U.S. v. Baumgardner, s. 95-2860

• Decision Date: 05 June 1996
• Docket Number: 95-3866,Nos. 95-2860,s. 95-2860
• Citation: 85 F.3d 1305
• Parties: Unempl.Ins.Rep. (CCH) P 15501B UNITED STATES of America, Appellee, v. Frank BAUMGARDNER, Appellant. UNITED STATES of America, Appellee, v. Frank BAUMGARDNER, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1305

85 F.3d 1305

Unempl.Ins.Rep. (CCH) P 15501B

UNITED STATES of America, Appellee, v. Frank BAUMGARDNER, Appellant.

UNITED STATES of America, Appellee, v. Frank BAUMGARDNER, Appellant.

Nos. 95-2860, 95-3866.

United States Court of Appeals Eighth Circuit.

Submitted March 12, 1996.

Decided June 5, 1996.

Jane Kelly, Asst. Federal Public Defender, Cedar Rapids, IA, argued, for appellant.

Mary Clare Luxa, Asst. U.S. Atty., Des Moines, IA, for appellee.

Before MAGILL, FLOYD R. GIBSON, and HEANEY, Circuit Judges.

HEANEY, Circuit Judge.

Frank Baumgardner appeals from his convictions for making a material false statement to the Social Security Administration (SSA) in violation of 18 U.S.C. § 1001 and for fraudulently concealing his receipt of workers' compensation benefits in violation of 42 U.S.C. § 408(a)(4). He argues that the section 1001 conviction cannot stand because under the recent Supreme Court decision, United States v. Gaudin, --- U.S. ----, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995), the materiality of his false statements is an element of the offense that must be found by the jury beyond a reasonable doubt. He also challenges the sufficiency of the evidence to support both convictions. In light of Gaudin, we vacate Baumgardner's false statement conviction and remand for a new trial. We affirm his conviction under 42 U.S.C. § 408(a)(4), however, and remand this case to the district court for resentencing on that count.

I. BACKGROUND

After sustaining serious injuries from a work-related fall, Baumgardner applied for disability benefits from the SSA in 1978. The SSA denied Baumgardner's application both initially and on appeal, but an Administrative Law Judge reversed the denial and awarded him benefits in August 1979. Until 1994, Baumgardner and his dependents received monthly disability payments, ranging from $600 to $1,393, totaling over $200,000.

In his benefits application, Baumgardner agreed to notify the SSA if his medical condition improved, if he returned to work, or if he applied for or received benefits under any workers' compensation law. The occurrence of any one of these events could have affected his eligibility status. The SSA informed Baumgardner many times of his duty to report changes in his work status and the possible consequences of failing to do so.

Despite these instructions, Baumgardner did not report that from September 1981 until February 1985, he received nearly $76,342 in workers' compensation benefits and $26,835 in medical payments for injuries that resulted from a trucking accident. Although the SSA knew that Baumgardner had worked as a truck driver for nearly five months in 1979, it was not informed that he received workers' compensation benefits or the medical payments.

In addition, Baumgardner failed to report that he began to repair, clean, and sell new and used Rainbow vacuums out of his home. Baumgardner did not report any self-employment income to the SSA until it contacted him in April 1992. Even when confronted by the SSA, Baumgardner maintained that his work with vacuums was merely a hobby, from which he did not derive any income. Specifically, in response to questions on a SSA work activity report completed by Baumgardner in 1992, he stated that there were no months from January 1979 until April 1992 in which he had made more than $75 or worked more than fifteen hours.

Baumgardner's responses on the work activity report sparked a two-year investigation of Baumgardner's self-employment, which culminated in the underlying two-count indictment. The government charged Baumgardner with making a false statement to a government agency in violation of 18 U.S.C. § 1001 for reporting that there were no months in which he earned more than $75.00 or worked more than fifteen hours. He was also charged with concealing the receipt of workers' compensation benefits with the fraudulent intent to secure payment in a greater amount than was due him in violation of 42 U.S.C. § 408(a)(4). After a jury trial, he was convicted of both offenses. He was sentenced to twenty-three months imprisonment and three years supervised release. He was also ordered to pay over $200,000 in restitution.

At the time of Baumgardner's trial, the Eighth Circuit--and every other circuit but the Ninth--considered materiality under section 1001 to be a question of law for the district court. United States v. Johnson, 937 F.2d 392, 396 (8th Cir.1991); see also, United States v. Gaudin, 28 F.3d 943, 955 (9th Cir.1994) (en banc) (Kozinski, J., dissenting) (citing authority from each circuit), aff'd, --- U.S. ----, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995). Accordingly, the district court decided that the alleged false statement was material and did not instruct the jury on this element. ¹ After Baumgardner's conviction, the Supreme Court decided United States v. Gaudin, --- U.S. ----, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995), in which it held that failure to submit the issue of materiality of an alleged section 1001 violation to the jury violated the defendant's Fifth Amendment right to due process of the law and his Sixth Amendment right to have a jury determine guilt of every element of the crime charged. Id. at ----, 115 S.Ct. at 2320. In light of Gaudin, Baumgardner filed a motion for a new trial with the district court, which was denied. This appeal follows.

II. DISCUSSION

On appeal, Baumgardner challenges both the district court's failure to instruct the jury on the element of materiality and the sufficiency of the evidence to support either conviction.

A. Gaudin Error

As the Supreme Court instructed in United States v. Gaudin, the district court's decision to remove the issue of materiality from the jury violated Baumgardner's Sixth Amendment right to have a jury determine guilt beyond a reasonable doubt of every element of the crime charged. See Gaudin, --- U.S. at ----, 115 S.Ct. at 2320; United States v. Raether, 82 F.3d 192, 193-94 (8th Cir. 1996). Because Baumgardner's counsel did not object to the court's decision at trial, however, we must review this issue under the plain error standard of Rule 52(b) of the Federal Rules of Criminal Procedure. This court has the limited authority to correct forfeited errors when (1) there was an error at trial, (2) the error is plain, and (3) the error affected the defendant's substantial rights. United States v. Olano, 507 U.S. 725, 732, 113 S.Ct. 1770, 1776-77, 123 L.Ed.2d 508 (1993); United States v. Ryan, 41 F.3d 361, 366 (8th Cir.1994) (en banc), cert. denied, --- U.S. ----, 115 S.Ct. 1793, 131 L.Ed.2d 721 (1995). In addition, we should not exercise our authority under 52(b) unless the error results in a miscarriage of justice or "seriously affect[s] the fairness, integrity, or public reputation of judicial proceedings." Olano, 507 U.S. at 732, 113 S.Ct. at 1776 (quoting United States v. Atkinson, 297 U.S. 157, 160, 56 S.Ct. 391, 392, 80 L.Ed. 555 (1936)).

Because the district court's failure to submit the question of materiality to the jury deviates from the Supreme Court's decision in Gaudin, the first prong of the Olano standard is met. We next consider whether this error is "plain." In this case, the question turns on whether we look to the law at the time of the trial or on appeal. At trial, the district court's decision was in accord with our circuit's firmly established law--materiality in a section 1001 case was a matter of law decided by the court. Johnson, 937 F.2d at 396. On appeal, with the benefit of hindsight, the district court's decision constitutes clear error. Gaudin, --- U.S. at ----, 115 S.Ct. at 2320.

The Olano Court explicitly acknowledged, but left unanswered, this precise situation:

We need not consider the special case where the error was unclear at the time of trial but becomes clear on appeal because the applicable law has been clarified. At a minimum, the Court of Appeals cannot correct an error pursuant to Rule 52(b) unless the error is clear under current law.

Olano, 507 U.S. at 734, 113 S.Ct. at 1777. Most circuits that have addressed this open question have permitted discretionary review of errors that become plain on appeal because of a change in settled law. United States v. Viola, 35 F.3d 37, 42 (2d Cir.1994) (plain error determined according to the law at the time of appeal), cert. denied, --- U.S. ----, 115 S.Ct. 1270, 131 L.Ed.2d 148 (1995); United States v. Retos, 25 F.3d 1220, 1230 (3d Cir.1994) (same); United States v. Jones, 21 F.3d 165, 173 & n. 10 (7th Cir.1994) (same); but see United States v. Calverley, 37 F.3d 160, 162-63 & n. 18 (5th Cir.1994) (en banc) (plainness viewed from perspective of law at the time of trial, but not specifically addressing open question), cert. denied, --- U.S. ----, 115 S.Ct. 1266, 131 L.Ed.2d 145 (1995); United States v. Marder, 48 F.3d 564, 573 (1st Cir.), (question left unanswered), cert. denied, --- U.S. ----, 115 S.Ct. 1441, 131 L.Ed.2d 320 (1995); United States v. Washington, 12 F.3d 1128, 1139 (D.C.Cir.), (creating a special, supervening-decision doctrine to provide the defendant with the benefit of a change in law), cert. denied, --- U.S. ----, 115 S.Ct. 98, 130 L.Ed.2d 47 (1994).

With the benefit of the varied analyses provided by our sister circuits, we now hold that the plain error prong of the Olano standard should be determined in accordance with the law at the time of appeal. This approach is consistent with the practical considerations of judicial proceedings. Given this court's holding in Johnson, an objection at trial would have been pointless. The more stringent prerequisites imposed by Rule 52(b), as compared to Rule 52(a), are designed to encourage a defendant to raise objections during the proceeding where they might be corrected, rather than strategically to withhold an objection as a basis of appeal. See Viola, 35 F.3d at 42. By contrast, to require a defendant to raise all possible objections at trial despite settled law to the contrary...