U.S. v. Humphrey

• Decision Date: 08 September 1994
• Docket Number: Nos. 93-1658,93-1659,s. 93-1658
• Citation: 34 F.3d 551
• Parties: Medicare & Medicaid Guide P 42,636 UNITED STATES of America, Plaintiff-Appellee, v. Charles Floyd HUMPHREY and Isabelle Heyder, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 551

34 F.3d 551

Medicare & Medicaid Guide P 42,636

UNITED STATES of America, Plaintiff-Appellee, v. Charles Floyd HUMPHREY and Isabelle Heyder, Defendants-Appellants.

Nos. 93-1658, 93-1659.

United States Court of Appeals Seventh Circuit.

Argued April 7, 1994.

Decided Sept. 8, 1994.

Norman R. Smith, Asst. U.S. Atty. (argued), Christopher W. Dysart, Criminal Div., Fairview Heights, IL, for U.S. in No. 93-1658.

Aaron E. Haith (argued), Indianapolis, IN, for Charles Floyd Humphrey.

Norman R. Smith, Asst. U.S. Atty. (argued), Christopher W. Dysart, Margaret

Mary Robertie, Office of U.S. Atty., Criminal Div., Fairview Heights, IL, for U.S. in 93-1659.

William A. Alexander (argued), Troutt, Alexander, Popit & Warner, Benton, IL, for Isabelle Heyder.

Before POSNER, Chief Judge, BAUER, Circuit Judge, and TINDER, District Judge. ^*

BAUER, Circuit Judge.

Charles Humphrey and Isabelle Heyder were each convicted of conspiring to defraud the United States. 18 U.S.C. Sec. 371. Humphrey was also convicted on three counts of making false statements to a government agency. 18 U.S.C. Sec. 1001. Humphrey and Heyder appeal their convictions, and Humphrey challenges his sentence. We affirm.

I.

This case centers around the activities of Paragon Health Care Systems ("Paragon"), a corporation owned and operated by Charles Humphrey. Until its dissolution in July of 1990, Paragon rented and sold durable medical equipment to patients for residential use. An investigation of the company revealed a pattern of fraudulent activity in its rental of oxygen concentrators to patients covered by Medicare. Paragon would first rent used oxygen concentrators to patients and then submit a claim to Medicare for reimbursement of the rental price. Then, on behalf of the same patient, Paragon would submit a second reimbursement claim to Medicare, this time for the purchase price of a new oxygen concentrator when in fact the patients were still using the rented machines. Investigators from the Department of Health and Human Services ("HHS") and the Federal Bureau of Investigation testified that although Paragon purchased only two new oxygen concentrators from its supplier between April of 1987 and March of 1988, Paragon submitted to Medicare thirty-six claims for new units sold. Paragon's records also indicated that during the same time, no new machines were delivered to any of the Medicare patients.

Isabelle Heyder was employed as a claims supervisor for Blue Cross and Blue Shield of Illinois ("Blue Cross"), the entity in charge of processing Medicare claims in the region. Evidence at trial established that Paragon employees would deliver their claims to Heyder in person and that she would ensure that Paragon's claims were processed in a special manner. Customarily, control numbers which replicated the serial numbers on the machines were assigned to all claims for durable medical equipment. In Paragon's case, over 100 claims were treated as "Special Projects", dispensing with the need for assigning control numbers and making it difficult to trace the claim to the exact machine. One claims reviewer testified that she knew of no other claims that were handled in this fashion and that pursuant to Heyder's instructions, she had paid Paragon for claims ordinarily considered nonpayable.

In late 1986, while still employed at Blue Cross, Heyder started working for Humphrey. It is not clear by which of Humphrey's business entities she was formally employed, but undisputed is that while working for Humphrey, Heyder was still overseeing the payment of Paragon's Medicare claims. Heyder claims that she was working for Heartland Leasing, a company which rented durable medical equipment to equipment suppliers. Testimony by a Paragon employee suggests, however, that the Heartland Leasing arrangement was a sham and that Heyder was in fact working for Paragon preparing the same Medicare claims that she would later review at Blue Cross. After leaving Blue Cross in November of 1987, Heyder went to work full-time for Paragon, submitting Medicare claims for equipment. She testified that she never knowingly submitted false claims.

On October 22, 1992, a federal grand jury issued a four count indictment charging both Humphrey and Heyder with one count of conspiracy to defraud the United States, 18 U.S.C. Sec. 371, and charging Humphrey with three counts of wilfully making false statements to a government agency. 18 U.S.C. Sec. 1001. A jury convicted both defendants as charged on November 16, 1992. Humphrey was sentenced to eighteen months imprisonment and three years supervised release. He was also ordered to pay $11,567 in restitution to HHS. Heyder was sentenced to five years probation.

II.

A. Motion to Suppress

During the course of their investigation, agents of the FBI and HHS made attempts to contact Humphrey through his mother and his parole officer. On the advice of his parole officer, Humphrey agreed to meet with two agents on August 8, 1991 at the FBI's offices in Carbondale, Illinois. The agents informed Humphrey that they were investigating him in connection with Paragon's Medicare claims. Because the agents did not consider Humphrey to be in custody, they did not provide him with Miranda warnings. He was told that he was free to leave at any time and free to contact an attorney if he so desired. Humphrey, nevertheless, stayed and answered a variety of questions about Paragon's operations. He also met with the agents the next day in Paducah, Kentucky and turned over all Paragon business records that were in his possession. Humphrey argues on appeal, as he did below in his unsuccessful motion to suppress, that the statements he made to FBI and HHS agents in the interview as well as the business records he provided the government should not have been admitted into evidence because they were the result of an interrogation given without Miranda warnings.

Miranda warnings need only be provided when suspects are in custody. Illinois v. Perkins, 496 U.S. 292, 296, 110 S.Ct. 2394, 2397, 110 L.Ed.2d 243 (1990). One is in custody when one's movement is restrained to the degree comparable to a formal arrest. California v. Beheler, 463 U.S. 1121, 1125, 103 S.Ct. 3517, 3520, 77 L.Ed.2d 1275 (1983). Unless clearly erroneous, we accept the district court's factual findings and credibility determinations on this issue. The ultimate issue of whether there was custodial interrogation is, however, a mixed question of law and fact subject to independent appellate review. ¹ United States v. Fazio, 914 F.2d 950, 955 (7th Cir.1990).

The evidence substantiates the district court's finding that Humphrey was not in custody during the interview. According to one of the agents' testimony, Humphrey was constantly reassured that he could leave when he wanted. Humphrey left the office at one point to inform his girlfriend not to wait for him. Then, at the conclusion of the interview, Humphrey returned to his mother's house in Paducah. There is no evidence that he was placed under arrest or at any time confined to the office. Humphrey's claim is that he felt compelled to cooperate with the agents because if he did not, they would somehow get his parole revoked.

In Minnesota v. Murphy, 465 U.S. 420, 437, 104 S.Ct. 1136, 1147, 79 L.Ed.2d 409 (1984), the Supreme Court considered whether the possibility of probation revocation could trigger Miranda protections. The Court drew a distinction between compulsion to appear and testify truthfully and compulsion to forego one's Fifth Amendment rights. Specifically, the Court held that the legal compulsion to answer questions truthfully subject to the possibility that probation might be revoked was insufficient to require Miranda warnings because such a condition does not penalize the right to remain silent. The Court stated that unless a state overtly threatens to revoke probation in retaliation for the legitimate exercise of the self-incrimination privilege, there is no reasonable basis for a probationer to believe that his Fifth Amendment rights are in jeopardy. Id. at 438, 104 S.Ct. at 1148.

Humphrey does not allege that had he asserted the Fifth Amendment privilege, the government agents would have reported him as having violated his parole. Nor does he claim that the terms of his parole prevented him from exercising this privilege. Humphrey fails to provide us with any facts which would render reasonable the belief that he could not freely refuse to answer questions or to produce Paragon's records. Humphrey claims only that he felt obligated to cooperate. This obligation is no different than that facing a witness summoned to testify before a grand jury. Under Murphy, this is clearly insufficient to require Miranda warnings, and therefore, the court's decision to deny Humphrey's motion to suppress was appropriate.

B. Sufficiency of the Evidence

Humphrey and Heyder challenge the sufficiency of the evidence underlying their convictions. Both contest the conspiracy count, and Humphrey also challenges his three convictions under 18 U.S.C. Sec. 1001. Our standard of review is familiar. We will reverse a conviction for insufficient evidence only if, after viewing the evidence in a light most favorable to the government, we determine that no rational trier of fact could have found the defendant guilty beyond a reasonable doubt. United States v. Hooks, 848 F.2d 785, 792 (7th Cir.1988).

We consider the challenge to the conspiracy conviction first. To prove a conspiracy, the government must establish beyond a reasonable doubt: (1) an agreement to accomplish an illegal objective against the United States; (2) one or more overt acts in furtherance of the illegal purpose; and (3) intent to commit the substantive offense. Id. Because of the clandestine nature of most conspiracies, they must often be proven using circumstantial evidence. Humphrey and Heyder both insist that there was no evidence of any agreement to do anything...