cannot be divided without
difficulty
and as a result, pursuant to 21 U.S.C. § 853(p), the United States is entitled to forfeiture of
22. Defendant further acknowledges that the United States is entitled to forfeiture of
substitute property in the amount of the proceeds of the crime and therefore agrees to the forfeiture
of substitute assets and entry of an order allowing the United States to conduct any discovery
depositions, interrogatories, requests for production of documents and the issuance of subpoenas,
without further application to the Court and to facilitate the identification and location of property
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declared forfeited, substitute assets, and to facilitate the disposition of any petitions for remission,
mitigation or restoration. The substitute property recovered shall not exceed in total $932,839
23. Defendant further agrees to cooperate fully and to execute any supplementary
documents, including authorizing the United States to obtain Defendant's credit report, and to take
any additional actions that may be necessary or appropriate to effect this agreement as to forfeiture,
24. Defendant further authorizes the United States Probation and Pretrial Services
Office (U.S.P.O.) to release the Presentence Investigative Report and all financial documents
pertaining to Defendant to the Asset Forfeiture Unit of the United States Attorney's Office ("AF
25. Defendant further authorizes the release to the AF Unit of his financial statement
26. Defendant further authorizes the Internal Revenue Service to Release his tax returns
for the years beginning 2016 through the pendency of the payment of the full amount of the Order
of Forfeiture.
27. Defendant agrees to waive all appellate rights concerning the entry of the money
28. Defendant understands that the United States Attorney's Office, in its submission to
the Probation Office as part of the Pre-Sentence Report and at sentencing, shall fully apprise the
District Court and the United States Probation Office of the nature, scope, and extent of defendant's
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conduct regarding the charges against him, as well as any related matters. The government will make
known all matters in aggravation and mitigation relevant to the issue of sentencing.
29. Defendant agrees to execute truthfully and completely a Financial Statement (with
supporting documentation) prior to sentencing, to be provided to and shared among the Court, the
United States Probation Office, and the United States Attorney's Office regarding all details of his
financial circumstances, including his recent income tax returns as specified by the Probation
provide this information, may be used as a basis for denial of a reduction for acceptance of
responsibility pursuant to U.S.S.G. § 3E1.1 and enhancement of his sentence for obstruction of
justice under U.S.S.G. § 3C1.1, and may be prosecuted as a violation of Title 18, United States
30. This Plea Agreement concerns criminal liability only. Except as expressly set forth
in this Plea Agreement, nothing herein shall constitute a limitation, waiver, or release by the United
States or any of its agencies of any administrative or judicial civil claim, demand, or cause of action
it may have against defendant or any other person or entity. The obligations of this Plea Agreement
are limited to the United States Attorney's Office for the Middle District of Tennessee and cannot
bind any other federal, state, or local prosecuting, administrative, or regulatory authorities, except as
31. Defendant understands that nothing in this Plea Agreement shall limit the Internal
Revenue Service (IRS) in its collection of any taxes, interest, or penalties from defendant or
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Entry of Guilty Plea
32. The parties jointly request that the Court accept the defendant's plea of guilty as set
forth in this agreement and enter an order reflecting the acceptance of the plea while reserving
acceptance of this plea agreement until receipt of the pre-sentence report and sentencing.
33. Regarding the issue of guilt, defendant hereby waives all (i) rights to appeal any issue
bearing on the determination of whether he is guilty of the crime(s) to which he is agreeing to plead
guilty; and (ii) trial rights that might have been available if he exercised his right to go to trial.
Regarding sentencing, defendant is aware that 18 U.S.C. § 3742 generally affords a defendant the
right to appeal the sentence imposed. Acknowledging this, defendant knowingly waives the right to
appeal any sentence within or below the Recommended Guidelines Range. Defendant further
waives all appellate rights and all collateral attacks concerning forfeiture and all matters related
thereto. Defendant also knowingly waives the right to challenge the sentence imposed in any motion
pursuant to 18 U.S.C. § 3582(c) and in any collateral attack, including, but not limited to, a motion
brought pursuant to 28 U.S.C. § 2255 and/or § 2241. However, no waiver of the right to appeal, or
to challenge the adjudication of guilt or the sentence imposed in any collateral attack, shall apply to
the government waives the right to appeal any sentence: (i) within or above the Recommended
Guidelines Range; or (ii) below such guideline range if the government has moved for a downward
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Other Terms
34. Defendant agrees to cooperate with the United States Attorney's Office in collecting
any unpaid fine and restitution for which defendant is liable, including providing financial statements
and supporting records as requested by the United States Attorney's Office. Defendant further agrees
that any monetary penalties imposed by the Court will be subject to immediate enforcement as
provided for in 18 U.S.C. § 3613, and submitted to the Treasury Offset Programs so that any federal
payment or transfer of returned property defendant receives may be offset and applied to federal debts
35. Defendant agrees to cooperate with the IRS in any tax examination or audit of
defendant and his wife and defendant's partnerships or corporations that directly or indirectly relates
to or arses out of the course of conduct defendant has acknowledged in this Plea Agreement, by
transmitting to the IRS original records or copies thereof, and any additional books and records
that the IRS may request. Nothing in this paragraph precludes defendant from asserting any legal
or factual defense to taxes, interest, and penalties that may be assessed by the IRS.
36. Defendant understands that pursuant to Title 12, United States Code, Section 1829, his
conviction in this case will prohibit him from directly or indirectly participating in the affairs of any
financial institution insured by the Federal Deposit Insurance Corporation (FDIC) except with the prior
written consent of the FDIC and, during the ten years following his conviction, the additional approval
of this Court. Defendant further understands that if he violates this prohibition, he may be punished by
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37. Should defendant engage in additional criminal activity after he has pled guilty but
prior to sentencing, defendant shall be considered to have breached this Plea Agreement, and the
Conclusion
38. Defendant understands that the information and this Plea Agreement have been or
will be filed with the Court, will become matters of public record, and may be disclosed to any
person.
39. Defendant understands that his compliance with each part of this Plea Agreement
extends until such time as he is sentenced, and failure to abide by any term of the Plea Agreement is
a violation of the Plea Agreement. Defendant further understands that in the event he violates this
Plea Agreement, the government, at its option, may move to vacate the Plea Agreement, rendering
it null and void, and thereafter prosecute defendant not subject to any of the limits set forth in this
Plea Agreement, or may require defendant's specific performance of this Plea Agreement.
Defendant understands and agrees that in the event that the Court permits defendant to withdraw
from this Plea Agreement, or defendant breaches any of its terms and the government elects to void
the Plea Agreement and prosecute defendant, any prosecutions that are not time-barred by the
applicable statute of limitations on the date of the signing of this Plea Agreement may be
commenced against defendant in accordance with this paragraph, notwithstanding the expiration
of the statute of limitations between the signing of this Plea Agreement and the commencement of
such prosecutions.
40. Defendant and his attorney acknowledge that no threats have been made to cause
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41. No promises, agreements, or conditions have been entered into other than those set
forth in this Plea Agreement, and none will be entered into unless memorialized in writing and
42. Defendant's Signature: I hereby agree that I have consulted with my attorney and fully
understand all rights with respect to the pending information. Further, I fully understand all rights with
respect to the provisions of the Sentencing Guidelines that may apply in my case. I have read this Plea
Agreement and carefully reviewed every part of it with my attorney. I understand this Plea Agreement,
Date: ti I I <Zq;U7
Richard N. Schott
Defendant
18
explained to defendant his rights with respect to the pending information. Further, I have reviewed
the provisions of the Sentencing Guidelines and Policy Statements, and I have fully explained to
defendant the provisions of those guidelines that may apply in this case. I have reviewed carefully
every part of this Plea Agreement with defendant. To my knowledge, defendant's decision to enter
Date:
c for Defendant
Respectfully
p Y submitted
DONALD Q. COCHRAN
United States Attorney
By:
Kathryn .Booth
Assistant U.S. Attorney
By: "T;,
Byron ones
Assistant U.S, ttornev
By; ----y+•—
Henry eve s
Depu Criminal Chief
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