U.S. v. Ziperstein

• Citation: 601 F.2d 281
• Decision Date: 20 February 1979
• Docket Number: Nos. 77-1863,s. 77-1863
• Parties: 4 Fed. R. Evid. Serv. 838 UNITED STATES of America, Plaintiff-Appellee, v. Eugene ZIPERSTEIN, Richard Petrizzi, Marvin Rosenthal, Shuw Ling Chang and Joseph Lentini, Defendants-Appellants. to 77-1867. . Heard
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 281

601 F.2d 281

4 Fed. R. Evid. Serv. 838

UNITED STATES of America, Plaintiff-Appellee, v. Eugene ZIPERSTEIN, Richard Petrizzi, Marvin Rosenthal, Shuw

Ling Chang and Joseph Lentini, Defendants-Appellants.

Nos. 77-1863 to 77-1867.

United States Court of Appeals, Seventh Circuit.

Heard Feb. 20, 1979.

Decided May 22, 1979.

Rehearing and Rehearing In Banc July 11, 1979.

Raymond J. Smith, Gerald M. Werksman, Frank Oliver, Edward J. Calihan, Chicago, Ill., for defendants-appellants.

Thomas P. Sullivan, U. S. Atty., William K. Hedrick and Charles B. Burch, Asst. U. S. Attys., Chicago, Ill., for plaintiff-appellee.

Before SPRECHER, TONE and WOOD, Circuit Judges.

SPRECHER, Circuit Judge.

The defendants, all of whom were connected with the ownership or operation of so-called Medicaid mills, were convicted of mail fraud, a conspiracy to defraud the United States, and conducting a criminal enterprise affecting interstate commerce. We find that all of the arguments raised by the defendants are without merit and affirm the convictions.

I

The defendants operated twenty-eight medical clinics owned by defendant Ziperstein. These clinics, located in Chicago, Illinois, consisted of a number of facilities housing offices for doctors, pharmacists and medical support personnel. The Medicare and Medicaid billing by these organizations was handled by two companies, also owned by Ziperstein, which processed the charges and sold them to factoring companies that ultimately collected from the State of Illinois for their own account.

The purpose of the conspiracy, as established at trial, was to increase by fraudulent means the reimbursements received from the Medicaid program. Specifically, the defendants sought to obtain compensation from the government for services which were performed without any arguable justification or necessity. The trial transcript, exceeding 6000 pages, reveals numerous devices engaged in by the defendants to accomplish this end. Only a few of these need to be recounted to clarify the nature of the scheme.

The most notable technique employed by the defendants came to be known as the "Garfield Shuffle" ("Garfield" was the name of one chain of clinics). Patients were sent to one or more doctors for unscheduled examinations which bore no relation to the patient's specific complaint before sending the patient for treatment of that complaint. Likewise, laboratory tests, such as x-rays and blood analyses, as well as prescription drugs, were ordered for patients regardless of medical necessity.

Not only were patients subjected to unnecessary drugs and procedures, but also the clinic employed devices to inflate the billing on all procedures performed. For example, two prescriptions were written where one would have sufficed, thereby resulting in a double, flat-rate "professional fee" for the prescriptions. Additionally, laboratory samples were taken in double amounts for a double charge.

Finally, the clinics billed the state for services that were not even performed. Prescriptions, for instance, were dispensed in amounts lower than that specified on the prescription form but the state was billed for the full amount stated. Many prescriptions were also signed in blank so that employees could later fill in larger amounts.

The evidence presented at trial established that all of the convicted defendants were participants in this scheme. In particular, evidence revealed that the defendants had encouraged or, more accurately, pressured clinic personnel to engage in these practices in order to meet specified production quotas. Eugene Ziperstein, principal owner and chief administrative officer of the clinics was sentenced to 30 months in custody and assessed a $10,000 fine. Petrizzi and Lentini, who were administrators of the clinics, were given sentences of a $1,000 fine, one year in custody, and three years on probation. Rosenthal, another administrator, was given the same sentence as Messrs. Petrizzi and Lentini, but it was suspended on condition that he spend six months on work release and the remainder on probation. Shuw Ling Chang, a supervisor in the pharmacies, was sentenced to three years on probation. Various other defendants were acquitted. The convicted defendants now appeal.

II

All defendants now urge that their trials should have been severed from the trial of Wu Win-Peng, one of the acquitted defendants. Defendants maintain that Wu's defense was mutually antagonistic to that of the other defendants and that Wu's counsel's courtroom behavior prejudiced their defense.

This circuit has a well-established standard for determining when the claim of "mutually antagonistic" defenses will mandate a severance. Such " mutual antagonism" only exists where the acceptance of one party's defense will preclude the acquittal of the other. United States v. Kahn, 381 F.2d 824, 841 (7th Cir.), Cert. denied, 389 U.S. 1015, 88 S.Ct. 591, 19 L.Ed.2d 661 (1967). See also United States v. McPartlin, 595 F.2d 1321, 1333, 1334 (7th Cir. 1979). An example of "mutually antagonistic" defenses is presented in De Luna v. United States, 308 F.2d 140 (5th Cir. 1962). In De Luna one defendant claimed that he came into possession of narcotics only when the other defendant saw the police approach and shoved the drugs into his hands. The other defendant, however, denied having ever possessed the drugs and claimed that they had always been in the possession of the first defendant. In a case such as De Luna, where someone must have possessed the contraband, and one defendant can only deny his own possession by attributing possession and consequent guilt to the other, the defenses are antagonistic.

This is completely different from a case, such as the one before us, where one defendant denied participation in a criminal conspiracy while admitting, gratuitously from the viewpoint of his own defense, the existence of a conspiracy. Such a "non-participatory" defendant can be acquitted even though no conspiracy is ultimately determined to have been in existence. In short, the defendant's non-participation adds nothing to the characterization of the acts in which the other defendants participated. Accordingly in United States v. Hutul, 416 F.2d 607 (7th Cir. 1969), Cert. denied, 396 U.S. 1012, 90 S.Ct. 573, 24 L.Ed.2d 504 (1970), the denial of severance was upheld in a case where one defendant claimed that the misrepresentations with which he was charged were made in reliance on statements made by the other defendants and that therefore he lacked the requisite intent to defraud proscribed by the mail fraud laws. In Hutul we noted that this simple antagonism of defenses did not automatically require severance. Id. at 620. Certainly the fact of reliance by one defendant does not mandate any finding that the statements by the other defendants were made with the requisite intent to defraud. Similarly, in this case, the alleged non-participation of defendant Wu in any conspiracy did not mandate any conclusion, regardless of Wu's statements to the contrary, that an illegal conspiracy in fact existed.

Of course, even if the nature of the defenses themselves did not require a severance, it is still possible that the defendants could have been prejudiced by the actual conduct of a co-defendant's defense. See United States v. Sacco, 563 F.2d 552 (2d Cir. 1977). ¹ This ground for severance, however, depends on a careful evaluation of facts elicited, prejudicial tendencies, and the entire course of the trial prior to the challenged conduct. Such determinations are uniquely within the province of the trial court, and accordingly it is well established that a trial court's denial of a motion for severance will be overturned only if it was an abuse of discretion. United States v. Tanner, 471 F.2d 128, 137 (7th Cir.), Cert. denied, 409 U.S. 949, 93 S.Ct. 269, 34 L.Ed.2d 220 (1972). Examining each instance of alleged prejudice we are unable to find any abuse of discretion.

The defendants first allege that undue prejudice resulted from several remarks in Wu's counsel's opening statement. Two unindicted co-conspirators had been murdered before trial. Judge Will determined that the manner of their death was irrelevant to any issue in the trial and directed counsel to make no mention of their deaths. Nevertheless, Oliver, Wu's counsel, made such a reference in his opening statement. However, he did not mention that the deaths were the result of a murder, and thus we fail to see any prejudice. In another remark in his opening statement, Oliver mentioned that his client was going to take the stand, since "an innocent man almost invariably is eager to take the witness stand." Oliver did not speculate as to whether any of the other defendants were going to refuse to take the stand. Accordingly, these statements clearly fit within our holding in Hutul that such remarks are merely an attempt to bolster the credibility of the testifying defendant, not to comment prejudicially upon the silence of the others. 416 F.2d at 621-22. See also United States v. Barney, 371 F.2d 166 (7th Cir. 1967). Finally, Oliver intimated that certain other defendants had attempted to tamper with witnesses. This statement was not prejudicial because there was a factual foundation to support the statement. The government offered to prove that one witness was approached by defendant Ziperstein who told her to take the Fifth Amendment before the grand jury and pointed out to her that the government could take her children away. Cf. United States v. Akin, 562 F.2d 459 (7th Cir. 1977), Cert. denied, 435 U.S. 933, 98 S.Ct. 1509, 55 L.Ed.2d 531 (1978) (belief that evidence would be adduced at trial sufficient to justify reference in opening statement).

The defendants also argue that Oliver's conduct of the cross-examination of government witnesses resulted in prejudice. The objections need not be specifically detailed since they all possess a common characteristic: each of these...