U.S. v. Nachamie

• Decision Date: 15 March 2000
• Docket Number: No. S3 98 CR. 1238(SAS).,S3 98 CR. 1238(SAS).
• Citation: 101 F.Supp.2d 134
• Parties: UNITED STATES of America v. Alan Barton NACHAMIE, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

101 F.Supp.2d 134

UNITED STATES of America v. Alan Barton NACHAMIE, et al., Defendants.

No. S3 98 CR. 1238(SAS).

United States District Court, S.D. New York.

March 15, 2000.

Jonathan N. Halpern, Robert R. Strang, Erika K. Thomas, United States Attorney's Office, Southern District of New York, New York, NY, for U.S.

Valerie Amsterdam, New York, NY, for Jose Hernandez.

Gerald J. McMahon, New York, NY, for Alan Barton Nachamie.

Diarmuid White, New York, NY, for Edwin Tunick.

Jeremy F. Orden, New York, NY, for Lydia Martinez.

Anthony D. Denaro, P.C., Hempstead, NY, for Ghanshyam Kalani.

Richard A. Tanner, Dickson, Ashenfelter, Slous, Tanner & Trevenen LLP, Upper Montclair, NJ, for Donna Vining.

Robert S. Fink, Caroline Rule, Kostelanetz & Fink, LLP, New York, NY, for Kenneth Schrager.

OPINION AND ORDER

SCHEINDLIN, District Judge.

This opinion addresses several pre-trial motions filed by the defendants in this prosecution for Medicare fraud. First, defendant Alan Barton Nachamie moves to prevent the Government from introducing evidence of two prior convictions. Second, if the Court grants Nachamie's motion, defendants Kenneth Schrager, Donna Vining, and Ghanshyam Kalani move to sever their trials from Nachamie's trial. On the other hand, if the Court denies Nachamie's motion, defendant Edwin Tunick moves to sever his trial from Nachamie's trial. Third, defendants Edwin Tunick and Jose Hernandez move to sever an object of the alleged conspiracy that was added by the Government in a recent superseding indictment. The Government opposes each defense motion, including the conditional severance motions. In addition, the Court addresses an unanticipated problem with the scheduled trial date.

I. BACKGROUND

The background of this prosecution can be found in this Court's opinion on the Government's motion to quash a number of subpoenas served by Hernandez pursuant to Rule 17(c). See United States v. Nachamie, et al., 91 F.Supp.2d 552, 554-57 (S.D.N.Y. 2000) ("Nachamie I"). On February 8, 2000, the grand jury returned a Third Superseding Indictment in this case. As in the previous indictments, Count One of the Third Superseding Indictment alleged that the defendants had conspired to commit offenses against the United States. The Third Superseding Indictment, however, contained a new allegation regarding the object of the alleged conspiracy:

It was a part and object of said conspiracy that ALAN BARTON NACHAMIE, a/k/a "Alan Barton," a/k/a "Dr. Lewellyn," EDWIN TUNICK, LYDIA MARTINEZ, and JOSE HERNANDEZ, the defendants, together with co-conspirators not named as defendants herein, unlawfully, willfully and knowingly, would and did solicit and receive remuneration (including kickbacks, bribes and rebates) directly and indirectly, overtly and covertly, in cash and in kind in return for purchasing, leasing, ordering, and arranging for and recommending purchasing, leasing, and ordering a good, facility, service, and item for which payment may be made in whole or in part under a Federal health care program, to wit, the defendants, and their co-conspirators, solicited kickback payments from an individual associated with a medical laboratory located in Florida in return for ordering and arranging for that medical laboratory to conduct tests that were to be billed to Medicare, in violation of Section 1320a-7b(b)(1)(A) of Title 42, United States Code.

Third Superseding Indictment, ¶ 14. In addition, the Third Superseding Indictment states that, as one of the "means and methods of the conspiracy:"

ALAN BARTON NACHAMIE, a/k/a "Alan Barton," a/k/a "Dr. Lewellyn," EDWIN TUNICK, LYDIA MARTINEZ, JOSE HERNANDEZ, and others, also solicited kickback payments from an individual associated with a medical laboratory located in Florida in return for ordering and arranging for that medical laboratory to conduct laboratory tests on the beneficiaries that were to be billed to Medicare.

Id., ¶ 15(i). Finally, the Third Superseding Indictment alleges the following incident as one of the overt acts of the conspiracy:

On or about October 21, 1997, JOSE HERNANDEZ received a check made payable to "Julie Hernandez," for $8,150 and drawn on the account of Key Biscayne Clinical Laboratories Inc.

Id., ¶ 16(ff). Notably, these new allegations involve only the four defendants who are not doctors (the "non-doctor defendants").

II. MOTION TO EXCLUDE PRIOR CONVICTIONS

Defendant Nachamie moves to preclude the Government from introducing two prior convictions, both from 1977:(1) attempted arson in the third degree, in New York State Court, Bronx County; and (2) conspiracy to commit health care fraud, in United States District Court, Southern District of New York.¹ According to the Government, the attempted arson conviction was connected to the health care fraud, because it involved Nachamie's attempt to burn down one of his clinics. See March 7 Tr., at 25. Nachamie argues that the Government should be prevented from introducing these prior convictions because they are not relevant under Fed.R.Evid. 404(b) and are substantially more prejudicial than probative under Fed.R.Evid. 403. The Government opposes Nachamie's motion.

Rule 404(b) states:

Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident....

Fed.R.Evid. 404(b). "In Huddleston v. United States, [485 U.S. 681, 108 S.Ct. 1496, 99 L.Ed.2d 771 (1988),] the Supreme Court outlined the test for admission of other acts evidence under Rule 404(b)." United States v. Gilan, 967 F.2d 776, 780 (2d Cir.1992).

First, the evidence must be introduced for a proper purpose, such as proof of knowledge or identity. Second, the offered evidence must be relevant to an issue in the case pursuant to Rule 402, as enforced through Rule 104(b). Third, the evidence must satisfy the probative-prejudice balancing test of Rule 403. Fourth, if the evidence of other acts is admitted, the district court must, if requested, provide a limiting instruction for the jury.

Id. (citations omitted).

The Government bears the burden of demonstrating the admissibility of evidence under Rule 404(b), although the Second Circuit has never stated it in those precise terms. See United States v. Zackson, 12 F.3d 1178, 1182 (2d Cir.1993) ("Under Federal Rules of Evidence 403 and 404(b), the government may introduce evidence of a defendant's prior crime if that evidence is relevant for a reason other than to show criminal propensity, and if the probative value of that evidence is not substantially outweighed by the danger of unfair prejudice."); United States v. Levy, 731 F.2d 997, 1002 (2d Cir.1984) ("The government ... must explain in detail the purposes for which the evidence is sought to be admitted."); see also United States v. Garcia-Montalvo, 885 F.Supp. 99, 101 (S.D.N.Y.1995) ("The Government has clearly met three of the four requirements for admissibility under Rules 404(b) and 403."). At least one circuit has placed the burden on the Government explicitly. See United States v. Arambula-Ruiz, 987 F.2d 599, 602 (9th Cir.1993) ("The Government has the burden of proving that the evidence meets all of the [Rule 404(b)'s] requirements."); see also 2 J. Weinstein, M. Berger, & J. McLaughlin, Weinstein's Evidence, § 404.23[5][b], at 404-138 (2d ed. Aug.1997) ("Once the question of admissibility has been raised, the party offering the evidence has the burden of convincing the court that it is relevant to a consequential fact in issue other than propensity, and that Rule 403 does not require exclusion."). Finally, the Supreme Court's decision in Huddleston suggests that, at least for the first two requirements of proper purpose and relevancy, the Government bears the burden. See Huddleston, 485 U.S. at 691, 108 S.Ct. 1496 (evidence must be offered for proper purpose and must be relevant).

A. Proper Purpose

The Government argues that both of Nachamie's prior convictions will help explain the background of the conspiracy because an accomplice witness will testify at trial that he participated in both the health care fraud conspiracy for which both he and Nachamie were convicted and the alleged Medicare conspiracy at issue in this case. According to the Government, Nachamie's prior criminal relationship with the accomplice witness will help explain why Nachamie invited that witness into the alleged conspiracy and why the other defendants trusted the accomplice witness enough to speak openly about their own criminal conduct. The Second Circuit has stated repeatedly:

Prior act evidence may be admitted to inform the jury of the background of the conspiracy charged, to complete the story of the crimes charged, and to help explain to the jury how the illegal relationship between participants in the crime developed.

United States v. Pitre, 960 F.2d 1112, 1119 (2d Cir.1992); see also United States v. Williams, 205 F.3d 23, 32 (2d Cir.2000). The Government has established that both convictions are being offered for the proper purpose of establishing the background of the conspiracy.

In addition, the Government argues that the conspiracy conviction is being offered to prove his knowledge or intent, both of which are proper purposes under the explicit language of Rule 404(b). In response, Nachamie argues that neither his knowledge nor his intent are disputed issues in this case. The Second Circuit has explained that, if a defendant removes the element of intent or knowledge from a case, prior act evidence cannot be introduced for the purpose of establishing that element. See United States v. Colon, 880 F.2d 650, 656-57 (2d Cir.1989); United States v. Figueroa, 618 F.2d 934, 941-42 (2d Cir.1980). But the defendant must clearly and unequivocally remove the element from the case:

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