Petition — Radetsky v. United States

Sisveme Court, oa

Filgegp

APR 28 1976

MICHAEL RODAK JR., CLERK

; 1 i

IN THE

Supreme Court of the Anited States

OCTOBER TERM, 1975

No. €5-1576

Louis MARTIN RADETSKY,

a/k/a L. M. RADETSKY, Petitioner

Vv.

UNITED STATES OF AMERICA, Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

WARREN O. MARTIN

500 Capitol Life Center

Denver, Colorado 80203

Counsel for Petitioner

<7 BRADFORD PRINTING COMPANY, DENVER

INDEX

Page

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Constitutional Provision, Statutes,

and Court RuleInvolved .........+4+4.-. 2

Statement of the Case

SS reer ae arr a ee ee 3

2. The indictment and bill of

I aie a ee en a ee a 4

i CS gc tte eee es 7

4. Theadmonitionofsecrecy .......... 9

Reasons forGrantingthe Writ .......... 10

"ee I on kha Sa ae ete Ps ee ie a a

Appendix A— Court of Appeals Opinion ..... la

Appendix B — Constitutional Provision, Statutes

and Court RuleInvolved .......... lb

CITATIONS

‘ CASES: Page

Bellis v. United States, 417 U.S. 85(1974) ..... 16

i Boyd v. United States, 116 U.S. 616(1886) .. . . 15

Pipkin v. United States,

243 F.2d 491 (Sth Cir. 1957)... ..... 12, 13

Russell v. United States,

Saw Um. PepCieeey wt ttt 11,12, 13, 15

State v. Bickham, 239 La. 1094, 121 So. 2d 207 (1960) 13

United States v. Borelli, 336 F.2d 376 (2d Cir. 1964) . 13

United States v. Empey, 406 F.2d 157

en s+ & 6k ee eee es 15

QQ CO aa

il Index Continued

United States v. Mitchell, 372 F. Supp. 1239

ak os Pr

Westry v. Commonwealth, 206 Va. 508.

144 S.E.2d 427(1965) ......

STATUTES:

8 oR Pe ee eee er ee

ow St) en ae ee a ae

FS ol). ae ase ae

y IS fom Dy . | ) a eee ae

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COLO. REV. STAT. ANN. 1973,

ee ghee

COLO. REV. STAT. ANN. 1973,

8

Rule 6(e), Federal Rules of

Criminal Procedure ......

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et ee ee en eo

IN THE

Count of the United States

OCTOBER TERM, 1975

No.

LOUIS MARTIN RADETSKY.

a/k/a L. M. RADETSKY , Petitioner

Vv.

UNITED STATES OF AMERICA, Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

Petitioner respectfully prays that a Writ of Certiorari

issue to review the judgment and opinion of the United

States Court of Appeals for the Tenth Circuit entered in

this case on March 29, 1976.

OPINIONS BELOW

The opinion of the Court of Appeals, which has not

been published, appears in Appendix A hereto. No writ-

ten opinions were rendered by the United States District

Court for the District of Colorado.

2

JURISDICTION

The judgment of the Court of Appeals for the Tenth

Circuit was entered on March 29, 1976. This petition for

certiorari was filed within 30 days of that date. The juris-

diction of this Court is invoked under 28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

|. Whether the indictment failed to meet the standards

of specificity required by the fifth amendment to the

United States Constitution.

2. Whether the submission of the Government's bill of

particulars to the jury violated defendant's fifth amend-

ment right to be tried solely on the charges contained in the

grand jury’s indictment.

3. Whether the introduction into evidence of medical

records, used by defendant solely for the purpose of treat-

ing his patients, constituted a violation of the fifth amend-

ment’s protection against compulsory self-inc rimination.

4. Whether the prosecutor’s improper admonition of

secrecy to witnesses appearing before the grand jury con-

stituted a denial of defendant's fifth amendment rights and

entitled him to pretrial inspection of grand jury tran-

scripts.

CONSTITUTIONAL PROVISION, STATUTES,

AND COURT RULE INVOLVED

The constitutional provision involved is the fifth

amendment to the United States Constitution. It is printed

in Appendix B infra, at p. Ib.

The relevant statutory provisions concerning the nature

of a Colorado professional medical service corporation and

the nature of physician-patient relationship thereunder are

COLO. REV. STAT. ANN. 1973, 12-36-134 [formerly COLO.

3

REV. STAT. ANN. 1963, 91-3-37, as amended (Perm. Cum.

Supp. 1969) ] and COLO. REV. STAT. ANN. 1973, 13-90-

107(1)(d) [formerly COLO. REV. STAT. ANN. 1963, 154-

1-7(5)}. They are printed in Appendix B infra, at pp.

The relevant court rule is Rule 6(e) of the Federal Rules

of Criminal Procedure. It is printed in Appendix B. infra,

at p. Ib.

STATEMENT OF THE CASE

1. Introduction

Louis Martin Radetsky is a doctor of osteopathy,

licensed under the laws of Colorado. He is actively engaged

in the practice of osteopathic medicine at the South Denver

Clinic in Denver, Colorado. He served as chairman of the

department of medicine at Rocky Mountain Hospital for

the ten years immediately preceeding the trial of this case

and was the chief-of-staff at that hospital in 1957 and 1958.

On November 9, 1973, Dr. Radetsky was indicted on 41

substantive counts under 18 U.S.C. §§ 1001 and 1002. In

essence, these counts alleged that Radetsky had knowingly

concealed material facts from, and had made false state-

ments to, Colorado Medical Services, Inc., the paying

agent for Medicare funds pursuant to a contract with the

Social Security Administration. The indictment also con-

tained an additional count under 18 U.S.C. § 371, alleging

a conspiracy to defraud among Radetsky, Marie Stan-

defer, Richard E. Griffin, Gwendolyn Alice Green and

Carolyn Largent. Griffin, Green and Largent were not

indicted.'

‘Marie Standefer was indicted as a co-defendant on all counts.

Pursuant to a motion by the Government, Standefer’s trial was se-

vered from that of Radetsky. Subsequently , Standefer plead guilty to a

misdemeanor under 42 U.S.C. § 408, and all other charges against her

were dismissed.

4

The Government dismissed counts 20, 21 and 37 prior to

trial and the trial court entered a judgment of acquittal on

the conspiracy count at the close of the evidence. The jury

returned a verdict of acquittal on counts 1-6 and convicted

Radetsky on counts 7-19, 22-36, and 38-41. At sentencing,

the trial court imposed a fine on defendant of $1,500 for

each count, or a total fine of $48,000. On June 27, 1974,

Radetsky filed a notice of appeal to the United States Court

of Appeals for the Tenth Circuit.

On March 29, 1976, the United States Court of Appeals

for the Tenth Circuit rendered its decision affirming

Radetsky’s conviction on counts 7, 8, 11, 15, 28 and 36.

The convictions on counts 9-14, 16-19, 22-27, 29-35, 38-39

and 40-41 were reversed on the ground that the false

statements alleged therein were immaterial as a matter of

law because they involved drugs which were noncompens-

able under the guidelines established by the paying agent

for Medicare.”

2. The Indictment and Bill of Particulars

The 41 substantive counts of the indictment alleged that

Radetsky had submitted certain request for payment

forms containing false information to the paying agent for

Medicare. Each count related to one such request form for

“The Court of Appeals’ opinion reveals that the three-judge panel

was deeply split with respect to the issues raised on appeal. Judge

Holloway. writing the opinion of the court, concluded that the convic-

tions on 26 counts should be reversed because the alleged false state-

ments relating to those counts were not material. Chief Judge Lewis.

dissenting, asserted that submission of the Government's bill of par-

ticulars to the jury constituted reversible error as to all counts. Judge

Barrett, concurring in part and dissenting in part, would have af-

firmed on all counts.

en ee ee ee

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5

one patient.* Each request for payment form listed a mul-

tiplicity of patient visits for periods covering from one to

six months; specified from 14 to 75 separate services ren-

dered to the patient during the period; and itemized from

7-49 separate charges for those services. The indictment

did not identify which of the numerous statements con-

tained on the request forms were allegedly false: it merely

categorized them into one of four groups:

(1) The patients actually received medical services less

frequently than stated on the Requests for Payment

(dates in parentheses hereinbelow indicate those when

the patient did not receive any medical service), (2)

the Requests for Payment did not fully, truly, and

accurately describe the medical procedures and ser-

vices for each date given as required (indicated

hereinbelow by the word “‘services”’), (3) the Re-

quests for Payment did not disclose that the amount

shown as charges for services were at a higher rate

and more than the customary charges of South Den-

ver Clinic, Inc., to either Medicare on non-Medicare

patients for the same services (indicated hereinbelow

by the word ‘‘charges’’), and (4) the amounts shown

on the Requests for Payment as already paid by the

patients against such charges were inflated (indicated

hereinbelow by the words ‘‘amount paid’’).. . .

The indictment then proceeded to list for each count the

date of the claim form; the time period covered by the

form; the patient’s name; and whether the alleged false

Statement related to dates on which services were ren-

dered, services, charges and/or amount paid.*

*The Court of Appeals included two such request for payment forms

at pp. ix-x of the Appendix to its opinion.

‘The Court of Appeals included « copy of portions of the indictment

at pp. i-iv of the Appendix to its opinion.

6

On December 3, 1973, defendant filed a written motion

to dismiss on the ground that the indictment failed to meet

the specificity requirements of the fifth amendment to the

United States Constitution.* The trial court denied this

motion; however, the court did require the Government to

furnish a bill of particulars identifying those statements on

each request form which were allegedly false.

In response to the trial court’s order, the Government

filed a 15-page bill of particulars which merely listed

numerous discrepancies between defendant's office rec-

ords and the request for payment forms. On some counts,

the Government's bill of particulars challenged all items

on the request for payment form, while on other counts

only a few of the items on the request form were challenged

as falsifications.®

After the close of the evidence, the United States Attor-

ney moved to have the bill of particulars submitted to the

jury for use in its deliberations. Both the prosecutor and

the trial court acknowledged that the jury could not de-

termine from the indictment which statements on the re-

quest forms constituted the basis for the grand jury's

charges.’ The defendant objected to submitting the bill of

particulars to the jury on the grounds that (1) any attempt

to cure defects in the indictment by submission of the bill

of particulars to the jury would violate defendant’s fifth

*The motion to dismiss based on insufficiency of the indictment was

renewed and denied immediately prior to trial and again at the close of

the evidence.

“For example, on count 36 only 10 of the 40 statements relating to

services on the request form were claimed to be false. See p. 10 of the

Court of Appeals’ opinion.

‘In his argument for sending the bill of particulars to the jury, the

prosecuting attorney stated in part:

“My concern ts that if we don’t send the Bill of Particulars, the

jury ts going — they may well convict on one of the items listed

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7

amendment rights; (2) the bill of particulars would only

serve to confuse the jury; and (3) it was fundamentally

unfair to give the jury a 15-page statement which, in

essence, merely contained the Government's theory of the

case. The trial court granted the Government's request

and submitted the bill of particulars to the jury over

defendant's objection.

‘Judge Holloway, writing the opinion for the Court of

Appeals, recognized that the issues of whether the indict-

ment met the fifth amendment requirements of specificity

and whether defendant had been convicted on charges

other than those contained in the grand jury’s indictment

raised substantial constitutional issues which were ‘‘seri-

ous and not free from doubt .. .”’ He concluded, how-

ever, that the indictment was constitutionally adequate.

He further concluded that submission of the bill of particu-

lars to the jury, while improper, did not constitute prejud-

icial error. Chief Judge Lewis, dissenting, determined that

a bill of particulars should never be submitted to the jury

and that in the present case prejudice to the defendant was

‘*glaringly apparent.”

3. The Patient Records

At the time of the alleged offenses, defendant and his

wife were the sole shareholders in, and defendant was

on the request for Payment which hasn’t even been challenged

by the United States, and | think it would all be kind of a nullity

in the process.”’

The trial court stated:

Well, the Court has given some thought to the Bill of Particu-

lars since yesterday afternoon. I have come to the conclusion that

in view of the multicharges within the various Counts, that it’s

the only sensible thing to do, and the Court will do it, because it

appears to the Court that a Bill of Particulars of this nature and

in this type of case is almost a necessity if the jury is going to

return an intelligent verdict.

8

president of, the South Denver Clinic, a professional medi-

cal corporation organized under the Colorado Medical

Practice Act.* On July 6, 1973, a grand jury subpoena

duces tecum was issued to the South Denver Clinic. The

subpoena required the production of four categories of

patient records:

1. Patient charts, which contain the name of the

patient; the nature of his or her illness; the dates on

which treatment was given; and the specific nature of

the treatment given;

2. ‘Blue slips,’” prepared for the patient on each

visit which contain the name of the patient; the date of

the office call and the charge for services rendered;

3. IBM cards, which indicate the name of the pa-

tient; the dates on which the patient had been seen;

the attending physician and general nature of the

treatment by code number; and the charge;

4. Day sheets, which contain a list of all patients

seen on a particular date and the charge for the ser-

vices rendered.”

The South Denver Clinic and Dr. Radetsky moved to

quash the grand jury subpoena. They asserted that the

documents in question were Radetsky’s personal records

used solely for the purpose of treating his patients, and

thus, the fifth amendment to the United States Constitu-

tion prohibited their production over his objection. The

motion to quash was denied.

SCOLO. REV. STAT. ANN. 1973, 12-36-134 [formerly COLO. REV.

STAT. ANN. 1963, 91-3-37, as amended (Perm. Cum. Supp. 1969) }.

*All of the subpoenaed documents related to treatment given by the

defendant to his patients. This is especially true of the patient charts

which contained no financial information whatsoever and which were

used solely for the purpose of providing proper medical care.

9

After the indictment was returned, Radetsky moved to

suppress all of the records subpoenaed by the grand jury

on the ground that their introduction into evidence would

violate defendant's fifth amendment right to be free from

compulsory self-incrimination. The trial court denied this

motion on December 21, 1973.

The Court of Appeals determined that the records in

question belonged to the professional corporation. The

court further held that by forming a professional corpora-

tion, defendant had relinquished any fifth amendment

rights which he might otherwise have been entitled to with

respect to these records.

4. The Admonition of Secrecy

The prosecuting attorney instructed each witness who

appeared before the grand jury that he should not discuss

his grand jury testimony with anyone without first obtain-

ing permission from a judge of the United States District

Court. For example, after Dr. Griffin finished testifying

before the grand jury, he was admonished by the pros-

ecutor as follows:

At this time Dr. Griffin, it is my duty to advise you

that the Grand Jury proceedings are confidential by

court order. The fact that you have been here, the

questions which were asked, and the answers which

were given are not to be discussed with anyone, and if

you feel the need to do so, you should first seek the

permission of U.S. District Judge through your attor-

ney, Mr. Creamer.

The record reflects that Dr. Griffin, one of the key

witnesses who gave damaging testimony against Radetsky

on the questions of knowledge and intent, refused to talk

with Dr. Radetsky, his attorneys, or his investigator. The

record further shows that the only other source of infor-

10

mation concerning Dr. Griffin’s knowledge of the facts

was the transcript of his grand jury testimony.

On December 3, 1973, Radetsky filed a motion for dis-

covery which, inter alia, requested inspection of the tran-

scripts of testimony given by witnesses before the grand

jury. Radetsky’s motion claimed that an examination of

the grand jury testimony was essential to the preparation

of his defense, and that he had no alternative method of

obtaining the information contained therein.'® The trial

court denied the motion except for compliance with the

Jencks Act. Radetsky was not permitted to inspect any

grand jury transcripts until after the trial had com-

menced.

The Court of Appeals held that an admonition of secrecy

to grand jury witnesses clearly violated Rule 6(e), but

found that neither this violation, nor the refusal of pretrial

inspection of grand jury transcripts, was prejudicial to the

defendant.

REASONS FOR GRANTING THE WRIT

1. This case presents important constitutional issues

involving the fifth amendment’s guaranty that a defendant

The hearing on defendant’s motion for discovery was held on

December 21, 1973. At that time, defendant’s counsel knew that Dr.

Griffin would not discuss anything relating to Dr. Radetsky with

either defense counsel or an investigator hired by the defendant. What

counsel did not know was the reason for Dr. Griffin's refusal — i.e.,

that the United States Attorney had imposed an obligation of secrecy

on the grand jury witnesses. It was only after defense counsel began to

receive the grand jury transcripts during the trial that he learned of

the United States Attorney's violation of Rule 6(e). Thus, the fact that

the trial court was not informed of what undoubtedly would have

constituted a particularized need for inspection of grand jury tran-

scripts was due solely to the prosecuting attorney's failure to reveal

that he had imposed such an obligation of secrecy on the witnesses.

may be tried only upon charges contained in a grand jury

indictment. In attempting to resolve these issues, the Court

of Appeals misapplied the decision of this Court in Russell

v. United States, 369 U.S. 749 (1962). Russell clearly

defines the functions which an indictment must fulfill. A

primaiy requirement is that the indictment must be suffi-

ciently precise to inform the defendant, prosecutor, trial

court, and jury of the basis for the charges contained

therein. If the indictment does not meet this test of specif-

icity, danger exists that the defendant might well be tried

and convicted for acts other than those on which the grand

jury intended to indict. Furthermore, it is constitutionally

impermissible to bolster a defective indictment by means

of a bill of particulars. As this Court stated in Russell,

supra:

But it is a settled rule that a bill of particulars

Cannot save an invalid indictment. . . . To allow the

prosecutor, or the court, to make a subsequent guess

as to what was in the minds of the grand jury at the

time they returned the indictment would deprive the

defendant of a basic protection which the guarantee of

the intervention of a grand jury was designed to sec-

ure. For a defendant could then be convicted on the

basis of facts not found by, and perhaps not even

presented to, the grand jury which indicted him. 369

U.S. at 770.

Of course, the sufficiency of the indictment under the

Russell guidelines must be judged in light of the facts of

each case. In the case at bar, it is simply impossible to

determine which of the numerous items listed on each

request for payment form constituted the basis for the

grand jury’s indictment. For example, count 36 of the

indictment merely alleges that Radetsky made false state-

ments with respect to charges. An examination of the

12

applicable request for payment form reveals that 40 sepa-

rate charges are contained thereon. The indictment does

not disclose which of these 40 items form the basis for the

grand jury's charge in count 36''. A similar problem is

presented with respect to counts 7,8, 11, 1S and 28.

The opinion of the Court of Appeals not only ignores the

fifth amendment protections which this Court sought to

preserve in Russell, but also poses a significant threat to

the just and proper enforcement of 18 U.S.C. §$ 1001 and

1002. A substantial number of prosecutions under §§ 1001

and 1002, like the one here in question, involve allegedly

false statements made on applications and informational

forms submitted to Government agencies. Invariably such

documents require voluminous data. When these docu-

ments are involved in prosecutions under §§ 1001 and

1002, constitutional rights can be preserved only if the

indictment describes the allegedly false statements relied

upon with enough precision to distinguish them from the

vast number of other statements contained on the applica-

tion or informational form. Yet, the opinion of the Court

of Appeals for the Tenth Circuit in this case lends judicial

approval to indictments which fail to meet this require-

ment. Furthermore, in holding that these deficiencies can

be corrected by a bill of particulars, the Court of Appeals

has approved what, in effect, amounts to indictment by the

prosecuting attorney in such cases. This practice, of

course, violates the specific mandate of Russell, supra.

2. The holding of the Court of Appeals that submission

of the Government’s bill of particulars to the jury over a

defendant’s objection does not constitute prejudicial error

Creates a conflict in principle with the decision of the Court

of Appeals for the Fifth Circuit in Pipkin v. United States,

''The request for payment form involved in count 36 is found at p. x

of the Appendix to the Court of Appeals’ opinion.

6 ee ett RR Oe re

13

243 F.2d 491 (Sth Cir. 1957). Furthermore, in light of the

facts of this case, the harmless error rationale relied upon

by the Court of Appeals does violence to the fifth amend-

ment guaranty of indictment by grand jury and is inconsis-

tent with the principles laid down by this Court in Russell

v. United States, 369U.S. 749 (1962).

In Pipkin, the defendant requested that the trial court

‘read the Government's bill of particulars to the jury. The

trial court refused and the Court of Appeals for the Fifth

Circuit affirmed:

His [defendant’s] final point that where the court

at the jury’s request read the indictment to them, he

should have read the bill of particulars also, is equally

insubstantial. No case is cited which supports the

contention. We think none can be found. The objec-

tive and purpose of a bill of particulars is not to

supplement or in anywise change or affect the indict-

ment as an indictment. It is to better apprise the

defendant of what he is expected to meet. The jury did

not ask for and would not have known what to do with

the bill of particulars. No useful purpose could have

been served by reading it to the jury. Indeed it would

have been error to read it. 243 F.2d at 494.

A similar indication that the submission of a bill of

particulars to the jury over defendant's objection consti-

tutes prejudicial error is found in the opinion of the United

States Court of Appeals for the Second Circuit in United

States v. Borelli, 336 F.2d 376 (2d Cir. 1964). See also

Westry v. Commonwealth, 206 Va. 508, 144 S.E.2d 427

(1965); State v. Bickham, 239 La. 1094, 121 So. 2d 207

(1960).

In the present case the prejudicial effect of the bill of

particulars is magnified to constitutional dimensions by

the deficiencies in the indictment. The facts reveal that

14

defendant Radetsky may very well have been tried and

convicted on charges other than those contained in the

grand jury's indictment. The patient treatment charts

which were turned over to the grand jury pursuant to

subpoena, almost without exception, indicate that

Radetsky had given each and every drug which was listed

on the request for payment forms. A comparison of the

patient treatment charts with the request for payment

forms merely suggested that, in addition to the drugs listed

on the requests for payment, certain other drugs had also

been given but had not been included on the request forms.

The only way the grand jury could have concluded that

Radetsky had failed to administer drugs listed on the

request for payment forms would have been through tes-

timony that the patient charts were inaccurate. No such

testimony could have been presented to the grand jury.

The only grand jury witnesses familiar with the office

records were Burke, Largent and Griffin. They could not

have discussed inaccuracies in the patient treatment

charts, because, at the time of their testimony, those

documents had not yet been subpoenaed and were not

available to the grand jury. Thus, it is apparent that the

grand jury’s indictment as it relates to “‘services”’ is based

only on an allegation that Radetsky did not list all drugs

administered.

Apparently, sometime after the grand jury returned its

indictment, the United States Attorney decided that the

patient charts had been altered and that certain drugs had

been added !n order to make the charts conform with the

requests for payment. He, therefore, concluded that

Radetsky not only had failed to list all drugs given, but also

had not administered certain drugs listed on the requests

for payment. As a result, the bill of particulars alleged that

Radetsky had both concealed drugs which had been given

and had failed to give other drugs which were listed on the

A Act OR RAT a

er e.g OR eee

15

request forms. Radetsky was tried on both of these

theories when, in fact, the indictment was almost assuredly

based solely on the former theory.

This case provides a graphic example of how the combi-

nation of a deficient indictment and a bill of particulars

can produce the constitutional problems which this Court

described in Russell, supra. Under the facts of this case,

the Court of Appeals’ determination that submission of the

bill of particulars to the jury was harmless error cannot

withstand constitutional scrutiny.

3. Whether the right to be free from compulsory self-

incrimination applies to patient treatment records used by

a doctor who has formed a professional medical corpora-

tion is a question of substantial constitutional importance

which has not been previously considered by this Court.

The records introduced into evidence over defendant's

objection were used by Dr. Radetsky solely for the purpose

of providing medical care for his patients. If the defendant

had not formed a professional corporation, these patient

records would have been personal records held by the

defendant in a personal capacity. Under the rationale of

Boyd v. United States, 116 U.S. 616 (1886), their intro-

duction into evidence over defendant's objection clearly

would have violated the fifth amendment. Whether the

existence of a professional corporation alters the capacity

in which these records were held depends upon the charac-

ter of a professional medical corporation as defined by the

laws of the state of incorporation. See, e.g., United States

v. Empey, 406 F.2d 157 (10th Cir. 1969).

Under the Colorado Medical Practice Act,'* the obliga-

tion of a doctor to provide treatment for his patient cannot

'2COLO. REV. STAT. ANN. 1973, 12-36-134 [formerly COLO. REV.

STAT. ANN. 1963, 91-3-37, as amended (Perm. Cum. Supp. 1969)}.

16

be a corporate responsibility. A corporation formed under

this Act is not a corporation for all purposes. For financial

purposes there is no doubt that a professional medical

corporation is quite similar to a corporation formed under

the general corporation statute. On the other hand, the

relationship between doctor and patient remains a per-

sonal one in which the corporation plays no part. Records

kept concerning treatment given, which do not contain

financial information, must, therefore, be considered per-

sonal records held by the doctor in his personal capacity.

Professional medical and legal corporations are in wide-

spread use throughout the United States. As a result, the

constitutional problem presented here will continue to

arise until this Court renders a definitive decision on the

subject.'*

4. The admonition of secrecy to witnesses before a

grand jury in violation of Rule 6(e) of the Federal Rules of

Criminal Procedure presents a serious threat to the proper

administration of justice in the federal courts and to the

concept of fair trial embodied in the due process clause of

the fifth amendment. The Government, of course, has no

obligation to aid a criminal defendant in the preparation of

his case Or to provide the defendant with information other

than that required by the rules of discovery. There is,

however, a constitutional obligation upon the Government

to refrain from interfering with the defendant's ability to

'SBellis v. United States, 417 U.S. 85 (1974) does not resolve the

question presented in this case. Bellis held that financial records of a

professional corporation do not fall within the fifth amendment

privilege. We agree that professional corporations are set up primarily

for financial reasons, and, therefore, financial records are corporate

documents. The question of whether other types of records prepared

in connection with the personal relationship between a doctor and his

patient or an attorney and his client fall within the protection of the

fifth amendment was not discussed in Bellis.

17

investigate and prepare his case. The record in the present

case establishes that Government inspired silence of grand

jury witnesses severely hampered Dr. Radetsky’s ability to

adequately prepare his defense. The only other avenue by

which the defendant could have obtained information

withheld by these witnesses was through the grand jury

transcripts. These were also denied to him until after the

trial had begun.'* The Court of Appeals’ decision that

Radetsky was not prejudiced by this Government inspired

silence significantly erodes the constitutional guaranty of a

fair trial and cannot be tolerated in the administration of

the federal criminal justice system.

CONCLUSION

For the foregoing reasons this Petition for a Writ of

Certiorari should be granted.

Respectfully submitted,

WARREN O. MARTIN

CLARK, MARTIN

AND PRINGLE

500 Capitol Life Center

Denver, Colorado 80203

Attorney for Petitioner

'4It has been indicted that Government inspired silence gives rise

to a particularized need for discovery of grand jury testimony. See,

e.g., United States v. Mitchell, 372 F. Supp. 1239 (S.D.N.Y. 1973).

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PUBLISH Hag 23 1875

} 8) ‘ MILLIFS |

UNITED STATES COURT OF APPEALS”

TENTH CIRCUIT

UNITED STATES OF AMERICA, )

Plaintiff-Appellee, ;

)

- )

} No. 74-1484

)

LOUIS MARTIN RADETSKY,

a/k/a L. M. RADETSKY, ;

Defendant-Appellant. )

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR.THE DISTRICT OF COLORADO

(District Court No. 73-UR-415)

Richard J. Spelts, Assistant United States Attorney, Denver,

Colorado (James L. Treece, United States Attorney, Denver,

Colorado, on the brief’ for Plaintiff-Appellee

Bruce D. Pringle, Attorney, Denver, Colorado (James D. Clark,

Clark, Martin and Pringle, Denver, Colorado, on the brief)

for Defendant-Appellant

Before LEWIS, Chief Judge, and HOLLOWAY and BARRETT, Circuit

Judges

HOLLOWAY, Circuit Judge

2a

Defendant-Appellant Radetsky, a Colorado osteopathic

physician, was indicted on 41 substantive counts under 18 USCA

§§ 1001 and 2, and a conspiracy count under 18 "ISCA § 371, in

connection with the submission of allegedly false medicare claims.

Three of the substantive counts were dismissed by the Government

prior to trial. The trial court dismissed the conspiracy count

at the close of the evidence. The defendant was found not guilty

by the jurv on six substan! e counts, and convicted on guilty

verdicts on 32 of the remaining substantive counts. The court

imposed a $1,590 fine on each ot these 32 counts, or a total

fine of $48,000, and defentant appeals.

Defendant argues numerous propositions for reversal. We

find it necessary to discuss :eversl of the principal appellate

contentions at some length concerning (1) whether the indict-

ment was defective, among other things failing to meet required

standards of specificity and failing to allege particular state-

ments charged to have been false so that the grand jury's charges

were not known, with trial and convictions occurring on charges

specified only in the bill of particulars in violation of de-

fendant's Fifth Amendment right that he not be held to answer

“unless on a presentment or indistment of a Grand Jurv;" (7)

whether it was error for the bill of particulars, together with

the indictment, to be sent with the jury for its deliberations;

3a

(3) whether prosecution was proper under 18 USCA § 1001, a

general felony statute, instead of under 42 USCA § 408, a more

recent and specific misdemeanor statute, covering false state-

ments made for use in determining medicare payments, among

other things; (4) whether there was error in admitting over

defendant's Fifth Amendment objection, and in not ordering the

return of, records found to have been subpoenaed from a profes-

sional corporation where defendant practiced, but said to have

been his personal papers and records; (5) whether the trial

court erred in denying inspection of grand jury testimony of

Government witnesses; (6) whether there was error in denying

challenges to jurors who had read pretrial publicity material

concerning defendant; (7) whether the trial court erred in

the exclusion and admission of evidence; and (8) whether certain

counts contained allegations of false statements which the court

should have held immaterial as a matt=r of law, and whether the

trial court, in any event, erred in submitting the issue of

materiality to the jury without a proper instruction.

We will treat the facts in discussing the appellate issues

before us.

4a Sa

i

I as a means of protecting the citizen against

unfounded accusation, whether it comes from

government, or be prompted by partisan passion

The Fifth Amendment guaranty concerning or private enmity. No person shall be required,

indictment by grand jury and the suffi- : according to the fundamenta! law of the country,

, chee | except in the cases mentioned, to answer for

ciency of the indictment any of the higher crimes unless this bodv, con-

sisting of not less than sixteen nor more than

; twenty-three good and l.iwfii men, selected from

the body of the district, shall declare, upon

The Fifth Amenument provides in part: | ; careful deliberation, under the solemnity of an

oath, that there is good reason for his accusa-

No person shall be held to answer for a tion and trial.

capital, or otherwise infamous crime, un-

less on a presentment or indictment of a

Grand Jury. . See Russell v. United States, ‘69 U.S. 749, 771; Stirone v

: 9 28. F ; .

The related provision of the Sixth Amendment states: United States, 361 U.S. 212, 218; see also Wood v. Georgia, 370

U.S. 375, 390

In all criminal prosecutions, the accused i

shall enjoy the right . . to be informed | , , } ;

al Geb Gheuse and Geee of the aneneeiae It is this fundamental guaranty to te tried only on

charges made by a grand jury that mainly cuncerns us. The sub-

, , , ¢ uiie : :

The importance of the historic guaranty of the provision stantial safeguard of the guaranty to those charged with serious

for indictment by a grand jury has long been recognized. In ' crimes cannot be eradicated under the claim that variations are

Ex Parte Bain, 121 U.S. 1, 11, the opinion recited this portion mere technical departures from the rules. Smith v. United States,

of a grand jury charge by Justice Field: 360 U. S. 1, 9. And in honoring the guaranty we must be mindful

Yet the institution was adopted in this of its corollary that a federal indictment may not be amended ex-

country, and is continued from considerations

similar to those which give to it its chief cept by resubmission to the grand jury, unless the change is

value in England, and is designed as a means,

not only of bringing to trial persons accused merely a matter of form. Russell, supra at 770-71. “Any other

of public offenses upon just grounds, but also

doctrine would place the rights of the citizen, which were in-

. l tended to be protected by the constitutional provision, at the

If presentment ever were an alternative to indictment, P . ‘

this has ak been the case since adoption of the Federal Rules mercy or control of the court or prosecuting attorney. . . ex

of Criminal Procedure, which make no provision for prosecution

by presentment. Gaither v. United States, 413 F.2d 1061, 1065,

n. 1 (D.C.Cir.).

parte Bain, supra at 13.

2

While the significance of the protection of the indictment

process has been emphasized, it has not been held applicable to

the States as a due process principle. See Beck v. Washington,

369 U.S. 541, 545.

6a

The purposes and requirements for the sufficiency of in-

dictments have been variously stated, but the essentials are

clear. First, the indictment must contain the elements of the

offense and sufficiently apprise the defendant of what he must be

prepared to meet; second, it must be such as to show to what ex-

tent he may plead a former acquittal or conviction as a bar to

further prosecution for the same cause. Russell, supra at 763-64;

United States v. Hess, 124 U.S. 483,487. And a purpose corollary

to the first is that the indictment inform the court of the facts

alleged, so that it may decide whether they are sufficient in law

to support a conviction, if one should be had. Russell, supra at

768; United States v. Hess, supra at 487. Furthermore,and of para-

mount importance, a sufficient indictment is required to implement

the Fifth Amendment guaranty and make clear the charges so as to

limit a defendant's jeopardy to offenses charged by a group of his

fellow citizens, and to avoid his conviction on facts not found,

or perhaps not even presented to, the grand jury that indicted

him. Russell, supra at 770-71; see Stirone v. United States,

361 U.S. 212, 217-18; Gaither v. United States, 413 F.2d 1061,

1066-67 (D.C.Cir).

Defendant argues that the present indictment is void and

fails to perform any of the four functions discussed above, stres-

sing most heavily that the impermissible vagueness of the indict-

ment infringed on his Fifth Amendment guaranty that he be tried

only on charges made by the grand jury and not on charges later

7a

determined by the prosecutor to be used as grounds for trial

and conviction. (Opening Brief of Defendant-Appellant, 22-27).

More specifically the indictment is challenged for lack of

specificity in failing to identify specific false statements as

to the “serv.ces’’ or "charges" referred to in the requests of

medicare patie” and claimed to have been the subject of know-

ing and wilful material concealment and covering up by trick,

scheme and device.

W ure not persuaded that the defendant has raised a

us problem here pertaining to any of the first three func-

wns <f the indictment—those relating to notice, double jeop-

irdy, and sufficiency in law of the facts alleged to support a

-~:;vtetion. A detailed bill of particulars was furnished to

~ne defendart four rorths prior to trial, giving adequate speci-

ries «5 to the particulars of the Government's proof. While a

“-'. ¢©f particulars cannot save an invalid indictment, Russell,

,so.2 4t 779, it can serve to give adequate notice for trial

-renararion in these circumstances. See Gaither v. United States,

ira, “413 F.2d at 1067. Likewise the bill of particulars, to-

getner with the record evidence of exhibits and testimony, affords

protection against double jeopardy since the whole record is avail-

able to avoid being placed twice in jeopardy for the same offense.

3

Form SSA-1490, *""Request For Medicare Payment" is the form

submitted by physicians and individuals as claims for medicare

payments. Portions of such requests pertaining to counts 34 and

36 are reproduced in the Appendix to this opinion, part c.

BEST COPY AVAILABLE

9a

8a

Tritt v. United States, 421 F.2d 928, 930 (10th Cir.). And we of Title XVIII of said Act, in that RADETSKY and

) STANDEFER did submit and cause to be submitted

are satisfied that the indictment, set out in part in the appendix to Colorado Medical Service, Inc., aka Colorado

Blue Shield, documents designated as Form SSA-

to this opinion, adequately alleged the facts in order to determine 1490, otherwise known as Request for Medicare

Payment—Medical Insurance Benefits—Social

that an offense was stated sufficiently to support a conviction if Security Act (hereinafter in this indictment re-

ferred to as Request for Payment), to secure pay-

one should be had. Russell, supra at 768. ment under Part B of Title XVIII of said Act, for

EEE medical services allegedly rendered in Colorado

to the patients and for the periods of time stated

The argument based on the Fifth Amendment guaranty of hereinbelow, which Requests for Payment purport

to show the date of each service, fully describe

trial only on an indictment of a grand jury raises serious the medical services rendered for each date given,

the charges, and the amount paid by the

questions. They must be carefully considered by focusing on patients against such charges, WHEREAS. in

truth and in fact, as RADETSKY and STANDEFER

the indictment in the context of the factual circumstances sur- then knew, (1) the patients actually received

medical services less frequently than stated

rounding the requests for payment and the allegedly false state- on the Requests for Payment (dates in paren-

thesis hereinbelow indicate those when the

ments and representations relied on by the Government, keeping patient did not rece‘ve ary medical service),

(2) the Requests for Payment did not fully,

in mind the important function of the constitutional guaranty truly and accurately describe the me ical pro-

cedures ane_services Lot each date given as

and its historic protections. Fequirec (indicated hereinbelow by the word”

P services"). (3) the Requests for Payment

did not disclose that the amounts shown as

charges for services were at a higher rate

and more than the customary charees of South

Denver Clinic, Inc. to either medicare or non-

Medicare patients for the same service (indi-

cated hereinbelow by the word “charges”, and

the amounts shown on the Requests for

Payment as already paid by the patients against

We turn to the indictment and the particulars of two counts—

count 34 and count 36—which illustrate the problem concerning this

indictment. In part the indictment charges that the defendants

...did unlawfully, knowingly and wilfully such charges were inflated (indicated herein-

conceal and cover up by trick, scheme, and below by the words "amc ints paid".

device material facts, and make and cause to

be made false statements and representations Ms

of material facts, all for the purpose of DATE TIME NAME

causing payments to be made under the provisions COUNT OF COVERED BY OF

CLAIM CLAIM PATIENT MATERIAL FACTS

. se 2

4 i

Another defendant, Standefer, was indicted also but her 34 8-19-70 = =5-1-70 BREYMATER Services ,charges, amount

trial was severed fromthat of defendant Radetsky. 9:7 2" paid.

kk *

The indictment is more fully set forth in the appendix

to this opinion, along with related parts of the bill of particu-

lars and some relevant exhibits. x6 6-3-70 1-19-70 GLENN Chevese.

to

5-25-70

10a

ALL OF THE FOREGOING COUNTS 1 THROUGH 41 in violation of Sections

1001 and 2, Title 18, United States Code. (Emphasis added)

As stated, defendant challenges the failure of the indict-

ment to allege particulars in connection with the "services" and

“charges” .claimed to have been misstated, underlined items 2 and

3 in the body of the quoted portion of the indictment. Defendant

says that because of the multiplicity of "services" and "charges"

covered by each claim form, there is absolutely no way to tell

whether the charges and services the prosecutor may list in the

bill of particulars are those relied on by the grand jury as the

basis for its charges. Thus, he argues, the Fifth Amendment guar-

anty is violated, relying, inter alia, on Russell and Lowenburg v.

United States, 156 F.2d 22 (10th Cir.).

It is true that the requests for payment alleged in the

indictment cover "services" and "charges" including numerous items,

in some instances spanning up to 5 1/2 months and 58 different

charges for 58 items of service. Moreover, the Government's bill

of particulars shows that while all items on some requests for pay-

ment were challenged in several instances, in many instances not

all the items were challenged as falsifications. For example, on

Exhibit 36-A only 10 out of 40 items were challenged as false,

5

whereas on Exhibit 34-A all 28 items were challenged. And since

5

In connection with counts 34 and 36. the extent of the

numerous items covered by the requests for payments may be seen

by examining those documents. Pertinent portions of them are

also reproduced in part c of the Appendix.

(Fn. 5 continued)

lla

the indictment's allegations are in somewhat general terms con-

cerning falsification of "services" and "charges," it can be argued

that the Government was free under this indictment to choose to in-

troduce proof on any of numerous items. See Lowenburg v. United

States, 156 F.2d 22, 23 (10th Cir.); Van Liew v. United States,

321 F.2d 664, 672 (Sth Cir.).

We must agree that this question is difficult and close,

in view of the requirements of the Fifth Amendment guaranty, as

applied in Stirone, in Russell and in similar cases. There are,

however, these specifics laid out in this indictment: it identifies

each of the basic documents—the requests for payment—that are re-

lied on as containing the false statements. Their dates and the

single individual patients involved are set out, together with the

period of time covered by each request for payment. The four types

——

(Fn. 5 continued):

In part b of the Appendix related portions of the bill of

particuiars are also reproduced. By comparison of the bill of par-

ticulars with the related request for payment, it is apparent that

on count 36 the Government was challenging only some items within

the "charges" covered by the request for pavment (Exhibit 36-A).

This is shown also by paragraph F of the conspiracy count (count 42)

which alleged that the concealment and false statements, etc., were

interspersed with levitimate services rendered (a judgment of

acquittal was entered on this count bv the court at the close of the

evidence, making that count moot).

Since the indictment itself, see part a of the Appendix,

alleged misstatements characterized merely as "services" and

“charges,” the detendant argues there was an impermissible vague-

ness permittin» the prosecutor to challenge items without their

having been designated by the grand jury itself.

of concealment and falsifications charged are specified—medical

services not rendered, by date; medical procedures and services

not fully, truly and accurately described ("services"); charges

being at a higher rate and more than customary for the same

service (charges); and the amounts paid, allegedly inflated above

amounts already paid by the patients.

In the circumstances before us we feel the indictment

adequately laid out the grand jury's charges and the general

factual circumstances underlying them. See United States v

Haskins, No. 74-1691, 9th Cir. (October 23, 1974,unpublished) ;

4

United States v. Kones, No. 74 Cr. 672-LFM, S.D.N.Y. (August 14,

1974, unpublished) The indictment set forth the essential facts

and the nature of the offenses charged and further details fall

in the category of evidence on which the case would rest, which

the indictment is not obliged to state. See Mims v. United

States, 332 F.2d 944, 946 (10th Cir.); Flying Eagle Publications,

Inc. v. United States, 273 F.2d 799, 802 (lst Cir.). And we

feel this is not a case where the grand jury mav have had a concept

of the scheme essentially different from that relied on by the

Government before the trial jury, as in United States v. Curtis,

506 F.2d 985, 989 (10th Cir.). See also Stirone v. United States,

361 U.S. 212, 217-18 While the question is serious and not free

from doubt, we are persuaded that the indictment met the essential

demands of the constitutional guaranty as staked out by the Supreme

Court

l3a

Defendant further asserts that evidence before the grand

jury was insufficient to support the indictment; that the first

grand jury declined to indict; and that hearsay and illegally

held evidence were used before the second grand jury, relying

on United States v. Leibowitz, 426 F.2d 39 (2d Cir.), and simi-

lar cases. The argument concerning the first gr-nd jury is ir-

relevant. Cf. United States v. Kysar, 459 F.2d 422, 423 (10th

Cir.). And it is clear that an indictment valid on its face —

as we hold this to be — is not subject to challenge on the

ground that the grand jury acted on the basis of inadequate or

incompetent evidence. Costello v. United States, 350 U.S. 359,

363; see also United States v. Calandra, 414 U.S. 388, 344-45;

United States v. Addington, 471 F.2d 560, 568 (lOth Cir.);

United States v. Kysar, 459 F.2d 422, 424 (10th as.”

6 '

A further attack on the indictment as improperly charg-

ing an offense under 18 USCA §§ 1001 and 2 instead of under 4

USCA § 408 is held to lack merit in Part III, infra.

l4a

II

The bill of particulars

Defendant argues that there was prejudicial error in submis-

sion of the bill of particulars, along with the indictment, to the

trial jury for use in its deliberations at the request of the Gov-

ernment and over the defendant's objections. The argument follows

from that made concerning the Fifth Amendment guaranty, already

“iseussed. being specified in three points: that since the de-

fendant could only be held to answer the grand jury's indictment,

submission of the bill of particulars to the trial jury along

with the indictment infringed on his rights under the constitutional

guaranty; that the bill of particulars could only confuse the

jury, since its purpose and use by the jurors were not explained

by the instructions and the bill of particulars itself did not

contain or explain the elements of the offenses; and that it was

unfair to give the jury a written summary of the prosecution's

case. which the defendant could not do in his behalf.

We must agree that submission of the bill of particulars

to a trial jury is undesirable. The au.iority relied on by the

Government, Shayne v. United States, 255 F.2d 739 (9th Cir.), cert.

denied, 358 U.S. 823, is not persuasive. On appeal the defendants

there arzued that it was error to send the indictment to the jury

without a bill of particulars, this resulting in eliminating

lSa

others as conspirators except the two appellants. The court

merely said it was a matter of discretion whether the bill of

particulars should be sent in, and that the decision not to do

So was not error. Id. at 743. The more difficult problem here

was not involved.

On the other hand we d not agree that cases primarily

relied on by the defendant here dictate a reversal. In United

St-tes v. Borelli, 336 F.2d 374, 393 (2d Cir.), the court was

reversing for other fundamental error and noted some further

points, including a defense argument that tne bill of particu-

lars should not have been sent to the jury. The court said it

should not have been sent to the jurors in the absence of a re-

quest from them; that the indictment makes the accusation; and

that the submission of the bill of particulars was likely to be

confusing, even with the instruction that it was not evidence.

Pipkin v. United States, 243 F.2d 491, 494 (5th Cir.) merely

held that the trial court did not err in refusing to read a bill

of particulars to the jurors when complying with their request

to have the indictment read to them. The court said that it

would have been error to read the bill of particulars, as the

jury would not have known what to do with it. We feel the cases

did not deal with a situation close to ours and they do not con-

vince us that reversible error occurred here.

l6a

As mentioned, we are not persuaded to approve the reading

or sending in of a bill of particulars to a trial jury,over a

defense objection, as was clearly made here. It does involve

the potential of confusion with the grand jury's charges in the

indictment and thus touches the sensitive area of the constitu-

tional guaranty. This point is supported to some degree by a

statement of the prosecuting attorney that if the bill of particu-

lars was not sent in, the jury might well convict on items in the

requests for payments not even challenged by the ieee” The

trial court's statement of its ruling to serd in the bill of particu-

8

lars lends some further support to the defendant's contention.

7

In his argument for sending in the bill of particulars

the prosecuting attorney stated in part (Tr. Vol. XVII,1174-75):

My concern is that if we don't send in the

Bill of Particulars, the jury is not going -- they

may well convict on one of the items listed on the

request for Payment which hasn't even heen chal-

lenged by the United States, and I think it would

all be kind of a nullity in the process.

8

The trial court stated, id. at 1175:

THE COURT: Well, the Court has given some

thought to the Bill of Particulars since yesterday

afternoon. I have come to the conclusion * at in

view cf the multicharges within the various Counts,

that it's the only sensible thing to do, and the

Court will do it, because it appears to the Court

that a Bill of Particulars of this nature and in

this type of a case is almost a necessity if the

jury is going to return an intelligent verdict.

ne

l7a

Moreover, the submission of a bill of particulars to the trial

jury does give some advantage to the ties ae as a written sum-

mary re-emphasizing the prosecution's case.

We feel, however, that reversible error is not demonstrated

by the defendant. There were careful instructions by the trial

court concerning both the indictment and the bill of particulars,

end we read the instructions as a whole as distinguishing ade-

quately bet.een the indictment as a statement of the charges and

the bril of eee” » specifying w:th more particularity

the basis of the charges. The instructions were clear that

9

We are mindful! of cases holding that no prejudicial error

occurred by permicting a trial jury to view summary exhibits such

as blackboards, not themselves in evidence, which listed items of

proof in evidence. E. Unitec States v. Downen, 496 F.2d 314

(10th Cir.), cert. denied, 419 |.S. 897 (1974:. We are not per-

suaded to ‘old that such cases support reading or submitting the

Prosecution’s bill of particulars to a trial ‘ury

10

In the opening portions of the charge the court referred

three times to the indictment as making tie charges (Tr. Vol.XVII,

1271-72). Later the court instructed in part (Id. at 1275):

You will have with vou in the jury room a

copy of the indictment ind a copy of the bill of

particulars filed by the zovernment which specifies

with more particularity than the indictment, the

basis of the charges in the i: dictment.

Now, these documents are not eviderce of any

kind against the accusec, and they do not create

any presumption or pernit any inference of guilt.

They are nothing more than the forma! method of ac-

cusin.. the defendant o* the charges against him and

advising him of the particularities of those charges.

‘Fn.190 continued)

18a

the indictment and the bill of particulars were not evidence.

Moreover we do not believe that the bill of particulars amounted

to a prejudicially unfair advantage for the prosecution. The

trial exhibits were grouped in numbers correlating to the numbered

counts of the indictment and the numbered exhibits, together with the

related testimony, presented the essence of the Government's proof

in an organized pattern. And, as we have said, we feel the in-

dictment itself had adequately set forth the essential facts and

the nature of the offenses charged.

While we conclude that the rule should be against giving

the bill of particulars to a trial jury over a defense objection,

We cannot agree that prejudicial error occurred here.

(Fn. 10 continued) :

Later the court instructed in part (Id. at 1286):

Now the exhibits, together with a copy of the

indictment and a copy of the bill of particulars,

will be furnished to you in the jury room.

The exhibits are there for your use, and let me

again remind you that the indictment and bill of par-

ticulars are not evidence. They are merely the written

charges against the defendant together with certain

specifics about the charges.

that it

l

Ԥ 408.

s7atute;

with me

19a

II!l

The objection to prosecution

under 18 USCA § 1001 instead

of under 42 USCA § 408

Defendant attacks the indictment on the further ground

-roceeds under 18 USCA § 1001 instead of under 42 USCA

The argument is that § 408 is a later, more specific

dicare claims; that the statutes are in conflict as to

§ 1001

ll

The relevant statutory provisions appear in 18 USCA

and 42 USCA § 408(b) and (c), which provide in turn:

§ 1001. Statements or entries generally

Whoever, in any matter within the jurisdiction of

any department or agency of the United States know-

ingly and willfully falsifies, conceals or makes any

false, fictitious or fraudulent statements or repre-

sentations, or makes or uses any false writing or

document knowing the same to contain any false, fic-

titious or fraudulent statement or entry, shall be

fined not more than $10,900 or imprisoned not more

than five years, or both. June 25, 1948, c. 645, 62 Stat.749.

x“ * &

§ 408. Penalties

Whoever—

kk *

(b) makes or causes to be made any false statement

or representation of a material fact in any applica-

tion for any payment or for a disability determination

under this subchapter; or

(c) at any time makes or causes to be made any false

statemen' or renresentation of a material fact for use

in determining rights to payment uncer this subchapter;

ek *

shall be guilty of a misdemeanor and upon conviction

thereof shall be fined not more than $1,000 or im-

prisoned for not more than one year, or both.

that it deals directly with false statements in connection

20a

penalties and a § 408 violation is expressly termed a misde-

meanor only; and that the more lenient statute should apply for

all these reasons under settled rules of construction.

We must disagree. It is true that in construing penal

Statutes, it is the rule that later enactments repeal former

ones practically covering the same acts but fixing a lesser penal-

ty. United States v. Yuginovich, 256 U.S. 450, 463. And there are

acts directly involved here — false written statements for medi- |

care payment — that come under both penal statutes, although

§ 1001 is broader and deals with one who conceals or covers up

by trick, scheme, or device a material fact as is also alleged

in the indictment. See Cohen v. United States, 201 F.2d 386,

393 (9th Cir.). Section 408 is part of a misdemeanor statute

with penalties and consequences significantly less hash than

those under the older felony statute with its more general

provisions.

We feel nevertheless that the statutory provisions reveal

no intent that 18 USCA § 1001 was barred from application here

by the enactment of 42 USCA § 408. There is no indication of

an intent to make the later act a substitute for any part of the

earlier statute. United States v. Gilliland, 312 U.S. 86, 96;

see Posadas v. National City Bank, 296 U. S. 497, 503. There

is no controlling significance in the difference in the penalities

2la

and no repugnancy in subject matter of the two statutes. Gilliland,

supra at 95. And there is no straightforward or direct rejection

of the prior statute. See Friends of the Earth v. Armstrong,

485 F.2d 1, 9 (10th Cir., en banc), cert. denied, 414 U.S. 1171

(1974).

We are persuaded to follow the holdings in United States

v. Chavmakis, 449 F.2d 315, 316 (5th Cir.), and United States v.

Matanky, 346 F.Supp. 116(C.D.Cal.), aff'd,482 F.2d 1319 (9th Cir.),

cert. denied, 414 U.S.1039 (1973), and conclude that prosecution

under 18 USCA § 1001 was not improper.

IV

The Fifth Amendment self-incrimination

objection to admission of exhibits from

defendant's clinic

Defendant contends that error occurred in denial of the

motion to suppress records subpoenaed by the first grand jury

from the South Denver Clinic where defendant practiced. He

says they were his personal records of treatment of patients;

that the existence of the professional corporation, of which

he was president and sole inteiiten” at the time of the al-

leged offenses, makes inapplicable the rule that corporate

records are not protected by the Fifth Amendment privilege

against self-incrimination; and that the court erred in not

ordering return of the records to defendant or the South Denver

Clinic.

An original and a renewed motion to suppress were heard

and denied by the trial court. Our record contains the argument

on the renewed motion, raising in essence the points outlined

above and brief statements on the motion for return of the records

(Tr. Vol. I, 10-21). It also contains the rulings denying the

motions (Id. at 20-21). While we have no evidentiary record

12

At trial the defendant testified that he and his wife

were the only stockholders of the corporation and that he was

i president (Tr. XIII, 928).

5

ee a on

23a

concerning the motions as such, the facts which we feel dis-

positive are shown by the trial record.

The South Denver Clinic was organized in 1969 as a pro-

fessional corporation under Colorado law. See C.P.S. 1973,

12-36-134. The defendant testified at trial that he was presi-

dent and that he and his wife were the only stockholders in 1970

and 1971. There were two doctors, the defendant and Dr. Griffin,

and three regular clinic employees. The defendant said the

patients were considered those of the individual doctors; however,

when asked about money received from patients Dr. Griffin brought

in, or medicare payments on their behalf, defendant said it went

to the clinic (Tr. Vol. XIII, 928-32). The statements to the

patients were on forms showing "South Denver Clinic,” and also

the names of the two doctors. Of the few checks in evidence,

some were payable to defendant and some to the Clinic, but all

were deposited to the credit of the Clinic.

The record exhibits in question consist of the yellow

patients’ charts; blue slips showing the test or service rendered,

and the charge for it; punched business machine accounting cards

showing dates of visits by patients, the doctor, the service,

charges and credits; and the day sheets on all patients patron-

izing the clinic, showing their names and charges to them.

The defendant said that the records, "the yellow charts

and so on. were the property of the corporation, but were

13

under his custody and control. The defendant described the

yellow sheets as a nurse's record, not a doctor's record.

We cannot agree that any error by the trial court is

demonstrated. The professional corporation was organized as an

independent institutional entity for the continuing conduct of

the medical practice of the clinic. Bellis v. United States,

417 U.S. 85, 95-97. The records were not treated as being held

by the doctors individually but were held in a representative

capacity for the clinic. Id. at 97; Matter of Berry, 521 F.2d

179, 183 (10th Cir.), cert. denied, 44 U.S.L.W. 3264 (11/4/75).

They were not possessed as private property which the Fifth

14

Amendment protects. Matter of Berry, supra at 183.

13

The "yellow charts" are the patients’ records showing

diagnosis, treatment, dates of visits and findings, and list-

ing medications tor the patients covered by the 41 substantive

counts. They were attached as exhibits with the requests for

ayments and other exhibits in groups correlating to each patient

4 5

covered by the substantive counts

14

The confidentiality arising out of the doctor-patient

relationshi» is relied on bv the defendant. He refers to the

provision in the professional corporation statute that it shall

not be deemed to modify the phvsician-parient privilege. See

c..8. 973, Lé<36-i34 (3) However, the Government points out

that the medicare patien’'s made a waiver on the request for pay-

ment forms. This is 4 broad waiver to the Socia! Security Ad-

ministration or its intermediaries or carriers for the furnish-

ing, of information .bout the patient. Under State law the

patient could waive this privilege. Kelly v. Holmes, 470 P.2d

590, 592 (Colo. Ct. App.)

ee

aut eee

25a

Moreover, the argument as to return of the documents is unten-

able since making available copies of the documents was accepted

as sufficient, and the originals were properly subject to re-

tention for trial, which was the intent of the court's order.

See Application of Bendix Aviation Corp., 58 F.Supp. 953, 954

(S.D.N.Y.) (Tr. Vol. XIX, 57).

26a

Vv

The denial of pretrial access

to grand jury transcripts

Defendant contends there was error by the trial court in

denying motions to inspect grand jury testimony of Government

witnesses before trial; that the Jencks Act as amended in 1970,

18 USCA §3500, does not bar pretrial discovery of such testimony;

that under the test of balancing the interests in protecting the

grand jury testimony, or under the test of a showing of a par-

ticularized need, he met the requirements for being furnished

such aids; and that his need was increased because of an impro-

per admonition of secrecy to witnesses by Government counsel

at the grand jury proceeding in violation of Rule 6(e), F.R.

Crim.P.

15

The admonition by Government counsel to Dr. Griffin, a

principal Grovernment witness, was as follows (Supp. Vol.III,8®%):

{GOVERNMENT COUNSEL] At this time, Dr. Griffin,

it is my duty to advise you that the Grand Jury pro-

ceedings are confidential by court order. That the

fact that vou have been here, the questions which were

asked, and the answers which were given are not to be

discussed with anyone, and if you feel the need to do so,

you should first seek the permission of U.S. District

Judge through your attorney, Mr. Creamer.

THE WITNESS: I understand that, sir.

[GOVERNMENT COUNSEL] The matters remain confiden-

tial, and I would ask at this time, Mr. Foreman, that

the witness be instructed that his subpoena continues

in effect, and he is to revort back to the Grand Jury

in March at the date notified by the United States

Attorney.

ee

27a

We must agree the admonition to the witness is contrary

to the provisions of Rule 6(e) that "[n]Jo obligation of secrecy

may be imposed upon any person except in accordance with this rule.”

16

No provision in the rule applied to support the admonition.

See In re Langswager, 392 F.Supp. 783, 788 (N.D.I11.). However,

we agree with the Government that no prejudice was shown in con-

nection with the admonition or the trial court's denial of the

transcripts.

Defendant argues that key Government witnesses flatly

refused to discuss any aspect of their grand jury testimony

with defendant's attorney. We are referred to testimony of Dr.

Griffin in which he admitted refusing to talk to a representative

from defense counsel's office and that he, Griffin, was not

willing to talk about the case (Tr. Vol. XII, 769-70). Dr.

Griffin was a key Government witness and did give damaging testi-

mony against defendant. And we assume it would have been desir-

able and advantageous that defendant know the details of what was

to come in advance. Nevertheless, the transcript of his grand

jury testimony was made available to defense «counsel before Dr.

Griffin commenced his direct testimony. It was available during

16

The Government advises us by its brief that the practice

of giving such admonitions to witnesses has since been discon-

tinued in the District of Colorado (Brief of Appellee, 53).

28a

direct testimony and a noon recess which intervened before

cross-examination.

No reference is made to any specific prejudice to defen-

dant from not having the transcripts earlier. Regardless of

whether the Jencks Act provisions or the particularized need

standard applies, see United States v. Quintana, 457 F.2d 874,

878 (10th Cir.), cert. denied, 409 U.S. 877; United States v.

Tager, 481 F.2d 97, 100 (lOth Cir.), cert. denied, 415 U.S. 914

(1974), we = satisfied that any error was harmless and not

prejudicial. . Defendant's position remains in effect a general

claim that it was error to deny him the transcripts because they

were needed for the defense, and this is not enough. United

States v. Addington, 471 F.2d 560, 569 (1lOth Cir.).

17

Under the particularized need standard it has been indi-

cated that Government inspired silence might premise a showing of

need for a transcript, see United States v. Mitchell, 372 F.Supp.

1239, 1258 (D.D.C.), but we need not decide the question since we

feel there was no prejudice to defendant.

29a

VI

The pretrial publicity and denial

of challenges to jurors

Defendant urges reversal on the ground of pretrial pub-

ltcity and the denial of challenges for cause to jurors. He

Says that there were several unfavorable articles about him in

the Denver papers, and prejudicial television coverage; that

misleading stories in the media were caused by statements of

Government counsel; that five potential jurors replied they

had read one or more articles concerning defendant, and that

challenges for cause were erroneously denied.

There was considerable unfavorable publicity concerning

defendant, and several jurors had read some of the articles.

Nevertheless, the exposure of jurors to pretrial publicity does

not compel their disqualification. Beck v. Washington, 369 U.S.

541, 557; Welch v. United States, 371 F.2d 287, 292 (10th Cir.),

cert. denied, 385 U.S. 957. Im United States v. Smaldone, 485

U.S. 1333, 1346 (10th Cir.), cert. denied, 416 U.S. 936 (1974),

the remedial step taken was to excuse all jurors who had know-

ledge of the publicity, but that remedy is not mandatory. Here

the trial judge carefully questioned all potential jurors con-

cerning their state of mind. He asked additional questions of .

those who acknowledged they had read or heard the pretrial

30a 31la

VII

; Claims of error in the exclusion

and admission of evidence

publicity, and ascertained whether they could serve as fair

and impartial jurors, havi F |

j » Raving read the material (E.g., Tr. Vol. | First, defendant claims error in rejection of offers of

III, 9-10, 27).

proof from several patients who would have testified that de-

fendant on numerous occasions did not bill or charge them for

We are satisfied the procedure met the standards for a

his services. The offer covered patients able to pay and others

fair trial. See Beck v. Washington, supra at 557; Irwin v. .

. unable to pay. It was argued to the trial judge that such evi-

Dowd, 366 U.S. 717, 723; Welch v. United States, supra at 292. si ; —

d : os ‘ dence was relevant and admissible to show a lack of motive by

And we cannot say the pretrial publicity was so intensive or

defendant to commit the offenses; that it was to meet Govern-

that examination of the entire panel revealed such prejudice

; ment proof that defendant's actions were caused by pressure he

that a court could not believe the jurors’ answers and would be

felt with respect to overhead and salaries, and that he had to

compelled to find bias or preformed opinions as a matter of law.

Beck v. Washington, supra at 557. get the money to pay overhead and expenses (Tr. Vol. XIV, 986-85).

The court considered the generalized offer of proof and

rejected it on the ground that it was irrelevant and that there

would be no limit to the evidence that could be produced, if

such testimony were admitted We cannot say there was an abuse

of discretion in the ruling on relevance and reasonable limits

on proof. See United States v. Twilligear, 460 F.2d 79, 81

(lOth Cir.). Insofar as the offer went to proof of defendant's

character, we note that five character witnesses were allowed

by the court, and no abuse on this score is shown

Second, defendant claims error in exclusion of proof

which would suygest that the defendant was a victim of discrimi-

natory prosecution because of his earlier association with the

Dita Beard Conyressional investigation controversy. The proof

32a 33a

offered was testimony by defendant relating his role in the

Congressional investigation, where he offered his professional | VIII

opinion that Mrs. Beard was not able to appear before any com- ioee ;

The materiality issue

mittee, and that within days after public announcement of his

opinion, his case was referred for prosecution. Defendant fur- At trial and on appeal one of the defendant's main

ther offered to prove that the seme thing happened to other arguments is that the issue of materiality of the alleged mis-

Cecters treating fire. Seard whe expressed the same opinion of representations on the requests for pavment should not have

her inability to testify (Tr. Vol. XIII, 890-93). : been submitted to the jury; that as to some 25 counts, part

or all of the items of alleged misrep:r«sentation were related

The trial court sustained a Government objection to the

'o several drugs which the proof clear +» showed to be noncompens-

offer, without stating reasons for the ruling. Without decid- y

i able under established guidelines used by the medicare payment

ing whether such proof might be grounds for challenging criminal

: agency in Denver (Colorado Blue Cross-Blue Shield); that since

proceedings, see United States v. Falk, 479 F.2d 616, 619-622

i the statements related only to such non-compensable drugs,

(7th Cir.), we sustain the ruling due to the remoteness and in-

; they were incapable of inducing payments and were not material

substantial nature of the offer of proof against the presumption

; : as a matter of law. Thus, it is argued’. the convictions on

of good faith in the prosecution, id. at 620, and the impro-

i these counts cannot stand.

priety of the offer of such proof, which should have been made

as a pretrial motion, rather than during the jury trial of the The governing principles are clear. Materiality of the

Genera® teow. Sule 1200), F.8.Ceim.?.; sae United Staves v. alleged misstatements is an essential element of offenses defined

en aa ae Noe See ee by 18 USCA § 1001. Gonzales v. United States, 286 F.2d 118, 120

(10th Cir.), cert. denied, 365 U.S. 878 (1961). The indictment

Third, defendant says there was error in the admissions

here alleged that defendant's concealments, false statements and

of medicare bulletins, Plaintiff's Exhibits 45A, 45B and 45C. ;

the like were of "material facts." The trial court recognized

We find no error or abuse of discretion in “heir admission in

materiality as an essential element of the offenses and so charged

view of the testimony by Dr. Griffin concerning defendants’ ;

the jury. There must be sufficient Government proof under the

handling of medicare bulletins generally at the clinic (Tr. Vol.

ndard applied in criminal cases that the alleged misstatement

XIV, 687-89). sta Ppp

was material. See Poulos v. United States, 387 F.2d 4. 6 (10th Cir.).

34a

eet en

The application of these principles to a statement request-

ing payment from the Government has been made clear in Bartlett and

Company Grain v. United States, 353 F.2d 338(10th Cir.). That prose-

cution under 15 USCA § 714m was for making a false statement to in-

fluence action of the Commodity Credit Corporation. A statement

that grain was unloaded at a Kansas warehouse was false. However,

under documents governing authority for payment of the allowance

sought, the court determined no payment was authorized unless grain

was delivered "in store": paymert was not authorized if delivery

was only "F.0.B. bin site." The Government proof was held to be

clearly of the latter type of transaction, according to the record

exhibits. And since payment was unauthorized if the grain had been

unloaded in accordance with the representations in “he statement,

the misstatement proved was incapable of inducing payment by the

l7a

CCC, and was therefore immaterial. Id. at 343.

It is this proposition that defendant relies on. He

Says the proof showed that the medicare payment agency guide-

lines excluded payment for the drugs involved in the 25 counts,

17a

The statute involved in Bartlett concerned a false

Statement made “for the purpose of influencing in any way the

action of [the CCC] or for purposes of obtaining for himself on

another money on anvthing of value..." This is parallel to the

test which applies under 18 USCA § 1001 on materiality — that

the statement F -has a natural tendency to influence, or was

capable of influencing, the decision of the tribunal... ." Gonzales

v. United States, supra, 286 F.2d at 122. This was the test

stated in the trial court's charge (Tr. Vol. XVII, 1277).

6 Oe ante a erat mat Toes

35a

-

in the circumstances shown. And since payment was not author-

ized, any misstatement cou'd not induce payment and was immaterial

as a matter of law.

We must agree with the substance of defendant's position.

The facts about the 25 counts involved are not simple, but they

may be summarized for our purposes.

Mr. Wells, an Assistant Vice President of Colorado Blue

Cross-Blue Shield, testified for ‘!« Government. At the time in

question he was Director of the Kenefit Review Division (BRD)

and it put out information on the compensability of drugs

under medicare’ (Tr. Vol. V, 131, et seq.). The BRD prepared a

manual which followed the provisions of the medicare statute

19

and regulations on compensabilit.. This written manual which

18

The determination of compensability for a particular

drug under Medicare is no simple matter. The detailed statutory

scheme for Medicare, 42 USCA § 1395 et seq., provides generally

for compensation for drugs if the drugs are listed in any of five

standard pharmaceutical compendia, or are specifically approved

for use bv a committee of hospital medical staff furnishing such

drugs. 42 USCA § 1395x(t). The statute excludes from coverage,

however, drugs which can be self-administered. 42 USCA § 1395x(s)

(2) (a) and (b). Federal regulations promulgated by the Social

Security Administration exclude from coverace drugs used in im-

munization, where the drug is used for vaccination or innoculation

not directly related to the treatment of an injury, 20 C.F.R.

§ 405.310(e), and also exclude drugs which are not reasonable and

necessary for the diagnosis or treatment of illness or injury,

20 C.F.R. § 405.310(k).

19 .

Mr. Wells testified that the statutes and regulations

establish four basic criteria determining compensability (Tr. Vol.V,

132-135). Basically, the criteria require: (a) the drug must be

listed in one of five standard drug compendia; (b) the drug must

be incapable of self-administration; (c) the drug may not be

given as an immunization: and (d) the drug must be reasonable and

necessary for the diagnosis and treatment of the patient's illness.

(Fn. 19 continued to next page)

36a

was furnished to the processing division was introduced in

evidence, Plaintiff's Exhibit 61.

The manual lists several hundred drugs. The notation

20

"NB" was described by Mr. Wells as indicating "no benefit."

Defendant points out several drugs involved here carried the

"no benefit" designation — Liparin, Thiosol, and Ethaverine

(Spasmol), and we note Guiadin also. Claims relating to these

21

drugs were involved in 12 counts. When the motion for a

directed verdict on this basis was made, the Government argued

(Fn. 19 continued):

Since medicare claims are processed not by doctors, but

by laymen, Colorado Blue Cross-Blue Shield prepared a manual

and a list of injectable drugs to aid clerks in the processing

division (Tr.Vol.V,132-135).This list of injectable drugs,

‘Plaintiff's Exhibit 61, reduces criteria (a) and (‘b) to a

checklist procedure. Also included in this manual are occa-

sional cross references to drug guidelines which are attached

to the drug list and which give some indication as to whether

criteria (c) and (d) are satisfied in the administration of

certain drugs.

20

Mr. Wells testified that drugs bearing the "NB" no-

tation were not listed in the five compendia referred to by

the statute and said they were not covered under any circum-

Stance. He stated: "No, they are specifically excluded

from coverage."" (Tr. Vol. XII, 781) (emphasis added).

21

These twelve counts are counts 12, 13, 14, 22, 23, 24

25, 26, 30, 35, 38 and 4O.

ee ee eee

37a

that other misstatements existed on the requests for payments,

along with these items, and that since other items could sup-

port a conviction on the counts, the motion should be denied.

The trial court agreed.

However, the presence of other material misstatements

concerning a count cannot sustain a conviction in these cir-

cumstances. In submitting the case the noncompensable drug

representations were not eliminated from the jury's consider-

ation. Now, in reviewing the convictions on those 12 counts

we cannot determine whether the jury may have relied on the

immaterial misstatements concerning noncompensable drugs, which

appear on the requests for pavment before the jury. If

in fact it was improper to consider any item of alleged misrepre-

sentation, and that item could have been the basis for a general

verdict of guilty on the count, the conviction cannot stand. See

United States v. Dota, 482 F.2d 1005-1006 (10th Cir.), cert. denied,

414 U.S. 1071(1973). Thus the convictions on these twelve counts

must be set aside.

The problem relating to Heparin is more involved. The

“Drug Listing" manual, Plaintiff's Exhibit 61, did not exclude it

from coverage. However, it placed strict conditions on compens-

22

ability. The conditions were ones that related in large part to

22

Unlike Liparin, Thiosol, Ethaverine and Guiadin, Heparin

and TBA (cortisone) are not designated "NB" in Plaintiff's Exhibit

tl. The notation "Heparin Guideline" appears opposite Heparin in

(Fn. 22 continued to next page)

38a

the diagnosis involved and the reasonableness of the use of the

dru in the circumstances. The difficulty is that the requests

for payment did rt show diagnoses coming within the conditions

for payment for Hevarin. The Government proof on these counts

(Fn. 2.2 continued):

Plaintiff's Exhibit 61. The Heparin guideline appears at the back

of Plaintiff's Exhibit 61 and reads:

Exclude from coverage except for:

phlebicis;

impendins myocardial infaction with hos-

pitalization the same day;

embolisr-cerebral, pulmonary or peripheral

with hospitalization

None of these diagnoses appear on any request for payment listing

Heparin.

The defendant makes a similar argument with respect to TBA

(cortisone). The notation "Steroid Guidelines" appears opposite

TBA (cortisone) in Plaintiff's Exhibit 61. The Steroid guidelines

are more complex. They specify that steroids may be given for

certain diseases, includinz those appearing on the Reauest for

Payment pertaining to count 8. For the diseases listed on the re-

quest for payment, steroids may only be given for periods of 2-3

weeks, and there must be a one month interval between the periods.

Five TBA injections are listed on the request for payment,

Plaintiff's Exhibit 8-A. The injections are dated 2/9/71, 2/16/71,

2/19/71, 2/23/71 and 3/1/71. The defendant contends that the Medi-

care agent had no authority to pay for the TBA injections of 2/23/71

and 3/1/71, apparently viewine their dates as bevond the 2-3 week

period beginning with the 2/9/71 injection, and not meeting the re-

quired one month interval (See Appellant's Brief at 51, n.29). We

reject this argument. 8y our calendar, the period from 2/9/71

through 3/1/71 is less than three weeks. Therefore, all five in-

jections are compensable under the guidelines, the alleged false

Statements are material under Bartlett, and the conviction on count

8 can stand.

39a

did not extend to showing any additional statements or diagnoses

furnished by defendant, which would result in the compensability

of claims for Heparin. Without more, the mere statement of a

claim for Heparin was not capable of inducing payment, as required

for materiality by Bartlett and Company Grain v. United States,

supra, 353 F.2d at 343.

The proof must be analyzed to see that there is suffi-

cient evidence that the alleged misstatement was material.

E.g., Poulos v. United States, 387 F.2d 6, 6 (10th Cir.). In

reviewing the guilty verdicts we must determine, viewing the

proof in the light most favorable to the Government, whether

there is sufficient substantial proof, direct or circumstantial,

together with reasonable inferences therefrom, from which a

jury migt find the Jefendant guilty beyond a reasonable doubt.

United States v. Twilligear, 460 F.2d 79, 81-82 (10th Cir.). And

Gonzales v. United States, supra, 286 F.2d 118, 120, makes it clear

that materiality ". . . is an essential element of the offenses

defined in Section 1001." In view of this requirement, and the

state of the record, we must hold the proof was not sufficient to

sustain the criminal convictions on these additional counts.

2

"We are mindful of the fact that actual loss’to the Govern-

ment need not be shown. See United States v. Godel, 361 F.2d 21,24

(4th Cir.), cert. denied, 385 U.S. 838 (1966). But the Bartlett re-

quirement is clear on materiality and we must hold that here it was

not sufficiently met to go to the jury as to the counts discussed

in this Part VIII of the opinion.

24

These additional counts are counts 9, 10, 16, 17, 18, 19,

27, 29, 31, 32, 33, 34, 39 and 41.

40a 4la

Accordingly the judgment is affirmed t

gm e on oe the six APPENDIX

counts not involving the issue of materiality; as to the

a. The Indictment

remaining 2% counts,the judgment is set aside, and the case

is remanded for dismissal of the indictment as to said In part the indictment states:

counts.

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

{ UNITED STATES OF AMERICA,

CRIMINAL CASE NO. 73-C8-415

False Medicare Claims,

18 U.S.C. 1901 and 2;

)

)

Plaintiff, )

)

)

) Conspiracy to Defraud the

)

)

)

)

)

Vv.

LOUTS MARTIN RADETSKY, United States, 18 U.S.C. 371

aka L. M. Radetsky,

MARIE STANDEFER,

Defendants.

: COUNTS 1 THROUGH 41

kk &

The Grand Jury charges:

D. That on or about the dates hereinbelow set

forth, in the State and District of Colo., in a matter within

the jurisdiction of said Administration, LOUIS MARTIN RADETSKY,

aka L. M. Radetsky and MARIE STANDEFER, did unlawfully, know-

25 |

These counts are: 7, 8, 11, 15, 28 and 36. ingly and wilfully conceal and cover up by trick, scheme,

26 | and device material facts, and make and cause to be made

99 93 P ae ogente are: 9, 16, 12, 13, 14, 16, 17, 18, 19 false statements and representations of material facts, all

» £7, €%, £9, £0, rep 29, . 4 . : :

and 4l. 30, 31, 32, 33, 34, 35, 38, 39, 40 : for the purpose of causing payments to be made under the

The defend : provisions of Title XVIII of said Act, in that RADETSKY and

e defendant challenged only 25 counts We find n i ; i i

: . . 4 © ”. oO ' - 4 ’ mie ;

merit in his challenge to count 28. Altough the defendant did STANDEFER did submit and cause to be submitted to Colorado

not specifically challenge counts 16 and -7 as containing im- a EE

material false statements, we find their position on the material- ;

ity problem indistinguishable as to the "charges" allegations 1 a/ The indictment refers to one Marie Standefer

of those counts, and we therefore reverse counts 16 and 17. 4 and one Richard E. Griffin, no charges being made against

Griffin. The trial of defendant Radetsky was severed from

that of Standefer, pursuant to a motion by the government.

Medical Service, Inc., aka Colorado Blue Shield, docu-

ments designated as Form SSA-1490, otherwise known as

Request for Medicare Payment--Medical Insurance Benefits--

Social Security Act (hereinafter in this indictment referred

to as Request for Payment), to secure payment under Part B

of Title XVIII of said Act, for medical services allegedly

rencered in Colorado to the patients and for the veriods

of time stated hereinbelow, which Requests for Payment pur-

Port to show the date of each service, fully describe the

medical services rendered for each date given, the charges,

and the amount paid by the patients against such charges,

WHEREAS, in truth and in fact, as RADETSKY and STANDEFLR

then knew, (1) the patients actually received medical ser-

vices less frequently than stated on the Requests for Pay-

ment (dates in parenthesis hereinbelow indicate those when

the patient did not receive any medical service), (2) the

Requests for Payment did not fuliy, trulv and accurately

describe the medical Procedures and services for each date

given as required (indicated hereinbelow by the word "ser-

vices"), (3) the Requests for Payment did not disclose that

the amounts shown as charges for services were at a hicher

rate and more than the customary charges of South Denver

Clinic, Inc. to either medicare or non-medicare patients

for the same service (indicated hereinbelow by the word

“charges"), and (4) the amounts shown on the Requests for

Payment as a!readv paid by the patients against such charges

were inflated (indicated hereinbelow by the words

pai a” :

“amount

-_

= Bt nt

Se ee

43a

DATE ‘TIME NAME

COUNT OF COVERED BY OF

CLAIM CLAIM PATIENT MATERIAL FACTS

* * &

7 6-23-71 4-10-71 CHARLES H. House call on April (19);

to BRADY charges

6-22-71

8 4-28-71 2-9-7) GLADYS Office call and treatment

to JOHNSON on Feb. (9); charges

3-1-71

9 §-27-7° 1-9-70 PEAPL H. Services, charges.

to FOLTc

5-15-79

10 3-3-71 9~-i1-79 PTAML H. Office calls and treatment

to FOLTZ on Sep. (18), Mt. (2);

12-31-70 services, charges.

eB 7-21-71 1-15-71 PEARL H.

to FOLTZ Services, charges.

. 7-2-71

12 5-27-70 1-9. 79 EVA C Services, charges.

t< FISHFR

»~ 15-70

13 3-3-71 9-4-70 FVA C Office call and treatment

to FISHER on Sep. (11); services,

12-23-70 charges.

14 7-14-71 1-§-71 EVA C Services, charges.

to FISHER

6-25-71

15 5-25-70 1-2-70 CAR? £. Services, charges.

to QAHLOUTS7

5-1-70

16 9-1-7060 5-2. -70 CAR. £ Services, charves.

to DAHLOUIST

8-21-70

17 1-20-71 8-28-7 CARL FEF. Services, charges.

to DAKLQUIST

12-18-70

18

19

21

23

24

25

26

27

28

29

30

7-14-71

12-8-71

6-29-71

12-1-71

4-15-70

5-27-70

8-19-70

7-14-71

6-17-70

9-30-70

1-8-71

to

6-21-71

7-9-71

to

11-26-71

1-7-71

to

6-25-71

7-2-71

to

11-18-71

2-12-70

to

3-26-70

4-2-70

to

5-15-70

5-22-70

to

8-14-70

8-21-79

to

12-31-70

1-15-71

to

6-25-71

7-9-71

to

11-19-71

1-2-70

to

5-25-70

6-18-70

to

9-10-70

1-21-71

to

6-3-71

44a

CARL E.

DAHLQUIST

CARL E.

DAHLQUIST

HENRY M.

BOOK

HENRY M

BOOK

CHARLES W

CLARK

CHARLES W

CLARK

CHARLES W

CLARK

CHARLES

CLARK

CHARLES

CLARK

CHARLES |

CLARK

ALEDA

SMITH

—

ALEDA J.

SMITH

ALEDA J

SMITH

Services,

Services,

Services,

Services,

Services,

Services,

Services,

Services,

Services

Services,

Charges,

Services,

paid.

Services,

ped.

charges.

charges.

charges.

charges.

charges.

charges.

charges

charges.

charges.

charges.

charges,

charges,

amount paid.

amounts

amount

Ft a a oe

nani

31

32

33

34

35

36

37

38

39

40

41

6-17-70

10-7-70

5-27-70

8-19-70

5-12-71

6-3-70

11-4-70

4-28-71

8-27-71

6-17-70

6-23-71

1-9-70

to

5-23-70

6-18-70

to

9-29-70

1-2-70

to

4-29-70

5-1-70

to

8-7-70

1-7-71

to

4-15-71

1-19-70

to

5-25-70

9-4-70

to

10-30-70

1-4-71

to

4-12-71

4-26-71

to

8-13-71

1-8-70

to

6-16-70

1-7-71

to

6-10-71

45a

PHILLIP

SOLOWAY

PHILLIP

SOLOWAY

ESTHER D.

BREYMAIER

ESTHER D.

BREYMAIER

ELEANOR

JOHNSON

DORA

GLEN}

CLARENCE

HEFLIN

LILIAN M.

HUBBARD

LILIAN M.

HUBBARD

GEORGE A.

WHEELER

GEORGE A.

WHEELER

Services, charges,

amount paid.

Services, charges,

amount paid.

Services, charges,

amount paid.

Services, charges,

amount paid.

Services, charges.

Charges.

Charges.

Office call and treatment

on Jan. (25); charges.

Charges.

Services, charges.

Charges.

ALL OF THE FOREGOING COUNTS 1 THROUGH 41 in violation of Sections

1001 and 2, Title 18, United States Code.

COUNT 42

The Grand Jury further charges:

A. The contents of paragraphs A, B, and C, of Counts l

through 41, supra, are hereby incorporated herein by reference.

* *« *

F. It was further a part of the conspiracy that in

those instances where the charge on the Request for Payment

was at a higher rate than the customary charge to the patient

for the same service the addition would be of small amounts,

e.g., $1.00 or $2.00 per service; that the concealmerit and

cover-up of material facts as well as affirmative false

statements and representations of material facts, as described

in paragraph C, supra, would be interspersed with legitimate

services rendered; all in an attempt to avoid detection.

ee Saree ae

Wied eer 5

NAR Rat Nite He tid Due shan

en eee

47a

b. The bill of particulars

The bill of particulars stated in part:

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

UNITED STATES OF AMERICA,

Plaintiff,

CRIMINAL CASE NO. 73-CR-415

LOUIS “ARTIN RADETSKY,

aka L. M. Radetsi

MARIE STANDEFER,

Defendants.

BILL OF PARTICULARS

ee eee

The United States, by Richard J. Spelts, Assistant United

States Attorney, submits this Bill of Particulars in accordance with

the Court order of December 21, 1973 Information is supplied in

two parts: I--Counts ! through 41, and II--Count 42

L.--COUNTS 1 THROUGH 41

Listed below for each count are the material facts which

the defendants did unlawfully, knowingly and wilfully conceal and

cover up by tricr cheme, and device, and make and cause to be

made as false statements and representations. Drugs listed were in

cont : , a ee 2 Cl os } ver

the form of an injection unless otherwise specified South Denve

Clinic, P. C., is referred

to herein as the Clinic

7-3-70

7-10-70

7-17-70

7-24-70

7-31-70

8-7-70

48a

COUNT 34 (Breymaier)

(A) Services:

Per Request for Payment

Per Clinic Records and/or Patient

Heparin and Mercuhydrin

(B) Charges:

Per Request for Payment

14 Office calls at $6 each;

Injections (14 times) at $2

each tine.

(C) Amount Paid:

Heparin and B-12

Per Clinic Records and/or Patient

Office calls including injection:

6 at $6 each until 5-19-70, then

8 at $7 each.

The request for payment, box 10 "Amount Paid," claims the patient

nad already paid $112, whereas the paitent paid less than this amount.

xk

COUNT 36 (Clem)

(A) Charges :

Per Request for Pavment

5 office calls at $6 each:

Injections (5 times) ar 5?

each time; all wumril 2-2-70.

Per Clinic Records and/or Patient

5 office calls includinp injection

at $6 each until 2-2-70, thereafter

$8 each as claimed on Request for

Payment .

oe Pek ae ie. PONT oe aA ctw 0 SB ee air Oe ae cle

ee eee St

Concerning count 34 (Breymaier).

49a

c. The requests for payment

Itemization of Account:

5-1-70

5-S=70

5-15-70

5-22-70

6-S=70

6-12-70

6-19-70

626-70

7-3=70

7-10-70

7-17-70

7-24-70

7-31-70

8=7=70

Orfico

100 mg,

Office

100 mg

Orfice

100

Orfice

100 mg

0,fico

100 mg

Office

100 mg

Office

100 m

0,fice

180 mg,

Office

100 mg

Office

100 me

Orfice

10C mg

Or-fice

100 mg

Office

100 mg

Office

100 mg

Call & Examination

Heparin & lec Mercuhydrin

Coll & sxamination

Heparin & lcc M,rcuhydrin

Call & Examination

me Heparin & lec Marcuhydrin

Cali & Examination

Heparin & lec Mercuhydrin

Cld1& Sxamination

Heparin & lec Morcubydrin

Call & Examination

Heparin & lec M,rcuhydrin

Call & Examination

Heparin & lec Mercuhydrin

Call & Examination

Heparin & lec Mercuhydrin

Call & Examination

Heparin & lec Mercuhydrin

Cail & Examination

Heparin & lec Mercuhydrin

Call & Examination

Heparin & lec Mercuhydrin

Call & Examination

Heparin & lec M,rcuhgdrin

Call & Examination

Heoarin & lec Mercuhydrin

Cell & Examination

Heparin & lec Mercuhydrin

Total charges from 4-29-70 thru

Paid on Account

Balance due

Plaintiff's Exhibit 24-A-1,

the request for payment, read in part as follows:

injections

injections

injections

injections

injections

injections

injections

injections

Lajections

injections

injections

injections

injections

injections

8-7-70

112.00

112.00

-0-

request for payment, read in part as follows:

50a

Concerning count 36 (Glenn), Plaintiff's Exhibit 36-A, the

Itemizaticr cf Account:

1-19-76

1-22-70

1-24-79

1-26-70

2-2-70

2-5-70

2-9-7

2-12-70

3-2-70

3-9-70

3-16-75

3-23-70

3-39-79

1, -6=70

L-13-70

cefice cali = oxamir.eticon

Thicmerin cnjeeticn

Orfice 7all . oxexicctisa

~G,e7er!:: inleess =:.

we. fee call . cxamicatica

shionestis. inisetica

Oefice Call « uxamication

Taiomerir. injecticn

Sftac Sakl & sx:sni-s%ton

Zulomerir. injescicn

Sfice call « cxaninstion

Talomerin injecticn

Orfice call a ixerirztioa

shicnerin infcesion

Oefice cell & oxcrix3atcon

Chicrerir irjecticn

Opfics c2ll . sreniraticn

Tilomerin infeecsica

Opfice call 4: cxarination

Tniomerin injecczicn

Jefice call « sxanminaticon

Thioxerin injecticn

Orfice 221) « cramiration

Thiomerirc iniectica

Cefise call «= cxasivaticn

Thiomerin infection

O,°178 Saki . Feanmisetion

Jefice sell «= 2”375°38i52

Taiomeria injestica

efice o-ll « oxatitstion

talorerin i:-jecston

C,fses8 sali axariration

Teioneria injestio%

offices call s ix2~ivc.atic:

:

Triomeria injection

Sefice Sall = oxs7i-a%ion

Thiomerin injection

O-fices S-ll = itkertsatioa

Thionerin inji2zction

Total charges from 1-1-70 thru 5-25-70

Paid on Account

Balance due

27.60

132.40

Sla

NO. 74-1484, UNITED STATES OF AMERICA v. LOUIS MARTIN RADETSKY

LEWIS, Chief Judge, dissenting.

I dissent from Part II of my Brother Holloway's opinion

relating to the submission of the bill of particulars to the

jury and my Brother Barrett's views on that aspect of the case.

This case is by its very nature one of complexity but

with careful preparation and presentation that complexity need

not have resulted in complete confusion. I am fearful that

defendant was convicted on grounds other than proof beyond a

reasonable doubt. And, to me, we seem to be perpetuating that

confusion.

Recognizing that a bill of particulars is a self-serving

prosecutorial document and neither part of the indictment nor

evidence, the main opinion states that the prosecution gained

an advantage by submitting the document to the jury but the

defendant was not prejudiced by such untraditional procedure.

But the trial judge termed submission of the bill of particulars

as “almost a necessity if the jury is to return an intelligent

verdict." In turn, the prosecutor indicated that without sub-

mission of the bill of particulars the jury "may well convict

on one of the items listed on the request for payment which

hasn't even been challenged by the United States."

In sum, I dissent because I believe that a bill of par-

ticulars is inherently a self-serving document created by the

prosecution which should never be submitted to the jury absent

a formal rule and that in this case the prejudice to defendant

is glaringly apparent. I would grant a new trial on each count.

52a

No. 74-1484 - United States of America v. Louis Martin Radetsky

PARRETT, Circuit Judge, concurring in part and dissenting in part:

4

I agree that in this case no prejudice resulted to

Radetsky by reason of submission of the bill of particulars,

together with the indictment and exhibits, for purposes of aid

to the jury during its deliberations. I do not agree with the

view that "the submission of 4 bill of particulars to the trial

jury does give some advantage to the Government as a written

summary re-emphasizing the prosecution's case". Criminal fraud

cases such as this are most difficult to prepare and try. They

involve -- just as the record here reflects -- that many

laborious, tedious hours are required in order to uncover, unfold,

reason upon, plan and develop the proper presentation of a case

involving voluminous records and trensactions. One is impressed

that it seems possible that a defendant who creates a difficult,

complicated, jig-saw factual puzzle may in fact succeed in

aborting the basic purposes of the criminal justice System. The

bill of particulars in this case does not contain any prejudicial

or conclusory language. It is in fact analogous to summaries so

often prepared by the Trial Court of detailed evidence admitted

in complicated tax evasion cases [Oertle v. United States,

370 F.2d 719 (10th Cir. 1966); Sauseverino v. United States,

321 F.2d 714 (10th Cir. 1963)] or summaries prepared by a party

relating to voluminous documents or records. We have held that

such summaries are admissible if the supporting documents fas in

the instant case) are available. Boehm v. Fox, 473 F.2d kus

(10th Cir. 1973); Ryder Truck Rental, ‘uc. v. Naticnal Packing

Company, 3&0 F.?d 328 (10th Cir. 1067). Similarly, a master's

report involving an ac‘cunting repert and damage findings may

be tr-ated as an item ef evidence entitled te such we'ght as the

Jury may accord it. Charles A. Wright, Inc. v. ¥.D. Rich Co.,

354 F.2d 710 (end Cir. 195€), cert. aenied, 384 U.S. y60 ‘1966).

53a

Ee

I respectfully dissent from the reversal of Radetsky's

conviction on 26 of the counts. The criteria adopted by CMS for

payment and/or non-payment of the specific drugs in issue does

not, as the majority opinion states, make the issue of materiality

a matter of law on the predicate (which I deem incorrect from

the record) that the agency would not have tendered payments on

the respective Requests for Payment filed by Radetsky.

I am troubled with the question as to whether the rule

in Bartlett, relied upon in the majority opinion, applies here.

On its face, it would appear to control. I have concluded, howe-

ever, that the complexities of the problems involved in the

Medicare payment area do not permit the application of Bartlett.

There, the facts were simple and uncomplicated. The misstatement

was contrary to express language employed in the statute [15 U.S.C.A.

§714m) authorizing payment for delivery of grain only "in store"

whereas the application for payment stated that the grain was

delivered "F.O.B. bin site". No such simplicity exists in the

case at bar.

Reliance on the criteria ignores the expert testimony

of Mr. Wells, Vice-President of CMS at the time of trial, who had

25 years experience with Blue Shield. ife was thoroughly familiar

with ‘Medicare law. CMS serves as contract carrier to safeguard

the fiscal integrity of Medicare in Colorado. Under detailed

examination relative to the Radetsky claims for payments relating

to the 26 counts here at issue, Wells explained the various

alternatives of disclosed false versus concealed actual drugs in

relation to the manner these couJd influence the action of Medicare.

As the Government so succinctly points out in its brief summarizing

Well's testimony: "Two situations are clear. (1) If the disclosed

false [drug] is covered, but the concealed actual drug is not, it

54a

is material. (2) If the disclosed false drug is not covered,

and the concealed actual drug is not covered under any circum-

stances, the concealment would not be material." Wells explained

a different situation. If the concealed actual drug may be

covered, it would influence Medicare. Even if the disclosed false

drug were also covered, Medicare would deny the Request for

Payment for having concealed the other drug. If the disclosed

drug were covered, the concealment of another covered drug defeats

Medicare's ability to have meaningful utilization review and

measure the relation to diagnoses. (T. 787, 793). Even if the

disclosed false drug is not covered, the false statement is

material in defeating the Medicare program since a third party --

the patient -- is denied the benefit of the insurance on the

actual covered drug. [Brief of Appellee, United States of America,

Appendix A, Footnote 46, p. A-12]. It was precisely because of

the variety of possible falsities involved that the Trial Court

determined, and properly so, that the dispute with respect to

whether the Request forms (a) contained misstatements (an essential

element of the offense) and/or (b) contained material representa-

tions intended to influence Government agency (Medicare) action

must be left for jury deliberation and determination as a matter

of fact. In my judgment, this setting meets the requirements

of Gonzales v. United States, 286 F.2d 118 (10th Cir. 1969), cert.

denied, 365 U.S. 878 (1961), re-affirmed in United States v. Weiss,

431 F.2d 1402 (10th Cir. 1970) authorizing submission of the issuc

to the jury for its determination as a matter of fact under proper

instructions directing the jury that it must find that a particular

matter constitutes a material representation.

Significantly, of the three requested jury instructions

on the materiality issue submitted by the Court, two were those

prepared by counsel for Radetsky. They met the Gonzales, supra,

standards. Jn my judgment no prejudice resulted to Radetsky.

The jurors clearly understood the elements of the offenses charged

and that which they must find beyond 4 reasonable doubt before

returning verdicts of guilt.

55a

Failure by Radetsky to make full disclosure under the

circumstances did constitute a violation of the statute if -- in

the totality of the facts and circumstances reflected by this

record -- his intent to defraud the Government, through Medicare,

was established beyond a reasonable doubt. The jury so believed.

It matters not that no monetary loss or damage to the Government

resulted from certain of Radetsky's actions in submitting the false

claims. United States v. Godel, 361 F.2d 21 (4th Cir. 1966),

cert. denied, 385 U.S. 838 (1966). The important, critical point

is that a jury of Radetsky's peers found beyond a reasonable

doubt in each of the 26 counts that he submitted the Request

for Payment forms with a specific intent to defraud the United

States. Intent is ordinarily a fact question for the jury.

United States v. Acree, 466 F.2d 1114 (10th Cir. 1972), cert.

denied, 410 U.S. 913 (1973). I would affirm.

fe BRI Nn lt te Bl. Nie ch ee

ate

Ib

APPENDIX B

Constitutional Provision, Statutes, and Court Rule Cited

The pertinent text of the fifth amendment to the United

States Constitution ts as follows:

No person shall be held to answer for a capital,

Or otherwise infamous crime, unless On a presentment

or indictment of a Grand Jury, except in cases arising

in the land or naval forces, or in the Militia, when in

actual service in time of War or public danger: nor

shall any person be subject for the same offence to be

twice put in jeopardy of life or limb; nor shall be

compelled in any criminal case to be a witness against

himself, nor to be deprived of life, liberty, or prop-

erty, without due process of law; nor shall private

property be taken for public use, without just com-

pensation.

The pertinent text of the Colorado Medical Practice Act,

COLO. REV. STAT. ANN. 1973, 12-36-134 [formerly COLO.

REV. STAT. ANN. 1963, 91-3-37, as amended (Perm. Cum.

Supp. 1969)] is as follows:

(1) Persons licensed to practice medicine by the board

may form professional service corporations for the

practice of medicine under the Colorado corporation

code, if such corporations are organized and operated

in accordance with the provisions of this section. The

articles of incorporation of such corporations shall

contain provisions complying with the following re-

quirements:

(a) The name of the corporation shall contain the

words *‘professional company”’ or ** professional cor-

poration’ or abbreviations thereof.

(b) The corporation shall be organized solely for the

2b

purposes of conducting the practice of medicine only

through persons licensed by the board to practice

medicine in the state of Colorado.

(c) The corporation may exercise the powers and

privileges conferred upon corporations by the laws of

Colorado only in furtherance of and subject to its

corporate purpose.

(d) All shareholders of the corporation shall be

persons licensed by the board to practice medicine in

the state of Colorado, and who at all times own their

shares in their own right. They shall be individuals

who, except for illness, accident. time spent in the

armed services, on vacations, and on leaves of absence

not to exceed one year, are actively engaged in the

practice of medicine in the offices of the corporation.

(e) Provisions shall be made requiring any

shareholder who ceases to be or for any reason is

ineligible to be a shareholder to dispose of all his

shares forthwith, either to the corporation or to any

person having the qualifications described in para-

graph (d) of this subsection (1).

(f) The president shall be a shareholder and a direc-

tor and, to the extent possible, a!l other directors and

officers shall be persons having the qualifications de-

scribed in paragraph (d) of this subsection (1). Lay

directors and officers shall not exercise any authority

whatsoever over professional matters.

(g) The articles of incorporation shall provide, and

all shareholders of the corporation shall agree, that

all shareholders of the corporation shall be jointly

and severally liable for all acts, errors, and omis-

sions of the employees of the corporation, or that all

shareholders of the corporation shall be jointly and

severally liable for all acts, errors, and omissions of

the employees of the corporation except during pe-

3b

riods of time when the corporation maintains in

good standing professional liability insurance which

shall meet the following minimum standards:

(}) The insurance shall insure the corporation

against liability imposed upon the corporation by law

for damages resulting from any claim made against

the corporation arising out of the performance of

professional services for others by those officers and

employees of the corporation who are licensed by the

board to practice medicine.

(11) Such policies shall insure the corporation

against liability imposed upon it by law for damages

arising out of the acts, errors, and omissions of all

nonprofessional employees.

(111) The insurance shall be in an amount for each

claim of at least fifty thousand dollars multiplied by

the number of persons licensed to practice medicine

employed by the corporation. The policy may provide

to an aggregate top limit of liability per year for all

claims of one hundred fifty thousand dollars also mul-

tiplied by the number of persons licensed to practice

medicine employed by the corporation, but no firm

shall be required to carry insurance in excess of three

hundred thousand dollars for each claim with an

aggregate top limit of liability for all claims during the

year of nine hundred thousand dollars.

(IV) The policy may provide that it does not apply

to: Any dishonest, fraudulent, criminal, or malicious

act or omission of the insured corporation or any

stockholder or employee thereof; the conduct of any

business enterprise, as distinguished from the practice

of medicine, in which the insured corporation under

this section is not permitted to engage but which

nevertheless may be owned by the insured corpora-

tion, or in which the insured corporation may be a

4b

partner or which may be controlled, operated, or

managed by the insured corporation in its own or ina

fiduciary capacity, including the ownership, mainte-

nance, or use of any property in connection therewith;

when not resulting from breach of professional duty,

bodily injury to, or sickness, disease, or death of any

person, or to injury to or destruction of any tangible

property, including the loss of use thereof; and such

policy may contain reasonable provisions with respect

to policy periods, territory, claims, conditions, and

other usual matters.

(2) A copy, certified by the secretary of state, of the

articles of incorporation of any corporation formed

pursuant to this section shall be filed with the board

together with a certified copy of all amendments

thereto. At the time of filing the original articles with

the board, the corporation shall file with the board a

written list of shareholders setting forth the names

and addresses of each and a written list containing the

names and addresses of all persons who are not

shareholders who are employed by the corporation,

and whe are licensed by the board to practice

medicine in the state of Colorado. Within ten days

after any change in such shareholders or employees, a

written list setting forth the information required by

this subsection (2) shall be filed with the board.

(3) The corporation shall do nothing which, if done by

a person licensed to practice medicine in the state of

Colorado employed by it, would violate the standards

of professional conduct as provided for in section

12-36-117. Any violation by the corporation of this

section shall be grounds for the board to terminate or

suspend its right to practice medicine.

(4) Nothing in this section shall be deemed to diminish

or change the obligation of each person licensed to

—_ nt naa

fs con eat cee

5b

practice medicine employed by the corporation to

conduct his practice in accordance with the standards

of professional conduct provided for in section 12-36-

117. Any person licensed by the board to practice

medicine who by act or omission causes the corpora-

tion to act or fail to act in a way which violates such

_ Standards of professional conduct, including any pro-

vision of this section, shall be deemed personally re-

sponsible for such act or omission and shall be subject

to discipline therefor.

(5) Nothing in this section shall be deemed to modify

the physician-patient privilege specified in section

13-90-107(1)(d), C.R.S. 1973.

(6) A professional service corporation may adopt a

pension, profit-sharing (whether cash or deferred),

health and accident insurance or welfare plan for all

or part of its employees including lay employees if

such plan does not require or result in the sharing of

specific or identifiable fees with lay employees, and if

any payments made to lay employees, or into any such

plan in behalf of lay employees, are based upon their

compensation or length of service, or both, rather

than the amount of fees or income received.

(7) Except as provided in this section, corporations

shall not practice medicine.

The pertinent text of COLO. REV.STAT. ANN. 1973, 13-

90-107(1)(d) [formerly COLO. REV. STAT. ANN. 1963,

154-1-7(5)] is as follows:

(d) A physician or surgeon duly authorized to practice

his profession under the laws of this state, or any

other state, shall not be examined without the consent

of his patient as to any information acquired in at-

tending the patient which was necessary to enable him

to prescribe or act for the patient; except this section

shall not apply to a physician or surgeon who is sued

6b

by or on behalf of a patient or by or on behalf of the

heirs, executors, or administrators of a patient on any

cause of action arising out of or connected with the

physician’s care or treatment of such patient, or to

physicians or surgeons who were in consuitation with

the physician or surgeon so sued on the case out of

which said suit arises.

The pertinent text of Rule 6(e) of the Federal Rules of

Criminal Procedure is as follows:

Disclosure of matters occurring before the grand jury

other than its deliberations and the vote of any juror

may be made to the attorneys for the government for

use in the performance of their duties. Otherwise a

juror, attorney, interpreter, stenographer, operator

of a recording device, or any typist who transcribes

recorded testimony may disclose matters occurring

before the grand jury only when so directed by the

court preliminarily to or in connection with a judicial

proceeding or when permitted by the court at the

request of the defendant upon a showing that grounds

may exist for a motion to dismiss the indictment be-

cause of matters occurring before the grand jury. No

obligation of secrecy may be imposed upon any person

except in accordance with this rule. The court may

direct that an indictment shall be kept secret until the

defendant is in custody or has given bail, and in that

event the clerk shall seal the indictment and no person

shall disclose the finding of the indictment except

when necessary for the issuance and execution of a

warrant Or summons.