|||UNITED STATES COURT OF APPEALS TENTH CIRCUIT
|||June 13, 2000
|||UNITED STATES OF AMERICA, PLAINTIFF- APPELLANT,
|||Appeal from the United States District Court for the District of Kansas
(D.C. No. 98-CR-20030)
|||Tanya J. Treadway, Assistant United States Attorney, (Jackie N. Williams,
United States Attorney, Topeka, Kansas, and William H. Bowne, Criminal Division,
Fraud Section, Department of Justice, Washington, D. C., with her on the
briefs) for Appellant. Charles W. German, of Rouse, Hendricks, German, May
P.C., Kansas City, Missouri, (Scott M. Brinkman with him on the brief) for
|||Before Baldock, McWILLIAMS, and Murphy, Circuit Judges.
|||The opinion of the court was delivered by: Murphy, Circuit Judge.
|||After a jury convicted Dennis McClatchey of one count of conspiracy and
one count of violating the Medicare Antikickback Act (the "Act"),
the district court granted McClatchey's motion for acquittal on both charges.
The district court concluded there was insufficient evidence from which
a reasonable jury could find McClatchey had a specific intent to violate
the Act. Additionally, the district court ruled in the alternative that
McClatchey would be entitled to a new trial based on prejudicial variances
between the indictment and the case presented to the jury. The government
appeals both the judgment of acquittal and the alternative grant of a new
trial. Exercising jurisdiction *fn1
pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3731, this court reverses both
rulings. We also reject McClatchey's two further arguments for affirming
the district court's grant of a new trial-that the district court improperly
instructed the jury it could convict McClatchey if remuneration was paid
"at least in part" to induce patient referrals and that the court
erred in receiving certain evidence.
|||In 1984, Doctors Robert and Ronald LaHue served as the principals in Blue
Valley Medical Group ("BVMG"), a specialized medical practice
which provided care to patients in nursing homes and other residential care
facilities. That year, the LaHues approached defendant Ronald Keel, an operations
Vice President at Baptist Medical Center ("Baptist"), and proposed
moving their patients from the hospitals they were currently using to Baptist
in exchange for Baptist's purchase of BVMG. Keel brought this proposal to
the attention of defendant Dan Anderson, the Chief Executive Officer of
Baptist, and then to the rest of Baptist's administrative staff, which included
McClatchey, Baptist's Chief Operating Officer. Gerard Probst, Baptist's
Chief Financial Officer, testified that he discussed with McClatchey the
notion that a relationship with the LaHues would result in the LaHues' "bringing
their patients to Baptist" and that McClatchey "support[ed] the
idea" of establishing such a relationship.
|||Although Baptist decided not to purchase BVMG, in January of 1985, Baptist
entered into a one-year agreement (the "1985 contract") with the
LaHues to pay each doctor $75,000 per year to act as Co-Directors of Gerontology
Services at Baptist. According to Probst's testimony, the negotiation over
the 1985 contract occurred in a "backwards" manner, with the parties
first establishing a fee and only then agreeing to services which the LaHues
would provide. The LaHues then began referring their nursing home patients
who required hospital care to Baptist.
|||In the summer of 1985, at the request of the LaHues, Anderson assigned
Baptist employee Tom Eckard the job of serving as a liaison between BVMG
and Baptist. Although Eckard's official title was Director of Geriatric
Services for Baptist, Eckard worked at BVMG and effectively acted as BVMG's
manager. Moreover, Baptist rather than BVMG always paid Eckard's salary.
Eckard served in this capacity for approximately eight years, and he testified
at trial that his primary responsibility was "to keep the relationship
[between Baptist and BVMG] positive." Eckard also testified that during
the first year of Baptist's contractual relationship with the LaHues, he
observed the LaHues provide "minimal to no" services to Baptist.
|||In June of 1986, Baptist entered into a new one-year agreement (the "1986
contract") with the LaHues, again paying each doctor $75,000 per year
to provide various services to Baptist. Although the 1986 contract technically
expired after one year, Baptist continued to pay the LaHues their $75,000
per year fee beyond the summer of 1987. *fn2
|||In March of 1991, Baptist merged with Health Midwest. As a result, Baptist's
new legal counsel reviewed its contracts with doctors and doctors' groups,
including the 1986 contract with the LaHues. That summer, defendant Mark
Thompson, one of the attorneys performing this due diligence review, began
discussing with McClatchey and other Baptist executives a way of drafting
a new contract with the LaHues to bring the contractual relationship within
safe harbor regulations which recently had been promulgated by the Health
and Human Services Office of Inspector General. From the summer of 1991
until April of 1993, when a new contract was finally executed (the "1993
contract"), McClatchey oversaw the negotiations between Baptist and
the LaHues. Although Keel initially served as Baptist's direct contact person
with the LaHues in the negotiation process, McClatchey placed Kevin McGrath
in that role in late 1991.From December 1991 through April 1993, Thompson
produced no less than eleven drafts of an agreement. According to McGrath,
he and McClatchey would instruct Thompson as to what services he should
include in the contract. The first five drafts each included a provision
which required the LaHues to perform a minimum number of hours of services
for Baptist. After the LaHues informed McClatchey, McGrath, and Thompson
that they would not accept a minimum hour requirement, that provision was
dropped from all further drafts, including the 1993 contract ultimately
|||Additionally, in late 1991 or early 1992, McClatchey and McGrath learned
that the LaHues had not been performing some of the services specified in
the 1986 contract and that certain staff members at Baptist were not interested
in having the LaHues perform such services. As a consequence, McClatchey,
McGrath, and Thompson discussed the concern that the LaHues were not performing
sufficient services to justify the fees which Baptist was paying them. On
November 5, 1992, an FBI Agent and Medicaid Fraud Investigator visited Baptist
and spoke with McClatchey and Anderson about the hospital's relationship
with BVMG. As a result, Baptist retained a Baltimore law firm to represent
it in the federal investigation and any resulting proceedings. At some point,
McClatchey, McGrath, and Anderson talked about terminating Baptist's relationship
with BVMG and the LaHues, but they ultimately decided to renegotiate the
|||In October of 1993, McClatchey left his position at Baptist to become
the Senior Vice President for Corporate Relations at Health Midwest. On
November 26, 1993, Robert LaHue wrote a letter to Anderson terminating the
1993 contract because LaHue anticipated selling BVMG to another company.
In response, Health Midwest executives, including McClatchey, began discussing
a strategy to replace the patients which they expected to lose with the
termination of the LaHue relationship. When the BVMG sale did not materialize,
however, Baptist once again began negotiating a new contract with BVMG and
the LaHues. Two temporary agreements sustained the payments to the LaHues
through June of 1994.
|||In 1998, a grand jury returned a superseding indictment against seven
individual defendants-Anderson, Keel, McClatchey, the LaHues, Thompson,
and attorney Ruth Lehr. The indictment charged McClatchey with one count
of conspiracy to offer or pay remuneration to the LaHues in exchange for
Medicare and Medicaid patient referrals, in violation of 18 U.S.C. § 2 and
42 U.S.C. § 1320a-7b(b)(2)(A), (B), and one substantive count of offering
or paying remuneration to the LaHues to induce such referrals, in violation
of 42 U.S.C. § 1320a-7b(b)(2)(A), (B).
|||At the close of the government's case, the district court granted Thompson's
and Lehr's (the "attorney defendants") motions for acquittal.
The district court further ruled at that time that the government had failed
to present sufficient evidence to demonstrate, as the indictment alleged,
that any defendant but the LaHues were involved in a conspiracy that extended
to six other hospitals in addition to Baptist. The district court thus limited
the jury's consideration of all evidence concerning these six other hospitals
to only the charges against the LaHues.
|||The jury returned a guilty verdict on both charges against McClatchey.
After the verdict, however, the district court granted McClatchey's motion
for judgment of acquittal on both counts, concluding that no reasonable
jury could find McClatchey deliberately intended to violate the Act based
on the evidence presented at trial. Pursuant to Federal Rule of Criminal
Procedure 29(d), the district court ruled alternatively that should its
acquittal decision be overturned, McClatchey would be entitled to a new
trial due to prejudicial variances between the case presented at trial and
the indictment against him. See Fed. R. Crim. P. 29(d) ("If a motion
for judgment of acquittal after a verdict of guilty . . . is granted, the
court shall also determine whether any motion for a new trial should be
granted if the judgment of acquittal is thereafter vacated or reversed .
. . .").
|||A. The District Court's Grant of a Judgment of Acquittal
|||This court gives no deference to a district court's decision to set aside
a jury's guilty verdict and grant a defendant's post-verdict motion for
judgment of acquittal. See United States v. Santistevan, 39 F.3d 250, 255
(10th Cir. 1994). We review that motion de novo, viewing the evidence in
a light most favorable to the government to determine whether a reasonable
jury could have found the defendant guilty beyond a reasonable doubt. See
|||In the instant case, the district court granted McClatchey's post-verdict
motion on the basis that the evidence presented failed to support a reasonable
finding that McClatchey possessed the requisite criminal intent to be convicted
on either count. The parties agree that to convict McClatchey of both the
conspiracy charge and the substantive charge of violating the Act, the government
needed to prove beyond a reasonable doubt that McClatchey knowingly and
willfully joined a conspiracy with the specific intent to violate the Act.
A defendant violates the Act when he
|||knowingly and willfully offers or pays any remuneration . . . to any person
to induce such person . . . 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 . .
. . 42 U.S.C. § 1320a-7b(b)(2)(A).
|||In instructing the jury, the district court defined willfulness as follows:
|||An act is done willfully if it is done voluntarily and purposely and with
the specific intent to do something the law forbids, that is, with the bad
purpose either to disobey or disregard the law. A person acts willfully
if he or she acts unjustifiably and wrongly while knowing that his or her
actions are unjustifiable and wrong. Thus, in order to act willfully as
I have defined that term, a person must specifically intend to do something
the law forbids, purposely intending to violate the law.
|||Neither party quarrels with this instruction. This court will therefore
affirm the district court's grant of acquittal only if the evidence presented
would not permit any reasonable jury to find beyond a reasonable doubt that
McClatchey knowingly, voluntarily, and purposefully entered into an agreement
with the specific intent to offer or pay remuneration to induce the LaHues
to refer Medicaid patients to Baptist. *fn4
|||Although the district court correctly concluded that no reasonable jury
could find beyond a reasonable doubt that McClatchey specifically intended
to violate the Act based on the evidence of his involvement, or non-involvement,
in the 1985 contract, the 1986 contract, and the loan of Eckard to BVMG,
this court disagrees with the district court's assessment of the evidence
concerning McClatchey's negotiation of the 1993 contract. The district court
concluded that McClatchey repeatedly acted to insure that the 1993 contract
was a legal one. Although it may be true that the 1993 contract appears
to encompass a legal arrangement, the evidence supports a reasonable inference
that McClatchey would never have supportted negotiating and entering into
that contract absent his intent to induce the LaHues to continue referring
their patients to Baptist.
|||Specifically, the evidence presented at trial reveals three important
aspects of McClatchey's knowledge which inform on his intent. First, well
before entering into the 1993 contract, McClatchey knew the LaHues had not
performed substantial services required under the prior contracts. The LaHues
themselves reported that fact to McClatchey and McGrath in late 1991 or
early 1992, and McGrath's subsequent investigation revealed the LaHues were
only reporting two hours per week of work at Baptist. Second, McClatchey
knew that certain Baptist staff members were not even interested in having
the LaHues perform some of these services. McGrath reported to McClatchey
that the medical director of the Family Care Residency Program did not want
the LaHues teaching residents and that the director of Social Services did
not want the LaHues to make nursing home referrals to Baptist patients because
her practice had always been to provide families the names of three doctors
who could make such referrals. Third, McClatchey understood how important
the LaHues' patient referrals were to Baptist's financial health. Eckard
even testified that McClatchey placed "substantial emphasis" on
Eckard's ability to maximize admissions and profitable outpatient visits
to Baptist from BVMG business. Based on this knowledge, a reasonable jury
could infer that McClatchey's very reason for negotiating a new contract
with the LaHues, rather than terminating the relationship, was to induce
them to continue their profitable referrals.
|||McClatchey makes two arguments against the reasonableness of such an inference.
He first contends that his surprise at learning of the failure to provide
services and his directive to McGrath and legal counsel to investigate and
remedy that situation belies an inference of criminal intent. This argument,
however, ignores the further evidence that McClatchey knew the hospital
staff did not even want or need some of the services specified in the contract;
based on that additional evidence, a jury could reasonably infer McClatchey
did not really care whether the contractual services were needed or performed,
but merely that the LaHues continued to refer their patients to Baptist.
Given this evidence, a jury could also infer that McClatchey directed McGrath
and legal counsel to address the service issue merely to insure that the
final contract appeared on its face to constitute a legal arrangement. This
possible explanation is supported by the inclusion in the 1993 contract
of a provision requiring the LaHues to provide resident instruction, despite
McClatchey's knowledge that the head of the residency program did not desire
|||McClatchey also argues that his actions throughout the negotiation process
cannot give rise to an inference of his criminal intent because they were
entirely directed and controlled by legal counsel. McGrath testified, however,
that he and McClatchey told the lawyers what services to include in the
contracts, not visa versa. Thus, the jury could reasonably attribute to
McClatchey and McGrath both the decision to remove a minimum hour provision
from the contract after the LaHues objected to such a requirement and the
inculpatory inference of intent that can be drawn therefrom. Moreover, it
was not the attorneys but McClatchey, Anderson, and McGrath who made the
important decision to negotiate a new contract rather than ending Baptist's
relationship with BVMG. Finally, McClatchey did not always heed the attorneys'
advice. For example, although Baltimore attorney Craig Holden stressed the
importance of reassigning Tom Eckard to a new job within the hospital and
even informed BVMG's attorney that this reassignment would occur by February
1, 1993, McClatchey personally delayed that move until March 1, 1993. The
evidence, therefore, permitted the jury to reasonably reject McClatchey's
good faith reliance on counsel defense and instead find he harbored the
specific intent to violate the Act.
|||The evidence concerning McClatchey's involvement in negotiating the 1993
agreement thus gives rise to a reasonable inference that he knowingly, voluntarily,
and purposefully entered into an agreement with the specific intent to induce
the LaHues to refer their Medicaid patients to Baptist. The district court
therefore erred in granting McClatchey's post-verdict motion for a judgment
|||B. The District Court's Grant of a New Trial
|||The government also challenges the district court's alternative ruling
that McClatchey is entitled to a new trial because the case presented to
the jury prejudicially varied from the charges set out in the indictment.
McClatchey asserts two further alternative bases for this court to affirm
the district court's grant of a new trial: the district court erroneously
instructed the jury it could convict McClatchey if remuneration was paid
"at least in part" to induce patient referrals; and the district
court erred in receiving certain evidence under the co-conspirator non-hearsay
rule. This court concludes that the district court's decision to grant McClatchey
a new trial was erroneous and rejects his alternative arguments for affirming
|||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.
See United States v. Morris, 700 F.2d 427, 430 (1st Cir. 1983). This court
therefore reviews de novo the district court's decision to grant a new trial
on the basis of a prejudicial variance. See Weese v. Schukman, 98 F.3d 542,
549 (10th Cir. 1996). "Variance arises when the evidence adduced at
trial establishes facts different from those alleged in an indictment."
Dunn v. United States, 442 U.S. 100, 105 (1979). Similarly, a shift in the
government's theory from the one set out in the indictment to that presented
at trial may also constitute a prejudicial variance. See United Stats v.
Meyers, 95 F.3d 1475, 1485 (10th Cir. 1996). A new trial is only necessary,
however, if the variance substantially prejudiced the defendant's right
to a fair trial. See United States v. Ailsworth, 138 F.23 843, 849 (10th
|||a. The Acquittal of the Attorney Defendants
|||McClatchey contends the district court correctly concluded a prejudicial
variance arose when the district court granted the attorney defendants'
motions for judgment of acquittal. He argues that while the indictment alleged
McClatchey and the attorney defendants worked in knowing cooperation to
craft "sham" contracts that would make Baptist's relationship
with the LaHues appear legal, the acquittal of the attorney defendants allowed
the jury to convict McClatchey on one of two entirely different theories-either
that McClatchey failed to disclose certain information to the attorney defendants
or that he failed to heed their advice. It is this shift in the theory of
McClatchey's involvement in the purported conspiracy which he contends constitutes
a prejudicial variance.
|||Even if the theory on which the jury convicted McClatchey did vary from
that set out in the indictment, *fn5
this court fails to see how McClatchey was substantially prejudiced by such
a change. McClatchey argues he was prejudiced by this purported variance
because allowing the jury to convict him on one of these two allegedly new
theories of his involvement eviscerated his good faith reliance on counsel
defense. As Instruction 39 demonstrates, however, by raising a good faith
reliance defense, McClatchey himself necessarily required the jury to consider
whether he made full disclosure to the attorneys and whether he followed
their advice. See Ailsworth, 138 F.3d at 850 ("It's presumed that [the
jury] followed those instructions." (quotation omitted)). Instruction
|||If a defendant, before taking any action, sought the advice of an attorney
whom he considered competent, in good faith and for the purpose of securing
advice on the lawfulness of his possible future conduct, and made a full
and accurate report to his attorney of all material facts which he knew
and acted strictly in accordance with the material advice of his attorneys
who had been given a full report, then the defendant would not be knowingly
and willfully doing wrong in doing something the law forbids . . . . (emphasis
|||This court fails to understand how shifting the jury's attention to two
allegedly new theories of McClatchey's involvement, which were already part
and parcel to his own defense theory, in any way eviscerated that defense.
McClatchey presumably understood when he decided to raise a good faith reliance
defense that full disclosure and following the attorneys' advice are elements
of that defense; thus, the purported variance in prosecution theories should
not have surprised or prejudiced McClatchey.
|||Moreover, the district court granted the attorney defendants' motions
for judgment of acquittal at the close of the government's case, before
McClatchey presented his defense and well before he took the stand. McClatchey
therefore had ample time to alter his evidentiary and testimonial strategy
to diminish any prejudice which might have resulted from the district court's
decision. Cf. Lincoln v. Sunn, 807 F.2d 805, 813 (9th Cir. 1987). Additionally,
McClatchey's failure to either move for a new trial or request a continuance
when the district court granted the attorney defendants' motions "militates
against any argument that he was surprised by or not prepared to defend
against the [allegedly new prosecution] theory." United States v. Weiss,
752 F.2d 777, 790 (2d Cir. 1985).
|||Relatedly, McClatchey argues the alleged variance was substantially prejudicial
because by indicting the attorney defendants, despite the lack of evidence
against them, the government tainted the attorney defendants' actions in
the minds of the jury, a taint which harmed McClatchey's good faith reliance
defense. This argument is also without merit, however, because McClatchey's
good faith reliance defense in no way depended on the legality of the attorney
defendants' actions. As Instruction 39 indicates, even if the attorney defendants
were acting with criminal intent, so long as McClatchey sought their advice
in good faith, made full disclosure to them, and acted strictly in accordance
with their instructions, he would have been entitled to an acquittal.
|||Finally, McClatchey argues the district court's acquittal of the attorney
defendants prejudiced him because the jury likely interpreted this ruling
along with the continued prosecution of McClatchey as a signal that the
court believed McClatchey was guilty. The jury, however, was not informed
that the district court had acquitted the attorney defendants. Instead,
the district court merely told the jurors that "the charges against
[the attorney defendants] . . . have been removed from your consideration
and are no longer before you for decision." The district court further
instructed the jury, "Do not concern yourself with these developments
and do not speculate about them." As noted earlier, this 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. See Ailsworth, 138 F.3d at 850.
The acquittal of the attorney defendants, therefore, did not substantially
|||In sum, even 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 McClatchey. The district court thus improperly granted McClatchey's
motion for a new trial on this basis.
|||b. The Other Hospitals Evidence
|||The indictment alleged that all seven indicted conspirators engaged in
one broad conspiracy to allow the LaHues to enter into illegal arrangements
with Baptist and six other hospitals. At the close of the government's case,
however, the district court ruled that the evidence failed to prove McClatchey,
Anderson, or Keel were at all part of a conspiracy involving the six other
hospitals. The district court thus limited all evidence relating to these
six other hospitals to the charges against the LaHues. In granting McClatchey's
motion for a new trial, the district court concluded that its narrowing
of the conspiracy charge against McClatchey constituted a variance and that
the "spillover from the other hospitals evidence" prejudiced him.
The district court stated, however, that "[w]ere this factor standing
alone, the court would not grant Mr. McClatchey a new trial."
|||Again, this court concludes that any variance caused by the narrowing
of the conspiracy charge did not substantially prejudice McClatchey. In
United States v. Powell, this court stated,
|||A defendant's substantial rights are affected if the jury determines a
defendant's guilt by relying on evidence adduced against coconspirators
who were involved in separate conspiracies. Relevant factors include: 1)
whether the proliferation of separate conspiracies in the case affected
the jury's ability to segregate each defendant's individual actions and
participation; 2) whether the variance caused confusion among the jurors
as to the limited use of certain evidence; and 3) the strength of the evidence
underlying the conviction. 982 F.2d 1422, 1431-32 (10th Cir. 1992) (citation
|||First, the jury's acquittal of Ronald LaHue on the charge of soliciting
and receiving bribes from two of the other hospitals and its acquittal of
Keel on all charges based on the statute of limitations strongly indicates
that it was perfectly capable of segregating and separately evaluating each
defendant's individual actions and participation. Second, the district court
repeatedly instructed the jury both during and at the end of the trial not
to consider the other hospitals evidence against anyone but the LaHues,
thus insuring the jury's understanding of the limited use of that evidence.
Third, though this court concedes that the case against McClatchey was relatively
close, as discussed above the government did present sufficient evidence
apart from the other hospitals evidence to prove McClatchey's guilt beyond
a reasonable doubt. See supra Section III.A. Finally, this court has held
that "there is no fatal variance where a defendant is convicted upon
evidence which tends to show a narrower scheme than that contained in the
indictment, provided that the narrower scheme is fully included within the
indictment." Ailsworth, 138 F.3d at 849 (quotation omitted). The narrowing
of the conspiracy charge against McClatchey, therefore, did not constitute
a fatal variance warranting a new trial.
|||2. The Jury Instruction
|||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 the 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).
|||McClatchey contends this instruction was incorrect and warrants a new
trial, because a defendant should not be convicted under the Act when his
offer or payment of remuneration was motivated merely in part to induce
referrals, but rather the motivation to induce referrals must be the defendant's
primary purpose. *fn6
"We review the district court's decision to give a particular jury
instruction for abuse of discretion and consider the instructions as a whole
de novo to determine whether they accurately informed the jury of the governing
law." United States v. Cerrato-Reyes, 176 F.3d 1253, 1262 (10th Cir.
|||Whether the "at least in part" or "one purpose" standard
applied in the instant case constitutes a correct interpretation of the
Act is an issue of first impression in this Circuit. McClatchey urges this
court to reject the test set out in Instruction 32 as too broad, because
"[e]very business relationship between a hospital and a physician is
based `at least in part' on the hospital's expectation that the physician
will choose to refer patients." This argument, however, ignores the
actual instruction given in the instant case, in which the district court
specifically informed the jury that "McClatchey cannot be convicted
merely because [he] hoped or expected or believed that referrals may ensue
from remuneration that was designed wholly for other purposes." According
to this instruction, therefore, a hospital or individual may lawfully enter
into a business relationship with a doctor and even hope for or expect referrals
from that doctor, so long as the hospital is motivated to enter into the
relationship for legal reasons entirely distinct from its collateral hope
for referrals. *fn7
|||The only three Circuits to have decided this issue have all adopted the
"one purpose" test. *fn8
See United States v. Davis, 132 F.3d 1092, 1094 (5th Cir. 1998); United
States v. Kats, 871 F.2d 105, 108 (9th Cir. 1989); United States v. Greber,
760 F.2d 68, 71-72 (3d Cir. 1985). In Greber, a doctor who owned a diagnostic
laboratory was convicted of violating the Act because he paid "interpretation
fees" to other physicians to induce them to refer Medicare patients
to use his laboratory's services. See id. at 69-70. Defendant Greber asserted
that these interpretation fees compensated the physicians both for providing
initial consultation services and for explaining the test results to the
patients. See id. at 70. On appeal, Greber argued that a jury instruction
much like Instruction 32 was erroneous, because the Act requires the government
to prove that the only purpose for the interpretation fees was to induce
referrals and that compensation for services actually rendered could not
constitute a violation of the Act. See id. at 71. Carefully examining the
language and purpose of the Act, the Third Circuit rejected Greber's proposed
interpretation and instead held that "if one purpose of the payment
was to induce referrals, the [Act] has been violated." Id. at 69 (emphasis
added); see generally id. at 70-72. Specifically, the Greber court noted
that when Congress amended the Act in 1977 to deter "the growing problem
of fraud and abuse in the system," it added a proscription against
the payment of "remuneration," which contemplates the rendering
of a service, whereas the predecessor statute merely prohibited payment
of "kickbacks," for which no service is rendered. Id. at 70-71,
71-72. The Greber court thus concluded that the "one purpose"
test is consistent with the legislative intent behind the amended Act. See
id. at 72.
|||This court agrees with the sound reasoning in Greber and thus holds that
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. Because the district court accurately informed
the jury of the applicable law, McClatchey is not entitled to a new trial
based on the jury instructions.
|||3. Co-Conspirator Non-Hearsay Evidence
|||McClatchey also argues he is entitled to a new trial because the district
court erroneously admitted evidence under the co-conspirator non-hearsay
See Fed. R. Evid. 801(d)(2)(E). McClatchey, however, fails to identify the
specific statements which he now contends were wrongly admitted or even
meet this court's modest requirement that he provide citations to the record
where these statements might be found. See Tenth Cir. R. 28.2(C)(2), (3)(a).
Due to these failures, this court cannot even attempt to assess the merits
of his argument. The issue of the admissibility of this evidence is therefore
waived on appeal. See Shaw v. AAA Engineering & Drafting, Inc., Nos.
97-6265, -6266, 2000 WL 640249, at *16 n.25 (10th Cir. May 18, 2000) (concluding
challenge to evidence was waived on appeal because the appellant did not
specify the precise evidence which it claimed was wrongly admitted).
|||This court concludes that the government presented sufficient evidence
from which a reasonable jury could infer McClatchey knowingly, voluntarily,
and purposefully entered into an agreement with the specific intent to violate
the Act. This court also disagrees with the district court's ruling that
prejudicial variances between the indictment and the case presented at trial
warrant a new trial. Nor do the jury instructions provide the basis for
granting McClatchey a new trial. We therefore REVERSE the judgment of acquittal
and the alternative order for a new trial entered by the District Court
for the District of Kansas and REMAND to that court with instructions to
reinstate the verdict rendered by the jury.
McClatchey contends this court lacks jurisdiction to decide this appeal
because the government's notice of appeal specified the document being appealed
from as the district court's memorandum and order of July 21, 1999, whereas
the jurisdictional statement in the government's brief seeks review of the
final judgment entered on July 22, 1999. McClatchey argues this insufficient
notice violates Federal Rule of Appellate Procedure 3, thus depriving this
court of jurisdiction. This court reads the government's jurisdictional
statement differently, however, interpreting it as seeking review of the
very July 21 order referenced in its notice of appeal. Moreover, McClatchey
concedes that he was not misled as to the issues being appealed. In Bohn
v. Park City Group, Inc., this court noted that we liberally construe Rule
3 requirements and held that because the appellee "had clear notice
of the issue being appealed and [thus would] not be prejudiced" by
the alleged Rule 3 deficiency, the court had jurisdiction. 94 F.3d 1457,
1460 (10th Cir. 1996). Pursuant to Bohn, therefore, this court has jurisdiction
over the government's appeal.
Baptist paid the LaHues $75,000 per year from 1985 through 1993, with the
exception that the LaHues only received $68,750 each in 1990.
Although the conspiracy charge submitted to the jury also allowed it to
convict McClatchey if it unanimously found he knowingly and willfully entered
into an agreement with the purpose of defrauding the government, the only
issue which the parties present to this court is whether McClatchey knowingly
and willfully entered into an agreement with the purpose of offering or
paying remuneration to induce Medicare patient referrals.
McClatchey concedes that if the evidence is sufficient to support the jury's
verdict on the conspiracy charge, he would also be criminally liable for
the substantive count of violating the Act pursuant to Pinkerton v. United
States, 328 U.S. 640, 647-48 (1946).
It is highly questionable whether this purported theoretical variance even
occurred. As McClatchey concedes, after the attorney defendants were dismissed
from the case, the government nonetheless continued to argue that the attorneys
culpably cooperated with McClatchey and others to draft the "sham"
contracts-the precise theory of McClatchey's involvement alleged in the
indictment. Moreover, the jury was never told why the attorney defendants
were dismissed from the case, and thus, it may well have convicted him on
this same theory. Although McClatchey now complains that the government
should not have been allowed to argue that the attorney defendants acted
with less than lawful intentions, he did not object to the government's
argument at trial. Furthermore, McClatchey's contention that the government
impermissibly presented to the jury the theory set out in the indictment
is strangely at odds with his complaint on appeal that the theory presented
to the jury differed from the one alleged in the indictment.
In his brief, McClatchey moves this court to allow him to provide additional
briefing on this issue and the next should we reach them. This court is
convinced that McClatchey had a fair opportunity to fully brief these arguments
and thus denies that motion. See Fed. R. App. P. 28(c) ("Unless the
court permits, no further briefs [beyond the reply brief] may be filed.").
This court recognizes that it may be difficult for a jury to distinguish
between a motivating factor and a collateral hope or expectation. Making
such difficult factual determinations, however, is the very role which our
system of justice assigns to the finder of fact. Cf. United States Postal
Serv. Bd. of Governors v. Aikens, 460 U.S. 711, 716-17 (1983) ("The
state of a man's mind is as much a fact as the state of his digestion. It
is true that it is very difficult to prove what the state of a man's mind
at a particular time is, but if it can be ascertained it is as much a fact
as anything else." (quotation omitted)).
McClatchey incorrectly contends that the First and Eighth Circuits have
"tacitly approved" the "primary purpose" test. In United
States v. Bay State Ambulance & Hosp. Rental Service, Inc., the First
Circuit explicitly declined to decide whether the "primary purpose"
or "one purpose" test is appropriate, because the defendants had
been convicted under the more stringent "primary purpose" standard.
See 874 F.2d 20, 30 (1st Cir. 1989). In resolving a separate issue, however,
the Bay State Ambulance court did rely upon the reasoning employed by the
Third Circuit in adopting the "one purpose" test in United States
v. Greber, 760 F.2d 68 (3d Cir. 1985). See Bay State Ambulance, 874 F.2d
at 30. The Bay State Ambulance court even stated it was "impressed
with the . . . reasoning" of Greber. Id. In United States v. Jain,
whether the Act encompasses the "primary purpose" or "one
purpose" standard was simply not an issue on appeal to the Eighth Circuit.
See 93 F.3d 436 (8th Cir. 1996).
For the same reason stated in note 6, supra, this court denies McClatchey's
motion to provide further briefing on this issue.
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