U.S. v. O'Brien

Decision Date05 January 1994
Docket NumberNo. 93-1832,93-1832
Parties, Medicare&Medicaid Guide P 42,092 UNITED STATES of America, Appellee, v. Kevin F. O'BRIEN, Defendant, Appellant. . Heard
CourtU.S. Court of Appeals — First Circuit

Alan Chapman, with whom Chapman & Chapman was on brief, for appellant.

Timothy Q. Feeley, Assistant United States Attorney, with whom A. John Pappalardo, United States Attorney, was on brief, for the United States.

Before SELYA, CYR and BOUDIN, Circuit Judges.

SELYA, Circuit Judge.

A jury convicted defendant-appellant Kevin F. O'Brien on two hundred ninety counts of making, or causing to be made, false statements related to applications for Medicare benefits, and one hundred thirty counts of converting federal funds to his own behoof. 1 After combing the record, we uphold the verdict.

I. BACKGROUND

We examine the relevant events as a whole, marshalling the evidence in the light most congenial to the prosecution's theory of the case. See United States v. Ortiz, 966 F.2d 707, 711 (1st Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1005, 122 L.Ed.2d 154 (1993); United States v. Maraj, 947 F.2d 520, 522 (1st Cir.1991).

Appellant was the president and sole shareholder of O'Brien Ambulance, Inc. and its lineal descendant, O'Brien Ambulance, Ltd. 2 As president of the corporation, appellant served as its chief executive and principal operating officer. He, and he alone, possessed authority to sign company checks during the period covered by the instant indictment, i.e., from March to August of 1987. During that period, appellant also acted as the corporation's sole director.

The corporation ran a licensed ambulance service. It regularly billed Medicare for ambulance services provided to Medicare recipients, with the result that the federal Medicare program accounted for a significant portion of corporate revenues. Many of the corporation's payment requests sought reimbursement for the transportation of Medicare recipients to and from approved kidney dialysis treatments. During the period covered by the indictment, the corporation, in order to maximize the remuneration associated with such services, regularly represented various Medicare recipients as bedridden when, in fact, they were ambulatory; and it also regularly represented trips for dialysis treatments to have been undertaken by ambulance when, in fact, the patients had been transported by van or wheelchair car. 3 Corporate records were falsified to camouflage these untruths. Subsequent investigation uncovered the scheme, revealing that, in numerous instances, the corporation's billing practices bore little relation to the reality of events, and that the corporation had bilked the government out of well over $300,000.

Based on this, and other, evidence--including evidence that, in late 1986 and early 1987, the corporation had been teetering on the brink of insolvency--a federal grand jury returned an indictment against appellant. 4 Evidence presented at trial showed that, during the six-month period in question, the corporation routinely transported ambulatory dialysis patients in vans or wheelchair cars (often as a group), but nonetheless misrepresented these services in applying for Medicare stipends, saying that they related to individualized transportation of non-ambulatory patients via ambulance.

Anticipating appellant's eventual line of defense, the government presented both live testimony and corporate records (in the form, inter alia, of run slips, run logbooks, and documents related to Medicare benefit applications) illustrating the pervasiveness of the criminal conduct. The government showed, through the testimony of corporate employees (some of whom were appellant's kith and kin), that appellant, in his management role, exercised substantial control over the day-to-day operations of the corporation; that, on occasion, he filled in for the dispatcher and assumed other "line" responsibilities; and that, in late 1986, the corporation altered its recordkeeping practices in two significant respects, the net effect of which was to make detection of the forthcoming fraud more difficult. Finally, the prosecution presented an expert witness who identified appellant's handwriting in connection with ambulance logbook entries, some of which involved the Medicare recipients at issue.

As the prosecution had anticipated, appellant offered little contradiction to charges that the corporation made fraudulent representations in seeking Medicare payments and that it unlawfully converted federal funds. Instead, appellant pitched his defense on a relatively narrow ground, denying that he, himself, knew of, or could be held criminally accountable for, the corporation's peccadilloes.

At the close of the evidence, appellant moved for judgment of acquittal, Fed.R.Crim.P. 29, principally on this ground. The district court rejected the motion. The jury convicted appellant on four hundred twenty counts (the other fifteen counts in the superseding indictment having been dropped before trial). This proceeding followed.

II. THE MERITS

This is a rifle-shot appeal. Appellant advances only a single assignment of error, claiming insufficiency of the evidence. In reality, he aims his fire at an even smaller target, for he effectively concedes that the government proved the commission of the crimes. Refined to bare essence, then, his appeal stands or falls on the simple proposition that the government failed to prove his complicity in the scheme. We consider his plaint.

A. Standard of Review.

The well-settled standard applicable to sufficiency-of-the-evidence challenges requires that this court determine whether, after assaying all the evidence in the light most amiable to the government, and taking all reasonable inferences in its favor, a rational factfinder could find, beyond a reasonable doubt, that the prosecution successfully proved the essential elements of the crime. See Ortiz, 966 F.2d at 711; Maraj, 947 F.2d at 522. In this process, a reviewing court must defer all credibility judgments to the jury. See United States v. David, 940 F.2d 722, 730 (1st Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 2301, 119 L.Ed.2d 224 (1992); United States v. Echeverri, 982 F.2d 675, 677 (1st Cir.1993); United States v. Serrano, 870 F.2d 1, 5 (1st Cir.1989).

Contrary to appellant's insinuation, the criminal law does not place a special premium on direct evidence. As a general matter, the prosecution's burden of proof can be satisfied by either direct or circumstantial evidence, or by any combination thereof. See Echeverri, 982 F.2d at 677; United States v. Victoria-Peguero, 920 F.2d 77, 86-87 (1st Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 2053, 114 L.Ed.2d 458 (1991). As long as the evidence taken in its entirety supports a judgment of conviction, it need not rule out every other reasonable hypothesis of innocence. See Victoria-Peguero, 920 F.2d at 86-87.

B. Discussion.

Appellant submits that the prosecution introduced no direct evidence that he, himself, committed fraud, aided or abetted another's fraud, or induced some third person to commit fraud. We agree: the government produced nothing in the way of a confession or any other single piece of evidence that, standing alone, might irrefutably prove appellant's guilty knowledge. But a court will not automatically invalidate a conviction merely because the jury based its finding of scienter, and, hence, its verdict, on circumstantial evidence alone. Guilty knowledge, like specific intent, see, e.g., United States v. Desmarais, 938 F.2d 347, 352 (1st Cir.1991); United States v. Campa, 679 F.2d 1006, 1010 (1st Cir.1982), seldom can be established by direct evidence. This principle has particular pertinence in respect to fraud crimes which, by their very nature, often yield little in the way of direct proof. Unless an accomplice turns, a miscreant confesses, or a suspect is snared by his own rodomontade, prosecutions for fraud must routinely be mounted on the basis of indirect evidence.

This approach to proving guilty knowledge is neither legally problematic nor even controversial. The law is long since settled that the prosecution may prove its case without direct evidence of a defendant's guilty knowledge so long as the array of circumstantial evidence possesses sufficient persuasive power. See Maraj, 947 F.2d at 523; United States v. Boylan, 898 F.2d 230, 242 (1st Cir.), cert. denied, 498 U.S. 849, 111 S.Ct. 139, 112 L.Ed.2d 106 (1990); United States v. Mount, 896 F.2d 612, 615 (1st Cir.1990); United States v. Thornley, 707 F.2d 622, 625 (1st Cir.1983). Moreover, "[c]ircumstantial evidence tending to show guilty knowledge need not compel a finding of such knowledge in order to sustain a conviction; all that is necessary is that reasonable jurors could be convinced beyond a reasonable doubt that the defendants had guilty knowledge." United States v. Flaherty, 668 F.2d 566, 579 (1st Cir.1981); accord United States v. Kilcullen, 546 F.2d 435, 443 (1st Cir.1976) (collecting cases), cert. denied, 430 U.S. 906, 97 S.Ct. 1175, 51 L.Ed.2d 582 (1977). In this case, then, the pivotal issue is not whether there is direct evidence of appellant's guilty knowledge. Rather, the proper query hinges on whether a rational factfinder reasonably could infer appellant's guilty knowledge and, hence, his participation in the charged crimes, from the whole of the evidence, bearing in mind the presumption of innocence and the government's burden to prove essential facts beyond a reasonable doubt. We believe this query merits an affirmative answer.

Here, the government proved the appellant held the reins of corporate control and had hands-on involvement in the operation of the business. There was testimony, for example, that appellant, himself, spent long hours at the corporate headquarters, ran the company, conducted management and staff meetings, reviewed run logs and weekly...

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