United States v. Umawa Imo

Case: 11-20791 Document: 00512491278 Page: 1 Date Filed: 01/07/2014

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

United States Court of Appeals

Fifth Circuit

FILED

No. 11-20791 January 7, 2014

Lyle W. Cayce

UNITED STATES OF AMERICA, Clerk

Plaintiff-Appellee,

v.

UMAWA OKE IMO; CHRISTINA JOY CLARDY; KENNETH IBEZIM

ANOKAM,

Defendants-Appellants.

Appeals from the United States District Court

for the Southern District of Texas

Before STEWART, Chief Judge, and DeMOSS and CLEMENT, Circuit Judges.

CARL E. STEWART, Chief Judge:

This appeal arises from the conviction of Defendants-Appellants Umawa

Oke Imo, Christina Joy Clardy, and Kenneth Ibezim Anokam for their

involvement in a health care fraud scheme. Defendants-Appellants challenge

the district court’s refusal to give a requested limiting instruction during trial

and the final jury charge. Clardy contends that there is insufficient evidence

to support her conviction for health care fraud, conspiracy to commit health

care fraud, and mail fraud. Clardy also raises three evidentiary challenges. In

addition, Clardy and Anokam challenge the district court’s application of a

sentencing enhancement based on their intended loss, and Anokam argues

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that the district court erroneously imposed a sentencing enhancement for mass

marketing. 1 We AFFIRM Defendants-Appellants’ convictions and sentences.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY 2

A. Factual Background

1. City Nursing Services of Texas (“CNS”)

Imo owned CNS, an alleged physical therapy clinic in Houston, Texas.

In May 2006, he submitted an application to Medicare on behalf of CNS; both

Imo and Clardy signed the certification statement on the application as the

administrator and medical director, respectively. Additionally, they signed the

Medicare participating physician or supplier agreement, which ensured that

payments for any filed claims would go to CNS rather than the patient.

Subsequently, Medicare approved CNS’s application and provided it

with a billing number. Medicare also sent CNS a confirmation letter,

indicating that Clardy was approved and providing an individual number for

billing. Claims could therefore be billed under Clardy’s number beginning on

July 19, 2006. In addition, Imo submitted an application to Medicaid for CNS,

identifying Imo as the owner and Clardy as the doctor. CNS was approved and

given the information needed to begin filing claims with Medicaid. From

approximately March 2, 2006 to June 26, 2009, CNS billed Medicare and

Medicaid for approximately $30 million. However, CNS was never registered

1 Although Imo and Clardy reserved the right to adopt the arguments raised by the

other Defendants-Appellants, they have not done so. However, Anokam sought to adopt the

arguments raised by Imo and Clardy. The only argument raised by another Defendant-

Appellant but not Anokam is Clardy’s sufficiency of the evidence challenge. Because that

argument is fact-specific, Anokam may not adopt that argument, and we therefore do not

consider it. See United States v. Stephens, 571 F.3d 401, 404 n.2 (5th Cir. 2009).

(“[S]ufficiency of the evidence challenges are fact-specific, so we will not allow the appellants

to adopt those arguments.” (internal quotation marks and citation omitted)).

2 We limit our discussion of the facts in this section to a general overview. Additional

facts are provided when necessary throughout this opinion.

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to provide physical therapy services and did not have any licensed physical

therapists.

Clardy, an anesthesiologist, worked at CNS along with her twin sister,

Dr. Catherina Clardy (“Dr. Catherina”). Clardy contracted with CNS to work

fifteen hours a week in return for a monthly salary of $5,000; 3 this contract

was also submitted in CNS’s application to Medicare. According to her contract

with CNS, Clardy’s duties included supervising the physical therapy services

provided and maintaining the medical records associated with those. In fact,

Clardy sent CNS a letter stating that physical therapy and occupational

therapy services could only be billed to Medicare when she directly supervised

the therapy and the services were pursuant to a treatment plan she

established. Clardy, however, was not licensed to provide physical therapy

services. A report by Health Integrity, a government contractor responsible

for investigating, inter alia, fraud for Medicare and Medicaid, demonstrated

that claims submitted under Clardy’s billing number were primarily for

physical therapy services. Indeed, based on the submitted bills, Clardy

supposedly supervised more than 380 patients during the course of a single

day; each patient purportedly received three hours of physical therapy.

2. Overview of the Scheme

Beginning in November 2006, Imo brought patients to CNS to be treated

by Latricia Smith, a physical therapy aide. CNS only accepted patients with

Medicare or Medicaid. Once CNS began to expand, additional employees were

hired to recruit patients to CNS. CNS paid these employees for each patient

they brought to the clinic. CNS also paid patients whenever they visited the

3 Clardy testified that she signed another contract with Imo in which she agreed to

work ten hours per week in return for a monthly salary of $10,000.

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clinic for an initial assessment and any subsequent reassessment. Initially,

Imo was responsible for paying the patients who came to CNS as well as the

people who referred them. When he was unable to make the payments, he

would assign the duties to another employee.

During a patient’s first visit to CNS, an employee would collect basic

medical information from the patient. Before patients received treatment,

CNS had them sign treatment forms, although the forms were intended to

serve as a record of the treatment each patient received during his or her visit

to CNS. Indeed, CNS often had patients sign multiple blank treatment forms

when they visited the clinic. CNS employees, including Imo, would then fill in

these blank treatment forms as if the patient received certain services,

regardless of whether the patient actually received any treatment. As more

patients began to come to CNS, patients would either not undergo any physical

therapy or receive treatment from employees not licensed to provide such

services.

Initially, Imo handled the billing for CNS; however, as time progressed,

Pam Ise and other employees became responsible for billing. Ise instructed

employees to bill for certain services regardless of what therapy the patient

actually received. In fact, CNS billed Medicare and Medicaid for deceased

patients. At one point, CNS billed Medicare for 382 patients in one day. Some

patients began to complain to CNS concerning their bills.

Beginning in 2008, Anokam began working at CNS. Witnesses testified

that Anokam was in charge of the clinic when Imo was not present, assisted in

falsifying data on the forms submitted to Medicare and Medicaid, handled

problems that arose, and paid people who came to the clinic complaining that

CNS had overcharged them.

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In August 2008, Clardy notified Medicare that she wished to terminate

the reassignment of her benefits to CNS. Because of a mistake in her

termination application, however, the reassignment was not immediately

terminated. Clardy waited almost two months before rectifying the problem;

once Medicare received a correct termination application, CNS could no longer

bill under Clardy’s number. In the notification, Clardy expressed concern

about potential legal liability. When Clardy and Dr. Catherina left CNS, they

were replaced by two other doctors—Dr. Theresa Rice and Dr. Thaddeus

Hume. In March 2009, CNS and the doctors associated with the clinic were

placed on prepay review—that is, all claims submitted had to have

corroborating documentation before the claims would be paid. Notably, none

of CNS’s claims were paid once the clinic was placed on prepay review.

b. Procedural History

Defendants-Appellants were indicted for conspiracy to commit health

care fraud in violation of 18 U.S.C. § 1349 (count one), health care fraud in

violation of 18 U.S.C. §§ 1347 and 2 (counts two through forty), 4 and mail fraud

in violation of 18 U.S.C. § 1341 (counts forty-one through forty-three). Imo was

indicted for money laundering in violation of 18 U.S.C. § 1957 (counts forty-

four through forty-eight), and Anokam was indicted for structuring to avoid

reporting in violation of 31 U.S.C. § 5324(a)(3). 5 A jury found Imo, Clardy, and

Anokam guilty on multiple counts of health care fraud, conspiracy to commit

health care fraud, mail fraud, money laundering, and structuring to avoid

reporting requirements. Subsequently, Imo was sentenced to 327 months’

4 Clardy was indicted only on counts two through twenty-eight, not twenty-nine

through forty.

5 Counts forty-nine through fifty-one applied to another defendant not a party to this

appeal.

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imprisonment and ordered to pay $30,216,592.15 in restitution as well as a

$4,800 special assessment. Imo objected to the loss calculation and the mass

marketing enhancement applied by the district court, but the court overruled

the objections. The court also approved a two-level enhancement for willful

obstruction or the attempt to obstruct justice.

The court sentenced Clardy to a total of 135 months’ imprisonment with

three years of supervised release. In addition, Clardy was ordered to pay

$15,626,084.01 in restitution and a $1,800 special assessment. Clardy raised

a number of objections, including that she was not the medical director for

CNS, the 22-level enhancement for intended loss was improper, and the two-

level enhancement for mass marketing was not applicable. The district court

overruled each of her objections. Clardy also moved for an acquittal or a new

trial, which the court denied.

Anokam was sentenced to a total of 151 months’ imprisonment. He

challenged the amount of loss he was held accountable for, the two-level

enhancement for his managerial role in the health care fraud scheme, and the

enhancement for mass marketing. He was ordered to pay $19,047,546.88 for

restitution and a $2,900 special assessment. Defendants-Appellants timely

appealed.

II. DISCUSSION

A. Limiting Instruction

For the most part, Defendants-Appellants raise similar, if not identical,

arguments on this issue. They contend that, because there was no limiting

instruction, there was a risk the jury improperly found violations of Medicare

and Medicaid regulations as sufficient proof of their criminal guilt. Moreover,

they argue that the court failed to provide the jury with instructions limiting

the evidence of Medicare and Medicaid violations to intent, knowledge, and

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motive. In addition, Clardy argues that Federal Rule of Evidence (“FRE”) 105

mandated that a limiting instruction be given. 6 Defendants-Appellants’

arguments are unavailing.

1. Standard of Review

We review a court’s failure to give a limiting instruction for an abuse of

discretion. See United States v. Davis, 609 F.3d 663, 689 (5th Cir. 2010).

Reversal is proper “only if the requested instruction (1) was a substantially

correct statement of the law, (2) was not substantially covered in the charge as

a whole, and (3) concerned an important point in the trial such that the failure

to instruct the jury on the issue seriously impaired the defendant’s ability to

present a given defense.” United States v. Peterson, 244 F.3d 385, 394 (5th Cir.

2001) (citation omitted). District courts are entitled to “substantial latitude in

formulating a jury charge.” Davis, 609 F.3d at 689 (internal quotation marks

and citation omitted).

2. Applicable Law

In United States v. Christo, we held that the district court committed

reversible error when it permitted the government to produce substantial

evidence concerning violations of a civil statute that was irrelevant to the

charged crimes. 614 F.2d 486, 492 (5th Cir. 1980). Essentially, the

“conviction[] result[ed] from the government’s attempt to bootstrap . . . a civil

regulatory violation[] into an equal amount of misapplication felonies . . . .” Id.

The trial court further compounded the error by “focusing the jury’s attention

to the” civil violations. Id. We have interpreted “Christo as being principally

6As an initial matter, we note that, contrary to the Government’s argument otherwise,

each of Defendants-Appellants requested a limiting instruction at trial.

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concerned with bootstrapping of civil violations into criminal liability.” United

States v. Brechtel, 997 F.2d 1108, 1115 (5th Cir. 1993) (per curiam).

However, we have “permitted use of civil violation evidence in criminal

prosecutions for more limited purposes.” Id. (collecting cases). In United

States v. Jones, 664 F.3d 966, 980 (5th Cir. 2011), the prosecution introduced

testimony regarding the connection between the alleged crimes, Medicare

regulations, and the corresponding state requirements. The defendant asked

for a limiting instruction, instructing the jury on keeping any state

requirement distinct from the federal crimes at issue in the case. Id. We held

that the district court did not err when it denied the request. Id. at 981.

Rather, after considering the jury instructions “as a whole,” we found that the

jury instructions given “sufficiently articulated to the jury that they were only

to consider the federal crimes charged and not any of the state rules and

regulations that were discussed.” Id. In particular, we relied on the district

court’s statement that the prosecution had to prove the crime alleged in the

indictment beyond a reasonable doubt, not any other conduct. Id.

Moreover, we have approved the use of regulatory violations to provide

clarity in regards to the criminal violations alleged when the prosecution also

adequately proved the charged crime. United States v. Brown, 553 F.3d 768,

791–92 (5th Cir. 2008). For example, in United States v. Arthur, we recognized

that the evidence of Medicare violations assisted the jury in understanding the

health care fraud scheme and also demonstrated the defendant’s intent. 432

F. App’x 414, 423 (5th Cir. 2011) (per curiam) (unpublished). Ultimately, we

found that the district court did not commit plain error when it did not give a

limiting instruction because 1) the evidence served a permissible purpose; 2)

the Government’s case did not rely solely on regulatory violations; 3) the

Government did not argue that Medicare violations were sufficient proof of the

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charged crime; and 4) the district court did not discuss the Medicare violations

in the jury instructions. Id. We have relied on limiting instructions, inter alia,

to demonstrate that no harm occurred. See, e.g., Brechtel, 997 F.2d at 1115.

Under FRE 105, if evidence is admissible for one purpose but not

another, “the court, on timely request, must restrict the evidence to its proper

scope and instruct the jury accordingly.” When a court admits such evidence,

“it cannot refuse a requested limiting instruction.” Lubbock Feed Lots, Inc. v.

Iowa Beef Processors, Inc., 630 F.2d 250, 266 (5th Cir. 1980). However, the

instruction “need not be given in the particular form or manner that is sought

by the parties, so long as the general instructions sufficiently serve the limiting

purposes of Rule 105.” Id. In United States v. Jensen, we affirmed the district

court’s refusal to use the defendant’s requested limiting instruction and jury

instruction because they were covered in the instructions provided by the

district court and the court’s refusal did not impact the defendant’s ability to

present his defense. 41 F.3d 946, 953–54 (5th Cir. 1994).

3. Discussion

Although it would have been preferable for the district court to provide

a cautionary instruction to the jury on the permissible purpose of the Medicare

and Medicaid violations, see Brechtel, 997 F.2d at 1115, the district court did

not abuse its discretion in refusing to give the requested limiting instruction.

Aside from the amount of time the prosecution spent demonstrating various

regulatory violations, Defendants-Appellants fail to point to any instance

during the trial when the prosecution or court utilized the regulations in an

impermissible manner. Rather, the district court instructed the jury on the

crimes charged and warned the jury that it was not to judge Defendants-

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Appellants on conduct other than that alleged in the indictments. 7

Defendants-Appellants were free to argue before the jury that the violations

were not a sufficient indication of criminal guilt. Indeed, the jury acquitted

Clardy of some of the charges although her conduct constituted violations of

Medicare and Medicaid regulations. Accordingly, the district court did not

abuse its discretion. See Jones, 664 F.3d at 981.

Reversal is further not warranted because, based on the record on

appeal, Defendants-Appellants’ requested jury instructions were

“substantially covered in the charge as a whole” and their ability to present a

defense was not “seriously impaired.” See Peterson, 244 F.3d at 394; Jones,

664 F.3d at 981. While the instructions discussed Medicare and Medicaid, the

discussion was limited to the information necessary to properly charge the jury

on its duty. Moreover, the district court did not violate FRE 105 because, as

stated above, Defendants-Appellants’ concerns were covered by the

instructions given by the district court. See Jensen, 41 F.3d at 953–54.

B. Sufficiency of the Evidence

Clardy contends that, while the government successfully demonstrated

that she was naïve, careless, and negligent, the evidence does not show that

she either knowingly or intentionally violated any criminal laws. We disagree.

1. Standard of Review

Sufficiency of the evidence challenges are reviewed de novo. United

States v. Grant, 683 F.3d 639, 642 (5th Cir. 2012). When reviewing the

sufficiency of the evidence, a court must determine whether “any rational trier

of fact could have found the essential elements of the crime beyond a

7 In fact, the jury charge contained a detailed description of the elements of the

charges against Defendants-Appellants.

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reasonable doubt.” United States v. Moreno-Gonzalez, 662 F.3d 369, 372 (5th

Cir. 2011) (internal quotation marks and citation omitted). Evidence is to be

viewed “in the light most favorable to the verdict.” Id. (internal quotation

marks and citation omitted). Moreover, courts are to “accept[] all credibility

choices and reasonable inferences made by the trier of fact which tend to

support the verdict.” Id. (internal quotation marks and citation omitted).

The evidence presented need not “exclude every reasonable hypothesis

of innocence or be wholly inconsistent with every conclusion except that of

guilt.” Id. (internal quotation marks and citation omitted). Furthermore, “any

conflict in the evidence must be resolved in favor of the jury’s verdict.” Id.

(citation omitted). Nevertheless, we do “not lightly overturn a determination

by the trier of fact that the accused possessed the requisite intent.” United

States v. Patel, 485 F. App’x 702, 709 (5th Cir. 2012) (unpublished) (quoting

United States v. Robichaux, 995 F.2d 565, 570 (5th Cir. 1993) (internal

quotation marks omitted)).

2. Applicable Law

a. Conspiracy to Commit Health Care Fraud

To establish a conspiracy to commit healthcare fraud, the government

must prove: “the existence of an agreement between two or more people to

pursue the offense of fraud; the defendant knew of the agreement; and the

defendant voluntarily participated in the conspiracy.” United States v.

Delgado, 668 F.3d 219, 226 (5th Cir. 2012) (citations omitted). The

conspirators may have a silent and informal agreement. Grant, 683 F.3d at

643. Indeed, the “voluntary participation may be inferred from a collection of

circumstances, and knowledge may be inferred from surrounding

circumstances.” Id. (internal quotation marks and citation omitted). A

defendant need not have actually submitted the fraudulent documentation to

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Medicaid in order to be guilty of health care fraud or conspiracy to commit

health care fraud. United States v. Girod, 646 F.3d 304, 313 (5th Cir. 2011).

Moreover, the Government may use either direct or circumstantial evidence to

prove each element. Delgado, 668 F.3d at 226. However, there is insufficient

evidence of a conspiracy if the Government has only “pile[d] inference upon

inference upon which to base a conspiracy charge.” Grant, 683 F.3d at 642

(internal quotation marks and citation omitted).

b. Health Care Fraud

Under 18 U.S.C. § 1347,

Whoever knowingly and willfully executes, or attempts 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 [commits health care fraud].

18 U.S.C. § 1347.

The Government does not have to prove that the defendant had actual

knowledge of or specifically intended to violate the applicable health care fraud

statutes. United States v. Whitfield, 485 F. App’x 667, 670 (5th Cir. 2012)

(unpublished).

c. Mail Fraud

To prove that a party has committed mail fraud under 18 U.S.C. § 1341,

the Government must demonstrate “(1) the defendant devised or intended to

devise a scheme to defraud, (2) the mails were used for the purpose of

executing, or attempting to execute, the scheme, and (3) the falsehoods

employed in the scheme were material.” United States v. Read, 710 F.3d 219,

227 (5th Cir. 2012) (internal quotation marks and citation omitted). The

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defendant must have known that “the scheme involved false representations.”

Id. (internal quotation marks and citation omitted). “The first element

includes a defendant’s scheme or artifice . . . for obtaining money or property

by means of false or fraudulent pretenses, representations, or promises. . . .”

United States v. Ratcliff, 488 F.3d 639, 644 (5th Cir. 2007) (internal quotation

marks and citations omitted). Moreover, a defendant violates § 1341 each time

the mail is used in the scheme. United States v. Akpan, 407 F.3d 360, 370 (5th

Cir. 2005).

A defendant “acts with the intent to defraud when he acts knowingly

with the specific intent to deceive for the purpose of causing pecuniary loss to

another or bringing about some financial gain to himself.” Id. (internal

quotation marks and citation omitted). We have held that the second element

is satisfied when “one does an act with knowledge that the use of the mails will

follow in the ordinary course of business, or where such use can reasonably be

foreseen.” United States v. Ingles, 445 F.3d 830, 835 (5th Cir. 2006) (internal

quotation marks and citation omitted); see also Read, 710 F.3d at 227 (holding

that the second element was satisfied when Medicare mailed the defendant

checks for the fraudulent claims the defendant billed). In Akpan, we explained

that the Government does not have to prove that a defendant actually used the

mail or even “intended that the mails be used.” 407 F.3d at 370. Instead, the

Government has to establish “that the scheme depended for its success in some

way upon the information and documents which passed through the mail.” Id.

3. Discussion

a. Conspiracy to Commit Health Care Fraud

There was sufficient evidence supporting Clardy’s conviction for

conspiracy to commit health care fraud. In count 1, the government alleged

that Clardy engaged in a conspiracy to commit health care fraud. Specifically,

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it states that from approximately March 2, 2006 to June 26, 2009, she

“knowingly and willfully” conspired with Imo and others to defraud Medicare

and Medicaid in violation of §§ 1347, 1349.

Our review of the record persuades us that there is sufficient evidence to

support Clardy’s conviction on count 1. The jury could have inferred an

agreement between Clardy and Imo to defraud Medicare and Medicaid through

CNS. The Government presented evidence of a letter dated July 25, 2007 from

Clardy to Imo threatening legal action if he did not stop billing Medicare and

Medicaid through her billing number. 8 Nevertheless, after meeting with Imo,

Clardy began working at CNS and receiving payments from CNS. Even before

she began receiving compensation from CNS, she signed two employment

agreements with Imo, which were dated May 10, 2006. 9 Although Clardy

testified that Imo assured her the billing was a mistake and promised to rectify

the mistake, the jury was entitled to find otherwise. The jury also could have

found not credible her explanations that Ise showed her information indicating

that CNS was properly billing Medicare and Medicaid and that Imo forged her

signature on the documents sent to Medicare and Medicaid. Indeed, Clardy

admitted to signing one of the documents in CNS’s Medicare application but

stated that she was unaware that it was part of the application process.

While it is possible that Clardy’s account of the facts is true, the

Government’s version is also plausible and Clardy has failed to convince us

otherwise. The above evidence suggests that she was aware of the agreement

and voluntarily participated. Accepting the jury’s credibility determinations,

8 Evidence was presented that, from January 2007 to July 25, 2007, CNS billed

approximately $8,000,000 by using Clardy’s billing information. After the letter was sent,

CNS billed approximately $22,000,000 using Clardy’s billing number.

9 One contract stated that she would receive $5,000 in salary while the other said

$10,000.

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there is sufficient evidence to support Clardy’s conviction for conspiracy to

commit health care fraud under count 1.

b. Health Care Fraud

The Government also provided sufficient evidence to support Clardy’s

health care fraud convictions under counts 5–8, 14–18, 20–21, 23–24, and 26–

27 of the second superseding indictment. In these counts, the Government

alleges that, beginning on approximately March 2, 2006 and ending on June

26, 2009, Clardy “knowingly and willfully” defrauded Medicare and Medicaid

by submitting fraudulent claims for physical therapy services that were either

not provided or provided by unlicensed employees. Based on the evidence

noted above, the jury could reasonably have found that Clardy “knowingly and

willfully” defrauded Medicare and Medicaid by submitting false claims. Clardy

stresses that she was unaware of the scheme being run through CNS; however,

the jury heard sufficient evidence upon which it could find this assertion

unavailing. 10 Notably, the testimony of both patients and employees indicates

that the vast majority of the patients did not receive physical therapy services.

Furthermore, those employees providing physical therapy services were not

qualified to do so; the jury reasonably could have determined that it was highly

unlikely that Clardy was unaware of what was going on, regardless of her

claims to the contrary.

c. Mail Fraud

Lastly, there was sufficient evidence to support Clardy’s mail fraud

convictions under counts 41–43 of the second superseding indictment. Counts

41–43 state that, beginning around March 2, 2006 and ending around June 26,

10 We acknowledge that there was also evidence that CNS employees attempted to

ensure that the doctors at the clinic were unaware that patients were paid to come to the

clinic.

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2009, the health care fraud scheme Clardy allegedly was involved in caused

Medicare and Medicaid to send payments for fraudulent claims through the

United States Postal Service. As demonstrated above, there was sufficient

evidence that Clardy entered into a scheme to defraud Medicare. Clardy

argues that she was not in charge of the mail and never received any

notifications from CNS; however, that is irrelevant to her mail fraud charges.

Rather, to prove the second element, the Government only had to prove “that

the scheme depended for its success in some way upon the information and

documents which passed through the mail.” Akpan, 407 F.3d at 370. That

element is satisfied here because CNS received payment from Medicare and

Medicaid through the mail. There also was evidence that the scheme involved

material falsehoods. The Government presented evidence that the bills sent

to Medicare and Medicaid were fraudulent for a variety of reasons. Some

claims purported to have given physical therapy services when no services

were actually rendered; other claims asserted that physical therapy services

were given by properly qualified individuals when that was not the case; and

some claims were submitted for deceased patients. Accordingly, we hold that

there is sufficient evidence supporting Clardy’s conviction for conspiracy to

commit health care fraud, health care fraud, and mail fraud.

C. Evidentiary Challenges

At trial, the prosecution cross-examined Clardy on the following: (1)

blank prescription forms she signed while working at two pain management

clinics; (2) the fact that the clinics required patients to pay cash; and (3) a letter

from an anonymous party that was found in her safe, which warned her that

prescriptions bearing her name were being sold on the street. While she

admitted that she signed the blank prescription forms and had a cash-only

policy, she explained that she did not investigate the allegation in the letter

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because she received the letter only a few days or approximately a week before

the authorities came and seized the letter. 11 Clardy contends that the

introduction of the above specific acts violated FRE 401, 403, 404(b), and 405.

Her arguments are without merit.

1. Standard of Review

Evidentiary rulings are reviewed under an abuse of discretion standard,

“subject to [a] harmless-error analysis.” Girod, 646 F.3d at 318. The admission

of evidence is reversible error only when the defendant’s rights were

“substantially prejudiced” by the admission. Id. at 318–19 (internal quotation

marks and citation omitted).

2. Applicable Law

Evidence is relevant if “it has any tendency to make a fact more or less

probable than it would be without the evidence; and [] the fact is of consequence

in determining the action.” Fed. R. Evid. 401. FRE 403 excludes relevant

evidence “if its probative value is substantially outweighed by a danger of [,

inter alia,] unfair prejudice.” Fed. R. Evid. 403. However, a court can reduce

the danger of undue prejudice by giving a limiting instruction. United States

v. Sanders, 343 F.3d 511, 518 (5th Cir. 2003). FRE 404(b) prohibits the use of

evidence of an act to prove that a person acted in conformity with the character

trait that act demonstrates. Fed. R. Evid. 404(b)(1). During cross-

examination, a party may question a witness on specific acts “if they are

probative of the [witness’s] character for truthfulness or untruthfulness.” Fed.

R. Evid. 608(b)(1).

Once a defendant testifies, “his character for truthfulness [is] in issue.”

Sanders, 343 F.3d at 518. In Akpan, we cautioned that a defendant’s choice to

11 She was unclear as to the exact amount of time that transpired.

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testify “does not give the prosecution free rein.” 407 F.3d at 373 (internal

quotation marks and citation omitted). Rather, the prosecution may “cross-

examine the defendant with respect to instances of misconduct that are clearly

probative of truthfulness or untruthfulness, such as perjury, fraud, swindling,

forgery, bribery, and embezzlement.” Id. (internal quotation marks and

citation omitted).

3. Discussion

The district court did not abuse its discretion in permitting the

Government to cross-examine Clardy on the blank prescription forms she

signed, the cash-only policy at two pain management clinics, and the letter

from the anonymous party. Moreover, even if there was error, it was harmless

because Clardy was not “substantially prejudiced” by the admission of the

evidence. See Girod, 646 F.3d at 318.

As we have previously held, the prosecution is permitted to cross-

examine defendants on fraudulent acts because they are indicative of the

defendant’s character for truthfulness. See Sanders, 343 F.3d at 519; Akpan,

407 F.3d at 373–74. Here, evidence that Clardy signed blank prescription

forms at two pain management clinics, which only accepted cash from patients

is probative of her character for truthfulness. Because she testified, this

character trait was a proper inquiry by the Government. See Sanders, 343

F.3d at 518–19. This evidence further implicates Clardy’s character for

untruthfulness, especially considering Clardy’s response to the anonymous

letter she received. Admittedly, the evidence of the cash-only policy is not as

fraudulent as the other two acts; however, when viewed in the context in which

it was introduced—namely, while explaining Clardy’s conduct at the other two

pain management clinics—it is at least somewhat probative of her character

for truthfulness.

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Additionally, any prejudice Clardy may have incurred due to the

introduction of this evidence was reduced by the limiting instructions given by

the district court both after the testimony was introduced and in the jury

charge. See id. at 518. Moreover, there was sufficient evidence presented at

trial indicating that Clardy was guilty of the crimes charged. See supra Part

B.3. Thus, it is highly unlikely that the Government’s cross-examination on

this evidence was determinative of the outcome of this case.

None of the other evidentiary violations Clardy alleges are meritorious.

The evidence presented was relevant, considering that it dealt with her

character for truthfulness and her testimony and credibility were key features

of her defense. Moreover, FRE 404(b) is inapplicable to this issue. See United

States v. Morgan, 505 F.3d 332, 339 (5th Cir. 2007) (“[W]hether Rule 404(b) or

Rule 608(b) applies to the admissibility of other-act evidence depends on the

purpose for which the prosecutor introduced the other-acts evidence. Rule

404(b) applies when extrinsic evidence is offered as relevant to an issue in the

case, such as identity or intent. Rule 608(b) applies when extrinsic evidence is

offered to impeach a witness, to show the character of the witness for

untruthfulness.” (internal quotation marks and citations omitted)). Because

this evidence was introduced to discredit Clardy, FRE 608 controls, not 404(b).

Consequently, the district court did not err in permitting the Government to

cross-examine Clardy on these specific acts.

D. Sentencing Enhancement Pursuant to United States Sentencing

Guideline (“U.S.S.G.”) § 2B1.1(b)(1)(L)

The district court found that Clardy intended a loss of $21,691,203, the

amount of fraudulent claims CNS billed Medicaid and Medicare from August

2007 to August 2008, the time period Clardy is alleged to have been a part of

the conspiracy. Anokam’s intended loss amounted to $28,617,426, which was

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also based on the time he was alleged to have been involved in the conspiracy.

Clardy asserts that the district court erred in holding her liable for the entire

amount CNS fraudulently billed Medicare and Medicaid during August 2007

through August 2008. Anokam also challenges the district court’s intended

loss computation. Their arguments are unavailing.

1. Standard of Review

Sentencing decisions by a district court are reviewed for an abuse of

discretion. United States v. Harris, 597 F.3d 242, 250 (5th Cir. 2010). While

factual findings are reviewed under a clear error standard, “the district court’s

interpretation or application of the Sentencing Guidelines is reviewed de novo.”

Id. (internal quotation marks and citation omitted). The district court has not

clearly erred if its findings are “plausible in light of the record as a whole.” Id.

(internal quotation marks and citation omitted). “The district court receives

wide latitude to determine the amount of loss and should make a reasonable

estimate based on available information.” United States v. Jones, 475 F.3d

701, 705 (5th Cir. 2007).

2. Applicable Law

U.S.S.G. § 2B1.1(b)(1) increases the offense level for a particular crime

based on the amount of the loss that results from the fraud. Loss is considered

“the greater of actual loss or intended loss.” U.S.S.G. § 2B1.1(b)(1) cmt. 3(A).

Actual loss is defined as “the reasonably foreseeable pecuniary harm that

resulted from the offense.” Id. at 3(A)(i). Intended loss “means the pecuniary

harm that was intended to result from the offense; and [] includes intended

pecuniary harm that would have been impossible or unlikely to occur (e.g., as

in a government sting operation, or an insurance fraud in which the claim

exceeded the insured value).” Id. at 3(A)(ii). In United States v. Isiwele, we

“endorsed a fact-specific, case-by-case inquiry into the defendant’s intent in

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determining intended loss for sentencing purposes” in the health care fraud

context. 635 F.3d 196, 203 (5th Cir. 2011) (internal quotation marks omitted).

The Government has to prove a defendant’s intent by a preponderance

of the evidence. Id. While the amount billed to Medicare and Medicaid is

“prima facie evidence of the amount of loss [the defendant] intended to cause,”

it is not “conclusive evidence of [the] intended loss.” Id. (internal quotation

marks and citation omitted) (first alteration in original). Rather, “parties may

introduce additional evidence to suggest that the amount billed either

exaggerates or understates the billing party’s intent.” Id. (internal quotation

marks and citations omitted).

When reviewing a district court’s findings, we “exercise great deference

to a district court’s credibility findings.” United States v. Hearne, 397 F. App’x

948, 951 (5th Cir. 2010) (per curiam) (unpublished) (internal quotation marks

and citation omitted). In Hearne, the defendant contested the district court’s

intended loss calculation on the basis that the loss should be the amount he

was reimbursed for the false claims rather than the amount he billed. Id. at

950. The district court found that even assuming he knew that he would not

be fully reimbursed, he sent Medicare and Medicaid bills with the intention

that he would be paid. Id. at 951. We found there was sufficient evidence to

support the district court’s finding even though (1) some of the evidence

suggested the defendant was knowledgeable of Medicare’s billing policies and

(2) the defendant hired others to oversee the billing. Id.

3. Discussion

The district court did not err in its intended loss calculation. The

Government only had to prove the amount of the intended loss by a

preponderance of the evidence. See Isiwele, 635 F.3d at 203. Although there

was evidence contradicting the intended loss amount, the Government carried

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its burden as to both Clardy and Anokam. First, there was evidence that

Clardy signed the Medicare application for CNS with Imo and was hired by

CNS to oversee and conduct physical therapy services there. Although Clardy

claimed her signature was forged, the district court reasonably could have

found her testimony not credible. Second, Clardy worked for CNS after

sending CNS a letter demanding that it stop billing Medicare under her

number. She attempted to explain her reason for working after she sent the

letter; however, again, the district court was entitled to find that it was not

credible. Admittedly, there was evidence that Ise was responsible for billing.

Nevertheless, there was sufficient evidence upon which the district court could

find that Clardy intended to cause a loss of $21,691,203, the amount CNS billed

Medicare during the year she worked at CNS. See Hearne, 397 F. App’x at 951.

The Government also carried its burden in regards to Anokam.

Testimony was elicited at trial that he had a managerial role in CNS and

participated with the billing. Moreover, there was testimony that he created

false patient files, hired employees, paid patients and recruiters, and was one

of only a few employees at CNS who had access to the mail. While he contested

his involvement, the Government only had to prove the intended loss amount

by a preponderance of the evidence. See Isiwele, 635 F.3d at 203. Furthermore,

Anokam’s contention that the district court conflated his possible knowledge of

the scheme with intent is unavailing as there was sufficient evidence for the

court to have found that he did intend to cause that loss. 12

III. CONCLUSION

12 Anokam also challenges the district court’s imposition of a two-level enhancement

under U.S.S.G. § 2B1.1(b)(2)(A)(ii) for mass marketing. However, he acknowledges that this

issue is foreclosed by our decision in Isiwele, 635 F.3d 196. We therefore hold that the district

court did not err by imposing a two-level enhancement pursuant to U.S.S.G.

§ 2B1.1(b)(2)(A)(ii). See Isiwele, 635 F.3d at 203–05.

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For the foregoing reasons, we AFFIRM Defendants-Appellants’

convictions and sentences.

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