U.S. v. Laughlin, 93-6049

• Decision Date: 16 June 1994
• Docket Number: No. 93-6049,93-6049
• Citation: 26 F.3d 1523
• Parties: , Medicare & Medicaid Guide P 43,061 UNITED STATES of America, Plaintiff-Appellee, v. Sidney C. LAUGHLIN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1523

26 F.3d 1523

44 Soc.Sec.Rep.Ser. 615, Medicare & Medicaid Guide

P 43,061

UNITED STATES of America, Plaintiff-Appellee, v. Sidney C. LAUGHLIN, Defendant-Appellant.

No. 93-6049.

United States Court of Appeals Tenth Circuit.

June 16, 1994.

Charles R. Lucus, Sp. Asst. U.S. Atty., Oklahoma City, OK (John E. Green, U.S. Atty., Oklahoma City, OK, with him on the brief), for plaintiff-appellee.

Stephen Jones (Jeremy B. Lowrey with him on the brief), of Jones & Wyatt, Enid, OK, for defendant-appellant.

Before: ANDERSON, ENGEL ^*, and KELLY, Circuit Judges.

ENGEL, Senior Circuit Judge.

The principal issues in this appeal are whether the trial court adequately instructed the jury with regard to the requisite mens rea for medicaid fraud and, if reversibly erroneous on that score, whether there was a spillover effect which fatally tainted the defendant's mail fraud convictions. While we are compelled to reverse the medicaid fraud convictions for failure to instruct on an essential element of the offense, we hold that the thoroughness and independence of the mail fraud instructions assured against any possible taint "spilling over" from the faulty medicaid fraud instructions.

I

Defendant Dr. Sidney Laughlin was charged in a fifty-seven count indictment with fifty-three counts of medicaid fraud, in violation of 42 U.S.C. Sec. 1320a-7b(a)(1)(i), ¹ and with four counts of mail fraud, in violation of 18 U.S.C. Sec. 1341. ² A jury found him guilty on fifty-two counts of medicaid fraud and all four counts of mail fraud. He appeals, arguing that: (1) the jury instructions for medicaid fraud were constitutionally defective in that they did not adequately inform the jury of the requisite mens rea, (2) the constitutional error in the medicaid instructions "spilled over" into the mail fraud convictions necessitating reversal of the mail fraud counts, (3) the evidence was insufficient to convict on certain specific medicaid fraud counts, (4) the trial court erred in its sentencing determination that Dr. Laughlin's fraudulent activity created a risk of serious bodily injury through the alleged scheme to defraud, and (5) the trial court erred in its sentencing calculation of loss for purposes of reimbursement.

Dr. Laughlin operated an obstetrics/gynecology clinic in Shawnee, Oklahoma. The allegations of medicaid fraud stem from claims for reimbursement for the treatment of six patients at this clinic. The charges are based on allegations that Dr. Laughlin fraudulently double-billed for related procedures, falsely claimed that a series of procedures were necessitated by "accidents at home," and fraudulently billed medicaid for other random procedures that he did not perform. The mail fraud charges relate to the alleged mailing of false claims to facilitate reimbursement for these procedures. All other relevant facts will be revealed at the appropriate time in this opinion.

II

Dr. Laughlin's first claim on appeal is that the trial court erred in not instructing the jury that he must either have known that the claims being submitted were false or have submitted his claims with the intent to defraud or deceive. Because "knowledge of falsity" is a specific and necessary element of this offense, and because the jury was not instructed that it had to find this element in order to convict, we reverse Dr. Laughlin's fifty-two count medicaid fraud conviction.

Initially, we hold that in accordance with the Ninth Circuit in United States v. Larm, 824 F.2d 780 (9th Cir.1987), "knowledge of falsity" is an essential element of medicaid fraud pursuant to 42 U.S.C. Sec. 1320a-7b(a). ³ At oral argument, counsel for the government, in defining the elements of the offense, expressly, and we think properly, conceded that the defendant must not only have made false claims, but he must have known at the time he was making such claims that they were, in fact, false. ⁴ The legislative history, to which we look to discern the mens rea for a specific offense, Liparota v. United States, 471 U.S. 419, 424, 105 S.Ct. 2084, 2087, 85 L.Ed.2d 434 (1985); United States v. Bailey, 444 U.S. 394, 406, 100 S.Ct. 624, 632, 62 L.Ed.2d 575 (1979), supports the conclusion of the Larm court and the concession by the government. See H.R.REP. NO. 393, 95th Cong., 1st Sess., pt. II, at 47-48 (1977), reprinted in 1977 U.S.C.C.A.N. 3039, 3050. ⁵ We therefore hold, in a question of first impression before this circuit, to be convicted of medicaid fraud, pursuant to 42 U.S.C. Sec. 1320a-7b(a), a defendant must know that the claims being submitted are, in fact, false. We are left to decide whether the jury in our case, based on the actual instructions given, was capable of making such a finding. After a thorough review of the instructions, both oral and written, we are not confident that the jury either made or was capable of making this finding.

Over the objection of the defense, the trial court instructed the jury, both orally and in specific written instructions taken back to the jury room, as follows:

INSTRUCTION 11 MEDICAID FRAUD--ESSENTIAL ELEMENTS

Three essential elements are required to be proved in order to prove the offenses of medicaid fraud as charged in Counts 1-53 of the indictment:

First: That the defendant made or caused to be made a statement or representation of material fact in an application for benefits or payment under the Medicaid Act;

Second: That the statement or representation was false; and

Third: That the defendant knowingly and willfully made or caused to be made the false statement or representation.

In order to convict the defendant, all 12 of you must agree that a material statement or representation in each count is in fact false.

Unless the government has proved the same false statement to each of you, you must acquit the defendant of the charge in that particular count of the indictment.

The above charge was incomplete and insufficient because it failed to apprise the jury that the statement must not only be false but that Dr. Laughlin must also have known that the statement was false when the claim was submitted. The jury, therefore, could have convicted Dr. Laughlin without considering whether he knew that the claims he was submitting were false.

A proper instruction could have been made simply by adding knowledge of falsity as a fourth element or appending knowledge of falsity to any one of the three cited elements in one of the following ways:

First: That the defendant made or caused to be made a statement or representation of material fact in an application for benefits or payment under the Act which he then and there knew to be false, or

Second: That the statement or representation was false as the defendant knew, ⁶ or Third: That the defendant knowingly and willfully caused to be made the false statement or representation knowing it to be false when he made the claim.

Any such variation would have been fully adequate to apprise the jury of the mens rea element of the offense. The trial court could also have rectified the error by adding an additional independent instruction defining a false statement or representation in a manner similar to that elucidated in the above examples. ⁷

The absence of a specific instruction on knowledge of falsity is in our judgment fatal. Failure to instruct on such an essential element as intent or knowledge requires reversal because the "Due Process Clause protects the accused against conviction except upon proof beyond a reasonable doubt of every fact necessary to constitute the crime with which he is charged." In re Winship, 397 U.S. 358, 364, 90 S.Ct. 1068, 1073, 25 L.Ed.2d 368 (1970). See also Cole v. Young, 817 F.2d 412, 424 n. 8 (7th Cir.1987) ("Indeed every federal court to consider the question since the Court decided In re Winship ... has agreed that a conviction procured without any jury instruction on an essential element of the offense is constitutionally invalid.").

Dr. Laughlin did not specifically request an instruction in any of the forms as listed above. Nonetheless he did object to the instruction as given and requested an instruction which stated that the jury could only convict if "the defendant knowingly and willfully made or caused to be made the false statement or representation with the specific intent to violate the law or, in the alternative, with the intent to violate the law." When this instruction was denied, he asked that the instruction with regard to the medicaid fraud counts mimic the instruction with regard to the mail fraud counts, so that the jury would be made aware that he had to "act with the specific intent to deceive."

The trial court rejected Dr. Laughlin's proffered instructions on the basis that a "specific intent" charge has been disfavored since Liparota, and that the essential elements of the crime, as listed in the instructions, when read in conjunction with the definitions of "knowingly" and "willfully," were sufficient to apprise the jury of the correct mens rea for medicaid fraud.

The trial court was correct that instructing in terms of "specific intent" has been disfavored by the courts because of the confusing and ambiguous nature of such an instruction. Liparota, 471 U.S. at 433 n. 16, 105 S.Ct. at 2092 n. 16; Bailey, 444 U.S. at 403, 100 S.Ct. at 631 (characterizing the distinction between general and specific intent as "ambigu[ous]" and as "the source of a good deal of confusion"); United States v. Valencia, 907 F.2d 671, 681-82 n. 12 (7th Cir.1990). In so recognizing, however, the trial court either misread or at least overextended Liparota, as not requiring any instruction whatever on the mental state required for a violation of medicaid fraud. Liparota, in qualifying the utility of the specific intent instruction, ⁸ in no way relieved trial courts of their responsibility to define each element of the offense clearly and accurately.

All the same, the government insists that the essential mens rea element was...