U.S. v. Bolden
| Decision Date | 03 April 2003 |
| Docket Number | No. 99-4873.,No. 99-4814.,99-4814.,99-4873. |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Glennis L. BOLDEN, Defendant-Appellant. United States of America, Plaintiff-Appellee, v. Clifford E. Bolden, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: Jefferson McClure Gray, Arent, Fox, Kintner, Plotkin & Kahn, P.L.L.C., Washington, DC, for Appellants. David Alan Brown, Office of the United States Attorney, Charlotte, NC, for Appellee. ON BRIEF: A. James Siemens, Siemens Law Office, P.A., Asheville, NC, for Appellant Clifford Bolden. Robert J. Conrad, Jr., United States Attorney, Brian Lee Whisler, Assistant United States Attorney, Karen Elise Eady, Assistant United States Attorney, Charlotte, NC, for Appellee.
Before TRAXLER, KING, and GREGORY, Circuit Judges.
Affirmed in part, reversed in part, vacated in part, and remanded by published opinion. Judge KING wrote the opinion, in which Judge TRAXLER and Judge GREGORY joined.
Glennis and Clifford Bolden appeal their multiple convictions and separate sentences in the Western District of North Carolina, resulting from charges arising out of a complex Medicaid fraud scheme. In their appeals, the Boldens challenge their 1998 convictions for money laundering and a related money laundering conspiracy, and Ms. Bolden challenges several of her convictions for the submission of false claims to the Government. They also challenge their sentences in several respects. As explained below, we affirm their convictions, but we reverse in part and vacate and remand their sentences in part.
The Boldens were indicted in December of 1997 by a grand jury in Asheville, North Carolina, and a superseding indictment was returned in October of 1998.1 The indictment alleged that, from 1989 until 1995, the Boldens planned and perpetrated an elaborate fraud scheme, improperly obtaining tens of thousands of dollars from North Carolina's Medicaid program ("Medicaid"). This fraud scheme was carried out through their operation of Emerald Health Care-Taylorsville ("Emerald Health"), a nursing facility owned by Henry Lane, Ms. Bolden's father.2 The fraud scheme had numerous components, but the object of each was the same: the illegal extraction of monies from Medicaid for the benefit of one or both of the Boldens.
In November of 1998, after a nine-day jury trial in Asheville, the Boldens were convicted of multiple offenses. In particular, each was convicted of conspiracy to commit mail and wire fraud (in contravention of 18 U.S.C. § 371); two counts of submitting false claims to the Government (in violation of 18 U.S.C. § 287); six counts of filing false income tax returns (in violation of 26 U.S.C. § 7206(1)); six substantive counts of money laundering (in violation of 18 U.S.C. § 1956(a)(1)); and a separate count of money laundering conspiracy (in contravention of 18 U.S.C. § 1956(h)). Ms. Bolden was also convicted on eighteen separate false claims charges.
On August 30, 1999, a probation officer submitted pre-sentence reports (the "PSRs") to the district court on the Boldens. The parties then submitted objections to the PSRs and, on October 7, 1999, the court conducted sentencing hearings. Ms. Bolden received 140 months in prison, and Mr. Bolden was sentenced to a term of fifty-seven months. In addition, Ms. Bolden was fined $1,700, and Mr. Bolden was fined $800. The Boldens were each required to make $146,719 in restitution to the Internal Revenue Service.3
Following sentencing, the Boldens filed timely notices of appeal, and we possess jurisdiction pursuant to 28 U.S.C. § 1291.
In their appeals, the Boldens raise multiple challenges to their convictions and sentences. In seeking reversal of their convictions, they assert the following (the "Conviction Issues"):
(1) that the evidence was insufficient to support their convictions on the money laundering counts;
(2) that their convictions for money laundering conspiracy are flawed because:
a. the charge of money laundering conspiracy, in Count Thirty-Seven of the indictment, was legally deficient;
b. the court committed reversible error in its instructions by constructively amending the money laundering conspiracy charge; and
c. the evidence was insufficient to support their convictions for money laundering conspiracy; and
(3) with respect to Ms. Bolden, that the evidence was insufficient to sustain her convictions on the eighteen separate false claims charges.
The Boldens also raise assertions of error with regard to their sentences (the "Sentencing Issues"), specifically maintaining that:
(1) the court erred in grouping their fraud and money laundering convictions;
(2) the court failed to make adequate factual findings on the sentencing issues in dispute; and
(3) to the extent the court's factual findings were adequate, they were clearly erroneous.4
Before turning to their contentions, we review the factual underpinnings for the Boldens' convictions and sentences.5
Between 1989 and 1995, Ms. Bolden served as Emerald Health's Director of Operations and as Supervisor of its Ventilator Unit. As Director of Operations, she approved Emerald Health's payments to vendors, authorized its capital purchases, transferred funds between its bank accounts, and directed its efforts to obtain reimbursements from Medicaid. In sum, she was responsible for most of the administrative and financial decisions of Emerald Health. Beginning in 1990, and until his resignation in early 1993, Mr. Bolden worked as Emerald Health's Director of Maintenance. In that capacity, he ordered supplies and supervised Emerald Health's housekeeping and maintenance staff.
The Boldens utilized their relationships with Emerald Health to manipulate North Carolina's Medicaid reimbursement system.6 The North Carolina Division of Medical Assistance (the "DMA")7 administers Medicaid, a healthcare program for low-income individuals partially funded by the federal government. Pursuant to its mandate, Medicaid reimburses nursing facilities, such as Emerald Health, for their treatment and care of Medicaid patients.
In making such reimbursements, Medicaid initially disburses "prospective payments" to nursing facilities that treat and care for Medicaid patients. N.C. Admin. Code tit. 10, r. 26H.0101. The "prospective payment rate" on which such payments are based is an estimate of the costs a nursing facility likely incurred in treating a Medicaid patient for one day. Medicaid has established three separate prospective payment rates, corresponding to the three levels of care provided by nursing facilities — intermediate nursing care, skilled nursing care, and ventilator care.8 Id. r. 26H.0102. Each prospective payment rate consists of two components, called "direct" and "indirect" components. The direct component consists of those nursing facility costs attributable specifically to patient care, such as nursing, food service, housekeeping, and laundry. Id. The indirect component consists of nursing facility costs related to property ownership, administration, and maintenance. Id. In order to receive its prospective payments, a nursing facility periodically submits bills to Medicaid (the "Medicaid Bills"). The Medicaid Bills specify the number of days each Medicaid patient resided in the nursing facility and the level of care each received. After receiving and approving a nursing facility's Medicaid Bills, Medicaid makes the prospective payments.9
At the end of each fiscal year, in order to ensure that the prospective payments were proper, Medicaid requires each nursing facility to file an annual cost report (the "Cost Report"). Id. r. 26H.0104. A Cost Report details both the direct and indirect costs a nursing facility actually incurred in treating and caring for Medicaid-eligible patients. If a nursing facility's actual direct costs are less than the direct cost component of the prospective payments it has already received, the facility is obliged to repay the difference to Medicaid. If, however, the nursing facility's actual direct costs exceed the direct cost component of the prospective payments the facility has received, Medicaid issues a "settlement payment" to the facility. Id. r. 26H.0102.
In contrast to direct costs, Medicaid does not make settlement payments, or require repayment, for the indirect cost component of a nursing facility's prospective payments. Id. In other words, unlike with direct costs, Medicaid does not make settlement payments to nursing facilities that expended more in indirect costs than was provided for in their prospective payments. By the same token, to the extent a nursing facility does not spend the portion of its prospective payments dedicated to indirect costs, it is under no obligation to repay Medicaid. Therefore, to the extent a nursing facility can characterize its costs as direct costs, the greater its Medicaid reimbursement.
In carrying out their fraud scheme, the Boldens manipulated Medicaid's reimbursement system in several respects in order to inflate the Medicaid payments received by Emerald Health. Of importance here, the scheme included the following:
(1) Ms. Bolden, as Emerald Health's agent, entered Emerald Health into lease agreements which were used for fraudulent purposes (the "Lease Transactions");
(2) the Boldens implemented a plan to circumvent Medicaid's "related party" regulations (the "Related Party Transactions");
(3) Ms. Bolden utilized Emerald Health to bill Medicaid for patients no longer in the nursing facility, and she miscategorized the levels of care provided to various patients on the Medicaid Bills, as well as on the Cost Reports (the "False Patient Billing");
(4) Ms. Bolden used Emerald Health funds to...
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