832 F.2d 676 (1st Cir. 1987), 86-1557, United States v. Kaplan

Docket Nº:86-1557.
Citation:832 F.2d 676
Party Name:UNITED STATES of America, Appellee, v. Robert D. KAPLAN, Defendant, Appellant.
Case Date:November 02, 1987
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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832 F.2d 676 (1st Cir. 1987)

UNITED STATES of America, Appellee,


Robert D. KAPLAN, Defendant, Appellant.

No. 86-1557.

United States Court of Appeals, First Circuit

November 2, 1987

Heard April 9, 1987.

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[Copyrighted Material Omitted]

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Alan M. Dershowitz, Cambridge, Mass., with whom Robert D. Keefe, Robert W. Thuotte, Nancy A. McCann and Hale and Dorr, Boston, Mass., were on brief, for defendant, appellant.

Peter A. Mullin, Asst. U.S. Atty., with whom Robert S. Mueller, III, U.S. Atty., Boston, Mass., was on brief, for appellee.

Before CAMPBELL, Chief Judge, TORRUELLA, Circuit Judge, and MALETZ, [*] Senior Judge.

TORRUELLA, Circuit Judge.

This case presents yet another example of an overly ambitious lawyer who finds himself convicted of knowingly and willfully participating with members of the medical profession in a scheme to defraud insurance companies in violation of 18 U.S.C. Sec. 1341 (mail fraud) and Sec. 2 (aiding and abetting in the commission of mail fraud). See, e.g., United States v. Krowen, 809 F.2d 144 (1st Cir.1987); United States v. Lebovitz, 669 F.2d 894 (3d Cir.), cert. denied, 456 U.S. 929, 102 S.Ct. 1979, 72 L.Ed.2d 446 (1982); United States v. Drury, 687 F.2d 63 (5th Cir.1982), cert. denied, 461 U.S. 943, 103 S.Ct. 2119, 77 L.Ed.2d 1300 (1983); United States v. Shavin, 287 F.2d 647 (7th Cir.1961).

On September 6, 1985, a grand jury returned a 15 count indictment against Robert D. Kaplan (Kaplan) for having mailed to insurance companies claims containing fraudulent medical bills and reports in motor vehicle accident cases. After a 24 day trial a jury found Kaplan guilty on 14 of the counts. On appeal the assignment of errors relates to the denial of motions for a new trial and judgment of acquittal, jury instructions, the limitation of an opportunity for cross-examination, and to the admissibility of evidence. We affirm.


During the relevant period of the indictment (from about 1973 through at least February 12, 1981), Massachusetts operated under a "no fault" automobile insurance system. The plan required an owner of a vehicle registered in the state to purchase personal injury protection ("PIP"). Under PIP coverage, a party injured in an accident could claim (regardless of fault) from the owner's insurer all reasonable and necessary expenses and a percentage of lost wages, up to a maximum of $2,000. See Mass.Gen.Laws Ann. ch. 90, Sec. 34A (West Supp.1986). A negligence suit (referred to by Kaplan as a "third-party case") could not be brought unless the medical expenses exceeded $500 or the accident resulted in death, disfigurement, fracture, or loss of a "body member," sight, or hearing. Mass.Gen.Laws Ann. ch. 231, Sec. 6D (1985).

Kaplan became acquainted with the "no fault" law from his high-volume personal injury practice. The typical motor vehicle accident case handled by Kaplan involved relatively minor "soft-tissue" injuries such as neck and back pain as opposed to "hard tissue" injuries (e.g., fractures). Briefly, the scheme operated as follows. If the client lacked his own physician, Kaplan would select for him a doctor from a "referral list" of forty to fifty medical providers. The list included doctors Hershenow, Rosenthal, Strauss, and Roodin who, it is uncontested, falsified bills by charging patients

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for visits that never occurred. Acting under Kaplan's directions, the doctor would send directly and only to Kaplan the patient's medical bills and reports. It is undisputed that Kaplan then would forward these, with the claim, to the insurer. Kaplan would distribute the award to his client, and would recommend to him how much to pay the doctors (the client would note that figure in a "direction to pay" form). Normally, Kaplan paid the doctors two-thirds of their bills and almost always by money orders. This set up was an economic incentive for Kaplan. In the PIP cases, Kaplan retained an amount based on an hourly fee to process the claim, whereas in the third-party case--that is, when the bills exceeded the $500 threshold--Kaplan operated under a contingent fee agreement retaining one-third of the recovery obtained by the client.

Kaplan's defense rests on the absence of specific intent, namely, that he never participated in the doctors' scheme knowing it to be fraudulent. This claim of innocence was supported by the following: 1) in the third-party cases medical providers were required by law to sign affidavits attesting the accuracy of their bills (and that Kaplan relied on the presumptively correct reports); 2) Kaplan's clients answered interrogatories propounded by insurance companies assuring that the amount charged by the doctor was accurate; 3) no medical provider ever told Kaplan about any false bills; 4) his employees did not know of or suspect the fraudulent scheme; and 5) because of the high workload at the law firm it was not unreasonable for Kaplan to lack knowledge of the scheme.

I. Sufficiency of the Evidence

Kaplan argues that the court erred in denying a motion for judgment of acquittal because the evidence was legally insufficient to sustain the verdict. There is no dispute here about the existence of a fraudulent scheme and the mailings as elements of mail fraud. The only issue is whether the jury had enough evidence to find beyond a reasonable doubt that Kaplan knowingly participated in the scheme.

For us to sustain the jury's determinations we need not find a "smoking gun," in the sense that Kaplan had been told "the bills are false, do not mail the claims." It is sufficient if from the admissible circumstantial evidence a jury can infer and conclude beyond a reasonable doubt that indeed he knew the falsity of these claims. United States v. Tierney, 760 F.2d 382, 384 (1st Cir.), cert. denied, 474 U.S. 843, 106 S.Ct. 131, 88 L.Ed.2d 108 (1985); United States v. Cincotta, 689 F.2d 238, 241 (1st Cir.), cert. denied, 459 U.S. 991, 103 S.Ct. 347, 74 L.Ed.2d 387 (1982). In reviewing for sufficiency, we consider the evidence in toto--together with all legitimate inferences that can be drawn from the evidence--in the light most beneficial to the government. See, e.g., United States v. Rothrock, 806 F.2d 318, 320 (1st Cir.1986).

The scheme apparently grew out of a 1973 contact between Rosenthal, a chiropractor, and Kaplan. Rosenthal testified under immunity that Kaplan had agreed to refer clients to him, and in consideration Kaplan would pay him two-thirds of his billings. The other one-third, Kaplan had said, would go back to his clients or would be used to thank those who referred business to him. Payments were made by money orders, apparently to facilitate income tax evasion and to encourage the medical providers to accept less than payment in full. Rosenthal also testified that he recruited Dr. Hershenow, an internist, and told him about the financial arrangements with Kaplan. According to Rosenthal, Kaplan got "angry" upon learning about this and told Rosenthal never again to discuss this subject matter with anyone. Yet Hershenow testified that he later met with Kaplan when the latter explained the importance of the $500 threshold for medical expenses in the third-party cases. Hershenow agreed to accept referrals and partial payments from Kaplan only if the patients were actually injured in an accident. During their conversations, Kaplan told him that one-third of his bill was payable to auto body shops and to insurance companies which referred clients to the law office. If Hershenow himself did the referrals,

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Kaplan would pay him one-hundred percent on the amount of his bills.

Not all doctors acquiesced in Kaplan's financial ideas. Dr. Taylor, a radiologist, testified under immunity that he complained to both Kaplan and Bernstein, Kaplan's office manager, that added fixed costs for radiological services had made it impossible for him to accept untimely and discounted payments. Taylor testified, uncontradicted by Bernstein's testimony at trial, that Kaplan had said that if he was unwilling to go along with it the office could refer clients to other "more cooperative" radiology services. Taylor said that subsequently Kaplan's referrals fell "almost to zero."

The pervasiveness of the fraud and the nature of the cases under Kaplan's responsibility laid the foundation for a permissible inference of knowledge. For example, Rosenthal testified that from 1973 through part of 1980 he accepted some 500 referrals from Kaplan of which 250 had false bills and reports. As extracted by the government from Rosenthal's internal medical files, some cases were particularly egregious. Rosenthal said that in the Bella Kaplan case (appellant's mother) he had inflated the number of visits for treatment. Kaplan had called Rosenthal to inform him that an investigator from the "fraudulent claims bureau" had questioned him regarding his mother's claim. Although Kaplan urged Rosenthal to verify the records, he never questioned the bills. The evidence also shows that Kaplan filed a PIP application on behalf of his wife. Yet Kaplan did not include Rosenthal's bill with the application in spite of the fact that this additional bill would have entitled her to bring a third-party action for negligence. The jury could well have concluded that Kaplan did not include the bill because he knew it was false.

The Neubstadt case is a good illustration of Kaplan's seemingly deliberate aloofness to the scheme. In that case, the Boston Municipal Court expressly found that Rosenthal's medical expenses were unreasonable and unnecessary. Yet Kaplan continued to refer clients to Rosenthal without ever inquiring from Rosenthal about the court's findings. And the insurers themselves gave Kaplan sufficient reason to believe the existence of wrongdoing. In the Howsworth case a claims adjustor wrote to Kaplan in 1974 "[i]n our opinion the injuries could not have been serious enough to...

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