United States v. Julio Diaz

Citation: 876 F.3d 1194Docket: 15-50538

Court: Court of Appeals for the Ninth Circuit; December 6, 2017; Federal Appellate Court

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The Ninth Circuit affirmed Dr. Julio Diaz's conviction for distributing controlled prescription drugs in violation of 21 U.S.C. § 841(a)(1). Diaz challenged the admission of expert testimony from Dr. Rick Chavez, claiming it constituted a legal conclusion prohibited by Federal Rules of Evidence 702 and 704. The court determined that expert testimony is permissible if it does not convey a specialized legal meaning or instruct the jury on applying the law. Dr. Chavez's testimony, asserting that Diaz's prescriptions were issued outside the usual medical practice and lacked legitimate purpose, was deemed a professional opinion rather than a legal conclusion. Consequently, the district court did not err in admitting this testimony.

Diaz's practice, which began as a legitimate clinic for geriatric patients, evolved into a scheme for illegally distributing narcotics, with over 50,000 prescriptions written and more than 5 million opiate pills prescribed from 2008 to 2011. The jury convicted him on 79 counts of illegal distribution, and the district court sentenced him to the maximum of 327 months. The panel upheld the conviction but vacated the sentence and remanded for resentencing.

The standard of review for the issue raised by Diaz is plain error, as it was not presented before the district court. To correct such an error, Diaz must demonstrate: (1) the existence of an error; (2) that the error is clear or obvious; (3) the error affected his substantial rights, specifically the outcome of the district court proceedings; and (4) the error significantly impacted the fairness or integrity of judicial proceedings.

Federal Rule of Evidence 702(a) mandates that expert testimony assist the trier of fact in understanding evidence or determining relevant facts, while Rule 704(a) specifies that opinions on ultimate issues are not inherently objectionable. However, the rule does not permit all opinions, as expert witnesses cannot provide legal conclusions, which would substitute their judgment for that of the jury. This principle is supported by various precedents, including United States v. Duncan, which emphasizes that expert opinions should aid jury decision-making rather than dictate outcomes.

Diaz contends that Dr. Chavez's testimony improperly addressed whether Diaz distributed controlled substances outside the professional practice. The prosecutor's questions were directed at whether the prescriptions fell outside typical medical practice and whether they served legitimate medical purposes. Dr. Chavez consistently affirmed that the prescriptions were outside the usual practice and not for legitimate purposes, which Diaz claims effectively supplanted the jury's judgment. Both parties reference United States v. Moran, which involved allegations of false tax returns related to a criminal charge, highlighting the complexity of determining whether expert testimony crosses the line into legal conclusions.

An expert for the government testified at trial that a certain program was a "sham." The district court defined "sham" for the jury, stating that to determine a transaction as such, they must find beyond a reasonable doubt that the taxpayer lacked any business purpose apart from obtaining tax benefits, and that the transaction lacked economic substance due to an absence of profit potential. The appellate court deemed the expert's testimony admissible, clarifying that even if the transactions were classified as a sham, the jury was still responsible for drawing its own inferences to address the ultimate factual question. 

In contrast, appellant Diaz interprets prior case law (Moran) to suggest that an expert's opinion on an element of a crime constitutes an "ultimate issue of law" and should be prohibited. However, the government argues that Moran only restricts expert opinions regarding a defendant's guilt or innocence. The court found Moran's reasoning insufficient to resolve Diaz's case and noted that other circuits have addressed similar issues regarding the exclusion of testimony related to ultimate legal issues. 

For instance, the Fourth Circuit in McIver allowed expert testimony indicating a physician's conduct was "outside the usual course of medical practice," determining that the terminology lacked a distinct legal meaning. Similarly, the Sixth Circuit in Volkman upheld expert testimony regarding prescriptions not being for a "legitimate medical purpose," concluding that this term's meaning in law aligns with its common understanding. The court found these precedents persuasive, asserting that while the value of expert testimony lies in specialized knowledge, experts sometimes must use language that overlaps with legal standards to express their opinions effectively.

The Fourth Circuit emphasized the limitations in vernacular for assessing whether a physician acted outside professional practice boundaries. It established that expert witness testimony is permissible as long as it does not represent a legal conclusion or instruct the jury on legal application. Dr. Chavez’s testimony was deemed necessary for the jury's understanding of the medical appropriateness of narcotic prescriptions made by Diaz. Although Dr. Chavez used phrases associated with legal standards, they were employed in their ordinary meaning without specialized legal significance. His opinions, based on patient prescription reviews, aligned with the medical community's standard of care and provided clarity without encroaching on the jury's role. The absence of a competing expert opinion from Diaz meant the jury could rely on Dr. Chavez's uncontradicted testimony. The court upheld the admission of this testimony under Rules 702 and 704, affirming Diaz's conviction while vacating and remanding his sentence for resentencing.