U.S.A v. Halstead
| Decision Date | 07 March 2011 |
| Docket Number | No. 09-7442,09-7442 |
| Parties | United States of America, Plaintiff-Appellee, v. Ronald L. Halstead, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
PUBLISHED
Appeal from the United States District Court for the Northern District of West Virginia, at Clarksburg. Irene M. Keeley, District Judge. (1:01-cr-00045-IMK-JSK-4; 1:08-cv-00135-IMK-JSK)
Before NIEMEYER, KING, and DUNCAN, Circuit Judges.
Affirmed by published opinion. Judge Niemeyer wrote the opinion, in which Judge King and Judge Duncan joined.
ARGUED: Richard Aaron Jaffe, Houston, Texas, for Appellant.
Daniel Steven Goodman, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.
ON BRIEF: Lanny A. Breuer, Assistant Attorney General, Greg D. Andres, Acting Deputy Assistant Attorney General, Patrick M. Donley, Fraud Section, Criminal Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Betsy Jividen, Acting United States Attorney, Wheeling, West Virginia, for Appellee.
Ronald Halstead was convicted of both healthcare fraud under 18 U.S.C. § 1347 and conspiracy to launder monetary instruments under 18 U.S.C. § 1956 and sentenced to 151 months' imprisonment. After unsuccessful appeals, he filed this petition for collateral review under 28 U.S.C. § 2255 to vacate his money laundering conviction on the ground that the evidence was insufficient to support convictions of two distinct crimes. He claims that the transactions supporting his money laundering conviction were the same transactions supporting his healthcare fraud conviction, leading to a "merger problem." He argues that the only way the government could have avoided "merger" of the two crimes would have been to prove that he laundered the "net profits," not the "gross receipts," of the healthcare fraud, which the government did not do. In making this claim, Halstead relies on the Supreme Court's decision in United States v. Santos, 553 U.S. 507 (2008), which was decided after his convictions and which, he argues, should be applied retroactively on collateral review.
In Santos, the Court held that, in order to avoid a merger of the crimes of money laundering and operating an illegalgambling business, the term "proceeds" in the money laundering statute must be construed to mean "net profits," not "gross receipts," of the illegal gambling business.
While we agree with Halstead that Santos does apply retroactively on collateral review, we conclude that it does not warrant relief in this case where the laundering of proceeds from the healthcare fraud involved transactions distinct from and subsequent to the transactions involved in the healthcare fraud itself. We read Santos to require a restricted interpretation of "proceeds" only when a broader interpretation would risk a "merger" of a money laundering crime and a crime for operating an illegal gambling business. In this case, however, regardless of whether "proceeds" is defined as "gross receipts" or "net profits," a merger problem does not occur, because Halstead's commission of healthcare fraud was complete before he committed money laundering. Accordingly, we affirm.
Ronald Halstead, a trained chiropractor, had been a consultant to chiropractic and medical practices since 1982 through his corporation, Management One Systems, Inc., doing business as Practice Systems. In late 1993, Halstead advised Robert Burns, a chiropractor in Morgantown, West Virginia, how Burns could increase his income by performing more reimbursable tests per patient visit by linking his chiropractic practice with a medical practice and marketing the joint practice in a specified manner. Under Halstead's direction, Burns formed a parent company, West Virginia Healthcare Management, to own two subsidiary corporations, one a chiropractic clinic known as Mountaineer Chiropractic Center and the other a medical clinic known as Priority one Medical Associates. He had Burns retain Dr. Amando Medina as a doctor to staff the Priority One Medical Association, naming him also as the nominal owner of the corporation. Dr. Medina, however, performed scant medical work, as he was retainedmostly to prescribe chiropractic services so that those services would be covered by the patients' healthcare benefits.
Halstead also hired a marketing specialist to generate increased traffic through the combined medical and chiropractic clinics. The marketer implemented a program where the clinic held marketing dinners, which were free for anyone who filled out a form listing an employer who provided health insurance benefits. At these dinners, the clinic would give out certificates for free examinations and x-rays.
To capitalize on the patient traffic thus generated, Halstead implemented a procedure for the clinic's chiropractors to follow when seeing new patients, providing an exact script for this purpose. The chiropractors were instructed to apply pressure to joints and ask the patient if he or she "noticed any pain or discomfort." After applying pressure, the chiropractor was supposed to tell the patient, "I think you'll agree with me that we have a serious problem here...." Under the script, the chiropractor was then instructed to take two x-rays of the patient and to show the x-rays to the patient, informing the patient that, "[t]hese vertebrae are severely twisted out of position." Finally, the chiropractor was directed to tell the patient that 20 to 30 visits were required to correct the problem. If the patient hesitated, the chiropractor was instructed to say, verbatim: To make sure that the examination script was being followed, Halstead taped some of the chiropractic exams, listened to them, and reviewed them with the chiropractors to point out discrepancies between the script and the actual examination.
To take advantage of the patients' healthcare benefits, which often required that a medical doctor order and supervise specified chiropractic services, Halstead and Burns adopted two courses of action. First, they had the medical cor-poration, Priority One, do all the billing of insurance companies and other healthcare providers, regardless of whether the patients' visits were chiropractic or medical in nature. Second, Halstead advised Burns to require Dr. Medina to focus on authorizing chiropractic treatments. While Dr. Medina thus became these patients' physician, it was in name only, as he actually acted mostly as a rubber stamp for the chiropractors' requests. Often, Dr. Medina would go through stacks of treatment sheets, signing each one without a clear idea of what treatments he was approving or whether they were necessary.
The clinic also employed a second doctor, Dr. Rebecca Price, with the hope that she too would sign off on these chiropractic treatment forms. Dr. Price, however, refused to participate in this fashion, and when the practice forged her signature on documents submitted to insurance companies and other healthcare providers, she resigned.
Halstead and Burns also orchestrated the cash flow thus obtained from the insurance companies and healthcare providers. All billings to them were conducted by Priority One, the medical subsidiary, and the payments received were deposited into Priority One's checking account. Priority One then transferred these funds to the management company, West Virginia Healthcare Management, which had purportedly been created to provide management services for Priority One. West Virginia Healthcare Management then transferred the money to Halstead and Burns' checking accounts. With respect to Halstead, the money was paid to the checking account of his company, Practice Systems.
During the course of the conspiracy, Priority One billed insurance companies and healthcare providers approximately $5.78 million and received something less than that amount. While some of the amounts received were attributable to legitimate chiropractic services, the Probation Officer in this case determined, for purposes of sentencing, that approxi-mately $1.287 million of the amounts received were from fraudulent billing.
Halstead and his co-conspirators were indicted in September 2001, and Halstead was subsequently convicted of one count of conspiracy to commit mail fraud and healthcare fraud, in violation of 18 U.S.C. § 371; 14 counts of healthcare fraud, in violation of 18 U.S.C. § 1347; and one count of conspiracy to launder monetary instruments, in violation of 18 U.S.C. § 1956(h). The district court sentenced him to 121 months' imprisonment, entering judgment on July 1, 2004.
On appeal, Halstead's convictions were affirmed, but his sentence was vacated and the case remanded for resentencing in light of United States v. Booker, 543 U.S. 220 (2005). United States v. Filcheck, 165 Fed. Appx. 284 (4th Cir. 2006). On remand, the district court, applying the advisory Guidelines range, sentenced Halstead to 151 months' imprisonment, and we affirmed. See United States v. Halstead, 261 Fed. Appx. 472 (4th Cir. 2008).
Following Halstead's convictions, the Supreme Court handed down its decision in United States v. Santos, 553 U.S. 507 (2008), holding that, in order to avoid a "merger problem," the term "proceeds" in the money laundering statute must be construed to mean "net profits" when the proceeds are derived from an illegal gambling business. Based on that decision, Halstead filed this motion under 28 U.S.C. § 2255, contending that his conviction for money laundering should be dismissed because a merger problem existed and the evidence at trial was insufficient to prove that the "proceeds" from his healthcare fraud were "net profits," rather than "gross receipts."
The district court denied Halstead's motion. It assumed, without deciding, that Santos applied...
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