U.S. v. Jones

CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)
Citation160 F.3d 641
Docket NumberNos. 98-2131,98-2133,s. 98-2131
Parties98 CJ C.A.R. 5858 UNITED STATES of America, Plaintiff-Appellee, v. Shirley A. JONES, Mega-Universal Oxygen and Home Care Services, Inc., Defendants-Appellants. National Association of Criminal Defense Lawyers, Amicus Curiae.
Decision Date16 November 1998

John D. Cline (Nancy Hollander with him on the briefs), Freedman, Boyd, Daniels, Hollander, Guttmann & Goldberg, P.A., Albuquerque, New Mexico, for Defendant-Appellant Shirley A. Jones.

Richard C. Minzner, Rodey, Dickason, Sloan, Akin & Robb, P.A., Albuquerque, New Mexico, on the briefs for Defendant-Appellant Mega-Universal Oxygen and Home Care Services, Inc.

Stephen R. Kotz, Assistant U.S. Attorney (John J. Kelly, United States Attorney, and Mary L. Higgins, Assistant U.S. Attorney, with him on the brief), Albuquerque, New Mexico, for Plaintiff-Appellee.

Graeme W. Bush and Nathan D. Finch, Caplin & Drysdale, CHTD, Washington, D.C.; and Barbara Bergman, University of New Mexico, UNM School of Law, Albuquerque, New Mexico, on the brief for Amicus Curiae.

Before SEYMOUR, Chief Judge; PORFILIO and BRORBY, Circuit Judges.

JOHN C. PORFILIO, Circuit Judge.

In these consolidated appeals we consider whether due process requires a district court to conduct a post-restraint, pre-trial adversarial hearing before continuing to freeze assets that a defendant allegedly needs for legal and living expenses. The federal criminal forfeiture statutes serve as our backdrop. We conclude that due process requires such a hearing if certain conditions are present.

I

The circumstances leading to the present appeals stem from an indictment returned against Mega-Universal Oxygen & Home Care Services, Inc., a corporation that provides medical supplies and services, and Shirley Jones, its president and majority shareholder. Defendants are charged with, among other things, submitting false claims for Medicaid disbursement in violation of the health care fraud statute. 18 U.S.C. § 1347. In a separate count in the indictment, the grand jury also alleged that certain real and personal properties were subject to forfeiture under 18 U.S.C. § 982(a)(6) 1 as constituting or having been derived from gross proceeds traceable to the health care fraud offense.

After the indictment issued, the government moved ex parte under 21 U.S.C. § 853(e)(1)(A) to freeze some of the forfeitable assets pending trial. The district court granted the government's request and restrained over $1.5 million of defendants' assets. Defendants moved for a post-restraint, pre-trial hearing under United States v. Monsanto to challenge the restraint and to obtain release of the assets for legal and living expenses. 924 F.2d 1186 (2d Cir.) (en banc), cert. denied, 502 U.S. 943, 112 S.Ct. 382, 116 L.Ed.2d 333 (1991). They argued that the Due Process Clause of the Fifth Amendment required a pre-trial hearing at which the government must establish probable cause to believe that defendants committed health care fraud and the assets named in the indictment are traceable to the offense.

The district court rejected that argument and concluded that section 853(e)(1)(A) did not permit, and procedural due process did not require, a post-restraint, pre-trial adversarial hearing. The court denied the motions and declined to release the restrained funds for any purpose. Defendants obtained a stay of the proceedings and timely appealed. Our jurisdiction arises under the collateral order doctrine. United States v. Musson, 802 F.2d 384, 385 (10th Cir.1986).

II

Before inquiring into the applicability of the Fifth Amendment to this case, we must first determine whether there is a reasonable construction of section 853(e)(1)(A) that would avoid the constitutional question. Tull v. United States, 481 U.S. 412, 417 n. 3, 107 S.Ct. 1831, 1835 n. 3, 95 L.Ed.2d 365 (1987) (courts must avoid deciding cases on constitutional grounds when statutory grounds are available). We review the district court's interpretation of the statute de novo, Southern Ute Indian Tribe v. Amoco Prod. Co., 151 F.3d 1251, 1256 (10th Cir.1998) (en banc), and conclude that no reasonable construction of section 853(e)(1)(A) permits a post-restraint, pre-trial hearing under the circumstances of this case.

In determining the scope of a statute, we must first look to its language. United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981). The language of section 853(e)(1)(A) 2 is inconclusive. Although the statute does not expressly provide for a post-restraint hearing, it does not prohibit one, leaving the statute susceptible to more than one reasonable interpretation. "In some cases, Congress intends silence to rule out a particular statutory application, while in others Congress' silence signifies merely an expectation that nothing more need be said in order to effectuate the relevant legislative objective." Burns v. United States, 501 U.S. 129, 136, 111 S.Ct. 2182, 2186, 115 L.Ed.2d 123 (1991).

Congress' omission need not detain us long, however, because the legislative history provides the answer:

[The post-indictment restraining order] provision does not exclude ... the authority to hold a hearing subsequent to the initial entry of the order and the court may at that time modify the order or vacate an order that was clearly improper (e.g., where information presented at the hearing shows that the property restrained was not among the property named in the indictment). However, it is stressed that at such a hearing the court is not to entertain challenges to the validity of the indictment. For the purposes of issuing a restraining order, the probable cause established in the indictment or information is to be determinative of any issue regarding the merits of the government's case on which the forfeiture is to be based.

S.Rep. No. 98-225, at 203, 213 (1984), reprinted in 1984 U.S.C.C.A.N. 3182, 3386, 3396 (emphasis added). Although the legislative history suggests that a post-restraint hearing may sometimes be proper, it clearly prohibits the sort of inquiry sought by defendants here. A court may not revisit any matter to which probable cause is established in the indictment.

A defendant's probable guilt on the underlying offense is of course a matter subject to the grand jury's determination and is inherent in the indictment. It is seldom reviewed before trial because we presume the grand jury has faithfully performed the duties assigned to it. Hamling v. United States, 418 U.S. 87, 139 n. 23, 94 S.Ct. 2887, 2918 n. 23, 41 L.Ed.2d 590 (1974). And despite the fact that criminal forfeiture is ordinarily not a part of the substantive offense, but is instead a part of the sentence, Libretti v. United States, 516 U.S. 29, 40, 116 S.Ct. 356, 363, 133 L.Ed.2d 271 (1995) (interpreting 21 U.S.C. § 853); United States v. Bornfield, 145 F.3d 1123, 1138 n. 12 (10th Cir.1998) (interpreting 18 U.S.C. § 982), a grand jury is necessarily called upon in this context to find probable cause to believe the assets named in the indictment are traceable to the underlying offense. Musson, 802 F.2d at 387; United States v. Nichols, 841 F.2d 1485, 1505 (10th Cir.1988).

For these reasons, we hold that issues of underlying guilt and forfeitability of assets are beyond purview under the statute. Accord United States v. Real Property in Waterboro, 64 F.3d 752, 756 (1st Cir.1995); Monsanto, 924 F.2d at 1203-04 (Oakes, J., concurring); id. at 1206-07 (Cardamone, J., dissenting); United States v. Moya-Gomez, 860 F.2d 706, 728 (7th Cir.1988), cert. denied, 492 U.S. 908, 109 S.Ct. 3221, 106 L.Ed.2d 571 (1989). That having been said, we next address whether due process nevertheless requires a pre-trial hearing at which defendants may challenge the grand jury's findings.

III

The procedural aspect of the Fifth Amendment Due Process Clause guarantees that government action may not deprive a person of life, liberty or property unless the government affords a fair procedure to contest the deprivation. U.S. Const. amend. V. The fundamental requirement of due process is the opportunity to be heard "at a meaningful time and in a meaningful manner." Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965). We review de novo the extent of constitutional rights and their effect on federal statutes. United States v. Hampshire, 95 F.3d 999, 1001 (10th Cir.1996), cert. denied, --- U.S. ----, 117 S.Ct. 753, 136 L.Ed.2d 690 (1997).

Both parties recognize that a restraining order issued under section 853(e)(1)(A) deprives one of property even though the assets named in the indictment are only frozen and may eventually be returned. Monsanto, 924 F.2d at 1192; Moya-Gomez, 860 F.2d at 725-26. The parties part ways, however, on what process is due when assets are restrained under the statute. Defendants suggest that due process requires a post-restraint, pre-trial adversarial hearing at which the government has the burden of establishing probable cause to believe that defendants committed the health care offenses and the funds subject to restraint are traceable to those offenses. The government contends the grand jury's determination of probable cause and the subsequent trial on the merits are all the process the Constitution requires. Although we ultimately agree with defendants, we temper our conclusion.

To determine whether due process requires some form of a post-restraint, pre-trial hearing we consider the private interest affected by the restraint; the risk of an erroneous deprivation of that interest through the procedures used, as well as the probable value of an adversarial hearing; and the government's interest, including the administrative burden that an adversarial hearing would impose. See Mathews v. Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893, 903, 47 L.Ed.2d 18 (1976); United States v. James Daniel Good Real Property, 510 U.S. 43, 53, 114 S.Ct. 492, 501, 126...

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