U.S. v. Krowen

Decision Date14 January 1987
Docket NumberNo. 86-1102,86-1102
Citation809 F.2d 144
PartiesUNITED STATES of America, Appellee, v. Jerril J. KROWEN, Defendant, Appellant.
CourtU.S. Court of Appeals — First Circuit

Ellen Y. Suni with whom Jack I. Zalkind, Boston, Mass., was on brief, for appellant.

Peter A. Mullin, Asst. U.S. Atty., with whom William F. Weld, U.S. Atty., Boston, Mass., was on brief, for appellee.

Before CAMPBELL, Chief Judge, WISDOM, * Senior Circuit Judge, and COFFIN, Circuit Judge.

LEVIN H. CAMPBELL, Chief Judge.

On January 22, 1985, Jerril J. Krowen was indicted on 15 counts of mail fraud, 18 U.S.C. Secs. 1341-1342 (1982). The indictments charged Krowen, an attorney, with knowingly participating in a scheme to defraud by submitting falsified bills to his clients' and other insurance companies. After an 18-day trial, the jury returned a verdict of guilty on each of the 15 counts. We affirm.

I.

The events relevant to this appeal occurred in Massachusetts between 1975 and 1981. During this period, Massachusetts operated under a "no fault" automobile insurance system that required, among other things, each owner of a vehicle registered in the state to obtain "personal injury protection" (PIP). Under PIP coverage, the owner of the vehicle and certain other persons automatically recovered from their insurance company all "reasonable expenses" resulting from an automobile accident, up to a maximum of $2,000. See Mass.Gen.Laws ch. 90, Sec. 34A (West Supp.1986). The owner and other covered persons were prohibited from bringing a negligence action against those who allegedly caused their injuries unless their expenses exceeded $500 or the accident resulted in death, disfigurement, fracture, or loss of a "body member," sight, or hearing. Mass.Gen.Laws ch. 231, Sec. 6D (1985).

In March of 1975, appellant Krowen established a law office in Boston, Massachusetts, styled "The Law Offices of Jerril Krowen." According to Bruce Garr, the only lawyer working with Krowen when the firm opened, about half the cases handled by the office involved motor vehicle accidents. Sometime during 1975 or 1976, Krowen began referring clients involved in such accidents to Dr. Rosenthal, a chiropractor, and Dr. Hershenow, an internist. Gradually, the volume of referrals grew to a substantial level. Dr. Rosenthal testified that from 1976 through 1980 Krowen sent to him between 300 and 400 patients. Dr. Hershenow acknowledged that over roughly that same period, Krowen referred approximately 450 patients to him, more than any other lawyer with whom he was doing business.

At trial, Rosenthal and Hershenow testified that they had devised a system by which to defraud various insurance companies of thousands of dollars in these accident cases. During the period that Krowen was referring patients to them, the doctors engaged in widespread falsification of bills, typically charging patients for visits that never occurred. For example, Dr. Hershenow testified to seeing Mario Bozza only one time although charging him for six visits. The Bozza case was not an isolated occurrence. Dr. Rosenthal said that he inflated the "vast majority" of bills relating to his treatment of Krowen's clients; Dr. Hershenow estimated that "approximately three quarters of the bills were fraudulent."

For obvious reasons, the doctors attempted to prevent their patients from seeing the bills. Rather than billing the patients directly, the doctors would send bills to Krowen (or to members of his law firm), who would then submit them to the relevant insurance company. When the claim was settled, Krowen, not the client, would use the proceeds received from the insurance company to pay the doctors.

Although Rosenthal and Hershenow benefited financially from the fraudulent scheme so, too, did Krowen. The doctors testified to having agreed with Krowen to pay Krowen a proportion of the insurance money they received for treating his clients. 1 Thus, the greater the total billings by the doctors, the more money Krowen personally would receive from them. At least as important, however, was the $500 expense predicate the no fault statute imposed on an injured party's ability to bring a tort suit. By artificially increasing medical expenses, the doctors inevitably pushed some patients' billings over the $500 threshold. 2 Given that a plaintiff may recover for pain and suffering in a tort suit, and given that Krowen's office charged between a 33 1/2 and 38 percent contingent fee, exceeding the $500 minimum could be of great economic benefit to Krowen.

The primary issue before the jury was whether Krowen participated in the doctors' scheme knowing it to be fraudulent. 3 That he, in fact, performed acts which were integral to the fraud (such as referring clients to the doctors and submitting to the insurers the padded invoices and remitting the payments received to the doctors) was not seriously contested. Krowen argued, however, that the prosecution failed to prove that he knew the doctors' bills were systematically inflated. Thus, while his own acts had the effect of furthering the illegal scheme, they may have been done, according to the theory, innocently, without requisite guilty knowledge.

After an extensive trial and two days of deliberations, the jury found Krowen guilty on each of the 15 counts for which he was tried. On appeal, Krowen assigns various errors, none of which we find to merit a reversal.

II.

Krowen argues that the district court erred in denying his motion for a judgment of acquittal. He contends that the prosecution did not present sufficient evidence, as a matter of law, for the jury to convict. The standards under which we analyze such a claim are well settled. "In reviewing the sufficiency of the evidence, we consider the evidence as a whole, taken in the light most favorable to the government, together with all legitimate inferences to be drawn therefrom, to determine whether a rational trier of fact could have found each defendant guilty beyond a reasonable doubt." United States v. Drougas, 748 F.2d 8, 15 (1st Cir.1984); see also United States v. Tierney, 760 F.2d 382, 384 (1st Cir.), cert. denied, --- U.S. ----, 106 S.Ct. 131, 88 L.Ed.2d 108 (1985). Because Krowen concedes that the only question is whether there was sufficient evidence of intent, we will limit our analysis to that issue.

After a careful review of the record, we hold that the government presented enough evidence of Krowen's knowing participation in the fraudulent scheme to warrant the district court's denying the motion for acquittal. There were a number of pieces of evidence from which guilty knowledge could be inferred. For example, Dr. Hershenow testified that Krowen asked him explicitly on at least one occasion to falsify a bill. Hershenow stated that during a phone conversation in April of 1977 Krowen "said he had a relative who had an injury and needed a medical report." Krowen then told Hershenow about his aunt, Harriet Weisman, whom Krowen claimed was injured at a hotel when a tray of dishes and china fell, causing a shard of glass to lacerate her foot. As a result of the telephone conversation and as a "favor" to Krowen, Hershenow mailed a report to Krowen claiming, without ever having seen Weisman, that he had treated Harriet Weisman for a mild inflammation and infection of the heel on her left foot, and that Weisman had been disabled for six weeks. Hershenow testified that all the information in the false report came directly from Krowen. It can be reasonably inferred from this evidence that Krowen knew that Hershenow was willing to fabricate a client's medical history and report, 4 since, if he had not known, he would not have asked him to do so then. Significantly, the conversation occurred early in Krowen's professional relationship with Hershenow; even if Krowen had not previously been sure of Hershenow's willingness to falsify, he certainly was aware thereafter.

Hershenow also testified to a conversation he had with Krowen in 1976 or early 1977 concerning the "Insurance Crime Prevention Index," a computer network established by the insurance companies to keep track of clients, attorneys, and doctors who are involved in automobile accident cases. According to Hershenow, Krowen explained how the Index worked and stated "that he had some control so that his name didn't appear in the computer." When asked whether Krowen described the nature of that control, Hershenow answered, "Just that he knew somebody there." The jury could have reasonably inferred from this testimony not only that Krowen knew that Hershenow had something to hide, but also that he himself was benefiting to such a degree as to warrant his actively helping Hershenow cover up.

Another piece of evidence suggesting that Krowen knew of the doctors' fraudulent scheme was Dr. Hershenow's testimony that he had advised Krowen in 1977 that his (Hershenow's) secretary "didn't want to type these bills anymore." (Hershenow later retracted testimony that he had termed the bills "phony" when speaking to Krowen, but the rest of his testimony stood.) That Hershenow's secretary did not want to type the bills any longer would have suggested that they gave her some cause for concern. Krowen's sole response was that Hershenow should handwrite the bills in the future. That Krowen did not inquire why she would not type the bills, or pursue the matter further, suggests that he knew or suspected why the secretary would not type the bills.

The government also produced evidence that at least nine episodes of overbilling by the doctors were actually brought directly to Krowen's attention by clients and employees. The most damning of these instances involved Debra Coull, who on August 16, 1976 was involved in an automobile accident. She went to Krowen, who referred her to Dr. Rosenthal. Although Dr. Rosenthal saw her very few times, perhaps only once or twice, on October 19, 1976 he billed her for 18 visits...

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