Opinion
IP 02-0112-CR-01 02-T/F
August 29, 2003
ENTRY ON MOTION TO SEVER COUNTS 5 AND 6
This Entry is a matter of public record and is being made available to the public on the court's web site, but it is not intended for commercial publication either electronically or in paper form. Although the ruling or rulings in this Entry will govern the case presently before this court, this court does not consider the discussion in this Entry to be sufficiently novel or instructive to justify commercial publication or the subsequent citation of it in other proceedings.
The Defendants move the court to sever Counts 5 and 6. The government opposes the motion.
I. Background
The Defendant Peggy Bisig is charged in all six counts of the Superseding Indictment (the "Indictment") in this case. Defendant Home Pharm-Assist, Inc. (HPA) is charged in Counts 1, 2 and 5. The Indictment alleges that in 1997 Ms. Bisig became HPA's principal operator, in 1998 she became HPA's sole shareholder, and in 1999 she became HPA's sole corporate officer.
Counts 1 through 4 charge healthcare fraud beginning in 1997 and continuing until on or about the date of the Indictment based on the submission of claims to Medicaid using incorrect forms and codes and overstating the units of services or number of milliliters of product provided in violation of 18 U.S.C. § 1347. Counts 1 and 2 allege that Ms. Bisig through HPA submitted hundreds of fraudulent claims to the Indiana Medicaid Program involving two drugs, Heparin Lock Flush solution and saline solution. Counts 3 and 4 allege that Bisig, as office manager of Cancer Care Center, Inc. ("Cancer Care") responsible for submitting claims to Indiana Medicaid and Medicare, submitted fraudulent claims for Heparin Lock Flush solution for reimbursement to the Indiana Medicaid and Medicare.
Count 5 charges that beginning in or about August 1997 and continuing until on or about the date of the Indictment, the Defendants paid unlawful kickbacks to nurses employed at Cancer Care in exchange for their patient referrals to HPA for the purpose of furnishing Total Parental Nutrition equipment and supplies provided by HPA to the patient for which payment was made in whole or part by Indiana Medicaid and Medicare, in violation of 42 U.S.C. § 1320a-7b(2)(A).
Count 6 charges that beginning on or about April 2000 and continuing until on or about the date of the Indictment, Ms. Bisig engaged in a scheme to defraud her employer, Cancer Care, in violation of 18 U.S.C. § 1341. It alleges that as Cancer Care's office manager, Ms. Bisig was responsible for selecting suppliers for drugs and supplies and she used HPA as a supplier to Cancer Care for products including Heparin Lock Flush solution and saline solution. It is alleged that Ms. Bisig and HPA charged Cancer Care in excess of the normal price for the cost of the products. It also is alleged that once Ms. Bisig was told she could not use HPA as a vendor for Cancer Care, she recruited another individual to her scheme. According to the Indictment, this other individual and Ms. Bisig allegedly made it seem as if the distributor for whom the individual worked was the new supplier for Cancer Care, but Ms. Bisig and HPA continued to be Cancer Care's supplier of Heparin Lock Flush solution and saline solution.
II. Discussion
A. Joinder Under Rule 8
When considering a motion for severance, the court must first decide whether joinder is proper under Rule 8 of the Federal Rules of Criminal Procedure. Offenses may be charged jointly if they "are of the same or similar character or are based on the same act or transaction or on two or more acts or transactions connected together or constituting parts of a common scheme or plan." Fed.R.Crim.P. 8(a). The Seventh Circuit broadly construes this rule to allow liberal joinder under Rule 8(b). See United States v. Stillo, 57 F.3d 553, 556 (7th Cir. 1995). The determination whether joinder is proper is based on the allegations of the indictment rather than evidenced proffered by the government. See United States v. Todosijevic, 161 F.3d 479, 484 (7th Cir. 1998).
The Defendants contend that Counts 5 and 6 are wholly unrelated to Counts 1 through 4. The government responds that each count contains charges of the same or similar character and are based on two or more acts or transactions connected together and constituting parts of a common scheme or plan.
The "same or similar character" is the broadest of the possible bases for joinder. United States v. Alexander, 135 F.3d 470, 476 (7th Cir. 1998). The "same or similar character" requirement "is a rather clear directive to compare the offenses charged for categorical, not evidentiary, similarities." Id. (quotation omitted). Counts may be joined under this standard if the offenses charged "are of like class, even if they are not temporally or evidentially related." Id. (quotation omitted). This standard may be satisfied "even if the offenses are not of identical statutory origin." Id.
Based on the allegations of the Indictment, the court concludes that the offenses charged in Counts 5 and 6 are of the "same or similar" character as the offenses charged in Counts 1 through 4. See Alexander, 135 F.3d at 476 (holding bankruptcy fraud and mail fraud offenses were of the same or similar character even though derived from three different statutes, each involved a materially false representation made with the intent to deceive a specified victim and was committed to enhance the resources of defendant's business); United States v. Levine, 983 F.2d 165, 167 (10th Cir. 1992) (concluding mail fraud and bank fraud charges were properly joined where both types of charges involved submission of falsified documents and arose out of the operation of the defendant's business); United States v. Kaplan, 895 F.2d 618, 621 (9th Cir. 1990) (concluding mail fraud counts addressed to false insurance claims submitted by physician were properly joined with counts alleging that physician had prescribed controlled substances for other than legitimate medical purposes).
Each count charges an offense arising in the health care industry. Each count involves either the overcharging of inexpensive products to Indiana Medicaid or Medicare and/or Cancer Care, or illegal activities relating to the treatment of Medicaid and/or Medicare patients. Each count alleges that the activities were conducted by Ms. Bisig for her financial gain. Counts 5 and 6, like Counts 1 and 2 involve Ms. Bisig's activities and HPA. The alleged victims of Ms. Bisig's alleged illegal activities in each count was either a health care benefit program or a provider that treats beneficiaries of such programs. Furthermore, Ms. Bisig used her position as office manager at Cancer Care and owner and operator of HPA to commit the illegal activities alleged in each count. But for her positions at Cancer Care and HPA, her alleged schemes would not have been as successful. In addition, there is temporal overlap between the offenses charged in Counts 5 and 6 and the offenses charged in Counts 1 through 4. Therefore, the court concludes that the offenses charged in Counts 5 and 6 are of the "same or similar" character as the offenses charged in Counts 1 through 4. The offenses charged in Counts 5 and 6 are thus properly joined under Rule 8 with the offenses charged in Counts 1 through 4.
B. Severance Under Rule 14
Even if initial joinder is proper, the court may sever offenses or defendants for separate trials under Rule 14 of the Federal Rules of Criminal Procedure if the economy of the joint trial is outweighed by the prejudicial effect on a defendant or defendants. See, e.g., United States v. Marzano, 160 F.3d 399, 402 (7th Cir. 1998). Whether to grant or deny a severance is within the district court's discretion. See, e.g., Zafiro v. United States, 506 U.S. 534, 541 (1993); United States v. Alexander, 135 F.3d 470, 477 (7th Cir. 1998). The reason for this is that the district court is in the best position to "balanc[e]. . . the cost of conducting separate trials and the possible prejudice inherent in a single trial." United States v. Moya-Gomez, 860 F.2d 706, 754 (7th Cir. 1988). To prevail on a motion for severance, a defendant bears a heavy burden of establishing that a joint trial would be unfairly prejudicial. See United States v. Williams, 858 F.2d 1218, 1224 (7th Cir. 1988); see also Alexander, 135 F.3d at 477 (stating that a defendant has to show that "the denial of a severance caused him actual prejudice in that it prevented him from receiving a fair trial; it is not enough that separate trials may have provided him with a better opportunity for an acquittal").
The Defendants contend that if all counts are tried together the jury will be prejudiced against them. They argue that the jury may use the evidence of one crime to infer a criminal disposition of a defendant and find the defendant guilty of another crime. They also argue that there is a risk of spillover evidence from the various crimes charged. Finally, they argue that joinder will compromise Ms. Bisig's right to testify or not to testify.
The joinder of all counts in this case does not create a danger of unfair prejudice due to the jury's use of evidence on one or more counts to improperly infer a criminal disposition of a defendant. The "prejudice requiring severance is not shown if evidence on the severed counts would be admissible in the trial of the remaining counts." United States v. Rollins, 301 F.3d 511, 519 (7th Cir. 2002) (quotation omitted). The evidence of the alleged illegal kickbacks charged in Count 5 and alleged scheme to defraud Cancer Care charged in Count 6 may be admissible as "other crimes" evidence to show, for example, motive, intent or knowledge under Rule 404(b). See Rollins, 301 F.3d at 519. And, because the alleged conduct constituting kickbacks and mail fraud would be probative of Ms. Bisig's truthfulness or untruthfulness, assuming Ms. Bisig testifies, this conduct may be inquired into on cross-examination of her regarding her character for truthfulness or untruthfulness. See Fed.R.Evid. 608(b).
So, the Defendants may be correct that the allegations of illegal kickbacks and mail fraud may cast a shadow on their defense of the healthcare fraud counts-that Ms. Bisig lacked any intent to defraud Medicaid and any errors made were innocent mistakes-but such a shadow would not be considered unfair prejudice as evidence of the alleged kickbacks and fraud may be admissible in the trial of the healthcare fraud counts.
The evidence of alleged illegal kickbacks in Count 5 and scheme to defraud in Count 6 also may be admissible under the inextricably intertwined doctrine. See United States v. Ojomo, 332 F.3d 485, 489 (7th Cir. 2003) (acts satisfy this doctrine and may be admitted if they satisfy Rule 403 and if they "complete the story of the crime on trial; their absence would create a chronological or conceptual void in the story of the crime; or they are so blended or connected that they incidentally involve, explain the circumstances surrounding, or tend to prove any element of, the charged crime"). Furthermore, the court anticipates giving a limiting instruction to the jury directing them to give separate consideration to each defendant and each count and the evidence relating to each count. The giving of such an instruction protects against the risk of prejudice resulting from the jury drawing an improper inference of criminal disposition. See United States v. Freland, 141 F.3d 1223, 1226 (7th Cir. 1998).
Atypical limiting instruction reads:
Although the defendants are being tried jointly, you must give separate consideration to each defendant. In doing so you must analyze what the evidence in the case shows with respect to each defendant, leaving out of consideration any evidence admitted solely against the other defendant. Each defendant is entitled to have his case decided on the evidence and the law applicable to him.
Each count of the Indictment charges each defendant named in that count with having committed a separate offense. You must give separate consideration both to each count and to each defendant. You must consider each count and the evidence relating to it separate and apart from every other count.
You should return a separate verdict as to each defendant and as to each count in which he is charged. Your verdict of guilty or not guilty of an offense charged in one count should not control your decision as to that defendant under any other count. Similarly, any verdict regarding one defendant should not control your decision as to any verdict regarding any other defendant.See 1 Edward J. Devitt, et al., Federal Jury Practice and Instructions § 12.13 (4th ed. 1992); Federal Criminal Jury Instructions of the Seventh Circuit No. 4.05 (1999).
The joinder does not create unfair prejudice because of juror confusion due to spillover evidence. As noted, the court anticipates giving a limiting instruction to the jury of the type noted above. Such an instruction provides "an adequate safeguard against the risk of prejudice in the form of jury confusion, evidentiary spillover and cumulation of evidence." United States v. Turner, 93 F.3d 276, 284 (7th Cir. 1996) (quotation omitted); see also Alexander, 135 F.3d at 478. The jury is presumed able to sort through the evidence and follow the court's instructions, including an instruction to give separate consideration to each defendant and each count. See, e.g., Turner, 93 F.3d at 284.
The joinder does not create unfair prejudice because of any alleged effect joinder may have on Ms. Bisig's right to testify or not testify on any count. "[S]everance is not required every time a defendant wishes to testify to one charge but to remain silent on another." United States v. Dixon, 184 F.3d 643, 646 (7th Cir. 1999) (quotation omitted). Severance is not required unless a defendant makes a convincing showing that "(1) [s]he has important testimony to give concerning one count and (2) a strong need to refrain from testifying on the other." Dixon, 184 F.3d at 646. General assertions are not sufficient to show prejudice, rather, the courts require "specific examples of the exculpatory testimony that the defendant would give." Alexander, 135 F.3d at 477.
Ms. Bisig has not offered any specifics regarding her testimony. Instead, she merely argues through counsel that "[d]epending on the development of the case, it might be advisable for [her] to testify in the healthcare fraud case, but not on the mail fraud or kickback counts." (Defs.' Mem. Support Mot. Sever at 5.) This general assertion does not satisfy the standard for severance. See Dixon, 184 F.3d at 646; Alexander, 135 F.3d at 477. Therefore, the court concludes that the Defendants have not shown that joinder causes them unfair prejudice warranting severance of Counts 5 and 6 under Rule 14.
III. Conclusion
For the foregoing reasons, the Defendants' motion to sever is DENIED.
ALL OF WHICH IS ORDERED.