United States v. Umawa Imo

Citation: Not availableDocket: 11-20791

Court: Court of Appeals for the Fifth Circuit; January 6, 2014; Federal Appellate Court

Original Court Document: View Document

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The appeal involves Defendants-Appellants Umawa Oke Imo, Christina Joy Clardy, and Kenneth Ibezim Anokam, who were convicted of participating in a health care fraud scheme. They contest the district court's refusal to provide a requested limiting instruction during trial and challenge the final jury charge. Clardy argues that the evidence was insufficient to support her convictions for health care fraud, conspiracy, and mail fraud, and raises three evidentiary challenges. Additionally, both Clardy and Anokam dispute the court's sentencing enhancements based on intended loss, while Anokam also challenges a mass marketing enhancement.

The factual background reveals that Imo owned City Nursing Services of Texas (CNS), which falsely billed Medicare and Medicaid approximately $30 million from 2006 to 2009 for physical therapy services, despite being unregistered and lacking licensed physical therapists. Clardy, an anesthesiologist, was involved in CNS as the medical director and was responsible for supervising therapy services, although she was not licensed to provide such services. The fraudulent scheme involved recruiting patients who were covered by Medicare or Medicaid and submitting exaggerated claims, highlighting the lack of legitimate medical oversight and the illegitimacy of the services billed. The court ultimately affirmed the convictions and sentences of the defendants.

CNS compensated employees based on the number of patients they brought to the clinic and paid patients for their initial and follow-up assessments. Initially, Imo managed these payments; when he failed to do so, he delegated the task. During initial visits, employees collected basic medical information and had patients sign treatment forms, which were often blank and later filled in by staff falsely indicating that services were provided. As patient numbers increased, some received no physical therapy or were treated by unlicensed employees. Imo initially handled billing until Pam Ise and others took over, with Ise directing billing for services not actually rendered, including claims for deceased patients. CNS notably billed Medicare for 382 patients in one day, leading to patient complaints about overcharging.

In 2008, Anokam joined CNS and was involved in falsifying data for Medicare and Medicaid claims, addressing patient billing issues, and overseeing operations in Imo's absence. Clardy attempted to terminate her reassignment of Medicare benefits to CNS in August 2008 but encountered administrative delays, resulting in CNS continuing to bill under her name until resolved. Following the departure of Clardy and Dr. Catherina, they were replaced by Dr. Rice and Dr. Hume. By March 2009, CNS faced prepay review from Medicare, requiring documentation for claims, and all claims were subsequently denied.

Defendants were indicted for conspiracy and multiple counts of health care fraud, mail fraud, and money laundering. Imo received a 327-month prison sentence and over $30 million in restitution; he challenged the loss calculation and enhancements, which the court denied. Clardy was sentenced to 135 months in prison, three years of supervised release, and ordered to pay approximately $15.6 million in restitution.

Clardy objected to her designation as medical director for CNS, the application of a 22-level enhancement for intended loss, and a two-level enhancement for mass marketing, all of which the district court rejected. Clardy's motions for acquittal or a new trial were also denied. Anokam received a 151-month prison sentence and contested the loss amount attributed to him, the managerial role enhancement, and the mass marketing enhancement, resulting in an ordered restitution of $19,047,546.88 and a $2,900 special assessment. Both defendants appealed. 

In the discussion regarding a limiting instruction, the defendants claimed the absence of such an instruction risked jury misinterpretation of Medicare and Medicaid violations as evidence of criminal guilt. Clardy further argued that Federal Rule of Evidence 105 required a limiting instruction. The court reviewed the failure to provide a limiting instruction under an abuse of discretion standard, emphasizing that reversal is warranted only if the requested instruction was substantially correct, not adequately covered in the overall jury charge, and critical to the defense. The court noted the district courts have significant latitude in jury charge formulation.

In precedent, the court highlighted that in United States v. Christo, a reversible error occurred when civil statute violations were improperly linked to criminal charges. However, the use of civil violation evidence is permitted for specific purposes. In United States v. Jones, the court upheld the denial of a limiting instruction, finding that the overall jury instructions sufficiently guided the jury to consider only the federal crimes charged, not state regulations, and clarified that regulatory violations could aid in understanding the criminal violations, provided the charged crime was adequately proven.

In United States v. Brown, the court addressed the admissibility of evidence related to Medicare violations in a health care fraud case. The court found that the district court did not err in refusing to issue a limiting instruction on this evidence for several reasons: the evidence was used for a permissible purpose, the government's case was not solely based on regulatory violations, and the jury was instructed to consider only the charges in the indictment. While it would have been preferable for the district court to provide a cautionary instruction regarding the Medicare and Medicaid violations, the refusal did not constitute an abuse of discretion. The jury was adequately instructed on the relevant crimes, and the defendants had the opportunity to argue that the violations did not equate to criminal guilt. The court affirmed that the district court's instructions sufficiently addressed the concerns raised by the defendants, complying with Federal Rule of Evidence 105.

Regarding the sufficiency of the evidence, Clardy claimed that the evidence showed only negligence, not intentional wrongdoing. The court clarified that sufficiency challenges are reviewed de novo, and it must ascertain whether a rational trier of fact could have found the crime's essential elements proven beyond a reasonable doubt.

Evidence must be evaluated in favor of the verdict, with courts accepting credibility choices and reasonable inferences that support the jury’s decision. Conflicts in evidence are resolved in favor of the verdict, and overturning a finding of intent by the trier of fact is not done lightly.

To prove conspiracy to commit healthcare fraud, the government must demonstrate: (1) an agreement among two or more individuals to commit fraud; (2) the defendant's knowledge of this agreement; and (3) the defendant's voluntary participation. An agreement can be informal and inferred from surrounding circumstances, and actual submission of fraudulent documentation to Medicaid is not necessary for guilt. 

Under 18 U.S.C. § 1347, healthcare fraud involves knowingly executing a scheme to defraud a healthcare benefit program or to obtain money through false pretenses. The government does not need to prove actual knowledge of the violation.

For mail fraud under 18 U.S.C. § 1341, the government must show: (1) the defendant intended to devise a fraudulent scheme; (2) the mails were used in furtherance of this scheme; and (3) the falsehoods were material. The defendant must know that false representations are involved. Each mail use in the scheme constitutes a separate violation, and intent to defraud is established if the defendant knowingly seeks to deceive for financial gain. The government does not need to prove actual mail use but must show that the scheme relied on mail communication for its success.

Clardy was convicted of conspiracy to commit health care fraud based on evidence showing she knowingly conspired with Imo and others from March 2, 2006, to June 26, 2009, to defraud Medicare and Medicaid. Key evidence included a threatening letter from Clardy to Imo regarding unauthorized billing through her number and her subsequent employment at CNS, where she received payments. Despite her claims of being misled about the billing practices, the jury found her participation credible and sufficient to support the conviction.

Additionally, evidence supported Clardy's convictions for health care fraud under multiple counts, alleging that from March 2, 2006, to June 26, 2009, she submitted false claims for physical therapy services that were either not rendered or provided by unlicensed personnel. Testimonies indicated that most patients did not receive the claimed services, undermining Clardy's assertion of ignorance regarding the fraudulent activities.

Finally, Clardy's mail fraud convictions were upheld, with counts indicating that her involvement in the scheme resulted in fraudulent claims being processed through the U.S. Postal Service. Clardy's defense that she was not responsible for the mailing process was deemed irrelevant to the charges against her. Overall, the evidence presented was deemed sufficient for all convictions.

To establish the second element of the Government's case, it was sufficient to demonstrate that the fraudulent scheme relied on information transmitted via mail. CNS's receipt of payments from Medicare and Medicaid through the mail met this criterion. Evidence presented indicated that the submitted bills contained material falsehoods, including claims for non-rendered services, misrepresentation of service providers' qualifications, and submissions for deceased patients. Thus, there exists adequate evidence supporting Clardy's convictions for conspiracy to commit health care fraud, health care fraud, and mail fraud.

During the trial, Clardy was cross-examined regarding blank prescription forms she signed, a cash-only payment policy at two clinics, and a warning letter found in her safe about her prescriptions being sold illegally. Clardy admitted to signing the forms and having a cash policy but claimed she did not investigate the letter due to its timing. She argued that the introduction of this evidence violated Federal Rules of Evidence (FRE) 401, 403, 404(b), and 405, but her claims were dismissed as meritless.

Evidentiary rulings are reviewed under an abuse of discretion standard with a focus on whether the admission of evidence substantially prejudiced the defendant. Evidence is relevant if it makes a fact more or less probable and is considered in light of its potential to cause undue prejudice. The court can mitigate such prejudice through limiting instructions. FRE 404(b) prohibits using evidence of prior acts to show conformity with character traits, but specific acts may be questioned if relevant to a witness’s truthfulness, particularly after a defendant testifies.

The district court acted within its discretion by allowing cross-examination on the contested evidence. Even if there were errors in admission, they were deemed harmless as Clardy was not significantly prejudiced, and the prosecution's questioning about fraudulent acts was permissible as it related to her character for truthfulness.

Clardy signed blank prescription forms at cash-only pain management clinics, which was relevant to her character for truthfulness and allowed for proper inquiry by the Government due to her testimony. Although the cash-only policy was less egregious than other acts, it was somewhat indicative of her truthfulness in the context of her conduct at other clinics. Any potential prejudice from this evidence was mitigated by the district court's limiting instructions. The evidence presented was sufficient to support Clardy's guilt, making it unlikely that the cross-examination on this evidence influenced the trial's outcome. Other alleged evidentiary violations by Clardy were not substantiated, as the evidence was pertinent to her credibility, and the admissibility of other-act evidence fell under FRE 608(b) rather than FRE 404(b). 

Regarding sentencing, the district court determined that Clardy intended a loss of $21,691,203 based on fraudulent claims submitted to Medicaid and Medicare, while Anokam’s intended loss was $28,617,426. Clardy contested the district court's allocation of the entire amount billed during the relevant period, but this argument was unsuccessful. Sentencing decisions are reviewed for abuse of discretion, and factual findings are assessed under a clear error standard. The district court has broad discretion to determine loss amounts and must make reasonable estimates based on available evidence. Under U.S.S.G. 2B1.1(b)(1), the offense level can increase based on the greater of actual or intended loss, with actual loss defined as foreseeable financial harm resulting from the offense.

Intended loss refers to the financial harm a defendant aimed to cause through their offense, encompassing harm that may not have been realistically achievable, such as in cases involving government sting operations or inflated insurance claims. The determination of intended loss requires a fact-specific inquiry into the defendant's intent, as established in *United States v. Isiwele*, where the government must prove intent by a preponderance of the evidence. While the amount billed to Medicare and Medicaid serves as prima facie evidence of intended loss, it is not definitive; additional evidence can clarify whether the billed amount misrepresents the defendant's intent.

In reviewing district court findings, especially regarding credibility, courts maintain a high degree of deference. In *Hearne*, the court upheld an intended loss calculation notwithstanding the defendant's claims that the loss should reflect only the amount reimbursed, as evidence indicated he intended to submit bills for payment. The district court's assessment of witnesses' credibility, including the credibility of Clardy's claims of forgery and her continued employment at CNS despite a letter asking to stop billing, supported the conclusion that she intended to cause a loss of $21,691,203.

Similarly, evidence against Anokam showed his managerial role at CNS, his involvement in billing, and actions indicating intent to defraud. His argument that the district court conflated knowledge with intent was rejected, as the evidence supported a finding of intent to cause the claimed loss. Anokam’s challenge to a two-level enhancement for mass marketing was dismissed based on precedent. The court affirmed the convictions and sentences of both defendants.