United States v. Willett

• Decision Date: 02 May 2014
• Docket Number: No. 13–10425.,13–10425.
• Parties: UNITED STATES of America, Plaintiff–Appellee v. Hugh WILLETT, Defendant–Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

751 F.3d 335

UNITED STATES of America, Plaintiff–Appellee
v.
Hugh WILLETT, Defendant–Appellant.

No. 13–10425.

United States Court of Appeals,
Fifth Circuit.

May 2, 2014.

[751 F.3d 337]

William A. Glaser, Ellen R. Meltzer, Esq., Special Counsel, U.S. Department of Justice, Washington, DC, for Plaintiff–Appellee.

Shirley L. Baccus–Lobel, Dallas, TX, for Defendant–Appellant.

Appeal from the United States District Court for the Northern District of Texas.
Before SMITH, DeMOSS, and HIGGINSON, Circuit Judges.

HIGGINSON, Circuit Judge:

Defendant–Appellant Hugh Willett (“Willett”) was charged with one count of conspiracy to commit health-care fraud, in violation of 18 U.S.C. § 1349, and six counts of aiding and abetting health-care fraud, in violation of 18 U.S.C. § 1347 and 18 U.S.C. § 2. After a bench trial, the district court found Willett guilty on all seven counts and sentenced him to a 41–month term of imprisonment, the bottom of the applicable guidelines range. For the reasons that follow, we AFFIRM.

I.

JS & H Orthopedic (“JS & H”) was a durable medical equipment (“DME”) supplier. DME suppliers provide items to patients with prescriptions and then submit claims to Medicare and private insurance companies, which reimburse the suppliers directly for the items they provided based on the billing codes (called HSPCS codes) that the suppliers included in their claims. The Medicare provider application for JS & H listed Willett's wife, Jean Willett (“Mrs. Willett”), as the owner of JS & H. However, JS & H stood for “Jean, Stuart, and Hugh” (as in Hugh Willett), and people perceived Willett as a co-owner

[751 F.3d 338]

or principal of JS & H because Willett represented himself as such. JS & H had fewer than ten employees, including Ryan Canady (“Canady”), Willett's grandnephew, who worked in billing and deliveries; and Robin Canady (“Mrs. Canady”), Canady's mother and Willett's niece, who worked in billing.

JS & H purchased another company, Texas Orthotic and Prosthetic Systems (“TOPS”), of which Willett certified he was a five-percent-or-greater owner. The employees were told that both Willett and Mrs. Willett owned TOPS. JS & H submitted claims to Aetna through TOPS because JS & H was not in Aetna's network. The Medicare provider application for TOPS listed Willett as the owner, and he signed the application, which stated: “My signature legally and financially binds this supplier to the laws, regulations, and program instructions of the Medicare program.”

In February 2011, a federal grand jury indicted Willett and Mrs. Willett with one count of conspiracy to commit health-care fraud, in violation of 18 U.S.C. § 1349, and five counts of aiding and abetting health-care fraud, in violation of 18 U.S.C. § 1347 and 18 U.S.C. § 2. Mrs. Willett pleaded guilty to the charges against her. In June 2012, a second superseding indictment charged Willett with one count of conspiracy to commit health-care fraud, in violation of 18 U.S.C. § 1349, and six counts of aiding and abetting health-care fraud, in violation of 18 U.S.C. § 1347 and 18 U.S.C. § 2. Willett pleaded not guilty, and the parties later agreed to a bench trial.

At trial, the government alleged that JS & H “upcoded” and billed for three more expensive items of DME that it did not in fact provide. First, JS & H coded hip abduction pillows—for which Medicare would have provided no payment, and for which private insurers would have paid about $40—as hip orthotics (or braces), for which Medicare and private insurers paid about $770. Second, JS & H coded walking boots—for which Medicare and private insurers would have paid about $150—as tibia fracture braces, for which Medicare and private insurers paid about $500. Third, JS & H coded basic wrist braces—for which Medicare and private insurers would have paid about $50—as complex wrist braces, for which Medicare and private insurers paid about $170. Furthermore, the government alleged that TOPS submitted claims to Aetna for the upcoded tibia fracture braces and complex wrist braces, which neither JS & H nor TOPS had in fact provided. Finally, the government alleged that JS & H employees, in a practice directed by Mrs. Willett, signed physician names, without permission, on letters of medical necessity (“LMNs”) that JS & H and TOPS submitted to private insurers and prepared the LMNs so that they also reflected the fraudulent codes.

After a four-day bench trial, the district court found Willett guilty on all seven counts. Willett filed a post-verdict motion for judgment of acquittal and for a new trial, arguing that the verdict rested on “inference upon inference”—particularly with respect to the marriage relationship—to find the requisite level of knowledge for conviction. Willett also asked the district court to reconsider its decision to exclude certain polygraph evidence and to grant a new trial to consider the portion of the polygraph evidence that allegedly would counter one key witness's testimony. The district court denied the motion.

The presentence investigation report (“PSR”) recommended a guidelines range of 41 to 51 months, which included a two-level sentence enhancement under U.S.S.G. § 3B1.3 for abuse of trust based on Willett's position as co-owner of a DME distributor, his responsibility to submit legitimate and genuine claims to Medicare,

[751 F.3d 339]

and his use of that position to silence an employee who confronted him about billing discrepancies. Willett objected to application of the enhancement. The district court overruled the objection and sentenced Willett to an imprisonment term of 41 months, the bottom of the guidelines range. Willett timely filed a notice of appeal from the judgment of conviction and sentence.

II.

Willett argues first that the evidence was insufficient to prove that he had the requisite knowledge—specifically, that he knew about Mrs. Willett's fraudulent coding—to sustain his convictions. “When a defendant challenges a bench-trial conviction on sufficiency-of-the-evidence grounds we focus on whether the finding of guilt is supported by substantial evidence, i.e., evidence sufficient to justify the trial judge, as the trier of fact, in concluding beyond a reasonable doubt that the defendant is guilty.” United States v. Tovar, 719 F.3d 376, 388 (5th Cir.), cert. denied,––– U.S. ––––, 134 S.Ct. 461, 187 L.Ed.2d 308 (2013) (internal quotation marks and citation omitted). “We view all evidence in the light most favorable to the government and defer to reasonable inferences drawn by the trial court.” United States v. Esparza, 678 F.3d 389, 392 (5th Cir.2012), cert. denied,––– U.S. ––––, 133 S.Ct. 1455, 185 L.Ed.2d 367 (2013).

To prove a conspiracy to commit health-care fraud in violation of 18 U.S.C. § 1349, “the government must prove beyond a reasonable doubt that (1) two or more persons made an agreement to commit health care fraud; (2) that the defendant knew the unlawful purpose of the agreement; and (3) that the defendant joined in the agreement willfully, that is, with the intent to further the unlawful purpose.” United States v. Grant, 683 F.3d 639, 643 (5th Cir.2012) (citing 18 U.S.C. §§ 1347, 1349; United States v. Delgado, 668 F.3d 219, 226 (5th Cir.2012)). “Direct evidence of a conspiracy is unnecessary; each element may be inferred from circumstantial evidence.” Delgado, 668 F.3d at 226 (citing United States v. Garza–Robles, 627 F.3d 161, 168 (5th Cir.2010)). “The conspirators may have a silent and informal agreement. Indeed, the voluntary participation may be inferred from a collection of circumstances, and knowledge may be inferred from surrounding circumstances.” United States v. Umawa Oke Imo, 739 F.3d 226, 235 (5th Cir.2014). “However, there is insufficient evidence of a conspiracy if the Government has only piled inference upon inference upon which to base a conspiracy charge.” Id. (internal quotation marks and citation omitted); see also United States v. Mackay, 33 F.3d 489, 493 (5th Cir.1994).

To prove health-care fraud in violation of 18 U.S.C. § 1347, the government must prove beyond a reasonable doubt that the defendant “knowingly and willfully execute[d], or attempt[ed] to execute, a scheme or artifice—(1) to defraud any health care benefit program; or (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, in connection with the delivery of or payment for health care benefits, items, or services.” Imo, 739 F.3d at 235–36 (quoting 18 U.S.C. § 1347); see also United States v. Girod, 646 F.3d 304, 313 (5th Cir.2011).

Both charges require proof of knowledge and specific intent to defraud. See, e.g., United States v. Brooks, 681 F.3d 678, 699 (5th Cir.2012), cert. denied, ––– U.S. ––––, 133 S.Ct. 836, 133 S.Ct. 837, and 133 S.Ct. 839, 184 L.Ed.2d 652 (2013);

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Delgado, 668 F.3d at 225–26;Girod, 646 F.3d at 314;United States v. Garcia, 432 Fed.Appx. 318, 326 (5th Cir.2011) (unpublished) (citing United States v. Hickman, 331 F.3d 439, 443–45 (5th Cir.2003)). However, this proof may be inferred from circumstantial evidence. See, e.g., Delgado, 668 F.3d at 226;United States v. Whitfield, 485 Fed.Appx. 667, 670 (5th Cir.2012) (unpublished) (citing United States v. Ismoila, 100 F.3d 380, 387 (5th Cir.1996)); Grant, 683 F.3d at 643. Furthermore, “[a] defendant need not have actually submitted the fraudulent documentation ... in order to be guilty of health care fraud or conspiracy to commit health care fraud.” Imo, 739 F.3d at 235.

For the reasons elaborated below, the evidence was sufficient to justify the district court in concluding that Willett knew about the fraudulent upcoding and that the government proved Willett's guilt beyond a reasonable doubt.

First, the district court could infer that Willett knew about the upcoding because of his proximity to the fraudulent activities. Willett was responsible for making...