Petition for Writ of Certiorari — Hale v. United States

FILED 1)

Me

neo 97-50 JUL 21997

Supreme Court, U.b». (1

O§ INE CLERKS

ine

Supreme Court of The United Diites

October Term 1996

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DAN E. HALE,

Petitioner,

we

UNITED STATES OF AMERICA,

Respondent.

+

Petition For A Writ Of Certiorari

To The United States Court of

Appeals For The Sixth Circuit

€ —

PETITION FOR WRIT OF CERTIORARI

with Appendix

e

*ROBERT W. RITCHIE

WADE V. DAVIES

RITCHIE, FELS & DILLARD, P.C.

606 W. Main Street, Suite 300

P.O. Box 1126

Knoxville, TN 37901-1126

(423) 637-4623

Attorneys for Petitioner

*Counsel of Record

——-

LEGAL ADVANTAGE * 432 Walnut Street * Cincinnati, OH 45202

(800) 581-2252

i

QUESTIONS PRESENTED

WHETHER THE SIXTH CIRCUIT’S

RESTRICTIVE INTERPRETATION OF BRADY y.

MARYLAND, WHICH PROHIBITS DISTRICT COURTS

FROM CONTROLLING THE TIMING AND MANNER OF

PRODUCTION OF BRADY MATERIAL, VIOLATED DR.

HALE’S RIGHT TO DUE PROCESS BY PREVENTING

DEFENSE COUNSEL FROM RECEIVING AND MAKING

EFFECTIVE USE OF BRADY MATERIAL.

WHETHER THE STRICTER STANDARD OF

BRADY REVIEW, WHICH MANDATES REVERSAL

ONLY WHEN THERE IS A REASONABLE LIKELIHOOD

THAT FALSE TESTIMONY COULD HAVE AFFECTED

THE JUDGMENT OF THE JURY, SURVIVES KYLES vy.

WHITLEY AND APPLIES TO A SITUATION IN WHICH

THE PROSECUTOR ELICITED A FALSE STATEMENT

FROM A KEY PROSECUTION WITNESS ON REDIRECT

EXAMINATION.

WHETHER THE SIXTH CIRCUIT’S

INTERPRETATION OF RICO’S “RELATEDNESS”

REQUIREMENT, WHICH ALLOWS UNRELATED MAIL

FRAUD SCHEMES TO BE JOINED IN ONE RICO

COUNT AS LONG AS EACH SCHEME ALLEGES

MULTIPLE MAILINGS, EVISCERATES THE

“RELATEDNESS” REQUIREMENT AND RENDERS THE

STATUTE UNCONSTITUTIONALLY VAGUE.

li

TABLE OF CONTENTS

QUESTIONS PRESENTED 2.2... .cccccccccceccess i

TARE OF CARE 6.e4 Lock kd aoswaaeenaeees il

TABLE OF At Tene bn oobi cc en cceeueneweese Vv

OPRGULINS BeGare 50554 56 4Gse ee oe eae l |

STATEMENT OF KURT TOON ... cc cievccwens | |

CONSTITUTIONAL AND STATUTORY

PROVIGIING BUVURL VED ook o's secede cewtacseues l

STATEMENT OF THE CAGE 2. .cnscsccsvesecscess 2

REASONS FOR GRANTING THE WRIT ............ 6

I. THE SIXTH CIRCUIT’S RESTRICTIVE

INTERPRETATION OF BRADY y.

MARYLAND, WHICH PROHIBITS

DISTRICT COURTS FROM

CONTROLLING THE TIMING AND

MANNER OF PRODUCTION OF BRADY

MATERIAL, VIOLATED DR. HALE’S

RIGHT TO DUE PROCESS’ BY

PREVENTING DEFENSE COUNSEL

i a Dina tig oy lee lta ich Re Det Di St BEA Sa Ee etn Sota es

“ PL te bP Oe

ill

FROM RECEIVING AND MAKING

EFFECTIVE USE OF BRADY MATERIAL ..... 6

THE STRICTER STANDARD OF BRADY

REVIEW, WHICH MANDATES

REVERSAL ONLY WHEN THERE IS A

REASONABLE LIKELIHOOD THAT

FALSE TESTIMONY COULD HAVE

AFFECTED THE JUDGMENT OF THE

JURY, SURVIVES KYLES v. WHITLEY

AND APPLIES TO A SITUATION IN

WHICH THE PROSECUTOR ELICITED A

FALSE STATEMENT FROM A KEY

PROSECUTION WITNESS ON REDIRECT

EXAMINATION ......---eeeeee reer teeee 16

THE SIXTH CIRCUIT’S

INTERPRETATION OF RICO’S

“RELATEDNESS” REQUIREMENT,

WHICH ALLOWS UNRELATED MAIL

FRAUD SCHEMES TO BE JOINED IN

ONE RICO COUNT AS LONG AS EACH

SCHEME. ALLEGES MULTIPLE

MAILINGS, EVISCERATES THE

“RELATEDNESS” REQUIREMENT AND

RENDERS THE STATUTE

UNCONSTITUTIONALLY VAGUE ........ 20

iV

CONCLIUMEE ... Gn 2 a i eed 25

APPENDIX

OPINION BY THE SIXTH CIRCUIT ........ App. 1

ORDER OF THE SIXTH CIRCUIT ......... App. 20

U.S. CONSTITUTION, AMENDMENT V_ ... App. 22

IS UMC MONE: wos liies ssc App. 22

ISUGC SION okies ce edaeee ces App. 23

18 U.S.C. §3500(b) oo... cece e eee ee ee ee App. 23

RESPONSE TO PETITION FOR

REHEARING AND SUGGESTION FOR

REHEARING EN BANC ..........00-005- App. 24

Vv

TABLE OF AUTHORITIES

Cases

Ashland Oil, Inc. v. Arnett, 875 F.2d 1271

5, Ce ME . Sereerepenere ng ars 2 eer ry oe 22,23

Brady v. Maryland, 373 U.S. 83 (1963) ......... passim

Feinstein v. Resolution Trust Corporation,

O62 ESE PEG Bi che ieee ed) 21,22

Grant v. Alldredge, 498 F.2d 376 (2d Cir. 1974) ... 11,12

H.J., Inc. v. Northwestern Bell Telephone Company,

RGZ AED: FoR eee 0 ai AAS AIS 24

Kyles v. Whitley, 514 U.S. 419,

115 S. Ct. 1555, 131 L.Ed.2d 490 (1995) ...... passim

Sutherland v. O’Malley, 882 F.2d 1196

4 1k Peer Gas ee ee re te 22

United States v. Agurs, 427 U.S. 97 (1976) ..... 16,17,18

United States v. Alzate, 47 F.3d 1103 (11th Cir. 1995) .20

vi

United States v. Anderson, 481 F.2d 685

(4th Cir. 1973), aff'd 417 U.S. 211 (1974) ......... 1]

United States v. Bagley, 473 U.S. 667 (1985) ........ 17

United States v. Elmore, 423 F.2d 775

(4th Cir. 1970), cert. denied, 400 U.S. 825 (1970) ...15

United States v. Dan E. Hale,

Rh Re |) nie i a ene ]

United States v. Jones, 612 F.2d 453 (9th Cir. 1979),

cert. denied, 445 U.S. 966 (1980) ................ 14

United States v. Owen, 933 F. Supp. 76

EP : SHE obs keke ecee de eau labeueteeieee 13

United States v. Pollack, 534 F.2d 964 (D.C. Cir.),

cert. denied 424 U.S. 924 (1976) .............. 13,14

United States v. Presser, 844 F.2d 1275

Ga CE sk nckcasveadhabecksaarceuen passim

United States v. Scott, 524 F.2d 465 (Sth Cir. 1975) ...14

Vii

United States v. Smith Grading and Paving, Inc.,

760 F.2d 527 (4th Cir.), cert. denied, 474 U.S. 1005

1...) eee eeeer er eee Pe Or ene eters Peer 14

United States v. Starusko, 729 F.2d 256 (3d Cir. 1984) . 13

United States v. Williams, 10 F.3d 1070

(4th Cir. 1993), cert. denied 115 S.Ct. 313 (1994) ...12

United States Textiles, Inc. v. Anheuser-Busch

Companies, Inc., 911 F.2d 1261 (7th Cir. 1990) ..... 22

Vild v. Visconsi, 956 F.2d 560

(6th Cir. 1992), cert. denied, 506 U.S. 832 (1992) ... 23

Re sy oa dawned case eases !

NONI iad os 2 i Sa cia pe sek 1,2

Re, ae er a ere re ree 3

| ne ee ene 1,7

Te o> et non Tene

United States Constitution, Amendment V ............ l

l

PETITION FOR WRIT OF CERTIORARI

Petitioner Dan E. Hale respectfully prays that a writ of

certiorari issue to review the judgment of the United States

Court of Appeals for the Sixth Circuit entered January 28,

1997.

+

OPINIONS BELOW

The District Court Judgment was affirmed by the

United States Court of Appeals for the Sixth Circuit on

January 28, 1997. United States of America v. Dan E. Hale,

No. 95-5915 (6th Cir. 1/28/97).

e

JURISDICTION

The opinion of the United States Court of Appeals for

the Sixth Circuit was entered on January 28, 1997. A timely

Petition for Rehearing and Suggestion for Rehearing En Banc

was filed on February 11, 1997. Rehearing was denied on

April 3, 1997. The jurisdiction of this Court is invoked under

28 U.S.C. § 1254(i).

¢

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

United States Constitution, Amendment V.

18 United States Code Section 1961(5).

18 United States Code Section 1962(c).

18 United States Code Section 3500(b).

2

STATEMENT OF THE CASE

Dr. Dan Hale operated a large medical center serving

primarily indigent patients in rural East Tennessee.

At trial, it was undisputed that a group of Dr. Hale’s

patients from Mt. Vernon, Kentucky, organized an insurance

fraud scheme. Led by Russell Ramsey, this group managed

to purchase multiple, supplemental insurance policies, which

paid claimants an amount for each day they were in a

hospital. Thereafter, these individuals sought hospitalization

for injuries that they had faked. The multiple insurance

policies provided a windfall for each hospitalized patient.

Each participant in the scheme provided a percentage of his

or her take to the organizer, Russell Ramsey.

The government indicted and convicted some 32

people involved in the insurance scam. As the participants

began to try to cooperate with the government, the

investigators turned their attention to their doctor. On

September 29, 1994, Dr. Hale was indicted. The original

indictment alleged that Dr. Hale participated in a RICO

conspiracy and committed a substantive RICO violation by

participating in the affairs of Boulevard West Medical Center

(BWMC) through a pattern of racketeering activity, in

violation of 18 U.S.C. § 1962(c). The government

superseded the indictment because it had improperly alleged

eee ee eT en ee

3

jurisdiction over certain counts.' The superseding indictment

alleged mail fraud as the “racketeering activity.” The

allegations of mail fraud fell into two distinct, unrelated

groups. The first group of counts alleged that Dr. Hale aided

and abetted the over- insurance scheme perpetrated by his

patients from Kentucky. In the second distinct group of mail

fraud counts, Dr. Hale was alleged to have committed mail

fraud against Medicare/Medicaid by billing and receiving

reimbursement for unnecessary medical procedures.

With regard to the insurance fraud scheme, the

question at trial was whether Dr. Hale knew that his Mt.

Vernon, Kentucky, patients had devised a scheme to defraud

the insurance companies and whether he knowingly aided and

abetted their efforts by admitting them to the hospital without

medical reason.

As one of their final witnesses, the government called

Russell Ramsey, the organizer, to testify against Dr. Hale.

Ramsey portrayed himself as having a close relationship with

the doctor. He testified that after he became involved in the

insurance scheme, he got other people involved. He testified

that he would introduce a new patient to Dr. Hale by telling

him that he had somebody that had been hurt and that he

wanted Dr. Hale to doctor them. The prosecutor then asked

'The district court had jurisdiction pursuant to 18

U.S.C. § 3231 to hear allegations of a violation of a fedeal

criminal statute.

4

Ramsey whether Dr. Hale seemed like he knew what Ramsey

meant, and Ramsey said that he did.

Among other extremely damaging claims, Ramsey

testified that Dr. Hale told him how to have his family and

friends act in the hospital. Finally, Ramsey testified that Dr.

Hale knew what was going on. Ramsey even claimed that he

once complained to Dr. Hale about a problem with all the

insurance forms.

What defense counsel did not know, however, was

that Mr. Ramsey had given a series of three interviews to the

prosecution team, including the prosecutor himself. In the

first two interviews, Ramsey admitted that he had organized

the insurance fraud scheme, but he exonerated Dr. Hale from

any involvement. In fact, the second memorandum of

interview reflects that although the Assistant United States

Attorney who handled the case confronted Ramsey with the

government’s belief that there must have been an agreement

with the doctors, Russell confirmed that he went in and lied

to the doctor about the injuries of the people he brought in

there. He insisted there was no “predetermined agreement

between he [sic] and the doctors.” Ramsey also responded to

interrogation about why he would protect the doctors by

saying that he would not do so. As the United States Court of

Appeals for the Sixth Circuit found in its opinion, these

exculpatory statements and others it listed in what it called a

“nonexhaustive list of Brady material” showed that, “the

5

government’s contention that the interview summaries do not

contain exculpatory material is patently unsupportable.”

Despite the obvious exculpatory nature of the

memoranda, the prosecution declined to produce them.

AD th Ra A Ses te Yin Spm ta hl SL Bs hb Alb ton Ye

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6

REASONS FOR GRANTING THE WRIT

I THE SIXTH’ CIRCUIT’S’§ RESTRICTIVE

INTERPRETATION OF BRADY v. MARYLAND,

WHICH PROHIBITS DISTRICT COURTS FROM

CONTROLLING THE TIMING AND MANNER OF

PRODUCTION OF BRADY MATERIAL,

VIOLATED DR. HALE’S RIGHT TO DUE

PROCESS BY PREVENTING DEFENSE COUNSEL

FROM RECEIVING AND MAKING EFFECTIVE

USE OF BRADY MATERIAL.

Because the United States Court of Appeals for the

Sixth Circuit has unduly restricted the authority of district

courts to order pretrial production of Brady material, even in

extremely complex cases such as this one, Dr. Hale had no

way to compel the government to produce this extraordinarily

important Brady material. See United States v. Presser, 844

F.2d 1275 (6th Cir. 1988). Had the district court had the

authority to compel pretrial production of Brady material in

this complex case, this problem would never have arisen. Dr.

Hale respectfully suggests that this Honorable Court should

grant his Petition for Writ of Certiorari and reject the overly

restrictive interpretation by the Sixth Circuit, which conflicts

7

with the holdings of several other circuits and is contrary to

the spirit of Brady v. Maryland’ and Kyles v. Whitley.

In Kyles v. Whitley, 514 U.S. 419, 115 S.Ct. 1555, 131

L.Ed.2d 490 (1995), this Court clarified the standard of

appellate review for Brady violations and emphasized the

prosecutor’s responsibility for ensuring that Brady material is

obtained and disclosed. Kyles v. Whitley, 115 S. Ct. at 1567-

69. This Court did not address, however, the timing and

procedure for Brady disclosure or the district court’s authority

to regulate the timing of such disclosure. Dr. Hale

respectfully submits that clarification of this important and

decisive issue is worthy of this Court’s consideration.

Unlike other circuits, the Sixth Circuit has held that a

district court exceeds its authority when it issues an order

requiring pretrial production of Brady material. United States

v. Presser, 844 F.2d 1275, 1284 (6th Cir. 1988). In Presser,

the government appealed a pretrial order of the district court

that required the government to disclose Brady/Giglio

evidence prior to trial. Jd. at 1276. The court surveyed this

Court’s decisions and determined that the Brady doctrine does

not create a general right to pretrial discovery. Jd. at 1283.

The Sixth Circuit also relied on the Jencks Act provisions at

18 U.S.C. § 3500(b) which provide that government’s witness

statements only have to be turned over after the witness has

2373 U.S. 83 (1963).

|

sake Pele he eS) I RR EE ie Sts BREE

8

testified on direct examination. Jd. at 1283. The court held

that the Jencks Act controls the timing of disclosure of any

exculpatory evidence contained within such statements.

Thus, the rule in the Sixth Circuit has come to be that a

district court has no authority to ensure that a defendant’s

Fifth Amendment right to due process is upheld by requiring

pretrial disclosure of Brady material.

Dr. Hale’s case presents a compelling example of how

the Sixth Circuit’s restrictive interpretation has the unforeseen

consequence of denying litigants such as Dr. Hale the

effective use of exculpatory information. Dr. Hale’s case was

extremely lengthy and complex. It resembled much more

closely a complex civil, regulatory matter in many ways than

it did a traditional criminal trial. This was a case that not

even the greatest defense lawyer could wing with last minute

preparation. The case required in-depth, early preparation.

Unfortunately, however, because the trial court lacked

authority to order pretrial production, defense counsel never

knew of the existence of interview memoranda that showed

a progression of a witness’ story that could have established

Dr. Hale’s theory of the case. Dr. Hale attempted to show

that he had no knowledge of the scheme and that those who

were involved in the fraud and now sought to implicate him

were in fact simply trying to curry favor with the United

States government after having gotten caught. These few of

Dr. Hale’s thousands of patients had fooled him and used

9

him. The memoranda showed just that scenario. The

organizer of the entire scheme initially told the truth that Dr.

Hale was not part of an agreement with them. Ramsey

explained that they had lied to the doctor to gain admission to

the hospital. Later, after months had gone by in which

Ramsey realized he was facing an extremely lengthy prison

sentence, he told the prosecution team what they had clearly

indicated in the first interviews they wanted to hear.

Armed with the knowledge that Ramsey had

exculpated Dr. Hale and then changed his story, defense

counsel could have launched a devastating attack, both on

Ramsey and the manner in which the government

investigators carried out their investigation. Defense counsel

could have effectively shown the jury how the prosecution

team suggested to those who participated in the fraud that the

government wanted to hear that Dr. Hale was involved and

that, facing lengthy prison terms, at least Russell Ramsey

finally gave them what they wanted to hear.

Without pretrial disclosure of the memoranda

themselves, effective cross-examination of Ramsey was

impossible, and the jury never got to hear about the

suggestions that the government team made to Mr. Ramsey at

the first, exculpatory interviews. That pretrial disclosure is in

some cases the only effective way to disclose Brady material

is illustrated by what actually happened in this case. In the

face of renewed Brady request by the defense, the prosecutor

10

did produce these memoranda for the trial court’s inspection,

but because of the way the prosecutor handled the disclosure,

the trial court only had a few seconds after the witness had

testified on direct examination to review the documents. The

district court’s cursory review proved to be too little too late.

The district court informed defense counsel orally that the

memoranda contained statements that Russell Ramsey had

lied to the doctor and that there had been no predetermined

agreement. However, without having the documents

themselves, defense counsel was wholly unable to use this

information. On cross examination, one of defense counsel’s

first lines of questioning involved a statement made by the

court that Russell Ramsey had at one time said that doctors

did not know about insurance forms. Ramsey’s response was,

“I believe the doctors knew everything.” Without having the

document, defense counsel could not impeach Ramsey with

his prior exculpatory statements. A bench conference was

held, and defense counsel explained that he was at a loss as to

how to handle the situation. The district court acknowledged

the problem caused by the manner in which defense counsel's

access to the memorandum had been restricted:

I gave you what was exculpatory in that one

paragraph. There were other things said in

that paragraph that made me believe that--I

don’t want to play psychologist--that maybe

Russell Ramsey was sort of in a train of

11

thought because I knew that what was said

was that he did not think the doctors knew,

but the very next sentence was, well, they did

have to get the doctor’s signature on the form

or something to that extent.

The court went on to acknowledge, “[t]hat’s the problem

when you get just exculpatory information.”

Thus, even the district court was uncertain about how

to handle the disclosure. Other courts have grappled with the

timing of Brady disclosure, and several different approaches

can be gleaned. As the Court of Appeals for the Fourth

Circuit has noted, part of the confusion stems from the fact

that “the Supreme Court has never pinpointed the time at

which the disclosure must be made.” United States v.

Anderson, 481 F.2d 685 (4th Cir. 1973), aff'd 417 U.S. 211

(1974).

Some courts have clearly held that pretrial disclosure

under certain circumstances is required in order to safeguard

the defendant’s right to due process. For example, in Grant

v. Aildredge, 498 F.2d 376 (2d Cir. 1974), the United States

Court of Appeals for the Second Circuit held that certain

types of Brady material must be disclosed prior to trial in

order to allow full exploitation by the defense. Jd. at 382. As

the Second Circuit made clear:

Although it may well be that marginal Brady

material need not always be disclosed upon

12

request prior to trial, the fact that Ms. Harris

had selected Walsh as a suspect was without

question specific, concrete evidence of a

nature requiring pretrial disclosure to allow

for full exploration and exploitation by the

defense. This information, so withheld by the

government, would have had a material

bearing on defense preparation and therefore

should have been revealed well before the

commencement of the trial.

Grant, 498 F.2d at 382 (citations omitted).

Other circuits have taken a much more balanced

approach than the Sixth Circuit and have recognized that

pretrial disclosure of Brady material may be required in order

to ensure its effective use. This issue has often come up when

courts consider whether exculpatory information, which is

also covered by the Jencks Act, must be disclosed prior to

trial. The United States Court of Appeals for the Fourth

Circuit, for example, has recognized that district courts may

need to order earlier production of Brady material. As the

court stated, the Jencks Act “in no way impairs the

government’s constitutional obligations under Brady v.

Maryland.” United States v. Williams, 10 F.3d 1070, 1079

(4th Cir. 1993), cert. denied, 115 S. Ct. 313 (1994).

Similarly, the United States Court of Appeals for the

Third Circuit has recognized that “compliance with the

13

statutory requirements of the Jencks Act does not necessarily

satisfy the due process concerns of Brady.” United States v.

Starusko, 729 F.2d 256, 263 (3d Cir. 1984).?

Several thoughtful district court opinions have taken

this approach as well. E.g., United States v. Owen, 933 F.

Supp. 76, 84 (D. Mass. 1996) (“given the important nature of

the constitutional rights at stake, this court rules that the

Brady requirement must effectively trump the Jencks Act

where the two are in direct conflict.”)

In United States v. Pollack, 534 F.2d 964, 973 (D.C.

Cir.), cert. denied, 424 U.S. 924 (1976), the court held that

“{d]isclosure by the government must allow the defense to use

that favorable material effectively in the preparation and

presentation of its case, even if satisfaction of this criterion

requires pretrial disclosure.” The Pollack court proposed the

use of a balancing test which could utilize the district court’s

ability to weigh competing interests:

Application of a strict rule in this area would

inevitably produce some situations in which

late disclosure would emasculate the effects of

Brady or other situations in which premature

disclosure would unnecessarily encourage

those dangers that militate against extensive

3In Presser, the Sixth Circuit acknowledged that its approach

potentially conflicted with the Third Circuit’s approach in Starusko.

Presser, 844 F.2d at 1283, n.9.

14

discovery in criminal cases, e.g., potential for

manufacture of evidence or bribing of

witnesses. Courts can do little more in

determining the proper time for disclosure

than balance in each case the potential dangers

of early discovery against the need that Brady

purports to serve of avoiding wrongful

convictions.

United States v. Pollack, 534 F.2d at 973-74.

On the other hand, other circuits have joined the Sixth

Circuit, at least to the extent of holding that where evidence

is both Brady and Jencks material, the Jencks Act controls the

timing of disclosure. United States v. Scott, 524 F.2d 465,

467-68 (Sth Cir. 1975); United States v. Jones, 612 F.2d 453,

455 (9th Cir. 1979), cert. denied, 445 U.S. 966 (1980). None

of these cases, however, seems to go as far as the Sixth

Circuit opinion purports to do in preventing the district court

from ordering the pretrial production of Brady material that

is not necessarily covered by the Jencks Act.

As noted above, the United States Court of Appeals

for the Fourth Circuit takes the position that Brady is fulfilled

when a disclosure of exculpatory material is made at a time

such that it allows the defense to make effective use of the

material at trial. See United States v. Smith Grading and

Paving, Inc., 760 F.2d 527, 532 (4th Cir.), cert. denied, 474

U.S. 1005 (1985). The Fourth Circuit has clarified that

15

“disclosure to be effective must be made at a time when the

disclosure would be of value to the accused.” United States

v. Elmore, 423 F.2d 775, 779 (4th Cir 1970), cert. denied, 400

U.S. 825 (1970). This Court should clarify that, in a complex

case, it is highly likely that effective disclosure must be made

at a time well in advance of trial.

In this case, the writ should be granted to clarify that

district courts do have a role to play in determining the timing

and manner of Brady disclosure. This Court could also use

the opportunity to promulgate a balancing test to set out those

proper factors. Among those of course would be the

complexity of the case. Clearly, in this case, the complexity

required pretrial production. This Court could also clarify the

manner in which disclosure is to be made. In this case, the

district court’s quick attempt to summarize the exculpatory

material was of no value to the defendant. Thus, the Sixth

Circuit plainly erred when it held that the most telling

exculpatory material was revealed to the defense by the trial

judge and was of a nature that it could be effectively exploited

by cross examination. (App.10). Even the trial judge’s

comments revealed the limitations of the district court’s

disclosure.

This Court should also grant the writ to clarify for

Department of Justice prosecutors what their role is and that

the courts do have authority over their conduct. After the

Sixth Circuit found that the prosecutor had withheld Brady

16

material in this case, that same prosecutor disclosed to the

court that one of the things he had learned from the

experience was that one of his approaches to this problem

would be not to take notes of his interviews in the future.

(App. 25).

Il. THE STRICTER STANDARD OF BRADY REVIEW,

WHICH MANDATES REVERSAL ONLY WHEN

THERE IS A REASONABLE LIKELIHOOD THAT

FALSE TESTIMONY COULD HAVE AFFECTED

THE JUDGMENT OF THE JURY, SURVIVES

KYLES v. WHITLEY AND APPLIES TO A

SITUATION IN WHICH THE PROSECUTOR

ELICITED A FALSE STATEMENT FROM A KEY

PROSECUTION WITNESS ON REDIRECT

EXAMINATION.

In United States v. Agurs, 427 U.S. 97 (1976), this

Court set out three different types of Brady claims and

applied different standards of review to each. The first

standard was to govern the situation in which the prosecution

introduced trial testimony that it knew, or should have known,

was perjured. 427 U.S. at 103-104. The Court mandates

strict review of this situation and held that “a conviction

obtained by the knowing use of perjured testimony is

fundamentally unfair, and must be set aside if there is any

17

reasonable likelihood that the false testimony could have

affected the judgment of the jury.” Agurs, 427 U.S. at 103.

The second two Agurs situations arise where the government

has failed to honor a defense request for disclosure of some

specific exculpatory evidence or where the government failed

to volunteer exculpatory evidence never requested or

requested only generally. In United States v. Bagley, 473

U.S. 667 (1985), the Court clarified that it would apply the

same standard of review to the latter two situations. The test

is that reversal is required “if there is a reasonable probability

that, had the evidence been disclosed to the defense, the result

of the proceeding would have been different.” Bagley, 473

U.S. at 682. In Kyles v. Whitley, US. ,115S.Ct.

1555 (1995), this Court clarified and refined this Bagley

materiality standard but specifically noted that it was not

addressing any claim under the first Agurs category. Kyles v.

Whitley, 115 S. Ct. at 1565 n.7.

Dr. Hale respectfully submits that this Court should

grant the writ to clarify the first Agurs situation and

specifically to clarify the difference in the standard of review

set out in Bagley and recently clarified in Kyles v. Whitley.

In this case, the prosecutor elicited testimony from the

organizer of the insurance fraud scheme, Mr. Ramsey, that

was simply false. The context is the same as in the first

Brady issue presented above. After having specifically

denied defense counsel the opportunity to examine Mr.

18

Ramsey’s glaringly exculpatory prior interviews, the

prosecutor compounded the prejudice by having Mr. Ramsey

affirm on redirect examination that Ramsey had always told

the truth and always told the same thing he told the jury.

Q. So, you have talked about this on

several occasions?

A. Yes, I have.

Q. And have you always told the same

thing that you have told this jury,

including what Dr. Hale’s role was in

this conspiracy?

A. I have tried my best 100 percent.

As set out above, contrary to this representation, Ramsey had

previously in effect denied that Dr. Hale had any role other

than to be used and deceived by the individual the

government was using as a witness. It is difficult to

comprehend asking this question when the prosecutor had the

memorandum in his possession and was personally present at

the interview for which the memorandum reflects that the

prosecution team asked him why he was covering for the

doctors.

After having just elicited information from Ramsey

that he had always told the same story and had always told the

truth, the prosecutor went on to ask Ramsey a leading

question that called for an answer again that contradicted

what Ramsey said when previously interviewed:

19

Q. Did Don Collins tell you before you

went down there in 1988 that Dr. Hale

was already doing this?

A. Yes.

Again, this directly contradicts the government’s

memorandum:

We asked him [Russell Ramsey] to go back to

the time when Donald Collins introduced him

to the doctors. He stated that-he was only

introduced to Dr. Hale and not Dr. Lynch. He

says that Donald Collins never said that he,

Hale, was a “crooked” doctor. Donald Collins

only told him, “They’ll put you in--act hurt.”

These affirmative acts by the prosecution mislead the

jury and defense counsel.

Having discovered this problem, appellate counsel for

Dr. Hale suggested to the Sixth Circuit that it would be

appropriate for the court to review the error under the stricter,

first Agurs standard set out for reviewing instances in which

the prosecution elicits or fails to correct perjury. The Sixth

Circuit failed to do so.

In contrast to the Sixth Circuit’s decision not to apply

the stricter standard of review in this case, the United States

Court of Appeals for the Eleventh Circuit has determined that

it is appropriate to apply the stricter standard when the

prosecution, even unintentionally, made a false representation

20

to the jury but did not correct it when it had the opportunity

to do so. United States v. Alzate, 47 F.3d 1103 (11th Cir.

1995). The Eleventh Circuit found that the stricter standard

was appropriate in cases involving prosecutorial misconduct

in the corruption of a truth-seeking function. Alzate, 47 F.3d

at 1110.

In light of the importance of the issue and the differing

approach taken in the different circuits, this Court should

grant the writ to clarify under what circumstances the stricter

standard is to be applied after Kyles v. Whitley.

III. THE SIXTH CIRCUIT’S INTERPRETATION

OF ~— RICO’S “RELATEDNESS”

REQUIREMENT, WHICH ALLOWS

UNRELATED MAIL FRAUD SCHEMES TO

BE JOINED IN ONE RICO COUNT AS LONG

AS EACH SCHEME ALLEGES MULTIPLE

MAILINGS, EVISCERATES THE

“RELATEDNESS” REQUIREMENT AND

RENDERS THE STATUTE

UNCONSTITUTIONALLY VAGUE.

The issue placed before the United States Court of

Appeals for the Sixth Circuit was whether two unrelated mail

fraud “schemes” can be lumped together in one RICO count

in an attempt to create a “pattern of racketeering activity.” As

21

Dr. Hale set forth, a common sense reading of the statutory

language indicates that unrelated criminal activity cannot

form a “pattern” as a matter of law. Dr. Hale has shown that

the Medicare/Medicaid over utilization allegations bore no

relationship to the Kentucky insurance fraud scheme. The

Sixth Circuit explicitly disregarded the problem:

Even if we assume arguendo that the alleged

Medicare and Medicaid abuse was unrelated

to the Kentucky insurance fraud, there were

many related predicate acts involved in the

insurance fraud alone. This is enough to

satisfy the RICO relatedness requirement.

(App. at 18) (citations omitted).

In one fell swoop, this ruling eviscerates the

“relatedness” requirement, conflicts with established circuit

precedent (including its own), and renders the statute

unconstitutionally vague.

First, the Sixth Circuit’s novel holding that unrelated

mail fraud schemes could be joined in one RICO count as part

of a “pattern” just because each scheme involved more than

one mailing directly contradicts other circuit precedent. In

Feinstein v. Resolution Trust Corporation, 942 F.2d 34 (1st

Cir. 1991), the United States Court of Appeals for the First

Circuit clearly rejected a similar argument. There, the court

addressed two different sets of transactions stemming from

formation of joint ventures. Jd. at 44. The court found that,

22

as here, each of the “schemes” featured several transactions.

Id. Nevertheless, the fact that each scheme contains several

transactions did not overshadow the real problem which was

that the unrelated schemes could not be joined in a single

RICO count alleging a pattern of racketeering. Jd.

Specifically in mail fraud context, there is a host of

cases which hold that the mere fact that there were several

mailings alleged to be in furtherance of a single scheme does

not create a RICO pattern. E.g., United States Textiles, Inc.

v. Anheuser-Busch Companies, Inc., 911 F.2d 1261, 1267-69

(7th Cir. 1990); Sutherland v. O'Malley, 882 F.2d 1196, 1205

(7th Cir. 1989) (“mail fraud and wire fraud are perhaps

unique among the various sorts of ‘racketeering activity’

possible under RICO and that the existence of a multiplicity

of predicate acts . . . may be no indication of the requisite

continuity of the underlying fraudulent activity. Thus, a

multiplicity of mailings does not necessarily translate into a

‘pattern’ of racketeering activity.”). In Ashland Oil, Inc. v.

Arnett, 875 F.2d 1271, 1278 (7th Cir. 1989), the court further

explained this concept:

The plaintiffs are mistaken to emphasize the

raw number of mail and wire fraud violations.

Some of the present. uncertainty over the

pattern elements stems from such arguments

which depend upon the unusual nature of

23

these two most commonly alleged RICO

predicate acts.

RICO includes as “racketeering activity” any

act indictable under the mail and wire fraud

Statutes. In mail and wire fraud, each mailing

or interstate communication is a separate

indictable offense, even if each relates to the

same scheme to defraud, and even if the

defendant did not control the number of

mailings or communications. Thus, the

number of offenses is only tangentially related

to the underlying fraud, and can be a matter of

happenstance.

(Citations omitted).

In the past, even the United States Court of Appeals

for the Sixth Circuit had recognized that multiple mailings

under one scheme could not cure the fact that unrelated

schemes cannot be joined in one RICO count. Véild v.

Visconsi, 956 F.2d 560, 567 (6th Cir. 1992), cert. denied, 506

U.S. 832 (1992). In the instant case, the Sixth Circuit seems

to have abandoned its prior reasoning.

Second, the Sixth Circuit’s approach undermines the

defendant’s right to a unanimous jury verdict. The Sixth

Circuit ruling indicates that a pattern could have been made

out of multiple mailings under either “scheme.” That is not

how Dr. Hale was charged. There is no way to know whether

24

a jury would have convicted Dr. Hale if the indictment had

only alleged the private insurance fraud scheme as consisting

of a pattern. Thus, the Sixth Circuit's approach undermines

Dr. Hale’s right to a unanimous jury verdict.

Finally, the Sixth Circuit’s ruling renders the pattern

requirement so nebulous that the RICO statute must be

deemed unconstitutionally vague. Justice Scalia

foreshadowed this problem in his concurring opinion in HJ,

Inc. v. Northwestern Bell Telephone Company, 492 U.S. 229,

256 (1989):

No constitutional challenge to this law has

been raised in the present case, and so that

issue is not before us. That the highest Court

in the land has been unable to derive from this

statute anything more than today’s meager

guidance bodes ill for the day when that

challenge is presented.

In affirming a conviction that was based on an

allegation of a “pattern” which itself comprised wholly

unrelated activity, the United States Court of Appeals for the

Sixth Circuit has inadvertently excised from the statute the

meager guidance that the public and the courts had previously

been given regarding the scope of the RICO statute and the

meaning of the pattern requirement.

25

CONCLUSION

Dr. Hale’s due process right to bring the truth before

the jury was abridged by the prosecutor’s refusal to disclose

exculpatory evidence and by his eliciting false statements

from Mr. Ramsey. This Court should grant the writ to clarify

to all district courts that they do have the right to prevent such

deprivations before trial and to clarify the standard under

which courts of appeals review instances of putting false

testimony before the jury. This Court’s review would also

serve to clarify an important issue regarding limitations on the

RICO pattern requir.inent. Dr. Hale respectfully prays that

a writ of certiorari issue.

Respectfully submitted,

ROBERT W. RITCHIE

WADE V. DAVIES

Counsel of Record

RITCHIE, FELS & DILLARD, P.C.

606 West Main Avenue

P. O. Box 1126

Knoxville, TN 37901-1126

(423) 637-0661

Attorney for Petitioner

APPENDIX

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

CASE N® 95-5915

+

PAGE NO.

Sixth Circuit Opinion,

gs Tr Terr reer Tere Te ee 1-19

Order [Denying Petition for

Rehearing En Banc},

ENT Shoda he's ce beceecerceccvcceus 20-21

U.S. Constitution, Amendment V ............. 22

18 U.S. Code § 1961(5) ...ccccccccccccvcves 22

18 U.S. Code § 1962(c) ..... cc ccvesccvecees 23

18 U.S. Code § 3500(b) ... wc crc ccc cvvecens 23

Excerpted Response to Petition

for Rehearing and Suggestion

for Rehearing En Banc,

ko, eee err ee eee ree eee eee 24-25

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

+

OPINION

Sixth Circuit Case N®&. 95-5915

Filed January 28, 1997

¢

Pages 1 thru 19

;

ye - :

;

App. |

NOT RECOMMENDED FOR PUBLICATION

No. 95-5915

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

DAN E. HALE,

Defendant-Appellant.

) OPINION

) (iled 1/28/97)

)

) ON APPEAL FROM

)THE UNITED

) STATES DISTRICT

) COURT FOR THE

) EASTERN DISTRICT

) OF KENTUCKY

BEFORE: NORRIS, SUHRHEINRICH, = § and

BATCHELDER, Circuit Judges.

ALAN E. NORRIS, Circuit Judge. Dr. Dan E. Hale

appeals from his multi-count conviction for crimes related to

his Tennessee medical practice. For the reasons outlined

below, we now affirm his conviction and sentence.

App. 2

I.

Defendant began practicing medicine in Morristown,

Tennessee, in 1977. For many years he worked in loose

association with Dr. Gene Lynch, eventually purchasing his

practice in 1992, at which time Lynch became an employee

of defendant’s professional service corporation, Boulevard

West Medical Center (““BWMC”).

In the early 1990s, several insurance companies

contacted the United States Postal Service to report their

belief that a large-scale insurance fraud was ongoing in

Kentucky and Tennessee. The Lexington, Kentucky, office

of the Postal Inspection Service looked into the matter.

Inspector Lanny Miller contacted insurance companies in an

effort to determine the extent of the fraud and the identity of

the perpetrators. Eventually, the Inspection Service focused

on about forty people living near Mt. Vernon and Corbin,

Kentucky.

The fraud worked simply. Participants would buy

numerous hospital indemnity policies that paid a sum certain

in the event of a hospital admission. They would then fake

injuries, present themselves to a “sympathetic” doctor, and

gain admission to a hospital, typically for a soft tissue injury.

The participants then filed claims for coverage with numerous

insurance companies.

After investigators developed a detailed understanding

of how the fraud operated, they confronted some of the

App. 3

participants, thirteen of whom testified against defendant,

explaining how he helped them by authorizing hospital stays.

Russell Ramsey, who directed many of the participants,

recalled how defendant had facilitated the enterprise. Ramsey

would simply tell defendant that he had somebody who

needed “doctoring.” So certain was Ramsey that his charges

would be admitted to the hospital that he explained in

advance what they needed in the way of supplies for a stay of

ten to fifteen days.

The fraud spanned several years, during which time

Ramsey estimated that he orchestrated as many as 100

admissions to the Morristown hospitals. He also indicated

during trial that defendant seemed to know what was going on

with respect to the fraud although they did not discuss it

specifically because, in Ramsey’s view, “I was kind of

protecting him.” According to Ramsey, defendant suggested

that the people he brought in for admission should “ride in

wheelchairs.” As further evidence of their close association,

Ramsey testified that defendant once asked to borrow

$200,000 to buy equipment for the office.

A primary issue at trial and on appeal involves when,

and if, defendant knew of the fraud. Defendant focuses on

what he sees as inconsistencies in three pretrial interviews of

Ramsey by law enforcement officials. In two of them,

Ramsey insisted “there was no predetermined agreement

between he [sic] and the doctors.” In the last interview,

App. 4

however, after having “had a good bit of time to reflect on his

relationship with Dr. Dan Hale,” Ramsey claimed that he

would talk to defendant the day before he was to bring in a

new “patient.” Defendant would tell Ramsey how to have the

patients behave: bend over in pain, use a wheelchair, and

request pain medication. He also discouraged Ramsey’s

fondness for staging car accidents because they involved

police; rather, “a bathtub was a good place to have an

accident.”

Other testimony that pertained to defendant’s

knowledge of the fraud came from Steven Taylor, who

administered a hospital in Morristown. In 1990, he was

warned that the hospital was being used for fraud. Testifying

from a contemporaneous file memorandum, Taylor recalled

that he discussed the fraud with defendant and Lynch.

Defendant indicated that he was aware of it. Although the

admissions stopped for a few months, they soon resumed.

While the insurance fraud investigation moved

forward, the Tennessee Bureau of Investigation began looking

into possible over billing by defendant in an attempt to

defraud the Medicare and Medicaid programs. Testimony

during trial indicated that his goal was to see as many patients

and perform as many tests as the government would pay for.

To that end, he used a three-minute egg timer to pace himself,

and posed special challenges to staff. During “EKG month,”

for instance, they would be rewarded if they exceeded the

App. 5

number of EKGs performed during the same month the year

before.

A doctor who worked briefly for defendant was told

by him that he must test patients every time they walk in the

door. As a result of this policy, tests were often scheduled

before the doctor even saw the patient.

In short, the testimony at trial from former employees,

including doctors, nurses, and staff about unnecessary testing

and dubious billing was overwhelming. Defendant does not

dispute this but rather argues that an avalanche of

inadmissible evidence unfairly prejudiced his defense.

Defendant was charged with numerous counts of mail

fraud in violation of 18 U.S.C. § 1341, as well as criminal and

civil violations of the Racketeer Influenced and Corrupt

Organizations Act (“RICO”). 18 U.S.C. §§ 1961-68. After

a lengthy trial, a jury convicted him on all counts.

Il.

I. Brady Material

It is well-established that “the suppression by the

prosecution of evidence favorable to an accused upon request

violates due process where the evidence is material either to

guilt or to punishment, irrespective of the good faith or bad

faith of the prosecution.” Brady v. Maryland, 373 U.S. 83, 87

(1963). Favorable evidence is material, and constitutional

error results from its suppression by the government, if there

is a reasonable probability that, had the evidence been

i. App. 6

disclosed to the defense, the result of the proceeding would

have been different. United States v. Bagley, 473 U.S. 667,

682 (1985). This does not require demonstration by a

preponderance that disclosure would have resulted in an

acquittal; rather, a reasonable probability of a different result

is shown when the government’s suppression of the favorable

evidence undermines confident in the outcome of the trial.

Kyles v. Whitley, 115 S.Ct. 1555, 1566 (1995).

Because, as a practical matter, implementation of the

Brady rule contemplates that the government will enjoy a

measure of discretion in determining whether evidence in its

possession is material, it is burdened with a corresponding

duty to evaluate potential Brady material in a manner that will

result in a fair trial. It is the prosecution’s duty, after all, to

seek a just verdict, not a conviction. See Berger v. United

States, 295 U.S. 78, 88 (1935). It alone knows what evidence

remains undisclosed and therefore it must be assigned the

primary responsibility of gauging whether it constitutes

evidence favorable to the accused and is therefore

discoverable. Whitley, 115 S.Ct. at 1568.

In the case before us, counsel for defendant sought

access to pretrial statements made by participants in the fraud

scheme. Among the statements in the government’s

possession were summaries of the three interviews of Russell

Ramsey. Because the government took the position that these

statements were not exculpatory, defense counsel asked the

|

App. 7

trial court to inspect the statements in camera prior to cross-

examination of the witness and make an independent

determination whether any of the material should be provided

to the defense.

After the direct examination of Russell Ramsey, the

trial court reviewed the interview summaries and concluded

that “the essence of most of these exculpatory matters have

been hit by Mr. Ramsey.” However, the court went on to

mention that the summaries indicated that Ramsey lied to the

doctor about the injuries of the people he brought to the

hospital; that he insisted that there was no predetermined

agreement between himself and defendant; and that he would

tip the women in defendant’s office $100 to fill in insurance

forms that were later signed by defendant. Although defense

counsel attempted to use the information provided by the

district court to cross-examine Ramsey, he contends that the

timing and nature of the disclosure compromised his ability

to cross-examine the witness effectively.

This court reviews de novo the issue of whether

evidence withheld by the prosecution constituted Brady

material. United States v. Phillip, 948 F.2d 241, 250 (6th Cir.

1991). Having had the opportunity to review the three

interview summaries at length, a privilege that the

government’s handling of this material denied to the district

court, we conclude that the memoranda contain exculpatory

material that should have been disclosed to the defense prior

App. 8

to trial. The following statements culled from the interviews

provide a non-exhaustive list of Brady material:

“Russell stood by his original claim that he

went in and lied to the doctor about the

injuries of the people he brought there. He

insisted there was no_ predetermined

agreement between he [sic] and the doctors.”

“{Inspector] Lanny [Miller] asked Russell

why he felt he needed to protect the doctors.

Russell responded that he wouldn’t.”

“Russell was asked if he’d ever told anyone

that he had an agreement with the doctors

about the scheme. He stated ‘no, that he’d

always led everyone to believe he was in

control of the situation.’”

“He said that on occasion, he would ask to be

admitted to the hospital, but that he never

talked to the doctors about actually faking the

accidents.”

“He never gave the doctors bribes -- only paid

the bill.”

In light of these statements and others not cited, the

government’s contention that the interview summaries do not

contain exculpatory material is patently unsupportable.

Moreover, its position that Russell Ramsey’s trial testimony

was consistent with these statements is likewise incorrect.

all

App. 9

One instance will suffice to illustrate this point. As noted

above, Ramsey stated before trial that he would not protect

the doctors. That hardly can be reconciled with his assertion

during trial that “I was kind of protecting him [defendant].”

The prosecution, then, was obliged to release the

exculpatory portions of the interview summaries to defendant.

In failing to do so, it improperly failed to carry out its duty to

evaluate the exculpatory nature of the statements. Surely, the

prosecution’s affirmative duty under Brady to disclose

evidence favorable to a defendant includes the affirmative

duty to evaluate whether the evidence is favorable to a

defendant; the prosecution cannot avoid the former duty by

defaulting on the latter and delegating it in every instance to

a trial judge. While it may be proper to seek the intervention

of the trial court where the material is arguably non-

exculpatory, that certainly was not the situation with these

interview summaries. Here, the trial judge effectively

evaluated the materials. However, since any last-minute

evaluation by the trial court runs the risk of not providing the

defense with an opportunity to prepare an adequate cross-

examination, which in turn may compromise the overall

fairness of the trial, it is all the more imperative that the

government not shirk its duty to make good-faith evaluations.

Furthermore, non-disclosure of Brady material places

an onerous burden on an appellate court. We must answer the

question posed by Whitley: Did the absence of the exculpatory

App. 10

material have the cumulative effect of depriving defendant of

a verdict worthy of confidence? Whitley, 115 S.Ct. at 1566-

67. In the context of a lengthy trial such as the one now

before us, resolution of this issue represents a difficult and

time-consuming task, requiring us to review the record of the

entire trial in order to determine the effect of non-disclosure.

We have done so and conclude that, although the

prosecution should have provided defense counsel with

interview summaries, their non-disclosure does not require

reversal. The most telling exculpatory material was revealed

to the defense by the trial judge, and it was of a nature that it

could be effectively exploited by cross-examination if the

defense cared to utilize it. Evidence of guilt, both direct and

circumstantial, was overwhelming. While we disagree with

the government’s characterization of Russell Ramsey’s

testimony as “relatively minor,” we do not believe that the

verdict in any way hinged upon it. Furthermore, much of his

testimony, which was clearly damaging to defendant, was

consistent throughout. Thus, while the exculpatory material

could have been used to impeach Ramsey, it would not have

enabled defense counsel to negate entirely the damaging

nature of his testimony. Given these considerations, our

confidence in the verdict remains intact.

2. Evidentiary Issues

Over the objection of defense counsel, the trial court

permitted the government to introduce evidence that the

App. 11

insurance fraud was much greater than that actually charged;

according to this testimony, which was admitted pursuant to

Fed. R. Evid. 404(b),? as many as 170 individuals took part in

the fraud. In its motion in limine, the government contended

that this evidence was admissible on the ground that it tends

to show a common scheme and to prove defendant’s

knowledge of the fraud:

It is beyond challenge that the

Kentucky people were patients of Dr. Hale

and Dr. Lynch and that the Doctors placed

them in the hospital. The sole issue for jury

determination is what was Dr. Hale’s state of

mind when he admitted these people. To

borrow a phrase: “What did he know, and

when did he know it?”

In this context it is easy to see that

anything which imputes to Dr. Hale

knowledge of the fraud, or makes his

knowledge more probable, is probative and

3Evidence of other crimes, wrongs, or acts is not admissible to

prove the character of a person in order to show action in conformity

therewith. It may, however, be admissible for other purposes, such as

proof of motive, opportunity, intent, preparation, plan, knowledge,

identity, or absence of mistake or accident, provided that upon request by

the accused, the prosecution in a criminal case, shall provide reasonable

notice in advance of trial, or during trial if the court excuses pretrial notice

on good cause shown, of the general nature of any such evidence it

intends to introduce at trial.” Fed. R. Evid. 404(b). Y

App. 12

=

admissible. . . . To the extent that Dr. Hale

takes the position that he could not see this

forty person Kentucky scam being perpetrated

through his office because it was not that large

in comparison to his overall practice, then the

existence of a 170 person identical scam

would be admissible to refute his defense.

Defendant contended that such testimony was overly

prejudicial, consisted of inadmissible hearsay, and was

improper opinion testimony.

In United States v. Feinman, 930 F.2d 495 (6th Cir.

1991), this court set out the following guidelines for

reviewing Rule 404(b) issues:

A trial court must employ a two-step analysis

in determining the admissibility of evidence

offered under Fed. R. Evid. 404(b). First, the

trial court must ascertain whether the

proffered evidence is relevant and admissible

for a proper purpose. To be relevant, the

evidence must relate to a matter which is “in

issue,’ and must deal with conduct

substantially similar and reasonably near in

time to the offenses for which the defendant is

being tried. To determine whether the

proffered evidence is admissible for a proper —

purpose, the trial court must decide, whether

eer eee

App. 13

that evidence is probative of a material issue

other than character.

Finally, the court must determine

whether the probative value of the evidence is

“substantially outweighed by the danger of

unfair prejudice.” The district court has broad

discretion in balancing probative value against

potential prejudicial impact. We review a

district judge’s balancing of prejudicial impact

and probative value under Fed. R. Evid.

404(b) under an abuse of discretion standard.

Id. at 499 (citations omitted).

Insurance investigator Tom Isbell testified about his

work uncovering fraud in Tennessee, which defendant

contends violates Rule 602 of the Federal Rules of Evidence:

“A witness may not testify to a matter unless evidence is

introduced sufficient to support a finding that the witness has

personal knowledge of the matter. Among other things, Isbell

mentioned investigating sixty-eight suspicious claims

involving soft tissue injuries. Nearly all of them were

patients of either Dr. Lynch or defendant. He also described

a conversation that he had with defendant in 1991 concerning

suspected insurance fraud.

Inspector Lanny Miller of the Postal Service also

testified regarding the “larger scam.” Like Isbell, he used

charts summarizing the various participants in the fraud to

App. 14

help illustrate his testimony. In our view, the testimony of

both Isbell and Miller is admissible. Contrary to the position

taken by defendant, each man discussed a subject of which he

had intimate personal knowledge, to wit, his own

investigation of fraud.

The testimony introduced by the government relating

to the alleged abuse of the Medicare and Medicaid programs

was supported in large part by administrators and

investigators who testified about defendant’s administrative

history with the programs.

According to witness Yvonne Wood, who investigated

fraud in the Medicaid program, the Medicaid Bureau could

track suspected “over utilization” by comparing doctors.

When it determined that a claimed procedure was not

medically necessary, it would send the doctor a “recoupment”

letter. She indicated that defendant had received such letters,

which she characterized as a relatively rare event.

Another witness, Kay Hogan, indicated that defendant

fell statistically into the “top 1%” of doctors with the most

aberrant history of Medicare claims. Similar testimony culled

from investigations and statistical models was admitted from

other witnesses as well.

Defendant argues that all of this testimony was

improper, at least in part, as “scientific” evidence introduced

by lay witnesses and it violated the rule against hearsay. He

also contends that it was overly prejudicial.

App. 15

However, at trial defense counsel did not object to

either lay witness testimony or to hearsay. Consequently, we

review for plain error. Fed. R. Crim. P. 52(b). Neither issue

remotely approaches the level of plain error required for

reversal. See United States v. Olano, 507 U.S. 725 (1993)

(explaining the application of Rule 52(b)).

Under Feinman, the trial court retains broad discretion

when balancing the potential prejudice of proffered testimony

against its probative value. 930 F.2d at 499. In this case, the

fact that the primary defense theory was based upon

defendant’s alleged ignorance of the fraud convinces us that

the district court did not abuse its discretion in ruling that the

evidence relating to both the abuse of the Medicare and

Medicaid programs and the actual extent of the insurance

fraud were relevant and not unfairly prejudicial.

3. Use of Grand Jury Testimony

This circuit has held that as a general rule testimony

given by a grand jury witness suspected of wrongdoing may

be used against him in a later prosecution for a substantive

criminal offense. United States v. Slone, 933 F.2d 595, 601

(6th Cir. 1987). Such statements are not considered hearsay.

Id. (citing Fed. R. Evid. 801(d)(2)).

Nonetheless, defendant contends that S/one does not

permit introduction of lengthy questions posed to him during

grand jury proceedings because they represent statements

made by the prosecutor, not by the defendant. We find no

= Ae 5

| eT

App. 16

support for this position. Rather, the questions were

necessary to put defendant’s responses in context and their

introduction during trial was proper.

4. RICO Pattern Requirement

RICO requires a pattern of racketeering activity,

defined as

at least two acts of racketeering activity, one

of which occurred after the effective date of

this chapter and the last of which occurred

within ten years . . . after the commission of a

prior act of racketeering activity.

18 U.S.C. § 1961(5). The Supreme Court requires the

criminal conduct to be connected and related:

In normal usage, the word “pattern” here

would be taken to require more than just a

multiplicity of racketeering predicates. A

“pattern” is an “arrangement or order of things

or activity,” and the mere fact that there are a

number of predicates is no guarantee that they

fall into any arrangement or order. It is not

the number of predicates but the relationship

that they bear to each other or to some

external organizing principle that renders

them “ordered” or “arranged.”

W

h

Tl seeensinieienneniiiieeaenmael

App. 17

RICO’s legislative history reveals Congress’

intent that to prove a pattern of racketeering

activity a plaintiff or prosecutor must show

that the racketeering predicates are related,

and that they amount to or pose a threat of

continued criminal activity.

What a plaintiff or prosecutor must prove is

continuity of racketeering activity, or its

threats, simpliciter. This may be done in a

variety of ways, thus making it difficult to

formulate in the abstract any general test for

continuity.

H.J., Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229,

238-41 (1989) (citations omitted). Defendant focuses on the

“relatedness” requirement, citing Vild v. Visconsi, 956 F.2d

560 (6th Cir. 1992), for the proposition that two separate

schemes do not qualify. The Vild court looked to H.J., noting

that “[t]he plaintiff may satisfy the relationship requirement

if the predicate acts alleged ‘have the same or similar

purposes, results, participants, victims, or methods of

commission, or otherwise are interrelated by distinguishing

characteristics and are not isolated events.” Jd. at 566 (citing

HJ).

Even if we assume arguendo that the alleged

Medicare and Medicaid abuse was unrelated to the Kentucky

App. 18

insurance fraud, there were many related predicate acts

involved in the insurance fraud alone. See Dana Corp. v.

Blue Cross & Blue Shield, 900 F.2d 882, 886-87 (6th Cir.

1990) (single scheme containing repetitive illegal conduct

satisfies relatedness requirement). This is enough to satisfy

the RICO relatedness requirement.

5. Jury Instruction

Finally, defendant argues that the district court erred

in giving a jury instruction that included the language “a

scheme to deprive another . . . of the intangible right to honest

services by false or fraudulent pretenses, representations, or

promises.”

Prior to November 18, 1988, such a charge was

impermissible. McNally v. United States, 483 U.S. 350

(1987). In an attempt to address this situation, Congress

enacted 18 U.S.C. § 1346, which reads: “For the purposes of

this chapter, the term ‘scheme or artifice to defraud’ includes

a scheme or artifice to deprive another of the intangible right

of honest services. This statute is not retroactive. United

States v. Davis, 873 F.2d 900, 902 (6th Cir. 1989). Thus,

defendant argues that the district court improperly allowed the

jury to consider a theory of criminal liability that was invalid

when some of his criminal conduct occurred.

The government concedes that the “honest services”

portion of the instruction was given in error with respect to

the wrongful activity committed by defendant before

- | .

App. 19

November 1988. Because it did not premise its case upon an

“honest services” theory, but rather upon the old-fashioned

motive of financial gain, the government argues that the error

does not require reversal.

Defense counsel neglected to object to the instruction

and we therefore review it for plain error. Fed. R. Crim. P.

52(b). Taken in the context of the prosecution’s theory of

guilt, we conclude that defendant has not, as he is required to

do, made a “specific showing of prejudice to satisfy the

‘affecting substantial rights’ prong of Rule 52(b).” See

United States v. Olano, 507 U.S. at 735 (1993).

Il.

For the foregoing reasons, the conviction and sentence

of defendant are affirmed.

a ne em 3 pr neem

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

+

ORDER

DENYING PETITION FOR REHEARING EN BANC

Filed April 3, 1997

+

Pages 20 thru 21

te

aves

no eae

App. 20

No. 95-5915

UNITED STATES COURT OF APPEALS ~

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

ORDER

DAN E. HALE, D.O.,

)

)

)

)

)

)

)

) Filed April 3, 1997)

)

)

Defendant-Appellant.

BEFORE: NORRIS, SUHRHEINRICH, and

BATCHELDER, Circuit Judges.

The court having received a petition for rehearing en

banc, and the petition having been circulated not only to the

original panel members but also to all other active judges of

this court, and no judge of this court having requested a vote

on the suggestion for rehearing en banc, the petition for

rehearing has been referred to the original panel.

App. 21

The panel has further reviewed the petition for

rehearing and concludes that the issues raised in the petition

were fully considered upon the original submission and

decision of the case. Accordingly, the petition is denied.

ENTERED BY ORDER OF THE COURT

/s/ _Leonard Green

Leonard Green, Clerk

APPENDIX C

+

U.S. Constitution, Amendment V

18 U.S.C. § 1961(5)

18 U.S.C. § 1962(c)

18 U.S.C. § 3500(b)

+

Pages 22 thru 23

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“ . 2

-

App. 22

United States Constitution, Amendment V.

Criminal actions - Provisions concerning - Due

process of law and just compensation clauses. — 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 be deprived of life, liberty, or property, without

due process of law; nor shall private property be taken for

public use without just compensation.

ee eeeeee et

18 United States Code § 1961(5)

“pattern of racketeering activity” requires at least two

acts of racketeering activity, one of which occurred after the

effective date of this chapter and the last of which occurred

within ten years (excluding any period of imprisonment) after

the commission of a prior act of racketeering activity.

:

i

|

/

!

i

App. 23

18 United States Code § 1962(c)

It shall be unlawful for any person employed by or

associated with any enterprise engaged in, or the activities of

which affect, interstate or foreign commerce, to conduct or

participate, directly or indirectly, in the conduct of such

enterprise’s affairs through a pattern of racketeering activity

or collection of unlawful debt.

e*ee+¢42¢4¢444%

18 United States Code § 3500(b)

Demands for production of statements and reports

of witnesses

(b) After a witness called by the United States has

testified on direct examination, the court shall, on motion of

the defendant, order the United States to produce any

statement (as hereinafter defined) of the witness~ in the

possession of the United States which relates to the subject

matter as to which the witness has testified. If the entire

contents of any such statement relate to the subject matter of

the testimony of the witness, the court shall order it to be

delivered directly to the defendant for his examination and

use.

=

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

+

EXCERPTED RESPONSE TO PETITION

FOR REHEARING AND SUGGESTION

FOR REHEARING EN BANC

Filed April 19, 1997

+

Pages 24 thru 25

App. 24

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

CASE NO. 95-5915

UNITED STATES OF AMERICA

Plaintiff-Appellee

vs.

~ DAN E. HALE

Defendant-Appellant

RESPONSE TO PETITION FOR REHEARING AND

SUGGESTION FOR REHEARING EN BANC

(EXCERPT FROM PAGE 7)

Reasonable people can disagree as to whether more or

less of the notes should have been disclosed. But to call what

occurred here “cheating,” deserving of the extreme remedy

suggested, is preposterous. If the undersigned had any

inclination to cheat or suborn perjury, there would not have

been any notes to review.

App. 25

There is a distinct risk of appearing recalcitrant by

continuing to argue the Brady issue itself. And, the

undersigned recognizes that the better course of action would

have been to give over redacted summaries to avoid these

issues.‘

=

‘These notes contained numerous investigative leads about

lawyers, insurance agent, etc. that could not be disclosed while the

investigation was ongoing. Redacting names would not suffice, because

the identity could be deciphered from the context. Redacting the entire

subject would have rendered the interviews confusing. (The Court must

understand we are not talking about redacting just Ramsey’s three

summaries. There were 13 scammer witnesses whose summaries would

have to be redacted). Having the Court review the summaries for

exculpatory information, which this-Court has repeatedly encouraged,

seemed to be the proper course of action. In the future, to avoid this kind

of issue, either no notes will be taken (still revealing oral Brady, but at

least avoiding unnecessary context and semantics disputes), or redaction

will have to be done.