U.S. v. Hershenow

• Decision Date: 14 September 1982
• Docket Number: Nos. 81-1363,s. 81-1363
• Citation: 680 F.2d 847
• Parties: 10 Fed. R. Evid. Serv. 1570 UNITED STATES of America, Appellee, v. Steven V. HERSHENOW, Stuart M. Rosenthal, Steven A. Shraiar, Defendants-Appellants. to 81-1365.
• Court: U.S. Court of Appeals — First Circuit

Page 847

680 F.2d 847

10 Fed. R. Evid. Serv. 1570

UNITED STATES of America, Appellee, v. Steven V. HERSHENOW, Stuart M. Rosenthal, Steven A. Shraiar Defendants-Appellants.

Nos. 81-1363 to 81-1365.

United States Court of Appeals First Circuit.

Argued March 4, 1982.

Decided June 11, 1982.

As Modified on Denial of Rehearing and Rehearing In Banc

Sept. 14, 1982.

Jeanne Baker, Cambridge, Mass., with whom Stephanie A. Cleverdon, and Baker & Fine, Cambridge, Mass., were on brief, for defendant, appellant, Steven V. Hershenow.

Richard M. Egbert, Boston, Mass., with whom Marcus & Egbert, Boston, Mass., was on brief, for defendant, appellant, Stuart M. Rosenthal.

Richard H. Gens, West Newton, Mass., for defendant, appellant, Steven A. Shraiar.

Michael A. Collora, Sp. Asst. U. S. Atty., Boston, Mass., with whom William F. Weld, U. S. Atty., Boston, Mass., was on brief, for appellee.

Before COFFIN, Chief Judge, ALDRICH and BOWNES, Circuit Judges.

BOWNES, Circuit Judge.

Defendants-appellants appeal their convictions of multiple counts of mail fraud in violation of 18 U.S.C. § 1341. Steven Hershenow, a medical doctor, Stuart Rosenthal, a chiropractor, and Steven Shraiar, a pharmacist, were found guilty of ten counts, eleven counts, and eight counts respectively of violations arising out of a scheme to defraud insurance companies from 1975 to 1980 by submitting false or inflated bills for services to persons involved in automobile accidents.

The essence of the scheme was as follows. Certain Boston-area attorneys would refer individuals with relatively minor injuries from automobile accidents to either Hershenow or Rosenthal, each of whom frequently would then refer the patients to the other. The patients would be seen by each doctor only two or three times but would be billed for many more visits, occasionally as many as twenty. These patients were also referred by the doctors to the Beaconsfield Pharmacy, owned by Shraiar, to purchase surgical equipment such as braces and whirlpools. Just as the Hershenow and Rosenthal bills reflected nonexistent visits, so did the pharmacy bills reflect nonexistent purchases.

The defendants' bills would be sent to the attorneys who had made the initial referrals, who would then submit them to the insurance companies for payment. The inflated billing was designed to exceed the $500 threshold under the Massachusetts "no-fault" statute; where medical expenses exceed $500 an automobile accident victim can sue the other party to the accident for negligence and recover damages for pain and suffering. See Mass.Gen.Laws, Ann. ch. 231, § 6D.

According to Hershenow's former secretaries, who testified for the government, his appointment book at the office reception desk and the patients' file records accurately reflected the number of office visits by patients. With regard to accident patients, however, the secretaries found substantial discrepancies between these records and the bills drawn up by Hershenow. As an example, one accident patient file identified by a secretary showed two office visits according to the patient's medical record but a bill made out by Hershenow for sixteen visits.

Rosenthal's former secretary observed similar instances of overbilling. An appointment book was kept which accurately reflected patients' office visits. But the front of accident patients' charts and a separate billing or "logging" book showed far more visits for these patients than had actually occurred. Secretaries for both doctors observed numerous false billing dates recorded in the doctors' handwriting.

Shraiar's role in the scheme was evidenced primarily through the testimony of accident patients who, when shown bills submitted on their behalf for equipment ostensibly purchased at Beaconsfield Pharmacy, testified that the bills were false. Some of the witnesses stated they had not received all the equipment listed. Some had never been to the pharmacy at all.

Appellants raise numerous issues in this appeal; the significant ones are considered seriatim.

The Search Warrants

Both Hershenow and Rosenthal claim that the district court erred in denying their pretrial motions to suppress documentary evidence seized from their medical offices pursuant to search warrants.

The Hershenow warrant authorized a search and seizure of

appointment books for the period January 1, 1976 to December 31, 1979; all accident patient files together with related manilla folders containing accident patient history forms, charge cards, bills and correspondence relating to accident patient files, active and inactive, for the years 1976-1979; and a rubber "Office Exam" hand stamp; which constitute evidence of violations of Title 18, United States Code, Section 1341.

Hershenow contends that the warrant description "accident patient files" is insufficiently particular and exceeds the scope of the probable cause established by the underlying affidavit. He argues that the focus of the investigation as shown by the affidavit was on fraud relative to automobile accident patients and that the warrant should have been so limited.

The fourth amendment requirement that a search warrant "particularly describe the things to be seized makes general searches under them impossible and prevents the seizure of one thing under a warrant describing another. As to what is to be taken, nothing is left to the discretion of the officer executing the warrant." Marron v. United States, 275 U.S. 192, 196, 48 S.Ct. 74, 76, 72 L.Ed. 231 (1927).

In United States v. Abrams, 615 F.2d 541 (1st Cir. 1980), we held invalid for lack of particularity a warrant authorizing the seizure from a doctor's office of "certain business and billing and medical records of patients ... which show actual medical services performed and fraudulent services claimed to have been performed in a scheme to defraud the United States and to submit false medicare and medicaid claims for payments to the United States...." Besides lacking a time limitation, the warrant contained no description of what specific records the executing officers were to seize. Without such guidance, the officers took all of the Medicare-medicaid records they found. Although on the facts of Abrams we found the warrant description infirm as overly general, we did suggest that if the affidavit information had established probable cause for the seizure of all the Medicare-medicaid records on the premises, a warrant authorizing seizure of all such records would not be invalid. Id. at 544 & n.7.

Similarly, in In re Application of Lafayette Academy, 610 F.2d 1 (1st Cir. 1979), we struck down a warrant that authorized the seizure of virtually "every sort of book or paper at the described premises," id. at 3, where the underlying affidavit established probable cause to believe only that fraud was being committed with regard to the school's participation in the Federal Insured Student Loan Program. Although our decision was based on a finding of insufficient particularity in the description of things to be seized, we noted that "it could be argued that as the above description authorizes in effect the search and seizure of all books, papers, etc., the warrant does not suffer from a lack of particularity. The directions to the executing officer are straightforward-he is to cart away all documents." Id. at 5 (emphasis original). The problem with that interpretation, we said, was that the underlying affidavit did not establish probable cause to search and seize everything.

The particularity and probable cause requirements of the fourth amendment are thus closely interconnected, as the Supreme Court has recognized in interpreting the pertinent language of the amendment: " 'and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.' This prevents the issue of warrants on loose, vague or doubtful bases of fact." Go-Bart Co. v. United States, 282 U.S. 344, 357, 51 S.Ct. 153, 158, 75 L.Ed. 374 (1931).

The Hershenow warrant authorizes the seizure of "all accident patient files" within a limited time period. On its face, nothing is left to the discretion of the executing officers-they are to take all files pertaining to patients involved in accidents. The warrant description, therefore, is sufficiently particular as long as the underlying affidavit established probable cause to believe that fraud was being committed in Hershenow's entire accident practice.

The affidavit, prepared by Postal Inspector John Dunn, focuses primarily on an investigation into fraud concerning automobile accident insurance. At the outset, it is stated that the insurance company representatives chose certain files for Dunn's investigation "based upon the excessive amount of medical treatment afforded, i.e.: physician, chiropractor, radiologist, etc., for largely minor car accidents where any injuries appear to have been negligible or highly unlikely." The company representatives believed that this excessive amount of treatment was being fraudulently geared towards exceeding the $500 "no-fault" limit in Massachusetts relating to motor vehicle accidents. Most of the remainder of the thirteen-page affidavit is based on the observations of secretaries working for Hershenow from 1973 to 1980. Each described her direct observation of bills prepared and sent out by Hershenow for accident patients reflecting visits that had not occurred; the statements were not confined to automobile accident patients. For example Ellen Steinberg, employed from 1973 to 1978, estimated that from 1975 until November 1978, when she left Hershenow's employ, 95% of the bills "for accident patients (primarily involving automobiles) contained bills for non-existent visits." Terry Carter, an employee in 1978, became aware of fictitious billing for accident patients several months after she began working for Hershenow. She compared his 1978...