U.S. v. Khan

• Decision Date: 21 April 1995
• Docket Number: 331,305 and 291,D,328,458,Nos. 293,s. 293
• Parties: Medicare & Medicaid Guide P 43,201, 42 Fed. R. Evid. Serv. 201 UNITED STATES of America, Appellee, v. Jamshaid KHAN; Charles Addo Yobo; Audrey Cecile Sadaphal; Nephtali Montfort and Parnell St. Louis, Defendants, Mohammed Sohail Khan; Jacqueline Otero; Deborah Williams; Rosaly Saba Khalil; Lancaster Lo and Gilbert Ross, Defendants-Appellants. ockets 93-1797 to 93-1799, 93-1801, 93-1802, and 93-1895.
• Court: U.S. Court of Appeals — Second Circuit

Page 507

53 F.3d 507

Medicare & Medicaid Guide P 43,201,

42 Fed. R. Evid. Serv. 201

UNITED STATES of America, Appellee, v. Jamshaid KHAN; Charles Addo Yobo; Audrey Cecile Sadaphal;

Nephtali Montfort and Parnell St. Louis, Defendants,

Mohammed Sohail Khan; Jacqueline Otero; Deborah Williams;

Rosaly Saba Khalil; Lancaster Lo and Gilbert

Ross, Defendants-Appellants.

Nos. 293, 331, 458, 328, 305 and 291, Dockets 93-1797 to

93-1799, 93-1801, 93-1802, and 93-1895.

United States Court of Appeals, Second Circuit.

Argued Dec. 1, 1994.

Decided April 21, 1995.

Karen B. Shaer, Asst. U.S. Atty., New York City (Mary Jo White, U.S. Atty. for the S.D.N.Y., Christopher P. Reynolds, Benjamin E. Rosenberg, Paul G. Gardephe, Asst. U.S. Attys., of counsel) for appellee.

Stephen M. Goldenberg, New York City, for defendant-appellant Mohammed Sohail Khan.

Jane Simkin Smith, Millbrook, NY, for defendant-appellant Deborah Williams.

Carolyn Corn Bichoupan, Carle Place, NY, for defendant-appellant Rosaly Saba Khalil.

Sanford M. Katz, New York City, for defendant-appellant Lancaster Lo.

Vivian Shevitz, Mt. Kisco, NY, for defendant-appellant Gilbert Ross.

Before: FEINBERG, VAN GRAAFEILAND and MINER, Circuit Judges.

MINER, Circuit Judge.

Defendants-appellants Deborah Williams, Rosaly Saba Khalil, Lancaster Lo and Gilbert Ross appeal from judgments of conviction and sentence entered on November 10, 1993, in the United States District Court for the Southern District of New York (Martin, J.) following a jury trial. Defendant-appellant Mohammed Sohail Khan appeals from a judgment of conviction and sentence entered on December 3, 1993, in the same court, after a plea of guilty. ¹ All defendants-appellants were convicted of conspiring to participate in, and participating in, a racketeering enterprise designed to defraud the New York State Medicaid system, in violation of 18 U.S.C. Sec. 1962(c) and (d), and mail fraud, in violation of 18 U.S.C. Sec. 1341, and each defendant-appellant, with the exception of Ross, was convicted of money laundering, in violation of 18 U.S.C. Sec. 1956(a)(1)(A)(i).

Williams was sentenced to forty-one months in prison, restitution of $1,814,896 to the State of New York, and forfeiture of $50,000 to the United States. Khalil was sentenced to forty-one months in prison, restitution of $1,931,992, and forfeiture of $90,000. Lo was sentenced to thirty-seven months in prison, restitution of $1,319,000, and forfeiture of $95,000. Ross was sentenced to forty-six months in prison, restitution of $612,855, and forfeiture of $40,000. Khan was sentenced to sixty months in prison and restitution of $8,000,000. Each defendant-appellant also received a term of supervised release and a special assessment.

BACKGROUND

At trial, the government set out to prove that, from February 1990 through June 1991, the defendants and others participated in a racketeering enterprise that defrauded the New York State Medicaid system ("Medicaid") of approximately $8,000,000. Khan was the leader of the enterprise, which operated through four clinics (the "Khan clinics") located at 1153 and 1826 Grand Concourse in the Bronx, and at 461 Lenox Avenue and 2301 Second Avenue in Manhattan, through the Ridgewood Pharmacy at 1153 Grand Concourse in the Bronx, and through two corporations controlled by Khan, Manhasset Diagnostics, Inc., and Manhasset Community Management Services, Inc.

The government presented its case through the testimony of cooperating co-conspirators, including Khan, two physicians who worked at the clinics, Charles Addo-Yobo and Audrey Cecile Sadaphal, two physicians' assistants named Melville Ferns and James Rich, and Carmen Guzman, who was The evidence illustrated the following scheme to defraud: Indigent patients, many of whom were homeless, alcoholic, or drug-addicted, came to the clinics to obtain prescriptions for drugs for which they had no medical need. The patients often would fill the prescriptions at a local pharmacy and then sell the drugs on the street. To obtain the prescriptions, the patients provided the clinics with valid Medicaid recipient numbers, underwent medically unnecessary procedures and tests, and gave blood samples. Physicians' assistants ("PAs"), who performed the vast majority of the patient diagnoses, saw approximately twenty-five to forty patients each weekday at the clinics. The PAs seemed fully aware of the fraud and made no pretense of legitimate treatment. Doctors rarely were on the premises of the clinics.

employed as a secretary and, later, as an office manager at one of the clinics. The government also presented the expert testimony of physicians associated with the New York State Department of Social Services ("DSS"), testimony from DSS employees, two of whom posed as patients at the Khan clinics, and the testimony of two actual patients. In addition, the government introduced inculpatory as well as false exculpatory statements made by each of the defendant-physicians as well as thousands of patient files seized from the Khan clinics and bills sent to Medicaid.

Medicaid was billed for each patient visit and office test. In addition, each blood sample was sent to Clin Path, a medical laboratory located in New Jersey, which, in turn, billed Medicaid for every blood test. Clin Path "kicked back" twenty-seven percent of its Medicaid receipts to Khan. Khan was the primary organizer of the scheme; he leased the space for the clinics, purchased what limited medical supplies were provided, and hired and paid the PAs. Khan advertised for the physicians by placing advertisements in the New York Times, promising "[v]ery, very good $ $." Because only a medical doctor could qualify as a Medicaid provider, Khan could not operate the scheme without the physicians.

The physicians received Medicaid payments for office visits and tests purportedly performed at the clinics. Of these payments, the physicians would "kick back" thirty to forty percent to Khan. The payments from the physicians eventually were disguised as rent payments. Under this arrangement, each physician entered into a lease agreement with Khan in which the physician agreed to pay Khan $1500 per week rent. This payment did not correspond to the actual rent paid by Khan for the premises.

The Khan clinics were unusual in a number of ways. They lacked substantial medical equipment and were very dirty and unsanitary. In some of the clinics, signs hung from the walls instructing patients not to discuss their prescriptions with one another. The patients consisted mainly of men between the ages of twenty-five and forty-five, in contrast to the diverse patient-mix that might be expected in the urban areas where the clinics were located. Such a mix would include children, women, and elderly persons. There never were any emergencies or hospital referrals, and every patient was a Medicaid recipient. Finally, the clinics had a policy of limiting follow-up visits. This policy was expressed at the 2301 Second Avenue clinic, for example, by a sign stating "no more old patients for tomorrow." While medically indefensible, the policy reduced the number of less-lucrative second visits that the clinics might expect. To accomplish the same purpose, repeat patients often were treated as "first-time" patients at several of the clinics.

The physician-appellants rarely examined any patients themselves; ² the work was done by the PAs. The PAs would see each patient for only a few minutes. The clinics' records indicated that virtually all of the patient complaints were described in one of a very limited number of ways; nearly all of the blood samples taken were analyzed under one of four highly specialized (and expensive) tests; hearing tests were ordered for patients whose charts indicated no hearing problem; EKG tests lacked required interpretation, and some EKG graphs were cut into pieces Following a three and a half week trial, the jury found Williams, Khalil and Lo guilty of all charges and Ross guilty of all charges except money laundering. The district court imposed sentence upon the four physician-appellants as well as upon Khan, who pleaded guilty. On appeal, Williams, Khalil, Lo, and Ross challenge the sufficiency of the evidence presented at trial and make various claims of error in regard to evidentiary rulings and the jury charge. Further, each defendant challenges portions of his or her sentence and each defendant, with the exception of Khan, challenges the district court's assessment of restitution.

and distributed among the files of various patients. Charles Addo-Yobo and Audrey Sadaphal, physicians who worked at the clinics, testified that they realized almost immediately that the clinics were not legitimate, and that they were fraudulently billing Medicaid.

DISCUSSION

I. EVIDENTIARY SUFFICIENCY CLAIMS

The physician-appellants argue that the evidence was insufficient to establish their knowledge of the fraudulent nature of the clinics' operations, and Ross further argues that there was insufficient proof of the existence of a pattern as required under RICO.

In determining whether the evidence was sufficient to convict the defendants, "we must view the evidence in the light most favorable to the government and construe all possible inferences in its favor." United States v. Badalamenti, 794 F.2d 821, 828 (2d Cir.1986); see also Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979). The standard is whether "any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson, 443 U.S. at 319, 99 S.Ct. at 2789 (emphasis in original). In making this determination, we do not engage in piecemeal review, but rather, we review the evidence as a whole. United States v. Carson, 702 F.2d 351, 362 (2d Cir.), cert. denied, 462 U.S. 1108, 103 S.Ct. 2456, 77 L.Ed.2d 1335 (1983). Moreover, the government may prove membership in a conspiracy by circumstantial evidence...