U.S. v. Franklin-El

• Decision Date: 03 February 2009
• Docket Number: No. 07-3257.,07-3257.
• Citation: 554 F.3d 903
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Peggy FRANKLIN-EL, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

554 F.3d 903

UNITED STATES of America, Plaintiff-Appellee, v. Peggy FRANKLIN-EL, Defendant-Appellant.

No. 07-3257.

United States Court of Appeals, Tenth Circuit.

February 3, 2009.

Rick E. Bailey, Conlee, Schmidt & Emerson, L.L.P., Wichita, KS, for Defendant-Appellant.

Tanya J. Treadway, Assistant United States Attorney (Eric F. Melgren, United States Attorney, with her on the brief), Topeka, KS, for Plaintiff-Appellee.

Before HOLMES, McKAY, and BALDOCK, Circuit Judges.

McKAY, Circuit Judge.

Defendant Peggy Franklin-El appeals her convictions on fifty-two counts of healthcare fraud and one count of obstruction of justice. The principal issue on appeal is whether sufficient evidence supports these convictions. In addition, Defendant contends the court erred by declining to dismiss the health care fraud charges as unconstitutionally vague. Finally, Defendant argues her sentence was procedurally and substantively unreasonable. We affirm her conviction and sentence.

BACKGROUND

In 1993, Defendant and her spouse, Johnnie Franklin-El, incorporated The Great Meeting Is On For Your Success, a nonprofit business licensed to provide outpatient drug and alcohol treatment services. They jointly owned and operated the business, with Defendant working as Executive Director and Mr. Franklin-El working as Program and Education Director. According to testimony, Defendant handled the financial aspects of the business, and both she and Mr. Franklin-El participated in its day-to-day operations and in client care. Defendant and Mr. Franklin-El were both certified drug and alcohol counselors who had been involved in the drug and alcohol treatment community for numerous years.

The record shows that from 1993 to 2003, The Great Meeting survived largely on income from fund-raising. Then, in 2003, the nonprofit became eligible to bill Medicaid. Medicaid only pays for drug or alcohol treatment for beneficiaries who are addicted. Before receiving Medicaid funds in Kansas, a Medicaid-trained counselor must assess the beneficiary, then complete a Kansas Client Placement Criteria form and submit it to a regional assessment center. Employees at the center assess and approve or deny services. Medicaid pays for limited addiction services through programs such as The Great Meeting— essentially, counseling and case management (facilitating access to ancillary services).

According to testimony, Defendant and Mr. Franklin-El both attended Medicaid billing training in August 2003. From July 2003 through November 2004, The Great Meeting submitted 1331 claims to Medicaid for drug and alcohol services. Counts two through fifty-three of the indictment are representative of these. A billing expert testified that she reviewed all 1331 claims and found them all to be false and fraudulent. A medical expert who reviewed the fifty-two client files supporting the charges agreed those claims were false in numerous respects and should not have been paid. The experts testified to several types of falsities, corroborated by testimony from fact witnesses and other evidence introduced at trial.

First, the experts testified that The Great Meeting submitted claims for drug abuse treatment for seventeen children under age twelve, even though the government introduced testimony that it is clinically impossible to diagnose or treat anyone under age twelve as an addict. Indeed, the evidence shows that two children were only weeks old and several were Defendant and Mr. Franklin-El's relatives. According to testimony, Defendant had learned in one administrative meeting that Medicaid computers do not edit for age. The Great Meeting received more than $420,000 from Medicaid for these seventeen children alone.

The experts also testified that in fifty of the fifty-two client files, the diagnosis on the initial assessment had been changed on the claims to reflect substance abuse. Put differently, the claims identified the clients as addicts even though, based on The Great Meeting's other documentation, they were not. A number of clients testified that their initial assessments contained false information and that The Great Meeting conducted only one assessment (while billing Medicaid for two). Some documents entered into evidence made it appear clients had received services they testified to never receiving. And clients testified they signed blank attendance logs which were later completed without their knowledge. Notably, Defendant's name appears on all the client KCPC forms, as well as on numerous initial assessments, attendance and transportation logs, and progress notes.

Further, the experts testified that The Great Meeting kept little-to-no documentation to support the Medicaid claims and that the company submitted claims for case management and addiction treatment although, according to its own documentation, it provided no such services. Instead, it offered only non-covered support services such as general counseling, anger management counseling, tutoring and homework help, after-school care, drug prevention education, transportation, and meals. At trial, Defendant testified in her own defense. She admitted that, at least as to the child clients, these support services did not constitute drug or alcohol treatment. Yet a report introduced into evidence by defense counsel showed that, in a July 2004 administrative meeting held at Defendant's request, Defendant had admitted she knew she could only bill Medicaid for drug and alcohol-related services. She had also claimed it was out of The Great Meeting's scope to admit a client for anything other than drug or alcohol problems.

A verbatim transcript of an administrative hearing held on November 12, 2003, was also admitted into evidence at trial. At the hearing, an administrative officer reviewed two of The Great Meeting's claims for alcohol and drug treatment which had been denied by the Kansas Medikan program. Medikan is a state program similar to Medicaid in some ways but with different enrollment criteria and stricter limitations on services. Defendant testified at this Medikan hearing that she believed the clients at issue to be covered by Medicaid at the time The Great Meeting provided services to them. Consequently, she made a variety of admissions about her knowledge of and participation in the Medicaid program. Among other things, Defendant admitted to having received the Medicaid provider manual in July 2003 and represented that she knew how to obtain preauthorization for Medicaid claims and, in fact, sought preauthorization for all clients. Yet, other evidence introduced at trial showed The Great Meeting obtained no preauthorizations from the regional assessment center for Medicaid clients. Additionally, Defendant attested at the hearing that The Great Meeting had provided drug and alcohol treatment to two clients, Rafael A. and James W. But a government expert testified at trial that there is no indication any such treatment was provided.

For his part, a defense expert opined that all the problems cited by the government's experts occurred simply because the defendants lacked understanding of the assessment tools used.

In addition to the experts, fact witnesses testified that both Defendant and Mr. Franklin-El specifically recruited people with Medicaid cards, offering community services in exchange for Medicaid identification numbers. In fact, there was testimony that Defendant and Mr. Franklin-El encouraged at least one relative to obtain a Medicaid card and turn it over to The Great Meeting in exchange for a rent-free place to live. The relative did so. Later, after she had problems obtaining grief counseling due to The Great Meeting's use of her card, she confronted Defendant. Defendant threatened to throw her out of the house, and Mr. Franklin-El changed the locks on the house several times. Through all this, the relative received no counseling from The Great Meeting.

The government also introduced evidence that both Defendant and Mr. Franklin-El personally benefitted from the Medicaid payments, essentially using their business bank account as a personal account. Defendant made numerous personal purchases with the money. She admitted that after years of fund-raising and scraping by, she wanted Medicaid funds to pay her back. The government presented evidence that Defendant and Mr. Franklin-El ultimately received more than $1.24 million in Medicaid money in less than seventeen months.

The record reveals that Defendant and Mr. Franklin-El became aware of the investigation when they received an initial request for records on September 16, 2004. Among other things, the request asked for proof the regional assessment center had authorized the billed services. On October 28, 2004, Defendant was served with a federal subpoena requesting the same records. Shortly thereafter, The Great Meeting started submitting preauthorization documents to the assessment center. In November 2004 alone, documents for thirty clients were submitted.

The government ultimately charged Defendant with (1) conspiracy, (2) obstruction, (3) fifteen counts of money laundering, and (4) fifty-two counts of health care fraud. She stood trial with Mr. Franklin-El and was convicted of all counts. However, the district court later declared a mistrial on the conspiracy count because of the jury's failure to identify which substantive crime Defendant and Mr. Franklin-El conspired to commit. The court also declared a mistrial on the money laundering counts because of a jury instruction error. The court granted the government's later motion to dismiss these charges. One additional count of conviction related to forfeiture. However, Defendant waived a jury trial on that count and has not contested the final forfeiture amount imposed.

At sentencing, the court considered a loss amount of more than $1.24 million. The court sentenced Defendant to ninety-two months (the low end of the guideline range) on each of the fifty-two fraud...