|||UNITED STATES COURT OF APPEALS TENTH CIRCUIT
|||No. 99-3344,, No. 99-3347,, No. 99-3352
|||August 17, 2001
|||UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
ROBERT C. LAHUE, DEFENDANT-APPELLANT.
UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
DAN ANDERSON, DEFENDANT-APPELLANT.
UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
RONALD H. LAHUE, DEFENDANT-APPELLANT. THE AMERICAN HOSPITAL ASSOCIATION; FEDERATION OF AMERICAN HEALTH SYSTEMS; ASSOCIATION OF AMERICAN MEDICAL COLLEGES; AMERICAN OSTEOPATHIC ASSOCIATION; MISSOURI HOSPITAL ASSOCIATION; NATIONAL ASSOCIATION OF CRIMINAL DEFENSE LAWYERS, AMICI CURIAE.
|||Appeal from the United States District Court for the District of Kansas
(D.C. Nos. 98-CR-20030-03, 98-CR-20030-01, 98-CR-20030-04)
|||Tanya J. Treadway (Jackie N. Williams, United States Attorney, Topeka,
Kansas; William H. Bowne, Department of Justice, Washington, D.C., with
her on the brief), Assistant United States Attorney, Topeka, Kansas, for
Plaintiff-Appellee. Bruce C. Houdek of Bruce C. Houdek, P.C., Kansas City,
Missouri, for Defendant-Appellant Robert C. LaHue. James R. Wyrsch (Keith
E. Drill, Jacqueline A. Cook, and Cheryl A. Pilate with him on the briefs)
of Wyrsch Hobbs Mirakian & Lee, P.C., Kansas City, Missouri, for Defendant-Appellant
Dan Anderson. Jeffrey D. Morris of Bryan Cave Llp, Overland Park, Kansas,
for Defendant-Appellant Ronald H. LaHue. Thomas S. Crane, Tracy A. Minder,
Jeffrey D. Clements and Theresa M. Claffey, of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., Boston, Massachusets, filed an amici curiae brief
for The American Hospital Association, Federation of American Health Systems,
Association of American Medical Colleges, and American Osteopathic Association,
Missouri Hospital Association. Vicki Mandell-King, National Association
of Criminal Defense Lawyers, Denver, Colorado; Barbara E. Bergman, National
Association of Criminal Defense Lawyers, Albuquerque, New Mexico; Philip
C. Zimmerman of Holme Roberts & Owen Llp, Denver, Colorado, filed an
amicus curiae brief for National Association of Criminal Defense Lawyers.
|||Before Anderson, Baldock and Brorby, Circuit Judges.
|||Before Anderson, Baldock and Brorby, Circuit Judges.
|||The opinion of the court was delivered by: Brorby, Circuit Judge.
|||These matters are before the court on appellants' petitions for panel
rehearing and for rehearing en banc. The petitions for rehearing are denied.
|||The petitions for rehearing en banc were transmitted to all of the judges
of the court who are in regular active service as required by Fed. R. App.
P. 35. As no member of the panel and no judge in regular active service
on the court requested that the court be polled, those petitions are also
|||A revised panel opinion is attached to this order.
|||Defendants Dan Anderson, Dr. Robert LaHue, and Dr. Ronald LaHue were convicted
by a jury for violations of the Medicare Antikickback Act ("Act"),
42 U.S.C. § 1320a-7b(b), which criminalizes any remuneration knowingly and
willfully offered, paid, solicited, or received in exchange for Medicare
or Medicaid patient referrals, and violation of the conspiracy statute,
18 U.S.C. § 371. See United States v. Anderson, 85 F. Supp. 2d 1047, 1053
(D. Kan. 1999). In ruling on defendants' objections during trial and denying
their motions for a new trial, the district court concluded: (1) the jury
instructions on the Act correctly utilized the "at least in part"
or "one purpose" standard; (2) Rule 801(d)(2)(E) of the Federal
Rules of Evidence contemplates statements made pursuant to a lawful common
plan, which justified the court's admission of over sixty documents under
the rule; (3) two variances between the indictment and the evidence at trial
did not prejudice defendants' right to a fair trial; and (4) it correctly
denied defendants' request to provide judicial immunity to selected witnesses
in light of this circuit's case law and no indication the government engaged
in a deliberate attempt to distort the fact-finding process. See Anderson,
85 F. Supp. at 1069-72, 1074-75, 1079-81. We have jurisdiction pursuant
to 28 U.S.C. § 1291 and affirm.
|||I. Background *fn1
|||As a guide, the individuals discussed in this opinion can be broken down
into three groups. First, osteopathic physicians Robert and Ronald LaHue
("the LaHues") served as the principals in Blue Valley Medical
Group ("Blue Valley"), a specialized medical practice providing
care to patients in nursing homes and other residential care facilities.
See McClatchey, 217 F.3d at 826-27; Anderson, 85 F. Supp. 2d at 1052. Second,
Baptist Medical Center ("Baptist"), a Kansas City, Missouri hospital,
|||Anderson, Dan (President, Chief Executive Officer)
|||Eckard, Tom (Director of Geriatric Services)
|||Flynn, Dixie (Director of Geriatric and Gerontology Services)
|||Grim, Sarah (Director of Alternative Care Services)
|||Grimes, Deborah (Director of Geriatric Services)
|||Keel, Ronald (Vice President)
|||McClatchey, Dennis (Senior Vice President, Chief Operating Officer)
|||McGrath, Kevin (Vice President)
|||Probst, Gerard (Chief Financial Officer) See McClatchey, 217 F.3d at 827;
Anderson, 85 F. Supp. 2d at 1052, 1054-57.
|||Third, attorneys Ruth Lehr and Mark Thompson represented Baptist at various
times during the course of the alleged conspiracy. See McClatchey, 217 F.3d
at 827-28; Anderson, 85 F. Supp. 2d at 1052.
|||In the early 1980s, the LaHues were part-time faculty members at University
Hospital, where they referred, admitted, and treated their patients. See
Anderson, 85 F. Supp. 2d at 1053. In 1984, the LaHues sought an increase
in salary from University Hospital in return for their continued patient
referrals, in light of a competing offer from Baptist for $120,000 to $140,000
per year for the same patient referrals. See id. at 1054. University Hospital
declined their request. See id.
|||In 1985, Baptist entered into a contract ("1985 contract") with
the LaHues making them "Co-Directors of Gerontology Services."
McClatchey, 217 F.3d at 827; see Anderson, 85 F. Supp. 2d at 1054. By this
time, the LaHues had approximately 3,500 patients in the Kansas City metropolitan
area and a correlatively large number of hospital referrals. See Anderson,
85 F. Supp. 2d at 1054-55. Mr. Probst testified the negotiations were "backwards"
- establishing the fee first and only then agreeing to the services the
LaHues would provide in return - and, from his and Messrs. Anderson, McClatchey,
and Keel's perspective, were grounded in the hospital receiving patient
referrals. *fn2 McClatchey, 217 F.3d at
827. Mr. Probst described the resulting arrangement as unlike any he had
seen in twenty years, and one with "the highest request for an annual
consulting fee that I had experienced or had been involved with."
|||The arrangement evolved into a consulting contract in 1986 between Baptist
and the LaHues ("1986 agreement"). See Anderson, 85 F. Supp. 2d
at 1055-56. The 1986 agreement stated Baptist "desires to obtain the
professional services of the [LaHues] to assist it and its affiliate organizations
in the development and maintenance of a comprehensive Geriatrics Program,
including medical education of health care professionals, quality of care
standards, and philosophical and promotional matters relating to the care
of the aged." The LaHues' duties under the 1986 agreement included:
(1) clinical instruction, training, and information to Baptist's professional
staff, including the Adult Health Care Services Clinic ("Clinic"),
Emergency Services, Social Services, the medical staff in general, and the
hospital administration; (2) instruction and training to the family practice
residents and medical students; (3) consultation relating to the development
of geriatrics programs and the expansion and utilization of Baptist's services
for the aged; and (4) assisting in the completion of applications or reviewing
patient care data for grants and studies relating to the medical care and
institutional treatment of the aged.
|||Pursuant to the 1985 contract and the 1986 agreement, Baptist paid $75,000
annually to each of the LaHues from 1985 to 1993, with the exception of
1990 when the LaHues each received $68,750. See McClatchey, 217 F.3d at
827 & n.2; Anderson, 85 F. Supp. 2d at 1054. *fn3
Mr. Anderson directed those payments. See Anderson, 85 F. Supp. 2d at 1054.
When the payments began, Blue Valley referred massive numbers of patients
to Baptist, with a corresponding halt in referrals to University Hospital.
See Anderson, 85 F. Supp. 2d at 1062. Blue Valley referred 8-10% of Baptist's
hospital admissions and over 90% of the out-patient volume in its Clinic,
which made it Baptist's largest referral source.
|||Ms. Grim, Baptist's Director of Alternative Care Services from 1984 to
1985, testified that Mr. Anderson: (1) made it clear to her the Baptist-Blue
Valley relationship was a business deal in which Baptist would pay money
to Blue Valley in return for patient referrals; and (2) told her he was
very protective of the Baptist-Blue Valley relationship, because, in her
words, Baptist was "going to get patients. It was about occupancy."
Ms. Grimes, Baptist's Director of Geriatric Services from approximately
1986 to 1988, testified she was not aware of the 1985 contract, which purportedly
made the LaHues Co-Directors of Gerontology Services.
|||In the summer of 1985, the LaHues approached Mr. Anderson for help in
managing their practice. See McClatchey, 217 F.3d at 827; Anderson, 85 F.
Supp. 2d at 1055, 1064. Mr. Anderson placed one of Baptist's employees,
Thomas Eckard, *fn4 with Blue Valley soon
thereafter, but kept him on the Baptist payroll. See McClatchey, 217 F.3d
at 827; Anderson, 85 F. Supp. 2d at 1055. "Although [Mr.] Eckard's
official title was Director of Geriatric Services for Baptist, [he] worked
at [Blue Valley] and effectively acted as [Blue Valley]'s manager."
McClatchey, 217 F.3d at 827.
|||Based on his discussions with Messrs. Anderson and McClatchey, and others,
Mr. Eckard understood his primary job responsibility was to maintain Baptist's
relationship with Blue Valley in order to ensure the continued flow of patients
to the hospital. See Anderson, 85 F. Supp. 2d at 1055. Mr. Eckard remained
on the Baptist payroll and worked at Blue Valley in this capacity for approximately
eight years. See id.
|||Mr. Anderson and the Baptist management team were aware Blue Valley never
compensated Baptist for Mr. Eckard's management services. Drawing on his
thirty-two-year career in the health care industry, Mr. Anderson testified
he was "not aware of any [situation] that's identical to what we had
with Blue Valley Medical Group and Tom Eckard." Mr. McClatchey testified
it was a one-of-a-kind relationship.
|||Mr. Eckard described the services provided by the LaHues pursuant to the
1985 contract as "`minimal to none.'" Anderson, 85 F. Supp. 2d
at 1056 n.6, 1062 (quoting Mr. Eckard's testimony). Indeed, with Mr. Anderson's
approval, the relationship changed to a consulting agreement in 1986, because
the LaHues did not perform their duties under the 1985 contract. Id. at
1056, 1065. However, this change did not significantly affect the amount
of services the LaHues provided to Baptist. Numerous witnesses "testified
that the LaHues performed very few actual services in return for the substantial
annual sum they were paid." Id. at 1062.
|||For example, Mr. Eckard testified his observations over the eight and
one-half years of the Baptist-Blue Valley relationship revealed the LaHues
did not provide the enumerated services in the agreements on a routine basis.
Specifically, Mr. Eckard testified the LaHues: (1) never operated the Clinic;
(2) only went on rounds with the Clinic staff "four or five times";
(3) provided "very little" in-service medical education and training
to Baptist personnel; (4) spent "very minimal" amounts of time
meeting with Baptist emergency room personnel on issues other than patient
care; (5) only met with the emergency room nurses "two or three times";
and (6) trained Baptist family practice residents just "a few times."
|||Ms. Grimes sent Mr. McClatchey the following memorandum on March 3, 1987:
|||The [Blue Valley] contract, effective June 1, 1986, stipulated scheduled
activities to be carried out through the year (see enclosed). As of this
date only one activity, quarterly staff meetings, has been implemented.
I feel that it is in Baptist Medical Center's best interest to promptly
implement the activities as outlined in the contract. See Anderson, 85 F.
Supp. 2d at 1056.
|||Ms. Flynn, Baptist's Director of Geriatric and Gerontology Services from
1988 to 1990, had operational responsibility for the Clinic and met weekly
with Mr. Anderson, who she characterized as "very knowledgeable"
regarding the Clinic and its operation. She testified the LaHues did not
provide her any administrative consulting regarding supervision, budgeting,
policy and procedure development, or standard of care development for the
Clinic. Further, all the clinical development work was performed by Ms.
Flynn and others; the LaHues only made recommendations as to the types of
clinics to be created.
|||Regarding the services listed in the 1986 agreement as those sought by
Baptist from the LaHues, Ms. Flynn testified: (1) the LaHues did nothing
to develop a comprehensive geriatrics program at Baptist; (2) she did not
observe them providing any medical education to health care professionals;
(3) they had "very limited" contact with the physicians who treated
their patients at Baptist; and (4) did not contribute regarding quality
of care issues. Turning to the LaHues' enumerated duties in the 1986 agreement,
Ms. Flynn testified she neither observed nor knew of the LaHues: (1) providing
appropriate clinical instruction and training to the professional staff
at Baptist; (2) performing rounds with Baptist personnel; (3) providing
instruction or training to the Baptist family practice residents; (4) developing
geriatric programs or expansion and utilization of Baptist services; and
(5) developing grants or studies. Most importantly, none of the Baptist
management team ever asked her whether the LaHues provided the required
services. She also testified she would not have budgeted any money for the
services the Clinic received from the LaHues. In summary, she stated: "I
felt more like I was working for them rather than them being available to
me," and, had she known about the $150,000 payments to the LaHues per
year, she stated: "I would have been alarmed."
|||In late 1991/early 1992, Mr. McGrath *fn5
learned from Dr. Robert LaHue that he and Dr. Ronald LaHue were not performing
some of the services listed in the 1986 agreement. See McClatchey, 217 F.3d
at 828. Further, Mr. McGrath received documentation the LaHues provided
consulting for only approximately two hours per week. See id. at 830. Mr.
McGrath discussed this information with Messrs. Anderson, McClatchey and
Thompson, and expressed his concern the two hours per week did not justify
the fees Baptist was paying the LaHues. See id. at 828. Messrs. Anderson,
McClatchey, and Thompson neither disputed the accuracy of nor told Mr. McGrath
the LaHues were performing other services not reflected in this documentation.
|||Nonetheless, the payments from Baptist to the LaHues continued. During
1993 and 1994, when it appeared the relationship with the LaHues might soon
end, "Mr. Anderson worked to develop a strategy to replace the [Blue
Valley] patients but did nothing to replace the LaHues' consulting services."
*fn6 See Anderson, 85 F. Supp. 2d at 1065.
As stated by the district court in its ruling on the defendants' post-trial
motions: "Mr. Anderson knew the payments he directed were more than
fair market value for consulting services, that the services specified ultimately
proved to be not entirely bona fide, and that the services specified were
not sufficiently being performed." Id.
|||The LaHues and Baptist benefitted greatly from their relationship. The
LaHues received over $1.8 million from Baptist as a result of the various
contracts and Mr. Eckard's unreimbursed salary, and Baptist received over
$39.5 million from Medicare for services rendered to Blue Valley's patients.
|||With Mr. Eckard's assistance, Blue Valley entered into similar arrangements
or contracts with four other hospitals: (1) from 1991 to 1994, St. Joseph's
Medical Center paid Blue Valley over $341,000 and received over $4.9 million
from Medicare; (2) from 1990 to 1992, Deaconess Medical Center paid Blue
Valley $125,000 and received over $2 million from Medicare; (3) from 1992
to 1994, Bethany Medical Center paid Blue Valley over $169,000 and received
over $3.5 million from Medicare; and (4) from 1992 to 1994, Alexian Brothers
Hospital paid Blue Valley $190,000 and received over $5.6 million from Medicare.
See Anderson, 85 F. Supp. 2d at 1060-61. Around 1992, Liberty Hospital refused
the LaHues' offer to enter a similar arrangement or contract. See id. at
|||II. Procedural History
|||In pertinent part, the Act provides:
|||(1) whoever knowingly and willfully solicits or receives any remuneration
... directly or indirectly, overtly or covertly, in cash or in kind -
|||(A) in return for referring an individual to a person for the furnishing
or arranging for the furnishing of any item or service for which payment
may be made in whole or in part under a Federal health care program ...
|||shall be guilty of a felony and upon conviction thereof, shall be fined
not more than $25,000 or imprisoned for not more than five years, or both.
|||(2) whoever knowingly and willfully offers or pays any remuneration ...
directly or indirectly, overtly or covertly, in cash or in kind to any person
to induce such person -
|||(A) to refer an individual to a person for the furnishing or arranging
for the furnishing of any item or service for which payment may be made
in whole or in part under a Federal health care program ...
|||shall be guilty of a felony and upon conviction thereof, shall be fined
not more than $25,000 or imprisoned for not more than five years, or both.
42 U.S.C. § 1320a-7b(b).
|||Baptist executives Mr. Anderson, Mr. McClatchey and Mr. Keel as well as
attorneys Ms. Lehr and Mr. Thompson were each charged with one count of
conspiracy to violate the Act with the LaHues and six other hospitals, and
one substantive count of violating the Act. See Anderson, 85 F. Supp. 2d
at 1052. The LaHues were each charged with one count of conspiracy to violate
the Act with Baptist and six other hospitals, seven substantive counts of
violating the Act, and a false claims conspiracy count in violation of 18
U.S.C. § 286. See id. Dr. Robert LaHue was also charged with threatening
a witness in violation of 18 U.S.C. § 1512. See id.
|||At the close of the government's case, the district court: (1) granted
the attorneys' motions for acquittal; (2) ruled the government failed to
present sufficient evidence to demonstrate that any defendant but the LaHues
participated in a conspiracy extending to the six other hospitals; *fn7
(3) severed the false claims and witness tampering counts as improperly
joined pursuant to Fed. R. Crim. P. 8(b); *fn8
and (4) dismissed one of the substantive counts against the LaHues on statute
of limitations grounds. See id. at 1053.
|||On completion of a nine-week trial, the jury: (1) convicted Mr. Anderson
on both charges; (2) convicted Mr. McClatchey on both charges; (3) acquitted
Mr. Keel on the basis of his statute of limitations defense; (4) convicted
Dr. Ronald LaHue of the conspiracy charge and four of the substantive charges
of violating the Act; and (5) convicted Dr. Robert LaHue of the conspiracy
charge and six of the substantive charges of violating the Act. See id.
The district court granted Mr. McClatchey's motion for judgment of acquittal
or, in the alternative, a new trial, and granted Dr. Ronald LaHue's motion
for acquittal as to the substantive count charging him with a violation
of the Act with regard to Alexian Brothers Hospital. See id. at 1051-52,
|||The district court: (1) sentenced Mr. Anderson to fifty-one months imprisonment,
a $75,000 fine, a $100 special assessment, and three years supervised release;
(2) sentenced Dr. Ronald LaHue to thirty-seven months imprisonment, a $25,000
fine, a $200 special assessment, and three years supervised release; and
(3) sentenced Dr. Robert LaHue to seventy months imprisonment, a $75,000
fine, $142,040 restitution, a $350 special assessment, and three years supervised
|||There are four issues on appeal. All three defendants raise the following
two issues: (1) whether the district court adopted an improperly broad construction
of the Act, thereby erroneously instructing the jury under a "one purpose
test" which effectively criminalized innocent conduct; and (2) whether
the district court erred in admitting numerous co-conspirator statements
under a so-called "joint venture" theory, thereby violating Fed.
R. Evid. 801(d)(2)(E) and defendants' constitutional right to confrontation.
Mr. Anderson and Dr. Robert LaHue raise the third issue: (3) whether the
district court erred in failing to grant a new trial based on prejudicial
variances between the indictment and evidence at trial. Finally, the LaHues
raise the fourth issue: (4) whether the district court abused its discretion
by refusing to grant use immunity to twelve proposed defense witnesses who
invoked the Fifth Amendment and refused to testify after the government
identified them as unindicted co-conspirators in this case.
|||Before the government filed its consolidated brief in this appeal, another
panel of this court published its opinion resolving the government's appeal
of the district court's judgment of acquittal and the alternative grant
of a new trial for Mr. McClatchey. See McClatchey, 217 F.3d at 826. This
court reversed the district court's judgment and order, and remanded with
instructions to reinstate the jury verdict against Mr. McClatchey. See id.
at 836. This opinion is critical to our resolution of the first and third
issues on appeal here, as we will detail in those sections of our discussion.
See infra Part III.A, C.
|||A. Jury Instruction on and Construction of the Act
|||Defendants *fn9 claim the applicable
jury instructions on the Act - Instruction #32 *fn10
for Mr. Anderson and Instruction #33 *fn11
for the LaHues - are incorrect and warrant a new trial. Specifically, they
challenge the "at least in part" or "one purpose" standard
applied in these two instructions. In other words, they argue a defendant
should not be convicted under the Act when his offer, payment, solicitation,
or receipt of remuneration was motivated merely in part to induce or in
return for referrals; rather, they suggest conviction is only appropriate
when the motivation to induce or in return for referrals was the defendant's
|||In their opening briefs - filed before the McClatchey panel published
its decision - defendants correctly noted this was an issue of first impression
in this circuit, and argued for the rejection of the "one purpose"
standard enunciated by the Third Circuit in United States v. Greber, 760
F.2d 68 (3d Cir.), cert. denied, 474 U.S. 988 (1985). Defendants argued
the "one purpose" standard was inappropriate because: (1) "[i]t
converts a criminal statute passed with a specific aim - to deter and punish
abusive practices that threaten the integrity of federally funded health
care programs - into prohibition of all arrangements, no matter how slight,
that implicate patient referrals" (emphasis in original); (2) as a
policy matter, it will destroy highly beneficial health care arrangements;
(3) statutory construction principles require a narrower interpretation
of the Act; (4) the Department of Health and Human Services, charged by
statute in 1987 to promulgate regulations defining conduct not subject to
the Act's prohibitions, did not provide "any authoritative interpretation
of the [Act] as it applied to hospital-physician relationships" during
the term of the charged conspiracy; and (5) it leads to "unduly confusing"
jury instructions and courts should utilize the actual language of the Act
instead. Finally, anticipating this court's potential agreement with Greber,
defendants argued the "one purpose" standard renders the Act unconstitutionally
vague by vesting undue discretion in "government officials to decide
what is legal and what is illegal."
|||In McClatchey, this court rejected Mr. McClatchey's same argument "that
the district court improperly instructed the jury it could convict [him]
if remuneration was paid `at least in part' to induce patient referrals."
McClatchey, 217 F.3d at 826, 834 (emphasis added). We held Instruction #32
"accurately informed the jury of the applicable law," because
"a person who offers or pays remuneration to another person violates
the Act, so long as one purpose of the offer or payment is to induce Medicare
or Medicaid patient referrals." Id. at 835 (emphasis added). We recognized
"[t]he only three Circuits to have decided this issue have all adopted
the `one purpose' test." Id. (citing cases from the Third, Fifth, and
Ninth Circuits). Our decision to adopt the "one purpose" test
rested upon our review of, and agreement with, the "sound reasoning"
of the Third Circuit in Greber. Id. In this appeal, the government claims
defendants' challenges to Instructions #32 and 33 are foreclosed by the
stare decisis effect of McClatchey, the Act as construed by McClatchey is
not void for vagueness under due process, and, therefore, defendants are
not entitled to a new trial based on the jury instructions. We agree with
the government. *fn12
|||"We are bound by the precedent of prior panels absent en banc reconsideration
or a superceding contrary decision by the Supreme Court." In re Smith,
10 F.3d 723, 724 (10th Cir. 1993) (per curiam), cert. denied, 513 U.S. 807
(1994). In this case, defendants' petition for initial hearing en banc on
this issue was denied, and the Supreme Court has not decided a case on the
Act since our McClatchey decision. See Order filed August 3, 2000. Accordingly,
McClatchey is controlling authority, *fn13
and we must conclude Instruction #32 accurately informed the jury of the
law applicable to Mr. Anderson.
|||Similarly, we conclude the reasoning underlying the McClatchey holding
applies equally to remuneration solicited or received in return for Medicare
or Medicaid patient referrals. See United States v. Meyers, 200 F.3d 715,
720 (10th Cir. 2000) ("The precedent of prior panels which this court
must follow includes not only the very narrow holdings of those prior cases,
but also the reasoning underlying those holdings, particularly when such
reasoning articulates a point of law."); see also McClatchey, 217 F.3d
at 835 (citing the Ninth Circuit's opinion in United States v. Kats, 871
F.2d 105, 108 (9th Cir. 1989) adopting the "one purpose" standard);
Kats, 871 F.2d at 108 (adopting the "one purpose" standard and
affirming the defendant's conviction for receiving kickbacks in exchange
for referral of Medicare payments). As a practical matter, if we held otherwise,
we could illogically be faced with a case in which the offeror/payor is
deemed to violate the Act, but the offeree/payee is not. Accordingly, we
conclude Instruction #33 accurately informed the jury of the law applicable
to the LaHues.
|||We turn to defendants' due process challenge to our "one purpose"
interpretation of the Act as unconstitutionally vague, which is the only
unresolved issue after McClatchey and our above conclusions. "When
reviewing a statute alleged to be vague, courts must indulge a presumption
that it is constitutional, and the statute must be upheld unless the court
is satisfied beyond all reasonable doubt that the legislature went beyond
the confines of the Constitution." United States v. Day, 223 F.3d 1225,
1228 (10th Cir. 2000) (quotation marks and citation omitted). "Under
settled law, a broadly worded statute can be sufficiently clarified by a
narrowing, authoritative interpretation to fend off a vagueness challenge."
Dirks v. SEC, 802 F.2d 1468, 1471 (D.C. Cir. 1986).
|||Defendants appear to argue this court's "one purpose" interpretation
of the Act is unconstitutional on its face and as applied to them. As a
preliminary matter, we hold their facial challenge is prohibited. See United
States v. Gaudreau, 860 F.2d 357, 360-61 (10th Cir. 1988). Facial challenges
are permitted when the statute "threaten[s] to chill constitutionally
protected conduct" and "in some instances ... on pre-enforcement
review." Id. at 360-61. In this case, defendants have not argued, nor
do we perceive, that the Act threatens to chill constitutionally protected
conduct, *fn14 and this is not a pre-enforcement
situation. See id. at 361. Accordingly, we must examine the Act, as applied
in this case, for vagueness in light of the conduct with which defendants
are charged. See id.
|||"[T]he void-for-vagueness doctrine requires that a penal statute
define the criminal offense with sufficient definiteness that ordinary people
can understand what conduct is prohibited and in a manner that does not
encourage arbitrary and discriminatory enforcement." Kolender v. Lawson,
461 U.S. 352, 357 (1983). "The same facets of a statute usually raise
concerns of both fair notice and adequate enforcement standards. Hence the
analysis of these two concerns tends to overlap. The Supreme Court, however,
while ... recognizing the second concern as more important, continues to
treat each as an element to be analyzed separately." Gaudreau, 860
F.2d at 359-60. We evaluate each element in turn. *fn15
|||Regarding fair notice, "[o]ne to whose conduct a statute clearly
applies may not successfully challenge it for vagueness." Day, 223
F.3d at 1228 (addressing the defendant's vagueness challenge to a federal
criminal statute) (quotation marks and citations omitted). In this case,
the evidence produced at trial clearly demonstrated defendants negotiated
and entered "consulting" contracts in an attempt to camouflage
an underlying agreement to exchange remuneration for patient referrals.
Therefore, defendants' conduct is the very conduct contemplated by the Act,
and they cannot successfully challenge the Act for vagueness as to fair
notice. See id. at 1228-29.
|||Specifically, the record shows the following about the Baptist-LaHues
relationship: *fn16 (1) the LaHues entered
negotiations with Baptist, because University Hospital refused to acquiesce
to their demand for an increased salary in return for continued patient
referrals; (2) the 1985 contract and 1986 agreement established a fee of
$150,000 per year from Baptist to the LaHues; (3) Baptist and the LaHues
resolved the fee before discussing an arrangement to justify it; (4) from
Mr. Anderson's perspective, these negotiations were grounded in the hospital
receiving patient referrals, and he told Ms. Grim the Baptist-Blue Valley
relationship was a business deal in which Baptist would pay money to Blue
Valley in return for patient referrals; and (5) once Baptist began the payments,
Blue Valley referred massive numbers of patients to Baptist with a corresponding
halt in referrals to University Hospital.
|||Further evidence substantiates this was a pay-for-patients scheme. For
instance, the record on whether the LaHues fulfilled their commitments under
the 1985 contract and 1986 agreement and Mr. Anderson's knowledge thereof
reveals: (1) Ms. Grimes was unaware of the 1985 contract, which purportedly
made the LaHues co-directors of gerontology services, and she documented
the LaHues' failure to fulfill all but one of the activities required of
them in the 1986 agreement as of March 1987; (2) Ms. Flynn testified the
LaHues did nothing required of them in the 1986 agreement from 1988 to 1990,
and intimated Mr. Anderson knew this because he was "very knowledgeable"
about the Clinic's operations; (3) in late 1991/early 1992, Mr. McGrath
met with Mr. Anderson and discussed (a) Dr. Robert LaHue's statement that
he and Dr. Ronald LaHue were not performing some of the services listed
in the 1986 agreement, and (b) documentation reflecting the LaHues consulted
at Baptist for only two hours per week *fn17
; and (4) Mr. Eckard testified the LaHues provided minimal to no services
under the 1985 contract, and failed to provide the enumerated services in
the 1986 agreement on a routine basis, if at all.
|||Finally, we note the evidence supports the following conclusions: (1)
although Mr. Anderson controlled whether the payments would continue, he
did not stop them when he learned the services were neither entirely bona
fide nor performed by the LaHues, and the payments were more than fair market
value for consulting services; and (2) when it appeared the Baptist/LaHues
relationship might end in 1994, Mr. Anderson worked to develop a strategy
to replace the Blue Valley patients, but did nothing to replace the LaHues'
consulting services. We therefore conclude the evidence produced at trial
demonstrated defendants knew their conduct, which was clearly a pay-for-patients
scheme, was prohibited by the Act. Accordingly, their vagueness challenge
as to fair notice must fail. See Day, 223 F.3d at 1228-29.
|||Regarding the adequacy of enforcement standards, "[d]ue process requires
that legislation state reasonably clear guidelines for law enforcement officials,
juries, and courts to follow in discharging their responsibility of identifying
and evaluating allegedly illegal conduct." Gaudreau, 860 F.2d at 363.
"Where the legislature fails to provide such minimal guidelines, a
criminal statute may permit `a standardless sweep [that] allows policemen,
prosecutors, and juries to pursue their personal predilections.'" Kolender,
461 U.S. at 358 (quoting Smith v. Goguen, 415 U.S. 566, 575 (1974)). A statute
is unconstitutionally vague if its language and construction by the courts
vest authority in law enforcement officers, prosecutors, and juries to assign
their own subjective meaning to an element of the offense. See Kolender,
461 U.S. at 355-61; Gaudreau, 860 F.2d at 363-64. *fn18
|||Even if defendants understood the illegality of a pay-for-patients scheme
under the Act, they claim the Act is unconstitutionally vague because it
encourages arbitrary enforcement. Defendants argue "prosecutors and
agency officials may choose to proceed criminally against virtually anyone
in the health care community" under the "one purpose" test,
which they describe as having "limitless reach." Specifically,
they claim the "one purpose" test
|||makes virtually every arrangement between a hospital and a physician unlawful,
because the hospital executive will always have patient referrals in mind,
at least to some degree....
|||... In other words, in the hospital-physician context at least, according
to the district court, all conduct is illegal unless the [Department of
Health and Human Services] has expressly, or through an `advisory' dispensation,
made a specific act legal.
|||We disagree for two reasons.
|||First, the Act explicitly prohibits any remuneration knowingly and willfully
offered or paid to induce, or solicited or received in return for, Medicare
or Medicaid patient referrals. See 42 U.S.C. § 1320a-7b(b). Defendants fail
to point to any language in the Act or the "one purpose" test
that vests authority in law enforcement officers, prosecutors, and juries
to assign their own subjective meaning to an element of the offense. We
do not perceive any such problem, and conclude a fair reading of the Act
provides reasonably clear guidelines for law enforcement officials, juries,
and courts to evaluate and discern illegal conduct. See Gaudreau, 860 F.2d
at 363-64. Moreover, it is the application of the Act to defendants by law
enforcement officials we review; in an "as applied" examination,
defendants may not generalize beyond the conduct with which they are charged.
See id. at 360-61. As noted above, the evidence produced at trial shows
defendants clearly participated in a pay-for-patients scheme. Thus, enforcement
of the Act as applied to defendants was not arbitrary or discriminatory.
See United States v. Corrow, 119 F.3d 796, 804 (10th Cir. 1997) ("Our
analysis of the fairness issue infuses our disposition of the second vagueness
concern, the potential for arbitrary and discriminatory enforcement."),
cert. denied, 522 U.S. 1133 (1998).
|||Second, defendants' argument ignores the actual instructions given in
this case. The district court instructed the jury that
|||[Mr.] Anderson ... cannot be convicted merely because [he] hoped or expected
or believed that referrals may ensue from remuneration that was designed
wholly for other purposes. Likewise, mere oral encouragement to refer patients
or the mere creation of an attractive place to which patients can be referred
does not violate the law.
|||The district court further instructed the jury that
|||Robert LaHue and Ronald LaHue cannot be convicted merely because they
received remuneration wholly in return for services and also decided to
refer patients to the hospital. Likewise, mere referral of patients because
of oral encouragement or because of a belief that the place to which patients
are to be referred is attractive does not violate the law.
|||This application of the Act by the district court clearly allows business
relationships between a hospital and physician where the motivation to enter
into the relationship is for legal reasons entirely distinct from the collateral
hope for or decision to make referrals. See McClatchey, 217 F.3d at 834
& n.7. Accordingly, contrary to defendants' assertion, the Act, as applied
in this case, does not make all conduct illegal when a hospital executive
or physician has referrals in mind.
|||In summary, under the controlling authority of McClatchey and for the
other reasons articulated herein, we conclude the district court correctly
instructed the jury on the Act. We hold the Act, as applied to defendants,
is not unconstitutionally vague. Accordingly, defendants are not entitled
to a new trial on this issue.
|||B. Rule 801(d)(2)(E) of the Federal Rules of Evidence
|||Rule 801(d)(2)(E) of the Federal Rules of Evidence excludes from the hearsay
prohibition "statement[s] by a coconspirator of a party during the
course and in furtherance of the conspiracy." Fed. R. Evid. 801(d)(2)(E).
|||In order for statements to be admissible under Rule 801(d)(2)(E), the
proponent of the evidence must establish, by a preponderance of the evidence,
that: (1) a conspiracy existed; (2) the declarant and the defendant were
both members of the conspiracy; and (3) the statements were made during
the course of, and in furtherance of, the conspiracy. United States v. Williamson,
53 F.3d 1500, 1517-18 (10th Cir.) (citations omitted), cert. denied, 516
U.S. 882 (1995).
|||Defendants *fn19 claim the district
court erroneously admitted over sixty documents under Rule 801(d)(2)(E).
Specifically, they challenge the district court's conclusion that the word
"conspiracy" includes a lawful common plan, and therefore argue
documents related to such a plan are inadmissible. The government argues
the district court correctly determined Rule 801(d)(2)(E) contemplates any
common plan or enterprise, whether legal or illegal, in which the declarant
and Mr. Anderson or the LaHues jointly participated. In the alternative,
the government claims any error in admitting the documents under Rule 801(d)(2)(E)
|||We conclude the admission of these disputed documents constitutes harmless
error. *fn20 See United States v. Jones,
44 F.3d 860, 873 (10th Cir. 1995) ("While we review evidentiary rulings
by considering the record as a whole, deference to the trial judge is heightened
when reviewing rulings on hearsay questions. This court applies a harmless
error standard when reviewing trial courts' rulings on hearsay objections
resting solely on the Federal Rules of Evidence."); United States v.
Perez, 989 F.2d 1574, 1582 (10th Cir. 1993) (en banc) (before considering
whether remand is appropriate for an alleged Rule 801(d)(2)(E) error, this
court should assume the challenged statements were inadmissible and then
assess whether their admission was harmless error). In applying the harmless
error standard, we must first resolve whether defendants' objection to the
documents rested solely on the Federal Rules of Evidence. On appeal, defendants
argue the admission of these documents violated their Sixth Amendment right
to confrontation. However, the government claims defendants did not raise
this Confrontation Clause argument to the district court, and waived it
on appeal by failing to claim the district court committed plain error by
not raising the issue sua sponte.
|||"[W]here a Confrontation Clause objection is not explicitly made
below we will not address the constitutional issue in the absence of a conclusion
that it was plain error for the district court to fail to raise the constitutional
issue sua sponte." United States v. Perez, 989 F.2d 1574, 1582 (10th
Cir. 1993) (en banc). Defendants do not respond to the government's argument
in their reply brief, and, as the government claims, they do not argue the
district court committed plain error in failing to raise the constitutional
issue sua sponte. For this reason, we deem the issue waived. See United
States v. Hardwell, 80 F.3d 1471, 1492 (holding issue waived when party
failed "to make any argument or cite any authority to support his assertion"),
reh'g granted in part on other grounds, 88 F.3d 897 (10th Cir. 1996). Accordingly,
we are left to review only a hearsay objection, which we review under the
non-constitutional harmless error standard. See Perez, 989 F.2d at 1582.
|||"A [non-constitutional] harmless error is one that does not have
a substantial influence on the outcome of the trial; nor does it leave one
in grave doubt as to whether it had such effect." Jones, 44 F.3d at
873. A conclusion that an alleged error is harmless completes our review
of a hearsay objection. See id. at 873-75. The Background section of this
opinion is supported by witness testimony and exhibits to which there is
no objection on appeal; in other words, it was constructed without any reference
to the disputed documents. See supra Part I. Our review of the disputed
documents, coupled with the overwhelming evidence of defendants' guilt of
the charged offenses revealed in the Background section, convinces us that
the admission of the disputed documents did not substantially influence
the trial's outcome and does not leave us in grave doubt as to whether they
had such effect. See supra Part III.A. Accordingly, even if the district
court erroneously admitted the disputed documents, we hold their admission
constituted harmless error.
|||Finally, defendants claim "the district court failed to require the
government to identify the declarant of the hearsay statements being admitted
into evidence over the objection of the defense." However, they fail
to identify the specific statements the district court allegedly admitted
in error, or even meet our requirement of providing citations to the record
where these statements may be found. See Fed. R. App. P. 28(a)(9)(A); Tenth
Cir. R. 28.2(C)(2), (3)(a). "Due to these failures, this court cannot
even attempt to assess the merits of [their] argument. The issue of the
admissibility of this evidence is therefore waived on appeal." McClatchey,
217 F.3d at 835-36.
|||Mr. Anderson and Dr. Robert LaHue claim certain variances between the
indictments and case presented at trial substantially prejudiced their right
to a fair trial. In its ruling on their motions for a new trial, the district
court stated: "The court agrees with the defendants that there were
two variances in this case. The first was the variance the court recognized
at trial when it narrowed the count one conspiracy. The second was the variance
with respect to the government's failure of proof as to the lawyer defendants."
Anderson, 85 F. Supp. 2d at 1070.
|||More specifically, the "other hospitals variance" represents
the government's failure to present sufficient evidence to demonstrate that
any defendant but the LaHues participated in a conspiracy extending to the
six hospitals other than Baptist. See id. at 1053. The "attorney defendants
variance" reflects the acquittal of Ms. Lehr and Mr. Thompson at the
close of the government's case. See id. Despite these variances, the district
court denied the motions for a new trial. See id. at 1051-52, 1069-73. On
appeal, Mr. Anderson claims these two variances entitle him to a new trial,
while Dr. Robert LaHue argues the "attorney defendants variance"
entitles him to a new trial. *fn21
|||"Whether a variance between an indictment and the case presented
at trial is sufficiently prejudicial to warrant a new trial is a question
of law.... A new trial is only necessary, however, if the variance substantially
prejudiced the defendant's right to a fair trial." McClatchey, 217
F.3d at 831. In McClatchey, this court faced the same two variances at issue
here, concluded neither variance substantially prejudiced Mr. McClatchey's
right to a fair trial, and reversed the district court's decision to grant
Mr. McClatchey's motion for a new trial. See id. at 831-34. Because Mr.
McClatchey, Mr. Anderson, and the LaHues were tried together, the government
argues the law of the case doctrine forecloses our review of this issue
and requires us to hold insufficient prejudice existed to require a new
trial. *fn22 Defendants *fn23
claim the McClatchey panel "did not have a complete record and based
its decision on factually erroneous conclusions," and, accordingly,
we should find the law of the case doctrine does not control and revisit
the issue. We hold the law of the case doctrine controls the "other
hospitals variance" issue, and, in combination with the invited error
doctrine, also controls the "attorney defendants variance" issue.
|||"The law of the case doctrine posits that when a court decides upon
a rule of law, that decision should continue to govern the same issues in
subsequent stages in the same case." United States v. Alvarez, 142
F.3d 1243, 1247 (10th Cir.) (quotation marks and citations omitted), cert.
denied, 525 U.S. 905 (1998). "Furthermore, when a rule of law has been
decided adversely to one or more co-defendants, the law of the case doctrine
precludes all other co-defendants from relitigating the legal issue."
United States v. Aramony, 166 F.3d 655, 661 (4th Cir.), cert. denied, 526
U.S. 1146 (1999). As a "rule of practice" and not a limit on a
|||we will depart from the law of the case doctrine in three exceptionally
|||(1) when the evidence in a subsequent trial is substantially different;
|||(2) when controlling authority has subsequently made a contrary decision
of the law applicable to such issues; or
|||(3) when the decision was clearly erroneous and would work a manifest
injustice. Alvarez, 142 F.3d at 1247.
|||As to the "other hospitals variance," Mr. Anderson does not
argue any of these three exceptions apply. In addition, he claims Mr. McClatchey
"was in all relevant respects identically situated to [Mr.] Anderson."
Accordingly, we affirm the district court's denial of Mr. Anderson's motion
for a new trial on the basis of the "other hospitals variance"
in light of McClatchey and the law of the case doctrine. See McClatchey,
217 F.3d at 833-34 (holding "any variance caused by the narrowing of
the conspiracy charge did not substantially prejudice [Mr.] McClatchey.")
|||As previously noted, defendants undertake the "formidable task"
of attempting to convince us the McClatchey decision was clearly erroneous
and would work a manifest injustice as to the "attorney defendants
variance." Alvarez, 142 F.3d at 1247. Specifically, they claim "the
panel partly based its decision that the attorney variance did not prejudice
[Mr.] McClatchey on the erroneous premise that the jury `was not informed
that the district court had acquitted the attorney defendants' and therefore
could not conclude he must have been guilty because the court had not acquitted
him too" (quoting McClatchey, 217 F.3d at 833). However, they do not
cite any case law in which such an argument prevailed. See Alvarez, 142
F.3d at 1247 ("[O]ur own research indicates that while courts may often
pay lip service to the clearly erroneous/manifest injustice exception, they
rarely, if ever, invoke it.").
|||We acknowledge defense counsel informed the jury of the attorney defendants'
acquittal during closing arguments, but this does not make the McClatchey
decision either clearly erroneous or even remotely work a manifest injustice
for the following reasons. Although defendants call this a "crucial
point," they acknowledge it was only one of several reasons why the
McClatchey panel held Mr. McClatchey's right to a fair trial had not been
substantially prejudiced due to this variance. See McClatchey, 217 F.3d
at 831-33. Here, defendants raise the same claims as did Mr. McClatchey,
but do not challenge the McClatchey panel's other reasoning. Therefore,
defendants themselves limit our review to this one claim of error regarding
the jury's knowledge of the attorney defendants' acquittal.
|||Focusing on this sole error, we conclude the jury's awareness of the district
court's acquittal of the attorney defendants did not substantially prejudice
their right to a fair trial in light of the invited error doctrine. "The
invited error doctrine prevents a party from inducing action by a court
and later seeking reversal on the ground that the requested action was in
error." United States v. Edward J., 224 F.3d 1216, 1222 (10th Cir.
2000) (quotation marks and citation omitted). The McClatchey panel correctly
determined the district court did not inform the jury of the attorney defendants'
acquittal in its jury instructions. See McClatchey, 217 F.3d at 833. Instead,
the jury was so informed by defendants' counsel during their closing arguments
as a result of the following events.
|||Toward the end of its closing argument, the government stated: "The
evidence in this case has been that the attorneys were well aware that the
- that this was a paying for patients deal and worked to develop agreements
that covered up that fact." On completion of the government's argument,
the district court recessed the proceedings and heard from Mr. Anderson's
counsel about this statement. Counsel argued this statement "opened
the door" to allow defense counsel to present to the jury the acquittal
of the attorney defendants. The district court agreed and stated: "You
may tell the jury that the two lawyer defendants were found - were acquitted
by order of the court." Defendants' counsel each took advantage of
|||In his closing argument, Mr. Anderson's counsel claimed the acquittal
of the attorney defendants created reasonable doubt as to his client's guilt:
|||In this case the quality of the Government prosecution creates reasonable
doubt. And that's what the jury system is set out to do is to correct these
|||For instance, the last argument that was made to you by the Government
in this case had to do with the attorneys. And she said that they were knowing
participants in a - knowing participants that this was a scheme to pay [sic]
patients and that they drafted sham agreements.
|||Well, folks, these two lawyers have been acquitted by the court. They
were acquitted here because the court found that there was no evidence beyond
a reasonable doubt that these lawyers had done anything. And yet the Government
stood up here in argument, and despite the fact they had been acquitted,
and told you that those lawyers had, in fact, been knowing participants
in crime and that's just not right.
|||That in itself should create a reasonable doubt as to all the other defendants
in this case, particularly the Baptist defendants.
|||Now the attorneys have been acquitted in this case. If they're not guilty
and Mr. Anderson relied upon what they said, does that - how does that affect
Mr. Anderson's specific intent in the case? He cannot have the specific
intent to violate the law if those lawyers, who are not guilty, advise him
appropriately, which they did.
|||Dr. Robert LaHue's counsel similarly argued:
|||Now, one other thing that Ms. Treadway spoke about were some of the defenses
that we have presented to you, and that is the defense of good faith. And
all of the witnesses, all of the Defendants - the evidence is clear, that
all of the Defendants relied on the attorneys who were acquitted in this
case and relied on attorneys for other hospitals to process and review and
prepare these agreements to make them legal and appropriate. The evidence
is uncontroverted about that. Nobody ever took - you never had an attorney
come in here and said they took my agreement and changed it, took it out
and changed it or modified it. You never had that.
|||These attorneys were acquitted. And the testimony of all the witnesses
was - certainly the hospital witnesses who employed the attorneys and witnesses
concerning the Doctors' activities who said the Doctors knew about and relied
on the advice of the attorneys that are - that are now acquitted and found
not guilty. And so there is good faith here, no doubt about it.
|||Obviously, neither counsel believed their statements would prejudice defendants'
right to a fair trial. In other words, they did not believe the jury would
interpret the district court's acquittal of the attorney defendants, along
with the continued prosecution of Mr. Anderson and Dr. Robert LaHue, as
a signal the court believed defendants were guilty. Indeed, counsel affirmatively
sought the opportunity to argue about the acquittal of the attorney defendants,
rather than object to the government's argument and have it stricken along
with an instruction from the court for the jury to disregard the argument.
We conclude the invited error doctrine applies and no prejudice was suffered,
because defendants' argument on appeal is a complete reversal from the position
they sought to and did assert during closing argument. See John Zink Co.
v. Zink, 241 F.3d 1256, 1259 (10th Cir. 2001) (holding the invited error
doctrine precluded review of appellants' argument on appeal that was directly
contradictory to its position in the district court).
|||Finally, defendants fail to explain, as they must in order to prevail,
how the application in this appeal of the ruling in McClatchey would work
a manifest injustice. See Alvarez, 142 F.3d at 1247. Indeed, as discussed
in McClatchey, the district court told the jury that "the charges against
[the attorney defendants] ... have been removed from your consideration
and are no longer before you for decision," and instructed them: "Do
not concern yourself with these developments and do not speculate about
them." See McClatchey, 217 F.3d at 833. "[T]his court presumes
that the jury followed the district court's instructions and therefore did
not speculate as to the reason why the charges against the attorney defendants
had been removed from its consideration." Id. (citing United States
v. Ailsworth, 138 F.3d 843, 850 (10th Cir.), cert. denied, 525 U.S. 896
(1998)). *fn24 As a result, we do not
perceive a manifest injustice resulting from the application of the McClatchey
ruling on the identical "attorney defendants variance" issue raised
in this appeal.
|||Accordingly, we affirm the district court's denial of defendants' motion
for a new trial on the basis of the "attorney defendants variance"
in light of McClatchey and the law of the case and invited error doctrines.
See id. at 833-34 ("[E]ven if the district court's acquittal of the
attorney defendants created a variance between the allegations in the indictment
and the case presented at trial, this court is unconvinced that such a variance
substantially prejudiced [Mr.] McClatchey.").
|||D. Use Immunity
|||In a two-part argument, the LaHues claim the district court abused its
discretion by refusing to grant use immunity to twelve proposed defense
witnesses who invoked the Fifth Amendment and refused to testify at trial.
First, the LaHues argue the government is guilty of prosecutorial misconduct,
because it allegedly engaged "in a plan to unduly distort the fact-finding
process" by: (1) identifying these twelve individuals as unindicted
co-conspirators; (2) leading them to believe, "in the pretrial setting,"
they faced potential criminal prosecution, which caused them to invoke the
Fifth Amendment and refuse to testify; (3) claiming, "near the end
of the trial," the government did not perceive them as criminally culpable;
and (4) confirming, prior to sentencing in this case, it would not subject
any of the unindicted co-conspirators to criminal charges. Second, the LaHues
argue this prosecutorial misconduct authorized the district court to grant
these twelve witnesses use immunity, and its refusal to do so constitutes
an abuse of discretion.
|||In response, the government claims it appropriately listed these individuals
as unindicted co-conspirators for Rule 801(d)(2)(E) purposes. It argues
"[t]he defendants offer no facts of discriminatory use of immunity
[by the government] to gain a tactical advantage, and offer no facts that
the government forced any witness to invoke the Fifth Amendment." (Emphasis
in original.) Finally, it cogently notes the LaHues failed on appeal to
identify the witnesses allegedly affected, proffer their expected testimony,
or explain how the witnesses "were essential to their defense."
|||The district court rejected the LaHues' arguments for judicial grants
of use immunity before, during, and after trial, emphasizing "there
is no indication that the government engaged in a `deliberate attempt to
distort the fact finding process.'" Anderson, 85 F. Supp. 2d at 1081
(denying defendants' motion for a new trial based on prosecutorial misconduct)
(quoting United States v. Hunter, 672 F.2d 815, 818 (10th Cir. 1982), abrogation
on other grounds recognized in United States v. Call, 129 F.3d 1402, 1404
(10th Cir. 1997), cert. denied, 524 U.S. 906 (1998)). *fn25
We review the district court's decisions under an abuse of discretion standard.
See United States v. Gabaldon, 91 F.3d 91, 94 & n.2 (10th Cir. 1996).
|||"`The power to apply for immunity ... is the sole prerogative of
the government being confined to the United States Attorney and his superior
officers.'" Hunter, 672 F.2d at 818 (quoting United States v. Graham,
548 F.2d 1302, 1314 (8th Cir. 1977)). Accordingly, courts have no inherent
authority to grant a witness use immunity. See id. However, in Hunter, we
left open the possibility "that where the prosecutor's denial of immunity
is a deliberate attempt to distort the fact finding process, a court could
force the government to choose between conferring immunity or suffering
an acquittal." Hunter, 672 F.2d at 818; see United States v. Chalan,
812 F.2d 1302, 1310 (10th Cir. 1987) (same), cert. denied, 488 U.S. 983
|||We need not decide this legal question and are not persuaded to overturn
the district court's finding for two reasons. First, the LaHues fail to
"cite the precise reference in the record where the issue was ... ruled
on" initially as required by our rules. 10th Cir. R. 28.2(C)(2). The
district court's pretrial ruling on this issue is critical, because the
court referred to and relied on its reasoning in that ruling to deny the
subsequent motions. See, e.g., Anderson, 85 F. Supp. 2d at 1081 ("The
court rejects the defendants' arguments for the same reasons it rejected
them before and during trial."). While the LaHues cite to a "Minute
Order" in which the district court memorialized its denial of their
"motion for grant of judicial immunity or for stay [doc. 142] ... as
set forth on the record," they do not identify where "on the record"
the district court ruling exists. Second, as the government claims, the
LaHues do not identify the twelve individuals at issue, provide a record
citation for the proffer of their expected testimony, or explain how their
testimony would be material, exculpatory, and not cumulative as well as
unavailable from any other source. See United States v. Bahadar, 954 F.2d
821, 826 (2d Cir.) (requiring such evidence to find a distortion of the
fact-finding process), cert. denied, 506 U.S. 850 (1992).
|||We will not "sift through" this case's voluminous record to
find support for the LaHues' claims, "but instead defer to the district
court's rulings." Mile High Indus. v. Cohen, 222 F.3d 845, 854 (10th
Cir. 2000). Likewise, we will not substitute our judgment for that of the
district court under the abuse of discretion standard of review, see In
re Coordinated Pretrial Proceedings in Petroleum Prod. Antitrust Litig.,
669 F.2d 620, 623 (10th Cir. 1982), especially in the absence of facts identifying
the material, exculpatory, and non-cumulative nature of the witnesses' testimony
as well as its unavailability from any other source. See United States v.
Rodriquez-Aguirre, 108 F.3d 1228, 1237 n.8 (10th Cir.) (holding it is the
appellant's responsibility to tie the relevant facts, supported by specific
citations to the record, to his legal arguments), cert. denied, 522 U.S.
|||Accordingly, the district court did not abuse its discretion in refusing
to grant immunity to the twelve unnamed defense witnesses, because use immunity
is the sole prerogative of the executive branch and defendants provided
no facts to support their claim the government engaged in a deliberate attempt
to distort the fact-finding process. *fn26
|||For the foregoing reasons, the convictions of Mr. Anderson, Dr. Robert
LaHue, and Dr. Ronald LaHue are AFFIRMED.
|||*fn1 Because this case arises from jury
verdicts against defendants, we view the evidence in the light most favorable
to the prosecution. See United States v. Woodlee, 136 F.3d 1399, 1405 (10th
Cir.), cert. denied, 525 U.S. 842 (1998). This section focuses on evidence
applicable to Mr. Anderson and the Drs. LaHue and necessary to resolve their
issues on appeal. We refer the reader to two of the published post-trial
opinions in this case for a comprehensive review of the evidence. See Anderson,
85 F. Supp. 2d 1047; see also United States v. McClatchey, 217 F.3d 823
(10th Cir.), cert. denied, 121 S. Ct. 574 (2000).
|||*fn2 Mr. Probst testified for the government
under a grant of statutory immunity. See Anderson, 85 F. Supp. 2d at 1054
|||*fn3 Baptist and the LaHues signed a
new contract in April 1993, but Dr. Ronald LaHue terminated it in November
1993. See McClatchey, 217 F.3d at 827-28. "Two temporary agreements
sustained the payments to the LaHues through June of 1984." Id. at
|||*fn4 Mr. Eckard pled guilty to conspiracy
to violate 18 U.S.C. § 666 and cooperated with the government. See Anderson,
85 F. Supp. 2d at 1055 n.4.
|||*fn5 Mr. McGrath testified for the government
under a grant of statutory immunity. See Anderson, 85 F. Supp. 2d at 1057
|||*fn6 Mr. Anderson claims Baptist "entered
into an agreement ... with Drs. Leonard Hock and Cathy Weatherford to perform
essentially the same services provided by the LaHues in prior consulting
agreements." The record does not support this claim, because Dr. Weatherford
(with Dr. Hock as backup) contracted to be the Clinic's Medical Director.
This role was previously handled by Dr. Nevada Lee, and the efforts of Drs.
Weatherford and Hock appear to have focused on primary patient care services
in the Clinic.
|||*fn7 Accordingly, the district court
limited the jury's consideration of all evidence concerning the other hospitals
to the charges against the LaHues.
|||*fn8 On the government's post-trial
motion, the court dismissed the false claims count with prejudice and the
witness tampering count without prejudice. (Doc. #415.)
|||*fn9 In this section, "defendants"
refers to Mr. Anderson and the LaHues.
|||*fn10 In Instruction #32, the district
court charged the jury as follows: In order to sustain its burden of proof
against the hospital executives for the crime of violating the Anti-Kickback
statute, the government must prove beyond a reasonable doubt that the defendant
under consideration offered or paid remuneration with the specific criminal
intent "to induce" referrals. To offer or pay remuneration to
induce referrals means to offer or pay remuneration with intent to gain
influence over the reason or judgment of a person making referral decisions.
The intent to gain such influence must, at least in part, have been the
reason the remuneration was offered or paid. On the other hand, defendants
Anderson, Keel, and McClatchey cannot be convicted merely because they hoped
or expected or believed that referrals may ensue from remuneration that
was designed wholly for other purposes. Likewise, mere oral encouragement
to refer patients or the mere creation of an attractive place to which patients
can be referred does not violate the law. There must be an offer or payment
of remuneration to induce, as I have just defined it. (Emphasis added.)
|||*fn11 In Instruction #33, the district
court charged the jury as follows: Likewise, in order to sustain its burden
of proof against the doctor defendants for violating the Anti-Kickback statute,
the government must prove beyond a reasonable doubt that the defendant under
consideration solicited or received the remuneration with specific criminal
intent that the remuneration be "in return for" referrals. To
solicit or receive remuneration in return for referrals means to solicit
or receive remuneration with intent to allow the remuneration to influence
the reason and judgment behind one's patient referral decisions. The intent
to be influenced must, at least in part, have been the reason the remuneration
was solicited or received. On the other hand, defendants Robert LaHue and
Ronald LaHue cannot be convicted merely because they received remuneration
wholly in return for services and also decided to refer patients to the
hospital. Likewise, mere referral of patients because of oral encouragement
or because of a belief that the place to which the patients are to be referred
is attractive does not violate the law. There must be a solicitation or
receipt of remuneration in return for referrals, as I have just defined
it. (Emphasis added.)
|||*fn12 Our resolution of these issues
moots defendants' sufficiency of the evidence challenge to Counts One and
Three of the indictment, which is predicated on our finding the "primary
purpose" standard applies.
|||*fn13 Defendants cite United States
v. Boyd, 958 F.2d 247, 249-50 (8th Cir. 1992) to support their argument
that McClatchey does not control here. Boyd is inapposite, because it dealt
with a res judicata argument by the government on issues not briefed by
the parties to the first appeal or decided by the district court. See Boyd,
958 F.2d at 249. In this case, we rely on our In re Smith rule, which is
based on stare decisis, see United States v. Nichols, 169 F.3d 1255, 1261
(10th Cir.), cert. denied, 528 U.S. 934 (1999), and the jury instruction
issue was both briefed by the parties in the first appeal, see McClatchey,
217 F.3d at 826, 831, 834-35, and decided by the district court pursuant
to defendants' motions for a new trial. See Anderson, 85 F. Supp. 2d at
|||*fn14 See Hanlester Network v. Shalala,
51 F.3d 1390, 1398 (9th Cir. 1995) ("[The Act] chills no constitutional
rights."); United States v. Bay State Ambulance & Hosp. Rental
Serv., Inc., 874 F.2d 20, 32-33 (1st Cir. 1989) ("[T]he [Act] is not
the type that can be used to chill constitutionally protected rights.").
|||*fn15 Defendants base their vagueness
challenge primarily on the alleged inadequacy of enforcement standards under
a "one purpose" test. Because they claim cases evaluating the
Act under the fair notice element are "irrelevant," defendants
do not address whether they could reasonably understand their conduct was
prohibited by the Act. See Gaudreau, 860 F.2d at 360 ("[C]riminal responsibility
should not attach where one could not reasonably understand that his contemplated
conduct is proscribed." (quotation marks, alteration, and citation
omitted)); see also Day, 223 F.3d at 1229 (same). Accordingly, in order
to resolve this question and in light of the interrelated nature of the
fair notice and enforcement standards inquiries, we address the fair notice
element as well. See Gaudreau, 860 F.2d at 359-60.
|||*fn16 We need address only the Baptist-LaHues
relationship because of its similarity to: (1) Dr. Robert LaHue's interaction
with the five other hospitals for which he was convicted of violating the
Act; and (2) Dr. Ronald LaHue's interaction with the two other hospitals
for which he was convicted of violating the Act. See Anderson, 85 F. Supp.
2d at 1060-64; supra Part I.
|||*fn17 Annualizing this data, Baptist
was paying the LaHues the effective rate of $1,442 per hour.
|||*fn18 For example, the Supreme Court
struck down as unconstitutionally vague a statute criminalizing a person's
failure to provide "credible and reliable" identification to police
during a valid investigative detention, because the determination of the
credibility and reliability of identification was left to the subjective
judgment of the police. See Kolender, 461 U.S. at 355-61. In light of the
"full discretion accorded to the police," the Court concluded
the statute "furnishes a convenient tool for harsh and discriminatory
enforcement by local prosecuting officials, against particular groups deemed
to merit their displeasure, and confers on police a virtually unrestrained
power to arrest and charge persons with a violation." Id. at 360 (quotation
marks and citations omitted).
|||*fn19 In this section, "defendants"
refers to Mr. Anderson and the LaHues.
|||*fn20 Accordingly, we will not address
the government's alternative theories of admissibility argument.
|||*fn21 Dr. Robert LaHue raises, for
the first time on appeal, an alternative argument that the district court's
severance of the false claims and witness tampering counts after the close
of the government's case was a prejudicial variance warranting a new trial.
However, he "has not attempted to articulate a reason for us to depart
from the general rule that `a federal appellate court does not consider
an issue not passed upon below.'" Walker v. Mather (In re Walker),
959 F.2d 894, 896 (10th Cir. 1992) (quoting Singleton v. Wulff, 428 U.S.
106, 120 (1976)). Therefore, we decline to consider his alternative argument.
|||*fn22 Although the government also
argues stare decisis controls this issue, we note its argument focuses on
the law of the case doctrine and supporting case law. Accordingly, and in
light of our resolution of this issue, we do not reach the government's
stare decisis argument.
|||*fn23 In this section, "defendants"
refers to Mr. Anderson and Robert LaHue.
|||*fn24 Defendants argue they faced
a "Hobson's choice" created by the government's closing argument
quoted above - either let the government's claim go unchallenged or "reluctantly"
tell the jury of the attorney defendants' acquittal, with prejudice either
way. We do not agree. Defense counsel had a third option - they could have
requested the district court strike that portion of the government's closing
and instruct the jury to disregard the statement and focus on the jury instructions
as to the attorney defendants, something defense counsel and the court did
with regards to other portions of the government's closing. This would have
returned defendants to the position deemed non-prejudicial in McClatchey,
where the jury is presumed to follow the "district court instructions
and therefore did not speculate as to the reason why the charges against
the attorney defendants had been removed from its consideration." McClatchey,
217 F.3d at 833. Further, the statements to the district court and arguments
to the jury on this issue by defense counsel clearly reveal their desire
to present the acquittal of the attorney defendants to the jury; any reluctance
in informing the jury of the acquittals must have accrued after these arguments
|||*fn25 During the trial, the district
court granted defendants the alternative relief sought in their "Motion
for Order Compelling Judicial Immunity." See Anderson, 85 F. Supp.
2d at 1081 n.29. Specifically, the district court gave defendants the opportunity
to call the attorneys of some of these witnesses to testify, pursuant to
Rule 807 of the Federal Rules of Evidence, about what the witnesses told
FBI agents in government interviews. See id. Although they sought this relief,
defendants decided against calling these attorneys as witnesses "based
on strategic trial issues."
|||*fn26 Notwithstanding the basis for
our decision, we have reviewed every document cited by the LaHues on this
issue in their appellate briefs. In their "Motion for Order Compelling
Judicial Immunity" filed on the close of the government's case, the
LaHues listed twenty unindicted co-conspirators and presented "proffers
of potential testimony" in varying levels of detail for fourteen of
them. They repeated this list and attached a copy of these "proffers"
to their motion for a new trial, which they inexplicably do not address
or cite on appeal. Further, although the LaHues cite to the defense witness
lists in their appellate briefs, they failed to provide these documents
in the record on appeal. Even if we were to consider this material as the
basis for the LaHues' appeal of this issue, there are three reasons why
it is insufficient to find the district court abused its discretion. First,
we do not know whether the twelve witnesses on appeal are a subset of the
twenty listed in these motions, or are others from the over 160 people defendants
allegedly listed as witnesses but did not call at trial. Second, the LaHues
provide information regarding testimony from only fourteen of the twenty
witnesses listed in the motions, and of these: (1) it is unclear whether
three were even subpoenaed by the defense or ever invoked the Fifth Amendment;
(2) there is no proffer of testimony for four; (3) virtually the entire
"proffer" of six are the conclusory assertions that the witness
both "affirms," "confirms," "defend[s]," or
"assert[s]" the "legitimate nature" of the relationship
between the hospital and the LaHues and "did not perceive the relationship
to be a payment for patients;" and (4) the four somewhat detailed proffers
provide no basis for determining whether this testimony was unavailable
from any other source. Finally, in their motion for a new trial, the LaHues
claim the witnesses who did testify at trial presented "exculpatory"
testimony for them, but do not explain how those who allegedly invoked the
Fifth Amendment would offer testimony, assuming arguendo it was material
and exculpatory, that would not be deemed cumulative.
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