107 F.3d 1120 (5th Cir. 1997), 95-31135, United States v. Tencer

Docket Nº:95-31135.
Citation:107 F.3d 1120
Party Name:UNITED STATES of America, Plaintiff-Appellee-Cross-Appellant, v. Steven B. TENCER and Ronald Lazar, Defendants-Appellants-Cross-Appellees.
Case Date:March 10, 1997
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 1120

107 F.3d 1120 (5th Cir. 1997)

UNITED STATES of America, Plaintiff-Appellee-Cross-Appellant,

v.

Steven B. TENCER and Ronald Lazar,

Defendants-Appellants-Cross-Appellees.

No. 95-31135.

United States Court of Appeals, Fifth Circuit

March 10, 1997

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Stephen A. Higginson, Assistant U.S. Attorney, Richard William Westling, Assistant U.S. Attorney, New Orleans, LA, for U.S.

Nathan Z. Dershowitz, Amy M. Adelson, Dershowitz & Eiger, New York City, for Tencer.

Ronald Lazar, Pensacola, FL, pro se.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before WISDOM, DAVIS and DUHE, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

Steven Tencer and Ronald Lazar challenge their convictions on multiple counts related to their scheme to submit fraudulent claims to insurance companies and obtain proceeds for unperformed chiropractic services. The government cross-appeals a number of the district court's rulings. For reasons that follow, we affirm in part, reverse in part, and remand this case to the district court for sentencing.

I.

Appellants Tencer and Lazar, both licensed chiropractors, worked at the Allied Chiropractic Clinic ("Allied") in Kenner, Louisiana. Tencer, who owned the clinic, turned over the bulk of his practice to Lazar, his employee, in 1989; thereafter, Tencer generally supervised the clinic's financial affairs while Lazar treated patients on a day-to-day basis. From sometime in 1988 to early 1992, Allied submitted false insurance claims to three insurance companies, Blue Cross/Blue Shield of Louisiana ("Blue Cross"), Mail Handlers Benefit Plan ("Mail Handlers"), and National Association of Letter Carriers ("NALC"), and collected proceeds for patients who were not treated at all or who received only minimal treatment.

To execute the fraud, the appellants paid insurance premiums for some patients who, in return, signed multiple sign-in sheets indicating their presence in the office awaiting treatment. Those sheets were then used to generate false insurance claims. Appellants followed a similar pattern with patients recruited from local and federal government agencies; patients with good insurance benefits for chiropractic services were paid to sign their names and the names of family members on the clinic's sign-in sheets. They were also compensated for referring coworkers to Allied.

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While Allied apparently provided some legitimate services, many patients testified that they and their family members received either no treatment or only cursory treatment consisting of brief massages or the application of heat pads. Yet, the claim forms Allied submitted for these same patients reported complicated diagnoses and elaborate treatment regimens. As a result of the scheme, Allied submitted hundreds of fraudulent claims and collected more than $450,000 in insurance proceeds related to these patients.

Before trial, Tencer moved unsuccessfully to sever his trial from Lazar. Following the jury trial, Tencer was convicted of one count of conspiracy to commit mail fraud and money laundering in violation of 18 U.S.C. § 371 (count 1); seventeen counts of mail fraud in violation of 18 U.S.C. § 1341 (counts 2-18); and eighteen counts of money laundering in violation of 18 U.S.C. § 1956 (counts 19-29, 31-37). The jury also returned a special forfeiture verdict of $1,598,645.18 and two vehicles allegedly involved in the money laundering. The district court acquitted Tencer on five money laundering counts (counts 26-29, 37) and reduced the jury's forfeiture order to $700,000. Tencer was sentenced to 78 months' imprisonment, fined $17,500, and ordered to pay restitution of $451,969.60 and to forfeit $700,000.

Lazar was convicted of conspiracy, mail fraud, and money laundering (counts 1-18, 37), but the court acquitted him on the money laundering count (count 37). He was sentenced to 33 months' imprisonment and fined $30,000. Tencer and Lazar raise a number of issues on appeal, which we discuss below. We also consider below several issues the government raises in its cross-appeal.

II.

Both Tencer and Lazar argue that the evidence is insufficient to support their convictions for mail fraud, money laundering, and conspiracy. Faced with such a challenge, this court must determine " 'whether, after viewing the evidence and all inferences that may reasonably be drawn from it in the light most favorable to the prosecution, any reasonably minded jury could have found that the defendant was guilty beyond a reasonable doubt.' " United States v. Krenning, 93 F.3d 1257, 1262 (5th Cir.1996) (quoting United States v. Leahy, 82 F.3d 624, 633 (5th Cir.1996)).

A.

To establish a mail fraud violation under 18 U.S.C. § 1341, the government must demonstrate (1) a scheme to defraud; (2) the use of mails to execute that scheme; and (3) the defendant's specific intent to commit fraud. United States v. Fagan, 821 F.2d 1002, 1008 (5th Cir.1987), cert. denied, 484 U.S. 1005, 108 S.Ct. 697, 98 L.Ed.2d 649 (1988). Counts 2-18 charged appellants with using the mails in furtherance of a scheme to defraud Blue Cross, Mail Handlers, and NALC. Counts 2-10 stem from nine separate mailings of checks from Blue Cross to Allied. Counts 11-18 involve checks mailed from Mail Handlers and NALC. The individual check that the government relies on for the "mailing" in each of the mail fraud counts is identified in the indictment and was introduced in evidence at trial.

  1. Appellants first argue that the evidence fails to establish the mailing requirement as it relates to the Blue Cross checks underlying counts 2-10. To convict a defendant under § 1341, the use of the mails must be " 'incident to an essential part of the scheme.' " Schmuck v. United States, 489 U.S. 705, 711, 109 S.Ct. 1443, 1448, 103 L.Ed.2d 734 (1989) (quoting Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362-63, 98 L.Ed. 435 (1954)). That is, completion of the alleged scheme must depend in some way on the information or documents that passed through the mail. United States v. Pazos, 24 F.3d 660, 665 (5th Cir.1994). Even a routine or innocent mailing may supply the mailing element as long as it contributes to the execution of the scheme. Schmuck, 489 U.S. at 714-15, 109 S.Ct. at 1499-50.

    Ample evidence supports the existence of a scheme to defraud Blue Cross, Mail Handlers, and NALC, and appellants' use of

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    mails to execute that scheme. Several patients testified that they never received treatments for which their insurers were billed, and insurance representatives testified that payments for all claims were mailed to Allied. The evidence regarding Blue Cross in particular showed that Allied billed the insurer for 2,944 visits with patients about whom testimony was offered; Allied received approximately $362,000 from Blue Cross in payment for the visits. The Blue Cross-insured patients testified that they received little or no chiropractic care in return for the money Blue Cross paid Allied.

    As to each of the counts at issue here (counts 2-10), the indictment alleges that Blue Cross mailed a specific check to pay fraudulent claims. The government, however, failed to produce any evidence tending to connect these individual checks with fraudulent claims. The record does not reveal the name of the patient, the date of the treatment, or other relevant information demonstrating what claims the individual checks paid. As the government acknowledged, Allied submitted some valid claims for legitimate treatment. Consequently, the government's evidence is insufficient to establish that the checks relied on in counts 2-10 were in payment of fraudulent claims and therefore were used to execute the scheme to defraud.

    The government argues that a review of claim forms, the checks, and patient testimony supports the inference necessary for convictions on these counts. According to the government, given the regularity with which patients signed in and claims were submitted and paid, the checks described in counts 2-10 must contain fraudulent payments. We disagree. The government submitted no evidence to indicate how quickly Blue Cross responded to claims or to illustrate the number or amount of legitimate claims Allied submitted to Blue Cross. Therefore, any conclusion that the nine individual checks were in payment for fraudulent claims is speculative.

    Alternatively, the government asserts that proof that each check contained fraudulent proceeds is not necessary to sustain mail fraud convictions. Simply put, the government argues that because the evidence of both a scheme to defraud and the use of mails is overwhelming, this court should overlook its failure to identify specific checks containing fraudulent proceeds.

    The government relies on United States v. Reid, 533 F.2d 1255 (D.C.Cir.1976), in which the defendant, a credit director, submitted for payment inflated bills to a collection agency. The defendant argued that the evidence was insufficient to support his mail fraud convictions because it did not demonstrate that the invoices or checks on which the mail fraud counts were based were inflated billings or payments. Id. at 1263. The court disagreed, stating:

    As a matter of practicality, in most schemes to defraud, it would be very difficult for the prosecution to show that any particular check or invoice was in itself false or inflated in amount, because in a course of dealing over a period of months the bills sent and the payments made are not necessarily tied in with ascertainable and accurate accounting data. In fact, it may be assumed that persons engaged in such a scheme to defraud...

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