State v. McDermitt

• Decision Date: 16 November 1981
• Docket Number: No. 81-KA-0824,81-KA-0824
• Citation: State v. McDermitt, 406 So.2d 195 (La. 1981)
• Parties: STATE of Louisiana v. Ron McDERMITT and Leslie McDermitt.
• Court: Louisiana Supreme Court

Page 195

406 So.2d 195

STATE of Louisiana v.Ron McDERMITT and Leslie McDermitt.

No. 81-KA-0824.

Supreme Court of Louisiana.

Nov. 16, 1981.

William J. Guste, Jr., Atty. Gen., Barbara Rutledge, Asst. Atty. Gen., John L. A. Lenfant, IV, David C. Forrester, Elizabeth V. Ward, Asst. Attys.Gen., David Caldwell, Dist. Atty., for plaintiff-appellee.

Captan Jack Wyly, Lake Providence, Herschel C. Adcock & E. Wade Shows, of Adcock, Dupree & Shows, Baton Rouge, for defendant-appellant.

CHIASSON, Justice Ad Hoc.^*

The defendants, Ron McDermitt and Leslie McDermitt, were charged by bill of information on April 16, 1980, with thirteen counts of Medicaid fraud in violation of La.R.S. 14:70.1.The State subsequently dismissed one count.The defendants pleaded not guilty and filed motions to suppress the evidence and quashthe bill of information.After the trial court overruled these motions, the defendants were tried by a six person jury who found both defendants guilty of all twelve counts in the bill of information.On January 9, 1981, the defendants were each sentenced to one year at hard labor on CountNo. 1, and various suspended sentences ranging from one to five years on the remaining eleven counts.The defendants have appealed their convictions and sentences, and remain free on an appeal bond.

Most of the facts in this case appear undisputed.Both the State and defense have accepted the following version of the facts.

During a routine check of nursing homes, Thomas Cain, a financial investigator for the Louisiana Department of Justice, Medicaid Fraud Control Unit, seized drugs belonging to patients in a nursing home located in Bastrop, Louisiana.Labels on said vials identified them as having been obtained from Epps Pharmacy in Epps, Louisiana, located in West Carroll Parish.Because the appearance of the pills contained in said vials did not correspond to photos in the Physician's Desk Reference of the drugs enumerated on the labels, Mr. Cain seized said drugs and vials and transported them to Baton Rouge.

Epps Pharmacy, Inc. was a medicaid provider as a result of an agreement with the State.Claim forms were submitted by Epps Pharmacy, Inc. to Computer, Inc., which transferred the information from the claim forms onto magnetic tapes and transferred said tapes to EDS Federal in Baton Rouge, an intermediary for the State that pays the medicaid provider.

Cain obtained a history profile from EDS Federal of each medicaid recipient whose drugs had been seized from EDS Federal and found that the State had been billed for the brand name drugs listed on the labels.He then obtained confirmation from a pharmaceutical consultant that the brand name drugs listed on the label were not contained in the vials.Cain interviewed other recipients in West Carroll Parish and followed the same procedure to locate discrepancies between drugs contained in vials and those listed on the label.Cain's investigation thus revealed that the McDermitts were defrauding the Medicaid Program through their operation of Epps Pharmacy by supplying Medicaid recipients with generic drugs while billing the Medicaid Program for the higher priced brand name drugs.

Investigator Cain subsequently discovered that both McDermitts were also pharmacists at Gibson Drugs, Inc. in East Carroll Parish.Cain decided to run a computer list of Medicaid recipients that the McDermitts provided prescriptions to in East Carroll Parish.The computer run generated a list of some thirty Medicaid recipients supplied by Gibson Drugs, Inc. Letters were sent to each recipient requesting them to appear at the Lake Providence Welfare Office with their drugs.Twenty-six recipients showed up.When the investigator discovered that drugs in fifteen of the recipients' vials did not correspond to the description of the drugs in the Physician's Desk Reference, they confiscated these vials and submitted the drugs therein to Baton Rouge for testing.These lists verified that the drugs in the vials were not the ones described on the label of the vials.A history profile of these prescriptions was ordered from Electronic Data Systems (EDS), a physical intermediary for this State which actually pays Medicaid claims upon presentment.The history profile revealed that EDS was billed for the higher priced drugs labeled on the vial instead of the cheaper, generic ones contained in the vial.It was discovered that Computer, Inc. was the company which presented these bills to EDS on behalf of Gibson Drugs, Inc. Twelve of the aforementioned fifteen prescriptions formed the basis for the twelve count bill of information from which the defendants were convicted on all twelve counts.

The defendants make ten arguments on eighteen assignments of error in this appeal.

ASSIGNMENTS OF ERROR NUMBERS 6 AND 12

Defense counsel argues that the trial court erred in admitting evidence concerning other alleged crimes and acts of the defendants which did not directly pertain to the offenses charged.The evidence in issue pertains to similar acts allegedly committed by the defendants in another pharmacy they operated in a different parish.Defense counsel first argues that this evidence has no independent relevance to the charges pending in East Carroll Parish because the evidence of alleged criminal acts committed in the operation of a separate business in a different parish was admitted to show defendants' criminal disposition instead of an element of the offense.Defense counsel also submits that the testimony regarding substitution of generic drugs for brand name drugs was also erroneous because it implied that this was a crime when substitution of generic drugs is not a crime.Defense counsel next contends that the State did not comply with mandatory procedural safeguards before introducing "other crimes" evidence, as required by State v. Prieur, 277 So.2d 126(La.1973).In challenging the State's failure to adequately notify defendant of which "other crimes"the State intended to introduce, defense counsel appears to concede that the prescriptions listed in the State's notice complied with the procedural safeguards set out in State v. Prieur, supra.However, he maintains that the trial court erroneously admitted a barrage of evidence unrelated to the trial at hand, including:

__numerous vials of drugs filed at Epps Pharmacy;

__tape billing verification reports for Epps Pharmacy;

__recipient medical history profiles in globo-Epps Pharmacy;

__letter from the Executive Director of the Louisiana Board of Pharmacy;

__EDS Federal Corporation remittance and state reports in globo for Epps Pharmacy.

By admission of this evidence, it is contended that the defendants were taken by surprise and were forced to defend against charges for which they were not on trial.Additionally, defense counsel maintains that the Prieur guidelines, requiring the State to affirmatively show that evidence of "other crimes" is not merely repetitive and cumulative and not a subterfuge for depicting the defendant's bad character, were not met by the State by its mere assertions to this effect.Finally, defense counsel contends that the evidence of other acts by defendants was erroneously admitted because any probative value it did have did not outweigh the risk of undue prejudice to the defendants.It is submitted that the jury gave excessive weight to the evidence of the similar acts and thereby convicted defendants irrespective of their guilt for the present charge.

The State submits that the evidence pertaining to the operations of the defendants' other pharmacy outside East Carroll Parish has independent relevance to the present case in that it tends to show "intent, knowledge and system" by the defendants in defrauding the State Medicaid program.It is claimed that evidence of these other acts establishes (1) intent of the defendants to defraud the State as opposed to mere mistakes or accident; (2) knowledge of the wrongdoing because both defendants were responsible for filling the prescriptions and billing the same to the State; and (3) a system of defrauding the State Medicaid program by supplying customers with the cheaper generic drugs yet billing the State for the more expensive brand name drugs from both pharmacies during the same time period.The State submits that their written notice setting forth the aforementioned purposes for introducing this evidence; the Rx#, prescription name and generic name of each prescription the State intended to introduce as "other crimes"; and the alleged strategy employed by the defendants in their system of deception, complied fully with the procedural safeguards enumerated in State v. Prieur, supra.As to the barrage of unrelated evidence which defense counsel contends he was not notified of, the State argues that these documents only served to trace the billing of false prescriptions from their origin point to their destination in Baton Rouge.The State submits that their "other crimes" did not prejudice the defendants because this evidence did not surprise, confuse or unduly sway the jury.

Generally, evidence of criminal offenses other than the ones defendant stands trial on are inadmissible as substantive evidence because of the substantial risk of grave prejudice to the defendant.State v. Prieur, supra;1 Wigmore, Evidence § 194(3rd Ed.);McCormick on Evidence, § 190(ClearyEd. 1972).However, La.R.S. 15:445 and 446 provide the following general exceptions to this exclusionary rule:

La.R.S. 15:445:

"In order to show intent, evidence is admissible of similar acts, independent of the act charged as a crime in the indictment, for though intent is a question of fact, it need not be proven as a fact, it may be inferred from the circumstances of the transaction."

La.R.S. 15:446:

"When knowledge or intent forms an essential part of the inquiry, testimony may be offered of such acts, conduct or declarations of the accused as tend to establish such knowledge or intent...