U.S. v. Burks, 88-3334

• Decision Date: 09 March 1989
• Docket Number: No. 88-3334,88-3334
• Citation: 867 F.2d 795
• Parties: UNITED STATES of America v. BURKS, (M.D.) Charles J. Appeal of Charles J. BURKS, M.D.
• Court: U.S. Court of Appeals — Third Circuit

Page 795

867 F.2d 795

UNITED STATES of America v. BURKS, (M.D.) Charles J Appeal of Charles J. BURKS, M.D.

No. 88-3334.

United States Court of Appeals Third Circuit.

Argued Jan. 11, 1989.

Decided Feb. 14, 1989.

Rehearing Denied March 9, 1989.

William F. Manifesto, Ellen Viakely (argued), Manifesto, Doherty & Donahoe, P.C., Pittsburgh, Pa., for appellant.

Paul J. Brysh, Bonnie Schleutter (argued), Asst. U.S. Atty., Pittsburgh, Pa., for U.S.

Before HIGGINBOTHAM, COWEN and ALDISERT, Circuit Judges.

OPINION OF THE COURT

A. LEON HIGGINBOTHAM, Jr., Circuit Judge.

This is an appeal from the final judgment of conviction and sentence imposed upon Appellant, Charles J. Burks, M.D., pursuant to a jury verdict of guilt of mail fraud in violation of 18 U.S.C. Sec. 1341 (1982). The Appellant contends that his conviction cannot stand because there was insufficient evidence of record for the jury reasonably to conclude that he wilfully participated in a scheme to defraud insurance companies by submitting fraudulent medical bills with the knowledge and intent that they be forwarded to insurance companies to induce recovery. The Appellant also contends that the government failed to demonstrate that the United States mails were used to accomplish the alleged fraud and, therefore, that his conviction under the federal mail fraud statute cannot stand.

We conclude that the government failed to present sufficient evidence that the United States mails were used to accomplish the alleged fraud. Accordingly, we will reverse the judgment of conviction.

I. Background

The indictment in this case charged Appellant, Dr. Charles Burks, with several instances of submitting fraudulent medical bills to an attorney, Donell Reed, that were subsequently submitted to insurance companies in support of claims for recovery from auto accidents. Burks and Reed apparently had a long established relationship of cross-referrals. The government alleged that Burks and Reed participated in a scheme to defraud the insurance companies by inflating the medical bills to reflect treatment that was never given in order to increase the recovery. The indictment listed sixteen counts of such fraud representing sixteen separate occurrences. Subsequently, however, four of these counts were dismissed by the district court as unsupported by the evidence presented by the government. Three other counts were dismissed by the government.

The jury returned a verdict convicting Burks of only Count 3 which charged that

[i]t was a part of the scheme and artifice to defraud that [Burks] would submit false and inflated medical reports and bills to [Reed] knowing that said reports and bills would be presented to insurance companies and self-insured business entities by [Reed] in support of personal-injury claims of clients of [Reed].

Joint Appendix ("Jt. App.") at 7-8. In support of that Count, the government alleged nine specific incidents of fraudulent medical records submitted by Burks. (These occurrences were charged in separate counts of the indictment as well). ¹

II. Evidence of Use of Mails

Burks cites this Court's decision in United States v. Pearlstein, 576 F.2d 531 (3d Cir.1978) for the test of what must be demonstrated to sustain a conviction on Sec. 1341. Pearlstein states, simply, that to sustain a conviction on that statute, the government must demonstrate: (1) the existence of a scheme to defraud; (2) the participation by the defendant in the particular scheme charged with the specific intent to defraud; and (3) the use of the Postal Service to execute the scheme. Burks contends inter alia, that the government failed to demonstrate that the report was actually mailed in the United States mails (as opposed to delivered via a private courier) and that the government thus failed to meet its burden of proof under Sec. 1341. We agree.

In support of its argument that the report was actually mailed, the government relies only upon circumstantial evidence concerning the standard business practice of Reed's office and the insurance company's usual experience of receiving such correspondence through the mail. No evidence was presented concerning the Reed correspondence specifically. Although circumstantial evidence may be used to prove the element of mailing essential to conviction under Sec. 1341, reliance upon inferences drawn from evidence of standard business practice without specific reference to the mailing in question is insufficient. "Proof of the use of the mails can ... be circumstantial, such as testimony regarding office practice, so long as the circumstances proven directly support the inference and exclude all reasonable doubt to the extent of overcoming the presumption of innocence." United States v. Brooks, 748 F.2d 1199, 1203 (7th Cir.1985) (emphasis added). See also Whealton v. United States, 113 F.2d 710, 713 (3d Cir.1940). Cf. United States v. Srulowitz, 785 F.2d 382, 387 (2d Cir.1986) (mere speculation that if letter had been in files it must have been mailed was too "thin" to support mailing element of offense). The testimony of Reed's secretary (Zacchero) and the Harleysville Insurance representative (Walters) reflects only the standard business practices of those offices, and does not exclude other possibilities for the sending or receipt of correspondence. Zacchero testified that most of the time correspondence was sent by United States mails, but sometimes by delivery; Walters testified that "99 percent" of the time the mails were used. Thus, the testimony of Zacchero and Walters establishes nothing more than a probability that the mails had been used. "[P]robability is not enough to convict a party of mail fraud." United States v. Scott, 730 F.2d 143, 147 (4th Cir.), cert. denied sub nom Wilson v. United States, 469 U.S. 1075, 105 S.Ct. 572, 83 L.Ed.2d 512 (1984). See also Brooks, 748 F.2d at 1204; United States v. Ellicott, 336 F.2d 868, 871 (4th Cir.1964). ²

Our conclusion in this appeal is supported by our holding in United States v. Hart, 693 F.2d 286 (3d Cir.1982). In Hart this Court reversed a conviction on a mail fraud count because the government's only evidence of the use of mails was testimony that something had been "sent." The Court held that since delivery by personal messenger or courier could not be ruled out as the method by which the document was "sent," the government had not sustained its burden of proving each of the essential elements of mail fraud. This Court stated that "[w]hen the government charges a defendant with...