747 F.2d 1339 (10th Cir. 1984), 82-1161, United States v. Warren

Docket Nº:82-1161.
Citation:747 F.2d 1339
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. David W. WARREN, Defendant-Appellant.
Case Date:October 25, 1984
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 1339

747 F.2d 1339 (10th Cir. 1984)

UNITED STATES of America, Plaintiff-Appellee,


David W. WARREN, Defendant-Appellant.

No. 82-1161.

United States Court of Appeals, Tenth Circuit

October 25, 1984

Page 1340

Bruce C. Houdek, Kansas City, Mo. (James, Millert, Houdek, Tyrl & Sommers, Kansas City, Mo., were on the brief), for defendant-appellant.

Amanda S. Meers, Asst. U.S. Atty., Kansas City, Kan. (Jim J. Marquez, U.S. Atty., Kansas City, Kan., was also on the brief), for plaintiff-appellee.

Before HOLLOWAY, Chief Judge, and BREITENSTEIN and LOGAN, Circuit Judges.

HOLLOWAY, Chief Judge.

Defendant David W. Warren, a practicing osteopathic physician in Kansas City, Missouri, was convicted after a jury trial of three counts of mail fraud in violation of 18 U.S.C. Secs. 1341 & 2. 1 Defendant appeals his conviction on the grounds that (1) the outrageous conduct of the Government investigators violated the Due Process Clause of the Fifth Amendment; (2) there was insufficient evidence to support the guilty verdict; (3) the trial court failed to properly instruct the jury on the elements of the offense under 18 U.S.C. Sec. 1341; and (4) the trial court abused its discretion in denying defendant's motion for disclosure of proceedings before the grand jury. We disagree with all of defendant's contentions and affirm.



In 1980, United States postal inspectors in Kansas City, Missouri, began an undercover operation directed at insurance fraud by doctors and lawyers. The operation was dubbed "MAIL-Fraud" (Medical And Insurance Liability Fraud). The inspectors conducted the undercover operation as follows.

First, the inspectors purchased automobile insurance policies under fictitious names for non-existent automobiles from insurance companies with claims offices in Kansas. III R. 82; VI R. 134-35. Second, the inspectors, with the cooperation of the Kansas City Police Department, prepared false accident reports. III R. 9-11, 82-83; IV R. 142; V R. 45. Third, Kansas City police officers prepared traffic tickets charging the inspectors with violations of municipal traffic ordinances. III R. 11-13. Fourth, the inspectors appeared in municipal court and entered pleas of guilty to the falsified charges under their assumed identities. III R. 13; V R. 60, 104-08 (motion hearing).

Four agents testified that they contacted an attorney to represent them in filing

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claims against their insurance company. 2 The attorney advised the agents to consult a physician and obtain a medical report to augment their claims against the insurance company. The agents then went to defendant Warren's office. They told defendant that although they were not injured in the accidents, they wanted to reach a settlement with their insurance company. Defendant arranged numerous office visits for each agent; during these visits the agents often received no medical treatment. Defendant then submitted falsified medical reports to the attorney, who forwarded them to the insurance company. Defendant falsely stated that the agents were partially disabled, and charged for some treatments that were never given and for an inflated number of office visits. 3

The three mail fraud counts on which defendant was convicted were based on a letter from the attorney to the insurance company's claims adjuster transmitting medical bills and reports prepared by defendant (Count 3), and letters from the claims adjuster to the attorney transmitting settlement drafts and releases (Counts 4 and 5).


The claim of outrageous governmental conduct

Defendant argues that the conduct of the postal inspectors was so outrageous as to violate due process. Defendant contends that "the deliberate misuse of the judicial system and falsification of official reports by law enforcement offices" requires reversal of his conviction. Reply Brief of Appellant 3. We disagree.

The Supreme Court has stated that it "may some day be presented with a situation in which the conduct of law enforcement agents is so outrageous that due process principles would absolutely bar the government from invoking judicial processes to obtain a conviction." United States v. Russell, 411 U.S. 423, 431-32, 93 S.Ct. 1637, 1642-43, 36 L.Ed.2d 366 (1973); see also Hampton v. United States, 425 U.S. 484, 491-95, 96 S.Ct. 1646, 1650-52, 48 L.Ed.2d 113 (1976) (Powell and Blackmun, JJ., concurring); id. at 495-500, 96 S.Ct. at 1652-1655 (Brennan, Stewart and Marshall, JJ., dissenting). Yet Justice Powell has cautioned that "[p]olice overinvolvement in crime would have to reach a demonstrable level of outrageousness before it could bar a conviction." Id. at 495 n. 7, 96 S.Ct. at 1653 n. 7.

We recognize that undercover activities are "a recognized and permissible means of investigation." United States v. Russell, 411 U.S. at 432, 93 S.Ct. at 1643. 4 Federal courts therefore should not exercise a " 'chancellor's foot' veto over law enforcement practices of which [they do] not approve." Id. at 435, 93 S.Ct. at 1644. The outrageous governmental conduct defense is manifestly reserved for only "the most intolerable government conduct."

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United States v. Jannotti, 673 F.2d 578, 608 (3d Cir.1982). 5

Neither the Supreme Court 6 nor this court 7 has ever overturned a conviction on the ground of outrageous governmental conduct. Moreover, other courts of appeals have rejected most due process challenges to allegedly improper governmental activity; 8 the only two federal courts of

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appeals cases upholding outrageous governmental conduct defenses have involved facts readily distinguishable from the present case. 9

We rejected a claim of outrageous governmental conduct on very similar facts in United States v. Gamble, 737 F.2d 853 (10th Cir.1984). Gamble involved the same undercover investigation at issue here. The defendant was a physician practicing in Kansas City. The undercover inspectors staged phony accidents, prepared false accident reports and traffic tickets, and entered pleas of guilty to the falsified charges under their assumed identities.

We held that "[a] defendant may not invoke the Due Process Clause, however, unless the government's acts, no matter how outrageous, had a role in inducing the defendant to become involved in the crime." Id. at 858. We concluded that the inspectors' fabrications were not so outrageous as to violate due process because that conduct did not itself induce defendant to commit insurance fraud. We stated that the inspectors "displayed shocking disregard for the legal system. But the actions did not directly induce defendant to participate in the fraudulent scheme .... [D]efendant did not rely on any display of fictitious credentials or falsified documents; apparently he relied entirely upon what his 'patients' told him." Id. at 859. We reached this conclusion even though the defendant there "had no criminal record and ... the agents had no apparent hint of [defendant's] predisposition to criminal activity." Id.

We similarly must hold here that the inspectors' conduct in preparing phony accident reports and traffic tickets, and in entering pleas of guilty to the falsified charges under their assumed identities, did not violate due process. 10 There is no indication

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in our record that defendant relied in any way on the phony accident documents or guilty pleas in submitting the falsified medical reports and bills. In these circumstances, we cannot say that the inspectors' conduct was so outrageous that "due process principles would absolutely bar the government from invoking judicial processes to obtain a conviction." United States v. Russell, 411 U.S. at 431-32, 93 S.Ct. at 1642-43.


Sufficiency of the evidence

Defendant contends that there was insufficient evidence to support his conviction of mail fraud under 18 U.S.C. Sec. 1341. 11 We disagree.

The elements of mail fraud under Sec. 1341 are (1) a scheme or artifice to defraud or obtain money or property by false pretenses, representations or premises; and (2) use of the United States mails for the purpose of executing the scheme. Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954); United States v. White, 673 F.2d 299, 302 (10th Cir.1982). In viewing the sufficiency of the evidence to support defendant's conviction, we must view the evidence in the light most favorable to the Government. Hamling v. United States, 418 U.S. 87, 124, 94 S.Ct. 2887, 2911, 41 L.Ed.2d 590 (1974); Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942); United States v. Gatewood, 733 F.2d 1390, 1392 (10th Cir.1984).

Defendant does not take issue with the sufficiency of the evidence relating to a scheme to defraud. Instead, he argues that he did not cause the use of the mails to further the scheme to defraud. We conclude that there is sufficient evidence to support the conviction under Sec. 1341. Correspondence between the attorney and the claims adjuster from the inspectors' insurance company formed the basis of the mail fraud counts upon which defendant was convicted. The first correspondence was a demand letter from the attorney to the claims adjuster. The subsequent letters transmitted settlement drafts from the claims adjuster to the attorney. Defendant had submitted falsified medical reports and bills to the attorney and was later reimbursed from the insurance company's settlement.

The Supreme Court has held that one causes the use of the mails when he "does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended." Pereira, 347 U.S. at 8-9, 74 S.Ct. at 362-363 (quoted in United States v. Maze, 414 U.S. 395, 399, 94 S.Ct. 645, 647, 38 L.Ed.2d 603 (1974)); see also United States v. Roylance, 690 F.2d 164,

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167 (10th Cir.1982); United States v. Curtis, 537 F.2d 1091...

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