801 F.2d 1477 (6th Cir. 1986), 85-1411, United States v. Mahar
|Docket Nº:||Shannon N. MAHAR (85-1411), Inner-City Medical Services,|
|Citation:||801 F.2d 1477|
|Party Name:||UNITED STATES of America, Plaintiff-Appellee, v.|
|Case Date:||September 24, 1986|
|Court:||United States Courts of Appeals, Court of Appeals for the Sixth Circuit|
Argued April 22, 1986.
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Stephen T. Robinson, Asst. U.S. Atty., Detroit, Mich., for U.S.
John Christensen, Detroit, Mich., for Riley Mahar.
Richard P. Yanko, Birmingham, Mich., for Shannon N. Mahar.
Robert S. Harrison, Birmingham, Mich., for Shannon N. Mahar and Inner-City Medical Services, Inc.
Before MERRITT and JONES, Circuit Judges, and THOMAS, Senior District Judge. [*]
WILLIAM K. THOMAS, Senior District Judge.
This criminal appeal involves the operation of Inner-City Medical Services, Inc. (dba Inner-City Medical Clinic), a Michigan corporation, during the period of a charged criminal conspiracy. The relevant years are 1981, 1982 and the first half of 1983.
Shannon Mahar owned the majority of the stock of Inner-City Medical Services, Inc. 1 and was its president. Walter V. Mahar, father of Shannon, was secretary-treasurer of the corporation. Riley Mahar, a registered pharmacist, was manager of the Clinic's pharmacy, licensed in the name of Inner-City Medical Services, Inc. Terrance 2 Mahar, whose registration as a pharmacist had been suspended, continued to work in the pharmacy during the period covered by the indictment. Kent Oliver supervised the X-rays of patients. Dr. Stephen B. Kay was the examining doctor on Monday, Tuesday, Thursday, Friday and Saturday. Maurice Norris, a supervisor, usually in charge of the "pink chair," also operated the nearby computer terminal. There, drug medications to be sold to each patient were selected and programmed into the Clinic computer, which printed out the prescriptions in the pharmacy.
Under 21 U.S.C. Sec. 846, 3 the foregoing persons and Inner-City Medical Clinic were charged in count 1 of a 32 count indictment with conspiracy to distribute schedule II, III, IV & V controlled substances. Among its allegations, count 1 charged that as part of the conspiracy:
SHANNON N. MAHAR and his father, WALTER V. MAHAR, also an officer of INNER-CITY MEDICAL SERVICES, INC., operated INNER-CITY MEDICAL CLINIC for the purpose, among others, of unlawfully selling controlled substances
and unlawfully issuing and selling prescriptions for controlled substances, all outside the usual course of medical practice and for no legitimate medical purpose....
SHANNON N. MAHAR's brothers, RILEY MAHAR, a pharmacist, and TERRENCE R. MAHAR, a pharmacist, operated a pharmacy inside INNER-CITY MEDICAL CLINIC, for the purpose, among others, of filling prescriptions for controlled substances, which, as they knew, had been issued outside the usual course of medical practice and for no legitimate medical purpose.
In counts 2 through 16 each of the defendants, except Maurice Norris, was individually charged with the unlawful distribution of a named controlled substance to an identified person, in violation of 21 U.S.C. Sec. 841(a)(1), 4 and 18 U.S.C. Sec. 2 (Aiding and Abetting).
Counts 18 through 32 charged each of the defendants, except Maurice Norris, with a violation of mail fraud under 18 U.S.C. Sec. 1341, 5 and 18 U.S.C. Sec. 2 (Aiding and Abetting). Each of these counts identified a particular State of Michigan Treasurer's warrant or Blue Cross/Blue Shield Michigan check sent and delivered by the postal service in an envelope addressed to Inner-City Medical Services, Inc., 15101 Livernois, Detroit, Michigan 48238. Paragraph 1 of count 18, incorporated by reference in counts 19 through 32, alleged in part that the defendants
devised and intended to devise a scheme and artifice to defraud and to obtain money by means of false and fraudulent pretenses and representations from Medicaid, a state and federally funded assistance program, and Blue Cross/Blue Shield of Michigan and other insurance companies....
It was part of the scheme and artifice that the defendants knowingly, intentionally and unlawfully distributed and aided and abetted the distribution of controlled substances to INNER-CITY MEDICAL CLINIC "patients" by knowingly and willfully dispensing drugs and issuing prescriptions for drugs outside the usual course of medical practice and for no legitimate medical purpose.
Paragraph 1 of count 18 further alleged:
It was a further part of the scheme and artifice that defendants required that patients at INNER-CITY MEDICAL CLINIC provide proof of medical insurance and/or Medicaid coverage and submit to medically unnecessary and unwarranted testing procedures in order to obtain controlled substances....
It was further a part of the scheme and artifice that in addition to blood tests, INNER-CITY MEDICAL CLINIC patients were required to submit to the following tests and procedures, among others, for which defendants knew there was no legitimate medical need or purpose:
pulmonary function studies;
It was a further part of the scheme and artifice that Medicaid and Blue-Cross/Blue Shield of Michigan and other insurance companies were billed for the tests and procedures administered to INNER-CITY MEDICAL CLINIC patients and, in some instances, for the drugs distributed to the patients, and
that in the billings, and elsewhere, it was expressly and/or impliedly represented that the drugs, tests and procedures were medically necessary and warranted, when in fact and as defendants well knew they were not.
Finally, in count 17 Shannon N. Mahar and Walter V. Mahar were charged with engaging in a continuing criminal enterprise in violation of 21 U.S.C. Sec. 848. 6
The defendants' seven week trial in the district court ended on February 26, 1985. The jury convicted defendants Shannon Mahar, Riley Mahar and Inner-City Medical Clinic on the count 1 conspiracy charge under 21 U.S.C. Sec. 846. As to counts 2-11, and 13-16 7 (violations of 21 U.S.C. Sec. 841(a)(1)), defendant Shannon Mahar was found guilty of counts 2, 3, 6-9, 11, 13, 15, 16. Defendant Riley Mahar was found guilty of counts 2-8, 10, 11, 13-16, and defendant Inner-City Medical Clinic was found guilty of counts 2-11 and 13-16. Inner-City Medical Clinic was convicted of mail fraud under counts 18 through 32 and defendant Shannon Mahar was convicted of all these counts except count 19. On counts 18-32 the jury found Riley Mahar not guilty. The jury further convicted Shannon Mahar of engaging in a continuing criminal enterprise under count 17 (21 U.S.C. Sec. 848). 8
The disposition of the charges against the remaining defendants was as follows: Before trial Maurice Norris plead guilty to count 1. During trial defendant Walter V. Mahar suffered a heart condition that required hospitalization. The charges against him were severed and the trial proceeded as to the other defendants. Subsequent to the trial he plead guilty to the count 1 conspiracy charge and to mail fraud. Dr. Stephen B. Kay was acquitted by the trial judge at the conclusion of the government's case. The judge made a finding of "no specific intent." Kent L. Oliver and Terrance R. Mahar were both acquitted by the jury on all counts on which each was charged.
Each of the three appellants asserts separate grounds of error, and each adopts and incorporates the arguments of the other appellants. Before considering the principal claims of error, the court will first review the evidence and will also consider whether it is sufficient to support the convictions.
Among the thirty-five witnesses who testified in the government's case were four undercover law enforcement officers (three FBI special agents and a Detroit police officer). 9 With reference to substantive counts 2-16 of the indictment, these witnesses testified as to their visits as "patients" at the Clinic. A total of six long-time Clinic patients also testified about their visits to the Clinic. Patient records
covering Clinic visits were received in evidence.
Other witnesses included various employees of the Clinic, who described its operation. The Clinic's computer software programmer explained the computer system, the programs he had installed, and the Clinic's use of the computer system. An internist and a pharmacist, called as expert witnesses by the government, gave their opinions regarding medical and pharmaceutical practices and standards. Representatives of Michigan's Medicaid program and of the state's Blue Cross/Blue Shield system also testified.
Inner-City Medical Clinic was located in a building at 15101 Livernois, Detroit, Michigan. A sign on the building stated "Medical Clinic and Weight Control--Medicare, Medicaid, Blue Cross." Another sign stated "Doctor is Here Now." A nearby sign announced "Open 7 days 9:00 AM-6:00 PM."
The front door of the Clinic opened into a waiting room. Along the inner wall was the glassed-in desk of the receptionist. One door of the waiting room led to the Clinic pharmacy and another door of the waiting room led to examination and testing rooms behind the waiting room. One of several signs read "PLEASE DIRECT ALL QUESTIONS TO THE RECEPTION PERSON AT THE FRONT WINDOW NOT TO THOSE PERSONS CALLING PATIENTS INTO EXAMINATION ROOMS." Another sign stated, in part, "NO CHANGES OR ADDITIONS AFTER YOU LEAVE THE PINK CHAIR. NEXT VISIT--14 DAYS." Patients were required to present to the receptionist a medical card (Blue Cross or Medicaid) and an ID card.
On a typical day at least 100 patients visited the Clinic. Twenty to twenty-five persons were lined up in...
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