United States v. Valdez

• Decision Date: 12 August 2013
• Docket Number: No. 12–50027.,12–50027.
• Citation: 726 F.3d 684
• Parties: UNITED STATES of America, Plaintiff–Appellee v. Anthony Francis VALDEZ, Defendant–Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

726 F.3d 684

UNITED STATES of America, Plaintiff–Appellee

v.Anthony Francis VALDEZ, Defendant–Appellant.

No. 12–50027.

United States Court of Appeals, Fifth Circuit.

Aug. 12, 2013.

Joseph H. Gay, Jr., Assistant U.S. Attorney, U.S. Attorney's Office, San Antonio, TX, for Plaintiff–Appellee.

Terri Raye Zimmermann, Esq., Megan Elizabeth Smith, Jack Benjamin Zimmermann, Esq., Zimmermann, Lavine, Zimmermann & Sampson, P.C., Houston, TX, for Defendant–Appellant.

Appeal from the United States District Court for the Western District of Texas.

Before HIGGINBOTHAM, OWEN, and GRAVES, Circuit Judges.

JAMES E. GRAVES, JR., Circuit Judge:

The defendant Anthony Valdez, a psychiatrist, challenges multiple aspects of his trial and sentence in this money laundering and health care fraud case. He argues that there is insufficient evidence to support his conviction for money laundering; that the district court erred in applying various enhancements to his sentence; that the jury should have been retained to decide issues relating to the forfeiture of his property; that the court erred in admitting evidence of medical malpractice; and that the cumulative effect of multiple errors requires reversal. We affirm the conviction and sentence, including the judgment of forfeiture.

I. Factual and Procedural Background

Anthony Valdez operated two pain management clinics under the name of International Institute of Pain Management, located in El Paso and San Antonio, Texas. The indictment alleged that Valdez providedpatients with prolotherapy, a “medical procedure purported to strengthen lax ligaments or to relieve pain by injecting an irritant ... such as dextrose, glycerin, calcium and phenol, around a painful joint to provoke a biological response that results in the growth of new cells.” However, Valdez billed federal and state health insurance programs Medicare, Medicaid and Tricare (collectively called “the Programs”) for facet joint injections, which temporarily eliminate pain by injecting anesthetics and/or steroids into facet joints in the vertebrae, and peripheral nerve injections, which temporarily eliminate pain by injecting anesthetics near a nerve. Prolotherapy is not reimbursable by the Programs, whereas facet joint and peripheral nerve injections are reimbursable. The indictment alleged that Valdez submitted insurance claims to the Programs under the codes for facet joint and peripheral nerve injections rather than the prolotherapy injections actually performed. The indictment further alleged that Valdez billed for “Level 4” office visits, which entail extended examination and evaluation, that did not occur, and that he trained and instructed his employees to perform and fraudulently bill for the same services. The indictment also alleged that Valdez engaged in financial transactions involving the proceeds of health care fraud with the intent to promote unlawful activity and to conceal the proceeds of his health care fraud, and engaged in monetary transactions with criminally derived funds of $10,000 or more. The indictment included a forfeiture demand.

Valdez was tried by a jury and convicted of one count of conspiracy to commit health care fraud, 18 U.S.C. §§ 1349 and 1347 (Count 1); six counts of health care fraud relating to six specific patients, id. § 1347 (Counts 2–7); six counts of false statements relating to health care matters relating to six specific insurance claims, id. § 1035 (Counts 8–13); one count of money laundering, id. § 1956(a)(1) (Count 14); and two counts of engaging in monetary transactions in property derived from unlawful activity, id. § 1957 (Counts 15–16).

Trial testimony from patients and expert doctors supported the allegations that Valdez actually performed prolotherapy when he billed the Programs for facet joint or peripheral nerve injections. The evidence included testimony that during a Texas Department of Insurance medical review, Valdez told Dr. Suzanne Novak that he did prolotherapy, and during that same review told Dr. Howard Smith that he only performed prolotherapy but called it “reconstructive anesthetic blocks” in order to bill insurance carriers who would not cover prolotherapy. Trial evidence, including testimony from employees, patients, and doctors, including doctors who reviewed video of Valdez performing procedures, indicated that Valdez's medical practices were consistent with prolotherapy and inconsistent with facet joint or peripheral nerve injections, including that he injected too much solution to be performing facet joint injections, repeatedly injected patients which would not be advisable if the injections were facet joint or peripheral nerve injections, did not have a fluoroscope (a type of x-ray machine typically used for facet injections), did not have steroids that are typically injected in facet joint injections but did have solutions consistent with prolotherapy, used a patient encounter form that included a section for prolotherapy but not facet joint or peripheral nerve injections, and advertised prolotherapy but not facet joint or peripheral injections. The evidence also supported the allegations that Valdez trained his employees to perform prolotherapy but not facet joint or peripheral nerve injections, including testimony from Rose Chavez, office manager at the El Paso clinic, who stated that prolotherapy was performed at both clinics, but not facet joint or peripheral nerve injections. Chavez also testified that she spoke to Valdez about the billing for prolotherapy after reading some material from a pain management seminar that stated that prolotherapy was not reimbursable by the Programs. Chavez testified that she mentioned the billing information to Valdez, but Valdez instructed Chavez to disregard it.

With regard to money laundering, at trial the government presented Emmanuel Gomez, an FBI agent who analyzed Valdez's financial records. Agent Gomez testified about Valdez's receipt and spending of reimbursements from the Programs over the course of the five-year period. The evidence showed that the proceeds of the fraudulent billing scheme were directly deposited from the Programs into two of Valdez's bank accounts. Based on Agent Gomez's analysis of the financial records, Valdez wrote checks from these accounts to pay employee salaries and loans, to make investments, to purchase property, to make deposits into multiple investment accounts, and to purchase multiple vehicles classified as business transportation.

At sentencing, the district court adopted the pre-sentence investigation report (“PSR”), calculated a guidelines range of life, overruled all of Valdez's objections to the PSR, and imposed the following sentence:

+----------------------------------------------------------------------------+
                ¦    ¦Counts 1–7: ¦120 months, 18 U.S.C. §§ 1347, 1349                       ¦
                +----+------------+----------------------------------------------------------¦
                ¦    ¦Count 8:    ¦60 months, 18 U.S.C. § 1035 (to run consecutive)          ¦
                +----+------------+----------------------------------------------------------¦
                ¦    ¦Counts 9–13:¦60 months, 18 U.S.C. § 1035                               ¦
                +----+------------+----------------------------------------------------------¦
                ¦    ¦Count 14:   ¦240 months, 18 U.S.C.1956(a)(1)                           ¦
                +----+------------+----------------------------------------------------------¦
                ¦    ¦Counts      ¦120 months, 18 U.S.C. § 1957                              ¦
                ¦    ¦15–16:      ¦                                                          ¦
                +----------------------------------------------------------------------------+
                

The district court sentenced Valdez to the statutory maximum for all offenses, and ordered that the 60–month sentence for Count 8 run consecutive with the other sentences, for a total of 300 months of confinement.

The court also imposed three years of supervised release on all counts, ordered $13,356,645.44 restitution to federal and state insurance programs and private insurers, and ordered a mandatory assessment of $1600. The court also ordered forfeiture of Valdez's property, as requested by the government, including the contents of multiple bank accounts, real property, the proceeds from the sale of real property, four vehicles, and a money judgment of over nine million dollars.

II. Discussion

A. Money Laundering Conviction

Valdez argues that the evidence was insufficient to support his conviction on one count of money laundering under 18 U.S.C. § 1956(a)(1). “We apply de novo review to a challenge to the sufficiency of the evidence, viewing the evidence in the light most favorable to the verdict and upholding the verdict if, but only if, a rational juror could have found each element of the offense beyond a reasonable doubt.” United States v. Pennell, 409 F.3d 240, 243 (5th Cir.2005).

Section 1956(a)(1) requires the government to prove the following elements: (1) Valdez conducted a financial transaction; (2) which he knew involved proceeds arising from a specified unlawful activity; (3) with the intent to promote or further those illegal actions (“the promotion prong”); or (4) with the knowledge that the transaction's design was to conceal or disguise the nature or source of the illegal proceeds (“the concealment prong”). See18 U.S.C. § 1956(a)(1)(A)(i), (B)(i); Pennell, 409 F.3d at 243. The two prongs are alternative ways to commit the offense; since Valdez was charged with both prongs in one count, the government must establish guilt under one prong or the other. See, e.g., United States v. Meshack, 225 F.3d 556, 580 n. 23 (5th Cir.2000), amended on reh'g in part,244 F.3d 367 (5th Cir.2001); United States v. Seher, 562 F.3d 1344, 1361–62 (11th Cir.2009) (reviewing cases from multiple circuits). Valdez argues that there is insufficient evidence supporting either prong and that the district court plainly erred by not giving a specific unanimity jury charge regarding money laundering. W...