Report and Recommendation — United States v. Patricia Ashton Derges, No. 21-03016-01-CR-S-BCW (Dkt. 111-1, W.D. Mo.)
Summary
Magistrate Judge David P. Rush of the Western District of Missouri recommends denying, as frivolous and unsupported by law, Patricia Ashton Derges' motion to dismiss the superseding indictment or, in the alternative, to recuse Assistant U.S. Attorney Shannon Kempf. The March 26, 2021 superseding indictment has twenty-three counts, including wire fraud involving the CARES Act Relief Fund. Derges argued that Kempf was a fact witness because of a former role as director of the Missouri Medicaid Fraud Control Unit, which had helped an HHS agent review the Medicaid enrollment of Derges' clinic. After a November 2, 2021 hearing, the judge found that role only ministerial and administrative and noted that none of the charges arise from the MFCU investigation. The report is dated December 13, 2021.
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IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MISSOURI
SOUTHERN DIVISION
UNITED STATES OF AMERICA, )
)
Plaintiff, )
)
v. ) No. 21-03016-01-CR-S-BCW
)
PATRICIA ASHTON DERGES, )
)
Defendant. )
REPORT AND RECOMMENDATION
Before the Court is Defendant’s Motion to Dismiss Superseding Indictment or, in the
Alternative, to Recuse Assistant United States Attorney (AUSA) Shannon Kempf. (Doc. 83.)
Pursuant to 28 U.S.C. § 636(b)(1) and Local Rule 72.1, this action has been referred to the
undersigned for the purpose of submitting a report and recommendations on all pretrial motions to
dismiss the indictment. Defendant moves for a dismissal of the case or disqualification of “AUSA
Kempf and any other AUSA addressing the present cause whose interaction with AUSA Kempf
effectively tainted their status as a prosecutor,” because Mr. Kempf is allegedly a fact witness in
the case due to his former role as director of the Missouri Medicaid Fraud Control Unit (MFCU).
As follows, it is RECOMMENDED that the Motion be DENIED as frivolous and unsupported
by law.
I. Background
On January 20, 2021, Defendant was charged in a twenty-count indictment. (Doc. 1.) On
March 26, 2021, Defendant was charged in a twenty-three-count superseding indictment, including
counts related to wire fraud, distribution of controlled substances by means of the internet without
a valid prescription, making false statements to federal law enforcement, as well as wire fraud
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involving the CARES Act Relief Fund. (Doc. 18.) On August 30, 2021, Defendant originally
filed this motion (doc. 46), but it was denied without prejudice (doc. 47) as untimely and filed
without leave to do so. On September 1, 2021, Defendant requested leave (doc. 50), which was
granted by the Court as unopposed on September 16, 2021 (docs. 65, 66). On September 22, 2021,
Defendant refiled the Motion, and on October 6, 2021, the Government filed its Response to the
Motion. (Doc. 89.) On October 18, 2021, Defendant submitted her reply brief. On November 2,
2021, the undersigned held a hearing on this and other pending motions. (Doc. 97, 98.) Relevant
to the Motion at issue, at the hearing, the Court heard testimony from Teresa Dailey, a Special
Agent (SA) with the United States Department of Health and Human Services (HHS), and Amanda
Burrows, a former investigator at the MFCU. (Doc. 100 at 62-63, 88.)
II. Findings of Fact
In April 2020, SA Dailey was contacted by the Federal Bureau of Investigation (FBI)
regarding an investigation into Defendant. (Doc. 100 at 63-64.) Thereafter, she opened a co-
investigation into Defendant’s medical practice, gathering relevant facts and speaking to witnesses.
Given concerns regarding Medicaid, 1 SA Dailey contacted the MFCU, and specifically, Agent
Burrows, to confirm whether Defendant was enrolled in Missouri’s Medicaid program, and to
review any available claims information. (Id. at 65, 90; Ex. 4.) Agent Burrows supplied SA Dailey
the Enrollment Application and Provider Agreement (the “agreement”) for Ozark Valley Medical
Clinic, which was signed by Defendant, indicating her intent to participate and comply with the
rules of the Medicaid program. (Doc. 100 at 67-68, 88-89; Ex. 4.) Agent Burrows also reviewed
the available claims data to ensure there was no violation of the agreement, and facilitated
interviews for SA Dailey with state employees, including the Director of the Missouri Medical
1
Defendant was an enrolled Medicaid provider and there were concerns that payments were made by patients for
services covered under Medicaid, which is not allowed under the provider agreement. (Doc. 100 at 73.)
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Marijuana program and the Director of the Missouri Dental Board. (Doc. 100 at 74, 90-92.)
SA Dailey testified that she only dealt with Agent Burrows during the investigation, and
did not have any interaction with Mr. Kempf, who was the MFCU director at the time. Id. at 75-
76. Similarly, Agent Burrows testified that Mr. Kempf did not participate in the investigation,
although he, as the MFCU director, along with Burrow’s immediate supervisor, was required to
approve the opening of the MFCU case file and was periodically informed about the investigation.
Id. at 94. Agent Burrows indicated that the approval is “sort of automated . . . [and she] kind of
had blanket approval to open cases on any federal investigation that they asked assistance on.” Id.
at 101. Mr. Kempf also informed the Court that his role in the MFCU investigation of Defendant
was strictly administrative as the MFCU director, and it was standard that that the MFCU would
support HHS whenever assistance was requested. Id. at 14-15. Ultimately, the MFCU case file
on Defendant was closed because there were no longer concerns of Medicaid exposure and no
further assistance was requested by HHS or the FBI. Id. at 95. Additionally, none of the pending
charges (docs. 1, 18) against Defendant involve Medicaid claims or arise from evidence gathered
during the MFCU investigation. (Doc. 100 at 15.)
In July 2021, Agent Burrows was contacted by a member of Defendant’s investigation
team. Id. at 95. She declined to speak with the investigator about the MFCU investigation, and
indicated that she would contact Mr. Kempf to see if she should speak with the investigator. Id.
at 96. She later contacted Mr. Kempf as well as SA Dailey to inform them that Defendant’s
investigator had reached out, and Mr. Kempf and SA Dailey advised her that it was her decision
whether to speak to the investigator. Id. at 15, 97-98.
III. Conclusions
As a principal matter, the undersigned finds Defendant’s Motion to be unclear and
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unsupported, given the inclusion of irrelevant facts and hyperbole, as well as the lack of clarity
and sufficient legal analysis. Given the meandering factual allegations and arguments in her brief,
it seems that Defendant is attempting to weave an elaborate (and largely, unsubstantiated)
narrative, implying that Mr. Kempf (and relatedly, the Government) targeted Defendant for some
nefarious purpose, likely politically motivated, given the timing of her candidacy announcement,
swearing-in ceremony as state representative, and the filing of the charges against her. As well,
she asserts without any legal support that Mr. Kempf (as an AUSA) faces an “irreconcilable
conflict” because he is a “federal prosecutor who served as a supervisor of a state investigator
conducting an investigation” into Defendant, although notably, none of the federal charges
Defendant currently faces arise from the MFCU investigation. The illogical and frivolous nature
of the facts and arguments presented are self-evident.
Reviewing the disjointed facts and conclusory arguments, the Court is left to speculate as
to what warrants the severe remedy of dismissal or recusal requested. Because proper legal
analysis and organization were sorely lacking, the Government was forced to respond to these
allegations, as best as it could understand them, as a claim of prosecutorial misconduct requiring
dismissal, and in the alternative, a motion for recusal because Mr. Kempf is a potential fact witness.
(Doc. 89 at 11.) The Court will address the Motion, construing Defendant’s arguments similarly:
Mr. Kempf has conflicting loyalties, or an appearance of impropriety, stemming from his former
role as the MFCU director and his supervision of Agent Burrows who investigated Defendant,
which was not disclosed, justifying dismissal of the case; and, if dismissal is not granted, Mr.
Kempf as well as other AUSAs “tainted” by their interaction with Mr. Kempf should be recused
“by virtue of his status” as a fact witness. (Docs. 83 at 1, 29-30; 94 at 4, 7-8.)
Based on a thorough review of the record, the undersigned concludes that Mr. Kempf does
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not have any conflicting loyalties nor is there any appearance of impropriety to warrant dismissal
of the case and further, Mr. Kempf’s recusal is also not supported because he is not a fact witness
in the case. Here, while Mr. Kempf formerly served as the MFCU director, overseeing the
investigation of MFCU agents, including Agent Burrow’s investigation of Defendant in support
of a federal investigation, the undersigned finds his former role was only ministerial and
administrative in function. Moreover, none of charges for which Defendant is indicted arise from
the MFCU’s investigation, lending further support to the conclusion that there is no conflicting
loyalties or appearance of impropriety in Mr. Kempf’s current role as an AUSA, requiring
dismissal of the case. Relatedly, the undersigned finds no prosecutorial misconduct or prejudice
because Mr. Kempf did not disclose to the grand jury his former position as the MFCU director.
In support of his arguments, Defendant heavily cites Young v. U.S. ex rel. Vuitton et Fils
S.A., 481 U.S. 787, 791 (1987), wherein the United States Supreme Court found improper the
appointment of attorneys to prosecute a criminal contempt for violations of an injunction against
trademark infringement because the same attorneys simultaneously represented the trademark
holder. (Doc. 83 at 27-28.) The case is inapposite to the case at bar. Unlike Young, here, Mr.
Kempf does not simultaneously represent any interested private party in a related matter.
Moreover, Defendant’s reliance on Young for the proposition that participation of an interested
prosecutor universally or generally infringes due process is misplaced, considering Young was
decided under the Supreme Court’s supervisory powers over the lower federal courts, not on
constitutional grounds.
To the extent Defendant implies that the MFCU investigation was improper because
Defendant did not receive any Medicaid reimbursements to justify an investigation, the
undersigned disagrees. The record establishes that Defendant enrolled in the Medicaid program
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per a signed agreement, and thus, the MFCU’s review, on SA Dailey’s request, as to whether
Defendant’s participation complied with the rules of the Medicaid program, was appropriate.
Defendant also raises concern that Agent Burrows declined to speak to her investigator because
she wanted to speak to her “former boss” (Mr. Kempf) first. The record clearly demonstrates that
Mr. Kempf properly advised Agent Burrow that she may speak to the investigator if she chooses.
The fact that she ultimately chose to not speak to the investigator, does not present conflicting
loyalties, an appearance of impropriety, nor prosecutorial misconduct on the part of Mr. Kempf.
United States v. Bittner, 728 F.2d 1038, 1041 (8th Cir. 1984) (“Although the prosecution and the
defense have an equal right to interview witnesses in a criminal proceeding [and the prosecution
may not without justification interfere with that right], the defendant’s right of access is not
violated when a witness chooses of her own volition not to be interviewed.”).
Finally, the undersigned notes that Defendant fails to identify to what precisely Mr. Kempf
is a fact witness. Regardless, given Mr. Kempf’s limited participation in the MFCU investigation
of Defendant while he was director, and again, that none of the charges arise from that
investigation, the undersigned concludes that Mr. Kempf is not a fact witness in the case.
Therefore, his recusal is unnecessary.
IV. Recommendation
Based on the foregoing, it is RECOMMENDED that the Motion (doc. 83) be DENIED.
/s/ David P. Rush
DAVID P. RUSH
UNITED STATES MAGISTRATE JUDGE
DATE: December 13, 2021
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