IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 97-10212
_____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
DANIEL JAMES HERLIHY, D.O.
Defendant-Appellant.
_________________________________________________________________
Appeal from the United District Court for the
Northern District of Texas
(3:96-CR-4-4-H)
_________________________________________________________________
August 17, 1998
Before POLITZ, Chief Judge, REAVLEY, and JOLLY, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:*
The defendant appeals his convictions for conspiracy, making
false statements, and mail fraud. He argues that the evidence is
insufficient to support the convictions and that the district court
misapplied the sentencing guidelines when it imposed an 84-month
term of imprisonment. After thoroughly reviewing the record and
the submissions by the parties, we are convinced that the record
provides sufficient evidence to uphold the judgment of conviction.
We also hold that the district court committed no reversible error
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
with respect to its application of the sentencing guidelines. For
these reasons, as set out more fully infra, we affirm the judgment
of conviction and sentence.
I
Dr. Daniel Herlihy began employment as a part-time contract
physician at Central Arlington Medical Management Company/Central
Arlington Family Health Center (“Central Arlington”)--a weight loss
clinic owned by Lisa Grossman1--in late 1990. Most of the clinic’s
patients had responded to an intensive advertising scheme wherein
the clinic offered a free medically-supervised weight loss program
to those who qualified. The clinic conducted a battery of tests2
on new patients and requested completion of a medical history
questionnaire purportedly to determine whether the patients were
healthy enough to start a diet. The patient would then meet with
a doctor who would make a diagnosis on the basis of the test
results and the patient’s medical history.
Unbeknownst to the patients, the clinic then billed their
respective insurance companies (one of which was the Civilian
Health and Medical Program of the Uniformed Services (“CHAMPUS”),
1
Grossman was an indicted coconspirator who pled guilty to
conspiring to defraud insurance companies by the submission of
false charges. The government dropped other charges against her in
exchange for her testimony against the remaining defendants.
2
The tests included a smack twenty-four, a CBC with
differential, a thyroid profile, an EKG, and a pulmonary function
test. The clinic could negotiate a lower price per test by sending
more tests to a particular laboratory and thereby increase its
profitability through testing new patients.
2
an agency for the Department of Defense) for the tests and the
doctor’s diagnosis and treatment. Central Arlington pursued a
policy of omitting overt claims related to its weight loss program
because insurance companies rarely provided coverage for a
diagnosis of obesity. Instead, the clinic physicians and staff
would submit an HCFA 1500 form (the standard insurance claims form
accepted by all insurance companies) that included the doctor’s
diagnosis premised on the test results, the medical history
questionnaire, and conversations with the patient. The clinic
never included obesity on the form as a reason for the patient’s
appointment.
Dr. Herlihy, somewhat reluctant at first, weighed the
financial fat of the practice (so to speak) with Grossman and
agreed to participate in the clinic’s scheme to bill insurance
companies for the tests and diagnoses, while trimming references to
the weight loss program as the incentive for the patients’
treatment. Indeed, in April 1992 he bought the clinic and took
over its operation. He changed its name to St. Francis Family Care
Clinic (“St. Francis Clinic”) and moved it to a different location.
Everything else about the clinic, however, remained virtually
unchanged. The St. Francis Clinic continued its practice of
submitting insurance claims for the tests and diagnoses of the diet
program’s participants--without mentioning the patient’s treatment
for weight loss.
3
Things began to melt down for Dr. Herlihy when a local
television station ran an exposé on the St. Francis Clinic and its
billing practices relating to the advertised weight loss program.
Federal authorities investigated the matter and indicted Dr.
Herlihy and others for multiple counts of conspiracy, mail fraud,
and making false claims to a government agency. After a full jury
trial, Dr. Herlihy was convicted on one count of conspiracy to
commit mail fraud and to make false claims to a government agency,
two counts of making such false claims, and nine counts of mail
fraud. The district judge sentenced him to a total of eighty-four
months of imprisonment. Dr. Herlihy appeals both his conviction
and sentence.
II
A
Dr. Herlihy first argues that the evidence will not support
his convictions. When evaluating an insufficiency of evidence
claim, we view the record and all reasonable inferences to be drawn
therefrom in the light most favorable to the government to
determine whether a rational trier of fact could have found the
essential elements of the offense beyond a reasonable doubt.
United States v. Greer, 137 F.3d 247, 249 (5th Cir. 1998) (citing
United States v. Bell, 678 F.2d 547, 549 (5th Cir. 1982) (en banc),
aff’d, 462 U.S. 356, 103 S.Ct. 2398, 76 L.Ed.2d 638 (1983)); United
States v. Burton, 126 F.3d 666, 669-70 (5th Cir. 1997). “‘The
evidence need not exclude every reasonable hypothesis of innocence
4
or be wholly inconsistent with every conclusion except that of
guilt, and the jury is free to choose among reasonable
constructions of the evidence.’” Burton, 126 F.3d at 669-70
(quoting United States v. Bermea, 30 F.3d 1539, 1551 (5th Cir.
1994)).
Whether the evidence is direct or circumstantial, our review
does not change. Burton, 126 F.3d at 670. What we may not do is
reweigh the evidence or assess the credibility of the witnesses;
instead we must “‘accept all credibility choices that tend to
support the jury’s verdict.’” Sneed, 63 F.3d at 385 (quoting
United States v. Anderson, 933 F.2d 1261, 1274 (5th Cir. 1991));
United States v. Lopez, 74 F.3d 575, 577 (5th Cir. 1996).
B
(1)
Dr. Herlihy first attacks his convictions for two counts
(counts 9 and 10) of making a false statement to a government
agency in violation of 18 U.S.C. § 1001. Section 1001 sets out
criminal penalties for:
Whoever, in any matter within the jurisdiction of any
department or agency of the United States knowingly and
willfully falsifies, conceals or covers up by any trick,
scheme, or device a material fact, or makes any
[materially] false, fictitious or fraudulent statements
or representations, or makes or uses any false writing or
document knowing the same to contain any [materially]
false, fictitious or fraudulent statement or
entry . . . .
18 U.S.C. § 1001. To prevail on a false statement claim, the
government must prove that the defendant (1) made a statement (2)
5
that was false (3) and material (4) with specific intent to deceive
(4) within the purview of government agency jurisdiction. United
States v. Shah, 44 F.3d 285, 288-89 (5th Cir. 1995) (quoting United
States v. Puente, 982 F.2d 156, 158 (5th Cir. 1993)); United States
v. Leal, 30 F.3d 577, 583-84 (5th Cir. 1994).
The government contends that Dr. Herlihy knowingly submitted
false claims for payment to CHAMPUS for diagnosis and treatment of
Sandra Baugh. Dr. Herlihy maintains that his claims for services
provided to Ms. Baugh were technically true, thus, placing the
second factor--falsity--in contention. “We cannot uphold a
conviction . . . where the alleged statement forming the basis of
a violation of section 1001 is true on its face.” United States v.
Moses, 94 F.3d 182, 188 (5th Cir. 1996). We thus turn to the
evidence in the record regarding Dr. Herlihy’s diagnosis and
treatment of Ms. Baugh.
Dr. Herlihy submitted claims for reimbursement from CHAMPUS
for diagnosis and treatment of carpal tunnel syndrome, allergic
rhinitis, blood, thyroid, and urinalysis. He did not make any
claim for treatment of obesity, nor did he list weight loss as a
reason for Ms. Baugh’s clinic visit, although the evidence showed
that she was lured to the St. Francis Clinic only after viewing a
television commercial advertising the free weight loss program.
Although Ms. Baugh included on her medical history questionnaire
past physical ailments including carpal tunnel syndrome, she did
not seek treatment for, nor--more importantly--did she receive
6
treatment of, any physical condition except obesity. Dr. Herlihy’s
submission of claims for his purported treatment of Ms. Baugh’s
various and sundry medical conditions thus constitutes a false
statement within the meaning of § 1001.3 A reasonable trier of
fact, when presented with this evidence, could have found that the
government proved each element of the charged offense under the
False Claims Act beyond a reasonable doubt.
(2)
Dr. Herlihy also argues that the evidence is insufficient to
support his convictions for counts 12 through 20, charging him with
mail fraud against Blue Cross/Blue Shield and Aetna Insurance
Company in violation of 18 U.S.C. § 1341. To prevail under this
statute, the government must prove (1) a scheme to defraud; (2) the
use of mails to execute that scheme; and (3) the defendant’s
specific intent to commit fraud. United States v. Tencer, 107 F.3d
1120, 1125 (5th Cir. 1997) (citing United States v. Fagan, 821 F.2d
1002, 1008 (5th Cir. 1987)). “[C]ompletion of the alleged scheme
must depend in some way on the information or documents that passed
through the mail.” Id. (citing United States v. Pazos, 24 F.3d
660, 665 (5th Cir. 1994)).
3
In fact, Dr. Herlihy admits in his brief that he submitted
reimbursement claims for treatment of Ms. Baugh’s various
conditions, but that she “was not specifically treated for each of
these conditions.” Appellant’s Brief at 16. The court is in the
dark as to how Dr. Herlihy can claim that insufficient evidence
exists to support his conviction of counts 9 and 10 when he has
admitted that he made claims for treatments that he never
administered.
7
The government maintains that it presented evidence
demonstrating that the insurance companies mailed reimbursement
checks to Dr. Herlihy for payment of the false claims he had
submitted. Each count of mail fraud posited that a specific check
had been mailed in furtherance of the fraud. Dr. Herlihy argues,
however, that the government failed to demonstrate that the
specific checks were reimbursement for false claims in the light of
the evidence that a portion of Dr. Herlihy’s practice included
valid claims for reimbursement. See Tencer, 107 F.3d at 1125-27
(reversing mail fraud convictions for failure of government to
connect each individual check with a fraudulent claim). He
contends that Blue Cross made its payments in bulk and that the
checks themselves did not identify for which specific claim they
were providing remuneration.
The government introduced documentary evidence, however, that
ties each check in counts 12 through 20 to a specific false claim.
The insurance companies attached to each check a Provider Claims
Transaction Report that listed the dates on which services had been
rendered and the total charges for those service dates. Also
introduced as government exhibits were the relevant patients’
health insurance claim forms and explanation of benefits forms
setting out with what illness they purportedly had been diagnosed
on a certain date and what services or treatment had been
8
rendered.4 When combined with the patients’ testimony concerning
the falsity of the health insurance claim forms, the evidence is
more than sufficient to tie each particular check to a false
claim.5
(3)
Dr. Herlihy similarly challenges his convictions for counts
12, 15, 18, and 20, which charge him with submitting false claims
for treatment of Barbara Brem, Connie Spagnoli, and Ronda Barnes.
Dr. Herlihy, however, never treated these individuals; another
clinic doctor, Dr. Yeoham, did. Dr. Herlihy maintains that
insufficient evidence exists to hold him responsible, either as a
conspirator or an aider and abettor, for Dr. Yeoham’s misconduct.
4
Although the documentary evidence is not quite as specific
with respect to count 12, the government elicited testimony at
trial sufficient to demonstrate a connection between the check in
that count and a false claim.
5
Although the amounts of the checks themselves do not match
the amounts listed in the indictment, this discrepancy is of no
moment. The amounts listed on the Provider Claims Transaction
Report, which was attached to each particular check, correlate with
the amounts in the indictment when only the amounts for which the
evidence supports a finding of a false claim are added together.
For instance, count 13 charges that a check dated January 11, 1993,
provided reimbursement in an amount of $202.13 for two particular
service dates, December 10 and 14, 1992. The actual check itself,
however, provides for payment in an amount of $295.93--a difference
of $93.80. The relevant insurance forms that evidence false claims
list service dates of December 10 and 14. The Provider Claims
Transaction Report lists service dates of December 10, 14 and 22
with corresponding charges of $157.13, $45.00, and $93.80,
respectively. There is no evidence that the claim for
reimbursement for services rendered on December 22 was false and
that amount of $93.80 was not included in the indictment. The
remaining amount of the check, $202.13, is the exact amount listed
in the indictment.
9
A conviction for conspiracy requires proof of (1) an agreement
between two or more persons (2) to violate the law (3) and the
commission of an overt act by at least one coconspirator in
furtherance of the unlawful scheme. United States v. Clark, 139
F.3d 485, 489 (5th Cir. 1998) (discussing conviction under 18
U.S.C. § 371); United States v. Chappell, 6 F.3d 1095, 1098 (5th
Cir. 1993) (same). The agreement among coconspirators need not be
formal or expressly stated and may be inferred by proof of concert
of action, but the evidence must sufficiently demonstrate that the
defendant’s participation in the conspiracy was knowing and
voluntary. Clark, 139 F.3d at 489; United States v. Sidhu, 130
F.3d 644, 648 (5th Cir. 1997); Chappell, 6 F.3d at 1098. A
defendant may be convicted of aiding and abetting a substantive
criminal offense “when he associates with the criminal activity,
participates in it, and acts to help it succeed.” United States v.
Delagarza-Villarreal, 141 F.3d 133, 140 (5th Cir. 1998); Sidhu, 130
F.3d at 650; United States v. Thorn, 917 F.2d 170, 175 (5th Cir.
1990); see 18 U.S.C. § 2.
Dr. Herlihy argues that the government “failed to establish
the existence of any unlawful agreement between Doctors Herlihy and
Yeoham.” In essence, he submits that he never advised Dr. Yeoham
as to her diagnoses and that he had no reason to question her
diagnoses or treatments. He argues that he signed her claim forms
without any knowledge that they included inaccurate, and thereby
false, statements. The government maintains, however, that Dr.
10
Herlihy should be held responsible for his own criminal conduct--
not that of Dr. Yeoham--in that “[e]ach of the insurance claims
submitted for reimbursement in each of the challenged counts bore
Herlihy’s name and signature.” Appellee’s Brief at 15. We must
uphold the convictions if a reasonable juror could have concluded
beyond a reasonable doubt that Dr. Herlihy knew the claims forms he
signed contained false information.
The record contains sufficient evidence upon which we may rely
to affirm Dr. Herlihy’s conviction of counts 12, 15, 18, and 20.
The record is replete with evidence from which one could readily
infer Dr. Yeoham’s complicity in the scheme to defraud the
insurance companies by falsifying diagnoses and refusing to
acknowledge on insurance forms the patient’s participation in the
clinic’s weight loss program. Dr. Herlihy also was well aware of
the scheme to defraud and of other staff members’ participation in
the scheme. The record amply supports the jury’s finding that Dr.
Herlihy knew the statements contained in the insurance claims were
false--irrespective of the fact that he did not treat those
particular patients.
(4)
As a final catch-all argument, Dr. Herlihy contests the
government’s proof of his intent to defraud--an element necessary
to uphold his convictions for conspiracy, false claims, and mail
fraud. United States v. Krenning, 93 F.3d 1257, 1264 (5th Cir.
1996) (conspiracy and mail fraud); Shah, 44 F.3d at 289 (false
11
claims). Dr. Herlihy maintains that he submitted claims only for
services rendered for which he was entitled to reimbursement. He
contends that all of the laboratory tests for which he requested
compensation from the insurance companies actually were performed
and medically were necessary before a patient began the clinic’s
stringent weight loss program. According to Dr. Herlihy, the
clinic also provided specific treatment to a number of patients for
medical conditions in addition to obesity and properly submitted
claims for these services.
The government presented evidence specifically relevant to the
treatment and diagnoses of nine patients. It also introduced
testimony concerning the general manner in which Dr. Herlihy
conducted clinic business. Dr. Herlihy issued explicit
instructions to his staff that participation in the clinic’s weight
loss program should not be listed as a reason for the patient’s
visit to the clinic on the patient’s chart. He also advised that
the staff should ferret out any signs or symptoms for treatment of
conditions other than obesity. Finally, he instructed staff
members to alter or destroy evidence and he attempted to intimidate
employees in an effort to dissuade them from cooperating fully with
investigating authorities. On the basis of the evidence in the
record, a reasonable finder of fact could have found beyond a
reasonable doubt that Dr. Herlihy acted with the requisite intent
to defraud.
12
III
A
In addition to his sufficiency of the evidence arguments, Dr.
Herlihy also maintains that the trial court abused its discretion
when it allowed the introduction of hearsay into evidence after
erroneously concluding that the statements were those of a
coconspirator made in furtherance of the conspiracy. We review
admission and exclusion of evidence by a district court for abuse
of discretion. United States v. Fike, 82 F.3d 1315, 1329 (5th Cir.
1996); United States v. Krout, 66 F.3d 1420, 1426 (5th Cir. 1995);
United States v. McConnell, 988 F.2d 530, 533 (5th Cir. 1993).
Hearsay, which generally is inadmissible, is defined as “a
statement, other than one made by the declarant while testifying at
the trial or hearing, offered in evidence to prove the truth of the
matter asserted.” Fed.R.Evid. 801(c). Certain out-of-court
statements, however, have been exempted from that definition and
constitute admissible nonhearsay. One such example is a statement
offered against a party that is made “by a coconspirator of a party
during the course and in furtherance of the conspiracy.”
Fed.R.Evid. 801(d)(2)(E); Fike, 82 F.3d at 1329. The prosecutor
must prove by a preponderance of the evidence “(1) that a
conspiracy existed, (2) that the coconspirator and the defendant
against whom the coconspirator’s statement is offered were members
of the conspiracy, and (3) that the statements were made during the
course and in furtherance of the conspiracy.” United States v.
13
Ruiz, 987 F.2d 243, 247 (5th Cir. 1993); United States v. Burton,
126 F.3d 666, 671 (5th Cir. 1997). The district court may consider
the contents of the statements sought to be admitted in making the
factual determination whether a statement falls within the
coconspirator exemption and we review only for clear error.
Burton, 126 F.3d at 671; Krout, 66 F.3d at 1426.
Dr. Herlihy specifically objects to the district court’s
admission of Grossman’s testimony concerning her telephone
conversations with two St. Francis Clinic employees: Corinne Shea
and Toni Smith. Shea’s statements, testified to by Grossman, are
as follows:
Corinne [Shea] was very concerned about the tenor and the
light in which the situation was portrayed. Attempting
to explain to me what had happened, how it had happened,
why it wasn’t exactly the way that it appeared. And we
had some -- we were friends, so we had some conversations
about that.
2 Supp. Record at 120. The district court clearly erred when it
found that Shea’s statements to Grossman were made in furtherance
of the conspiracy. The conversation appears to constitute only a
discussion between friends and the government has failed adequately
to explain how Shea’s statements furthered any conspiratorial
activity.6 That Shea’s statements were erroneously admitted,
6
Perhaps Shea recognized the fact that Grossman was a likely
candidate for interview with the authorities and she was attempting
to prime Grossman’s answers to interrogatories by explaining “why
it wasn’t exactly the way it appeared.” Statements made for the
purpose of concealing a conspiracy fall within the evidence rule’s
definition of nonhearsay. United States v. Broussard, 80 F.3d
1025, 1039 (5th Cir. 1996); United States v. Barksdale-Contreras,
14
however, does not end our inquiry. Erroneous admission of hearsay
constitutes reversible error only when the testimony has a
substantial impact on the jury’s verdict. United States v. Dickey,
102 F.3d 157, 163 (5th Cir. 1996). The three sentences of
inadmissible hearsay set out above could not have had a substantial
impact on the verdict so as to justify reversal in that they are
clearly immaterial and nonprejudicial. Furthermore, Shea testified
during the trial and was thus available for cross-examination.
Grossman’s testimony concerning Smith’s statements was more
substantial:
She called me to tell me that she had been contacted
by, I believe it was Rex Whitaker, but that office of the
postal inspector. But she had not spoken to him yet and
she wanted to know if I thought that she should speak to
him. And of course, I told her yeah, you should speak
with him. She said, well, I got a piece of paper, and I
don’t know what to do with it. And I asked her to tell
me, in fact, what she was talking about. And she told me
she had a piece of paper that was instructing somebody,
I believe, by the name of Resa to take the ledger cards
and change them from “diet services 300" to “medical
services 300" and that I think it might be written by
Corinne and she had said at Dr. Herlihy’s instructions.
There was a lot of stuff after the news stuff going on at
the clinic. People running around, files being pulled,
things being changed. And she had come upon this piece
of paper and what did I think she should do with it. I
asked her to send it to me thinking at some point in time
with what was going on in the investigation it might
prove valuable to me to have it. She didn’t want to do
that so I then told her don’t destroy it, you know, meet
with the government. You have to meet with them, anyway,
972 F.2d 111, 114-15 (5th Cir. 1992); United States v. Esacove, 943
F.2d 3, 5 (5th Cir. 1991); United States v. Del Valle, 587 F.2d
699, 704 (5th Cir. 1979). The government, however, failed to
demonstrate this, or any other, rationale behind Shea’s statements
by a preponderance of the evidence.
15
and give it to them. She said, what should I tell them?
I said tell them the truth. Tell them everything you
told me on the phone today. And I had not spoken with
her again, but through subsequent development I found out
that, yes, in fact she did speak with the government and
she did turn that letter over to them.
2 Supp. Record at 121-22. The government’s arguments concerning
Smith’s statements are more persuasive. The statement’s context
indicates that Smith was employed at the St. Francis Clinic at the
time she discovered the note and the record is replete with
evidence indicating that all of the clinic’s employees were aware
of and participants in the scheme to disguise obesity diagnoses and
treatments as other covered, and thus reimbursable, ailments and
services. The district court thus did not clearly err in
determining that the prosecution proved by a preponderance of the
evidence that Smith was a coconspirator at the time she made the
statement.
Neither did the court commit clear error when it found that
the statement was made in furtherance of the conspiracy. As noted
supra in note 5, statements made for concealment purposes are
considered to have been made in furtherance of the conspiracy.
From the context of the statement, the district court could have
concluded that Smith was considering destroying or otherwise
concealing the incriminating document. Although perhaps debatable,
the district court’s decision that Smith was a coconspirator and
that her statements were made in furtherance of the conspiracy is
not clearly erroneous. In the light of these findings, the
16
district court did not abuse its discretion when it allowed the
challenged testimony.
B
Dr. Herlihy next argues that the district court abused its
discretion in failing to give his requested jury charge. We review
only for abuse of discretion a district court’s refusal to give a
requested instruction and we consistently have noted that a
district court has “substantial latitude in formulating the jury
charge.” United States v. Pipkin, 114 F.3d 528, 535 (5th Cir.
1997); United States v. Asibor, 109 F.3d 1023, 1034 (5th Cir.
1997); United States v. Laury, 49 F.3d 145, 152 (5th Cir. 1995).
We will reverse only where the requested instruction (1) is
substantively correct, (2) was not substantially covered in the
court’s charge, and (3) concerns so important a point in the trial
that the failure to instruct on it materially impairs the
defendant’s ability to present his defense. Pipkin, 114 F.3d at
535; Laury, 49 F.3d at 152.
Dr. Herlihy specifically contends that the court failed
adequately to charge the jury on his theory of defense. A
defendant is “entitled to have the jury instructed on a theory of
the defense for which there is any foundation in the evidence.”
United States v. Cordova-Larios, 907 F.2d 40, 42 (5th Cir. 1990).
Dr. Herlihy’s theory of defense focused in part on his purported
lack of knowledge as to the falsity of the insurance claims and his
lack of any intent to defraud. His requested jury instruction No.
17
4 (Intent-Deliberate Purpose) set out in sum that, in order for the
jury to find Dr. Herlihy guilty, it had to find that he acted with
“deliberate purpose to defraud” and that he “knowingly and
intentionally sought to deceive another.” Requested jury
instruction No. 11 also noted that the jury “must find not only
that the diagnosis and claim were false, but that defendant had
actual knowledge at the time he was making such diagnosis and
claims that they were in fact false,” and that it could not convict
for acts of accident, mistake, or negligence.
Notwithstanding Dr. Herlihy’s arguments to the contrary, the
court’s jury charge adequately conveyed the substance of his
defense. In addition, the given instructions set out specific
definitions with respect to terms such as “knowingly,” “willfully,”
and “specific intent.” Furthermore, Dr. Herlihy’s requested
instruction No. 11 was incorrect inasmuch as it would have allowed
the jury to acquit if it found that the diagnoses actually recorded
were accurate, irrespective of the fact that Dr. Herlihy should
have provided other diagnoses or details to the insurance
companies. The indictment, however, also charged Dr. Herlihy with
claiming reimbursement for treatment for the diagnosed illnesses
listed on the claims forms that he never actually administered.
The court did not abuse its discretion when it refused Dr.
Herlihy’s requested instructions numbered 4 and 11.
Dr. Herlihy also maintains that the district court’s failure
to give his requested jury instruction No. 10 constitutes
18
reversible error. This requested instruction sets out that Dr.
Herlihy’s violation of any “federal or state health care regulation
or insurance standard . . . does not without more justify the
conclusion that he committed the separate and distinct criminal
offenses charged. . . . A mere violation of a health care
regulation is not a criminal offense.”
The prosecution presented evidence, without objection, that
CHAMPUS plainly requires the statement of the reason or reasons for
a patient’s visit to be asserted on the insurance claim form. The
St. Francis clinic never listed obesity on any claim form.
Instead, Dr. Herlihy submitted claims for false diagnoses that
disguised the true reason for the patient’s visit, which
representation constituted the making of false statements to a
government agency as charged in counts 9 and 10. The false
statements in the form of the ostensible diagnoses on the claims
forms, however, also violated the agency’s regulations that the
reason for the visit be listed on the claim form. Because of the
charges against Dr. Herlihy for making false statements to CHAMPUS,
the district court properly concluded that the requested jury
instruction might have confused the jury. In addition, the court
adequately instructed the jury as to the elements of each charged
offense, none of which permitted a conviction based solely on an
inadvertent violation of any agency regulation or insurance
standard. The district court did not abuse its discretion when it
refused to give Dr. Herlihy’s requested instruction No. 10.
19
C
In his final point of error with respect to the trial itself,
Dr. Herlihy argues that the district court abused its discretion
when it refused to excuse for cause ten prospective jurors who
recently had served together on a social security fraud case and
had returned a guilty verdict. Dr. Herlihy was forced to exhaust
his peremptory strikes to remove five of the challenged jurors, and
two of the ten were seated on his panel. He notes that he would
have preferred striking several others had he not already used his
peremptory strikes.
We review a district court’s ruling as to juror impartiality
for manifest abuse of discretion. United States v. Munoz, 15 F.3d
395, 397 (5th Cir. 1994). That jurors have served together in the
past, however, is no per se indication of presumptive partiality.
United States v. Basey, 816 F.2d 980, 1001 (5th Cir. 1987); United
States v. Jefferson, 569 F.2d 260, 261 (5th Cir. 1978). “The rule
in this Circuit, and indeed in all of the federal courts, is that
prior jury service during the same term of court in another
criminal case is not, standing alone, a sufficient basis to support
a challenge for cause.” Jefferson, 569 F.2d at 261; see also
United States v. Mutchler, 559 F.2d 955, 959 (5th Cir. 1977).
Counsel instead must show “specific evidence that the prior service
biased a particular juror.” Jefferson, 569 F.2d at 261.
Dr. Herlihy has not directed our attention to any specific
evidence demonstrating that the prior service biased any of the
20
particular jurors that made up his venire or sat on his panel so as
to justify their excuse for cause. The district court inquired as
to each juror’s impartiality and whether their prior service
affected in any untoward way their ability to provide Dr. Herlihy
with a fair and unbiased jury panel. All responded in the
negative. The court also further honored Dr. Herlihy’s request for
more specific inquiry regarding the prior social security fraud
case. Although the prior case and the case against Dr. Herlihy
both involved charges of fraud perpetrated against the government,
the trial court properly determined that the cases were
sufficiently dissimilar in several respects and that neither the
prosecutor nor any witnesses overlapped from the first case to Dr.
Herlihy’s. The court did not abuse its discretion when it declined
to strike for cause the ten challenged jurors.7
IV
A
Finally, Dr. Herlihy argues that, even if we affirm his
convictions, we must reverse his sentence for several errors in the
district court’s application of the sentencing guidelines. We
review the district court’s application and legal interpretation of
the sentencing guidelines de novo, and its findings of fact for
7
Dr. Herlihy’s reliance on our reasoning in prior cases
dealing with interim jury service is misplaced in that this case
does not deal with interim service. The reasoning of those cases
is inapposite inasmuch as they discuss the specific dangers
relevant solely to interim service.
21
clear error. United States v. Wyjack, 141 F.3d 181, 183 (5th Cir.
1998).
(1)
Dr. Herlihy initially maintains that the district court
erroneously calculated the amount of loss attributable to him. The
district court held Dr. Herlihy responsible for $1,015,052.63 in
losses due to the fraud perpetrated on the insurance companies and
CHAMPUS, which resulted in an eleven-level enhancement of his
offense level pursuant to U.S.S.G. § 2F1.1(b). Dr. Herlihy submits
that the correct amount of loss was between $20,000 and $40,000.
We review a district court’s loss calculation as a factual finding
subject only to clear error scrutiny. United States v. Peterson,
101 F.3d 375, 384 (5th Cir. 1996); United States v. Ismoila, 100
F.3d 380, 396 (5th Cir. 1996).
The dispute between the different amounts of loss centers on
“the percentage of insurance claims attributable to unreimbursable
weight loss treatment and the extent to which Dr. Herlihy should be
held responsible for claims made by the Grossman’s Central
Arlington Clinic.” Appellant’s Brief at 43. Dr. Herlihy maintains
that the district court erroneously bootstrapped to his offense
level the losses incurred by Grossman when she operated the clinic.
The sentencing guidelines allow a defendant to be held accountable
for “all reasonably foreseeable acts and omissions of others in
furtherance of [a] jointly undertaken criminal activity.” U.S.S.G.
§ 1B1.3(a)(1)(B). Dr. Herlihy maintains that he never acted in
22
concert with Grossman in executing her illegal undertaking and that
he should not be held responsible for the losses incurred when she
owned the clinic.
Specifically, Dr. Herlihy disputes the district court’s
imposition on him of losses incurred from May 1, 1991, until March
1992. The presentence report actually indicated that Dr. Herlihy
knew of and participated in the scheme as early as January 1991.
Testimony adduced at the sentencing hearing (as well as that
referenced from the trial) evidenced Dr. Herlihy’s early knowledge
of the fraudulent billing scheme as well as his acquiescence and
cooperation with Grossman in perpetrating the “fat” fraud. The
district court did not clearly err when it held Dr. Herlihy
responsible for losses incurred as early as May 1, 1991, under
Grossman’s watch.
Similarly, the court did not clearly err when it determined
the percentage of clinic deposits to use as a base reference for
calculating the losses suffered by the insurance companies and
CHAMPUS. The case agent, Postal Inspector Rex Whiteaker, testified
at the sentencing hearing as to the rationale underlying his
calculation of the losses incurred. The evidence was very thorough
and Whiteaker explained how he relied upon patient interviews,
employee interviews, bank records, and clinic records in
determining the percentages.8 In the light of all of the evidence,
8
The case agent determined that 80% of the payments made to
Central Arlington and 75% of those made to the St. Francis Clinic
23
the actual amount of loss as found by the district court was
derived from a conservative estimate of illegitimate claims and is
not clearly erroneous.
(2)
Dr. Herlihy next argues that the district court clearly erred
when it applied to his sentence a two-level enhancement for abuse
of a position of trust. The sentencing guidelines provide for the
enhancement “[i]f the defendant abused a position of public or
private trust, or used a special skill, in a manner that
significantly facilitated the commission or concealment of the
offense.” U.S.S.G. § 3B1.3. Dr. Herlihy insists that he did not
occupy a position of trust vis-a-vis the insurance companies. His
argument, however, is undercut by our recent opinion in United
States v. Iloani, 143 F.3d 921, 1998 WL 307190, *2 (5th Cir. 1998).
Iloani is directly on point and controls our decision as to this
issue. The district court did not err in applying the § 3B1.3
enhancement to Dr. Herlihy’s sentence.
(3)
As his final point of contention, Dr. Herlihy argues that the
district court clearly erred when it determined that he had
obstructed justice. The court applied U.S.S.G. § 3C1.1, which
provides for a two-level enhancement “[i]f the defendant willfully
obstructed or impeded, or attempted to obstruct or impede, the
were the result of fraudulent billings.
24
administration of justice during the investigation, prosecution, or
sentencing of the instant offense.” Dr. Herlihy maintains that
there was no ongoing government investigation at the time he
allegedly altered certain medical records and that the evidence
involved was not material in nature. United States v. Lister, 53
F.3d 66, (5th Cir. 1995). Neither of these arguments has any merit
under our review of the record9 and we AFFIRM the district court’s
imposition of the two-level enhancement.
IV
For the foregoing reasons, the defendant’s judgment of
conviction and sentence is
A F F I R M E D.
9
Although the parties disputed in their briefs whether Dr.
Herlihy had presented these claims to the district court, the
government conceded at oral argument that he had raised them. We
thus review for clear error instead of plain error. United States
v. Rickett, 89 F.3d 224, 226 (5th Cir. 1996).
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