United States v. Srivastava

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-4142
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
PRADEEP SRIVASTAVA,
Defendant - Appellant.
No. 10-4600
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
PRADEEP SRIVASTAVA,
Defendant - Appellant.
No. 10-4720
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
PRADEEP SRIVASTAVA,
Defendant - Appellant.
Appeals from the United States District Court for the District
of Maryland, at Greenbelt. Roger W. Titus, District Judge.
(8:05-cr-00482-RWT-1)
Argued: December 10, 2010 Decided: February 18, 2011
Before NIEMEYER and KING, Circuit Judges, and Patrick Michael
DUFFY, Senior United States District Judge for the District of
South Carolina, sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: Kannon Kumar Shanmugam, WILLIAMS & CONNOLLY, LLP,
Washington, D.C., for Appellant. Stuart A. Berman, OFFICE OF
THE UNITED STATES ATTORNEY, Greenbelt, Maryland, for Appellee.
ON BRIEF: Paula M. Junghans, ZUCKERMAN SPAEDER LLP, Washington,
D.C.; James A. Bruton, Amy R. Davis, WILLIAMS & CONNOLLY, LLP,
Washington, D.C., for Appellant. Rod J. Rosenstein, United
States Attorney, Baltimore, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
This appeal raises the question of whether Pradeep
Srivastava (“Srivastava”) made the “substantial preliminary
showing” under Franks v. Delaware, 438 U.S. 154 (1978), that is
required for him to be entitled to an evidentiary hearing
challenging the integrity of an affidavit submitted to support
the issuance of a search warrant. This appeal also raises the
question of whether the district court properly excluded
testimony of Srivastava as hearsay.
We hold that Srivastava did not make the “substantial
preliminary showing” required by Franks and, therefore, affirm
the district court’s ruling on the Franks issue. Furthermore,
we hold that the district court properly excluded Srivastava’s
hearsay testimony. Finally, we find that any issues Srivastava
raises as to the interpretation and execution of the March 2003
search warrants will not be revisited by this Court as we have
already analyzed these issues in United States v. Srivastava,
540 F.3d 277 (4th Cir. 2008)(“Srivastava I”), cert. denied, 129
S. Ct. 2826 (2009).
I.
In early 2003, a criminal investigation was initiated by
the Department of Health and Human Services (the “DHHS”), the
Federal Bureau of Investigation (the “FBI”), and the
3
government's Office of Personnel Management (the “OPM”), into an
alleged health care fraud scheme involving Srivastava, a
licensed cardiologist practicing with two associates in
Maryland. The federal authorities suspected that Srivastava and
his associates were involved in the submission of false claims
to various health care benefit programs, in violation of 18
U.S.C. § 1347. As a result, the authorities commenced an
investigation into Srivastava's billing practices.
On March 20, 2003, Special Agent Jason Marrero (“Marrero”
or “Agent Marrero”) of the DHHS Office of Inspector General
applied to the United States District Court for the District of
Maryland for three search warrants for evidence of federal
health care fraud. United States Magistrate Judge William
Connelly approved the warrants, which covered Srivastava’s two
medical offices and his residence. In support of its warrant
application, the government submitted an affidavit by Agent
Marrero that summarized evidence obtained by the Office of
Inspector General, the FBI, and the OPM concerning “allegations
that Srivastava’s medical group . . . submits false claims to
health care benefit programs.” The Affidavit asserted that
there was probable cause to believe that criminal fraud had been
committed by Srivastava’s medical group based upon five
categories of “[t]he evidence gathered to date [which] shows
that Srivastava’s medical office has defrauded health care
4
benefit programs. . . .” The warrants authorized agents to
search for “the following records, including, but not limited
to, financial, business, patient, insurance, and other records
related to the business of Dr. Pradeep Srivastava . . . which
may constitute evidence of violations of [medical fraud].” The
warrants proceeded to authorize the seizure of various specific
categories of records, including, “financial records, including
but not limited to accounting records, tax records, accounts
receivable logs and ledgers, banking records, and other records
reflecting the income and expenditures of the business.”
On March 21, 2003, agents executed the search warrants. In
the wake of the searches, the government abandoned its pursuit
of any criminal charges against Srivastava for health-care
fraud. Without conceding any wrongdoing, however, Srivastava
did enter into a civil settlement with the government involving
similar allegations. Based on records seized that indicated
that Srivastava had conducted financial transactions with the
Bank of India, the government suspected that Srivastava had
failed to file a report on a foreign bank account. The
government then launched a two-year investigation into
Srivastava’s tax returns, which uncovered evidence that, in tax
years 1998 and 1999, Srivastava had omitted certain capital
gains from personal stock-trading activity from his tax returns.
5
On October 12, 2005, the government obtained an indictment
from a grand jury in the District of Maryland charging
Srivastava with two counts of attempting to evade taxes and one
count of making false statements on a tax return.
Before trial, Srivastava moved for an evidentiary hearing
pursuant to Franks, 438 U.S. 154, contending that Agent
Marrero’s affidavit contained several omissions that were
intentionally and materially misleading and that had Agent
Marrero included the material information on the affidavit, the
affidavit would not sufficiently establish probable cause.
Srivastava also moved to suppress the tax-related documents
seized during the searches on the grounds that they fell outside
the scope of the warrants and that, even assuming they fell
within the scope of the warrants, they should be suppressed
under the “flagrant disregard” doctrine, which mandates blanket
suppression when officers act with flagrant disregard for a
warrant’s terms.
United States District Judge Roger W. Titus held hearings
on Srivastava’s motion to suppress evidence on March 27, 2006
and June 9, 2006. At the first hearing, the district court
denied Srivastava’s motion for a hearing under Franks. The
district court took evidence at the second hearing.
On August 4, 2006, the district court issued a memorandum
opinion and order suppressing evidence. United States v.
6
Srivastava, 444 F. Supp. 2d 385 (D. Md. 2006), reconsideration
denied, 476 F. Supp. 2d 509 (D. Md. 2007). The United States
appealed pursuant to 18 U.S.C. § 3731. On September 3, 2008,
this Court reversed the district court’s order, finding no
Fourth Amendment violation and no grounds to suppress any of the
government’s evidence. Srivastava I, 540 F.3d 277.
When the case returned to the district court in 2009,
Srivastava moved for reconsideration of the March 2006 order
denying his motion for a Franks hearing. The district court
denied the motion. A jury convicted Srivastava of all three
charged crimes. In a post-trial motion, Srivastava again sought
a Franks hearing. The district court denied the motion. The
court imposed concurrent sentences of 46 months of imprisonment
on counts one and two and 36 months on count three; three years
supervised release, including a special condition of release
requiring payment of $16,110,160 in restitution to the IRS; and
a $300 special assessment. This appeal followed.
II.
A.
We first address the district court’s refusal to grant
Srivastava a Franks hearing. In Franks, the Supreme Court held
that Srivastava may challenge affidavits upon which search
warrants are based under the Fourth and Fourteenth Amendments,
7
and that properly challenged warrants may be voided. 438 U.S.
154. To entitle a Srivastava to a Franks hearing, he must make
a substantial preliminary showing that a warrant was procured
through false statements intentionally or recklessly made, and
that such statements were necessary for establishing probable
cause. In other words, in regards to an alleged omission,
Srivastava has to make a preliminary showing (1) that the
affiant omitted facts with the intent to make, or in reckless
disregard of whether they thereby made, the affidavit misleading
and (2) that the affidavit if supplemented by the omitted
information would not have been sufficient to support a finding
of probable cause. Because other pre-trial mechanisms exist to
protect innocent citizens, Srivastava’s burden in establishing
the need for a Franks hearing, based on either false statements
or material omissions, is a heavy one. See United States v.
Jeffus, 22 F.3d 554, 558 (4th Cir. 1994)(citing Franks, 438 U.S.
at 171-72). Srivastava’s showing must be more than conclusory
and requires a “detailed offer of proof,” United States v.
Colkey, 899 F.2d 297, 300 (4th Cir. 1990), and “allegations of
negligence or innocent mistake are insufficient,” Franks, 438
U.S. at 171.
False statements include information intentionally or
recklessly omitted; however, “the affirmative inclusion of false
information in an affidavit is more likely to present a question
8
of impermissible official conduct than a failure to include a
matter that might be construed as exculpatory.” Colkey, 899
F.2d at 301-02. Failure to include a matter “potentially opens
officers to endless conjecture about investigative leads,
fragments of information, or other matter that might, if
included, have redounded to Srivastava’s benefit. The potential
for endless rounds of Franks hearings to contest facially
sufficient warrants is readily apparent.” Id. Accordingly,
merely showing an intentional omission of a fact from a warrant
affidavit does not fulfill Franks’ requirements. United States
v. Tate, 524 F.3d 449, 455 (4th Cir. 2008). “To satisfy the
Franks intentional or reckless falsity requirement for an
omission, Srivastava must show that facts were omitted “with the
intent to make, or in reckless disregard of whether they thereby
made, the affidavit misleading.” Id. “Stated otherwise, the
omission must be “designed to mislead” or must be made “in
reckless disregard of whether [it] would mislead.” Id.In order to show that the omitted material was “necessary
to the finding of probable cause,” id., Srivastava must show
that the inclusion in the affidavit of the omitted material
would defeat probable cause. Colkey, 899 F.2d at 301. Omitted
information that is potentially relevant but not dispositive is
not enough to warrant a Franks hearings. Id. For an omission
to serve as the basis for a hearing under Franks, it must be
9
such that its inclusion in the affidavit would defeat probable
cause. Id. Upon making this two-part preliminary showing,
Srivastava is entitled to a hearing, at which he bears the
burden of proving the allegations by a preponderance of the
evidence. See Franks, 438 U.S. at 156. If a Franks hearing is
appropriate and an affiant’s material perjury or recklessness is
established by a preponderance of the evidence, the warrant
“must be voided” and evidence or testimony gathered pursuant to
it must be excluded. Id. A warrant that violated Franks is not
subject to the good-faith exception to the exclusionary rule.
United States v. Leon, 468 U.S. 897, 923 (1984).
B.
Srivastava alleges that Agent Marrero knowingly and
intentionally, or with reckless disregard, omitted material
information from his affidavit, and that had the affidavit
included such omitted information, it would not have supported a
finding of probable cause. Srivastava accuses Marrero of
mischaracterizing “a harmless discrepancy in diagnostic codes,”
“shad[ing] and distort[ing]” innocuous evidence “to make it
appear that it reflected nefarious conduct,” and swearing out an
affidavit that “was intentionally crafted” to mislead the
magistrate and contained “little if any” evidence that “was
untainted by the government’s pervasive omissions and spin.”
However, we find that a careful examination of the facts
10
demonstrates that Agent Marrero’s affidavit did not contain
knowing and intentional material omissions. Therefore, we find
that the district court properly denied Srivastava’s request for
a Franks hearing.
Agent Marrero submitted a 19-page affidavit that summarized
evidence concerning allegations that Srivastava’s medical
practice submitted false claims to health care benefit programs.
Agent Marrero established probable cause by setting forth five
categories of evidence: (1) billing for services not rendered;
(2) billing for duplicative services through two different
CareFirst plans; (3) listing inappropriate diagnosis codes on
claims; (4) billing for incidental services, which is charging
for services that are already included in the primary diagnostic
or treatment procedure billed; and (5) altering medical records.
We will discuss Srivastava’s allegations in relation to the five
categories of evidence set forth in the affidavit to establish
probable cause.
1. Billing for Services Not Rendered.
The affidavit outlined evidence that Srivastava was billing
for services not rendered. To examine Srivastava’s billings,
the government hired Dr. David A. Rawling, a consultant and
practicing cardiologist. In June 2001, Dr. Rawling reviewed
spreadsheets that described services and procedures that
Srivastava’s office billed for three CareFirst patients and
11
three Medicare patients. Dr. Rawling concluded (1) that
Srivastava’s billing of combined right and left heart
catheterizations covered by Current Procedural Technology
(“CPT”) code 93526 appeared to be excessive, because fewer than
ten percent of cases justify procedures that include a right
heart catheterization or combined left and right heart
catheterizations; (2) that Srivastava consistently billed for
services already included in the primary diagnostic procedure;
and (3) that Srivastava appeared to be adding procedures or
services to bills to maximize reimbursements.
In November 2002, Dr. Rawling examined hospital patient
records for nine of Srivastava’s Medicare patients, including
records concerning sixteen dates of service in 2000 for which
Srivastava’s office billed Medicare using CPT 93526—the billing
code for a combined right and left heart catheterization. In
fifteen of those sixteen instances, Dr. Rawling found that the
hospital records did not show any right heart catheterization
being performed, nor any change in right heart pressure that
would be associated with a right heart catheterization. Billing
for a combined right and left heart catheterization rather than
a left heart catheterization alone increased the Medicare
payment by $141.85. Dr. Rawling advised that he detected “a
consistent pattern of over-billing, billing for procedures not
performed, or billing inappropriate codes.”
12
Dr. Rawling’s observations were corroborated by Dr. Bruce
Lloyd, another cardiologist who reviewed the medical records for
Srivastava’s treatment of a CareFirst member. Srivastava billed
CareFirst for a combined right and left heart catheterization,
but Dr. Lloyd concluded that “in each situation, only a left
heart procedure was done. No right heart study was done, but it
was billed. This is fraud.”
At the hearing on Srivastava’s initial motion for a Franks
hearing and on appeal, Srivastava claims that in this section,
Agent Marrero omitted information so as to make the evidence
appear more suspicious than it actually was. Srivastava claims
that Agent Marrero’s affidavit omitted information that in some
cases where Srivastava’s office billed for right and left heart
catheterizations, Srivastava had actually performed a left heart
catheterization and had “inserted a venous sheath into the
patient’s right heart.” Srivastava claims that Marrero failed to
tell the magistrate judge that Srivastava actually lost money by
billing for a combined right and left heart catheterization
rather than for two separate procedures of a left heart
catheterization and right heart venous sheath. Srivastava argues
that while “it was arguably incorrect to bill for the combined
procedure as a right and left heart catheterization,” Agent
Marrero still should have included information in his affidavit
that Srivastava had performed a right venous sheath in some
13
cases. Srivastava argues that “if Agent Marrero had disclosed to
the magistrate that the alleged miscoding identified in this
section of the affidavit often redounded to Srivastava’s
financial detriment, instead of his benefit, the magistrate
would presumably have determined that the allegations in this
section did not support the conclusion that Dr. Srivastava was
engaging in health care fraud.” Srivastava’s allegation is
based on entries in Dr. Rawling’s notes concerning his review of
Srivastava’s claims for combined right and left heart
catheterization. In two instances, Dr. Rawling wrote “no RHC
(right heart catheterization), just venous access.” In a third,
he wrote: “no RHC. Cath lab procedure report only indicates
venous sheath placed.” In other instances, he reviewed
laboratory records and simply wrote that “no RHC” had been
performed.
At the district court hearing, Srivastava offered no
evidence that Agent Marrero knew Srivastava had placed a “venous
sheath” in or near the right heart or knew, believed, or
deliberately omitted information that such an action was
medically equivalent to performing a right heart catheterization
or could be billed as such. As a result the district court
rejected Srivastava’s argument.
We agree with the district court that while Srivastava
claims that Agent Marrero should have disclosed that Srivastava
14
could have billed separately for the venous sheath procedure and
that had he done so he would have actually billed more for the
procedure, the record is devoid of any evidence (1) that Marrero
knew that Srivastava had conducted any venous sheath procedures,
(2) that he was aware that Srivastava could have billed more for
a left heart catheterization and a right venous sheath than for
a combined right and left heart catheterization, or (3) that he
intentionally omitted such information from his affidavit.
Srivastava points to Dr. Rawlings notes and Dr. Rawling’s
memorandum summarizing his findings as evidence that Agent
Marrero knew that Srivastava conducted venous sheath insertions
for which he did not bill. However, a review of Dr. Rawling’s
notes and memorandum indicates that Agent Marrero could not have
inferred from Dr. Rawlings findings that Srivastava performed a
venous sheath, which could have been billed for separately, and
that billing for a right and left heart catheterization
together, while erroneous, actually resulted in a lower amount
paid to Srivastava. Additionally, Dr. Rawling’s notes
indicating that a venous sheath was performed in some of the
instances does not explain the remaining instances where
Srivastava billed for a right and left heart catheterization and
did not perform a right catheterization or a venous sheath. The
district court correctly concluded that Srivastava failed to
make a preliminary showing that Agent Marrero omitted facts with
15
the intent to make, or in reckless disregard of whether they
thereby made, the affidavit misleading with respect to this
section on Billing for Services Not Rendered. The information
that Agent Marrero included in his affidavit accurately depicted
the overall findings of Dr. Rawling’s as to Srivastava’s billing
for services that he did not render.
2. Billing for Duplicate Services.
The affidavit also outlined evidence that Srivastava
submitted duplicate bills for the same services to two different
CareFirst entities. As background, Agent Marrero described how,
in May 1997, BlueCross BlueShield National Capital Area
(“BCBSNCA”) placed Srivastava on “pre-payment review” because of
concern about possibly fraudulent or inappropriate benefits, and
required Srivastava to submit supporting medical documentation
for it to examine prior to deciding whether to pay or reject
Srivastava’s claims.
The affidavit described that in the case of CareFirst
subscriber G.B., Srivastava submitted claims to BCBSNCA, dated
February 26, 1999, for eight procedures or services allegedly
performed on January 14, 1999. Payment for five of the eight
procedures was rejected for lack of documentation. Srivastava
then submitted claims dated December 8, 1999 to Blue Cross Blue
Shield Maryland (“BCBSM”) for seven procedures or services
16
performed on January 14, 1999. All seven procedures or services
had been part of the previously billed February 26, 1999 claims.
In the case of subscriber S.B., Srivastava submitted claims
to BCBSNCA and BCBSM, respectively, on August 20, 1998 and
November 23, 1999, which both billed for six identical
procedures or services that were allegedly provided on August
18, 1998.
In the case of patient, A.F., Srivastava submitted claims
to BCBSNCA and BCBSM, respectively, dated March 3, 1999, and
December 7, 1999, for four identical procedures or services that
were allegedly provided on March 2, 1999.
At the March 27, 2006 hearing, Srivastava barely challenged
this section of the affidavit. Srivastava suggested innocent
explanations for sending the same bill to two separate CareFirst
entities and contended that the affidavit should have included
exculpatory information that a longtime employee of his medical
office had told investigators that she was not aware of any
billing fraud.
The district court made short shrift of this argument,
pointing out that Franks and this Court’s Franks cases did not
require that every conceivable thing that is said by a person
being interviewed must find its way into the affidavit if it’s
exculpatory in nature. See Colkley, 899 F.2d at 301.
17
On Appeal, Srivastava claims that the heading, “Billing for
Duplicate Services,” is misleading. Srivastava claims that
Agent Marrero described Srivastava’s resubmission of denied
claims from CareFirst’s National Capital Area plan to its
Maryland counterpart and implied—via the section heading—that
the resubmission was duplicative and therefore fraudulent.
Srivastava argues that this implication was misleading because
Dr. Srivastava did not attempt to be paid twice for the same
procedures but instead merely resubmitted denied claims in
accordance with CareFirst’s written procedures.
We find that the district court properly concluded that
Srivastava failed to make a preliminary showing that Agent
Marrero omitted “with the intent to make, or in reckless
disregard of whether they thereby made, the affidavit
misleading” with respect to this section of the affidavit.
Srivastava has failed to make a preliminary showing that the
omission was “designed to mislead” or was made “in reckless
disregard of whether [it] would mislead.” Tate, 524 F.3d at
455. Rather, in this section of the affidavit, Agent Marrero
recounts the exact facts of how Srivastava billed two separate
providers for the same service. While Srivastava argues that
the heading is misleading, when we read the entire affidavit,
including a summary of the headings which says “(2) billing for
duplicate services through two different CareFirst plans,” we
18
find that the district court was correct in finding that
Srivastava has failed to make a preliminary showing that Agent
Marrero intended to mislead the Magistrate Judge in this
section.
3. Listing Inappropriate Codes on Claims.
The affidavit outlined evidence obtained when the FBI sent
three male undercover agents, using fictitious names, to receive
treatment at Srivastava’s medical practice. Before each agent
went to Srivastava’s office, Dr. Lloyd, a cardiologist and
consultant, checked his blood pressure, checked his height and
weight, and performed an electrocardiogram. In each case, Dr.
Lloyd advised the agent that the blood pressure, weight, and EKG
results were normal. After each agent visited Srivastava, Dr.
Rawling reviewed the claim forms and the agents’ summaries
describing visits to Dr. Lloyd and to Srivastava’s practice,
including information about the date they were seen by the
doctors, what services they recalled receiving and by whom, and
what if any complaints were noted.
The affidavit recited that after the agents visited
Srivastava’s practice, the office submitted claim forms
containing diagnostic codes for Agent Flores (hypertensive heart
disorder; tachycardia, unspecified; secondary cardiomyopathy,
unspecified; and other and unspecified hyperlipidemia); Agent
Yerdon (two diagnostic codes, including hypertensive heart
19
disorder); and Agent Striebich (two diagnostic codes, including
other and unspecified hyperlipidemia). Dr. Rawling reviewed the
available records; the claim forms and the agents’ summaries
describing visits to Dr. Lloyd and to Srivastava’s practice.
Based on this information, Dr. Rawling found no basis for the
diagnoses indicated by the billing codes used by Srivastava’s
medical practice.
At the 2006 hearing, Srivastava contended that three active
FBI agents were not considered to be normal in any time frame
that was remotely the same as when they were being seen by
Srivastava. This contention was based on brief passages in two
FBI form 302 memoranda relating to the agents’ visits with Dr.
Lloyd. The memoranda indicated that Dr. Lloyd had found EKG
results, weight and blood pressure to be in the normal range and
had so advised Agent Flores, Yerdon, and Striebich,
respectively. But one memorandum indicated that after Dr. Lloyd
told Agent Flores that his condition was normal, the agent
received a form listing services provided which contained a
diagnostic description of “401.1:L Essential hypertension,
benign.” A second memorandum indicated that documents given to
Agent Yerdon contained the same language. No such reference
appeared in the memorandum for Agent Striebich. The memoranda
did not indicate that Dr. Lloyd told any agent that he suffered
from hypertension, and Srivastava presented no evidence that
20
either Dr. Rawling or Agent Marrero was told anything about the
phrase “401.1: Essential hypertension, benign.” Nevertheless,
Srivastava claims these brief references to hypertension on
billing forms demand a conclusion that Agent Marrero made
knowing false representations about the agents’ condition.
The district court rejected this argument. The memorandum
for Agent Yerdon listed a blood pressure of 114/74, and the
district judge observed that hypertension is not diagnosed
“until you get to 140/90 or more.” The district court
speculated that “maybe this is a case of bad codes, but maybe
Dr. Lloyd simply coded the visit as being an evaluation of that
possible condition.” The district court later ruled:
Now, much is made by the defense of the fact that at
the end of the agent’s report of his visit to see Dr.
Lloyd, a diagnosis description was put down “essential
hypertension benign,” and it indicates that
notwithstanding everything the agent was told in
English, that this coding on a billing sheet indicates
that these agents, or at least two of these three
agents, had “essential hypertension benign.”
My understanding of what “essential hypertension
benign” means is that the cause of the hypertension is
not known, but there is hypertension. I have no idea
why Dr. Lloyd would have put that on his billing
records. It may be more of the extraordinary world we
live in with medical records that code has to be put
down for something. And if a person comes in to see a
physician and the physician puts down something is
wrong, that they won’t get compensated, so they have
to put down what the suspected diagnosis is . . . . I
don’t see anything here that indicates to me that
these agents reported to Agent Marrero that they had
“Essential hypertension benign.” They simply gave him
what the records said of the diagnosis code.
21
I would assume from the context of these, that if
these agents really did have blood pressure readings
taken that were within normal range, that they were in
fact told they were normal. So that from the
perspective of Agent Marrero, who’s trying to portray
accurately for Magistrate Connelly the circumstances
of these three agents, it is that these are three
agents who saw a cardiologist at Georgetown University
Hospital; and all three were told they were normal,
and they then decided to test what would happen when
they went to see Srivastava’s medical practice.
So I don’t find anything . . . that comes close to
meeting the Franks standard on the basis of the
statement allegedly made with reckless disregard of
the truth here. The highest level I could get this to
would be negligent. And even there, if he put down,
by the way the, diagnosis code when I left on a sheet
of paper was “essential hypertension benign,” I don’t
know that even if that had been intentionally and
recklessly made that that would gut this affidavit of
sufficient information to negate a finding by the
magistrate of probable cause.
Joint Appendix at 602-04.
On Appeal, Srivastava claims Agent Marrero intentionally
misled the magistrate about the results of the undercover
investigation in the way that he described the results of the
investigation. Srivastava argues that “the government undertook
its undercover investigation for the specific purpose of
catching Dr. Srivastava in the act of committing health-care
fraud. . . . However, when it became clear that Dr. Srivastava
had not committed fraud because he had performed and billed for
altogether appropriate procedures for the three undercover
agents, the government went to elaborate lengths to generate
22
evidence suggestive of wrongdoing.” First, Srivastava claims
that agent Marrero entirely excluded from the affidavit the most
relevant results of the undercover investigation: “namely, that
the investigation produced no direct evidence of health-care
fraud, because Dr. Srivastava billed only for procedures that he
appropriately performed on the undercover agents.” Second,
Srivastava claims that Agent Marrero “drew the magistrate’s
attention to the discrepancy in diagnostic coded that Dr.
Rawling eventually identified without explaining the
significance of the diagnosis codes or revealing that Dr.
Rawling was not provided with the medical records that would
have allowed him to determine if there was a basis for the
diagnosis or not.” According to Srivastava, “the overall effect
of Agent Marrero’s statements concerning the undercover
investigation, then, was to leave the magistrate with the
impression that the investigation had succeeded when it had in
reality completely failed.”
We find that Srivastava’s attack on the undercover
investigation section of the affidavit presented nothing that
comes close to meeting the Franks standard on the basis of
statement or omissions allegedly made with reckless disregard of
the truth. In his affidavit, Agent Marrero described how Dr.
Lloyd checked the undercover agents’ blood pressure, checked
their height and weight, performed an EKG, and advised them that
23
the results were normal. When the agents visited Srivastava’s
practice, the office submitted claim forms containing ominous
diagnostic codes for Agent Flores (hypertensive heart disorder;
tachycardia, unspecified; secondary cardiomyopathy, unspecified;
and other and unspecified hyperlipidemia), Agent Yerdon (two
diagnosis codes, including hypertensive heart disorder), and
Agent Striebich (two diagnostic codes, including other and
unspecified hyperlipidemia). Dr. Rawling reviewed the available
records—the claim forms and the agents’ summaries describing
visits to Dr. Lloyd and to Srivastava’s practice. Based on this
information, Dr. Rawling found no basis for the diagnoses
indicated by the billing codes used by Srivastava’s medical
practice. This is exactly what happened according to the
record, and Agent Marrero accurately described for the
Magistrate Judge the results of the investigation.
Srivastava claims that Agent Marrero “excluded” evidence
that “Dr. Srivastava billed only for procedures that he
appropriately performed on the undercover agents.” However,
Srivastava is making a conclusory statement that Dr.
Srivastava’s procedures were appropriate. All Agent Marrero
knew when he wrote the affidavit was that Srivastava billed for
a variety of diagnostic codes that were inconsistent with Dr.
Lloyd’s diagnoses of three healthy FBI agents. Second,
Srivastava claims that Agent Marrero excluded information that
24
Dr. Rawlings made his opinion without being provided with the
medical records that would have allowed him to determine if
there was a basis for the diagnoses or not. However, given that
the affidavit was submitted in support of applications for
search warrants to obtain Srivastava’s medical records, Agent
Marrero hardly concealed the fact that Dr. Rawling had not been
provided with Srivastava’s medical records. Therefore, we
affirm the district court’s finding that nothing Agent Marrero
included or failed to include in his affidavit comes close to
meeting the Franks standard for statements or omissions
“designed to mislead” or made “in reckless disregard of whether
[it] would mislead.” Tate, 524 F.3d at 455.
4. Billing for Incidental Services.
The affidavit also contained evidence of a form of double-
billing. Agent Marrero explained that descriptions of
procedures as defined by the CPT Code Book included all services
necessary to accomplish the primary diagnostic or treatment
procedure, even if an independent CPT code covers the specific
service. For the relevant time period, the CPT Code Book
definition of cardiac catheterization included, among other
things, the introduction, positioning, and repositioning of
catheters.
In the case of patient A.B., however, Srivastava’s office
submitted one claim to Medicare for a combined right and left
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catheterization (CPT 93526) on March 8, 2000, and also billed
for ten other procedures, including the introduction of the
catheter into the aorta (CPT 36200). Introducing the catheter
into the aorta is an included service in the primary diagnostic
procedure CPT code 93526. The same form of double-billing
occurred with respect to service provided to patient J.W. on
July 20, 1999, and patient L.S. on September 14, 2000.
In response to the results in these cases, Agent Marrero
recited that E.S., a former employee of Srivastava’s, told an
FBI agent that Srivastava used multiple billing codes and billed
for duplicative services, such as an electrocardiogram and its
interpretation. E.S. reported that she had worked for another
doctor who only billed one code for an EKG.
Srivastava’s primary criticism of this section of the
affidavit was that Agent Marrero should not have relied on
information from E.S. because her former employer was a
gynecologist, not a cardiologist. Srivastava also claimed that
Agent Marrero’s affidavit mischaracterized E.S.’s statements,
when in fact the affidavit closely tracked the interview memo.
The district court found no problem with this portion of the
affidavit, and Srivastava abandoned this issue in his motion for
reconsideration and in his post-trial motion.
On appeal, Srivastava does not allege that Agent Marrero
made any misleading statements or omissions in regard to this
26
section. Therefore, we adopt the district court’s finding that
the Affidavit did not contain intentional, material false
statements or omissions relating to billing for services not
rendered.
5. Altering Medical Records.
Finally, the affidavit contained evidence of altered
medical records. For example, Srivastava’s office billed
CareFirst twice for six laboratory procedures or services
provided to patient S.H. The dates of service were allegedly
November 2 and 3, 1998, but the affidavit stated that “the
documentation provided for the November 3rd date of service
appears to be altered because a ‘3’ is handwritten over where
the typewritten ‘2’ appears to be in the date ‘11/02/1998.’” In
the case of patient O.B., Srivastava’s office billed CareFirst
for four procedures (CPT 93307, 03320, and 93325) allegedly
provided on November 24, 1997, and for six procedures (including
the same three CPT codes) allegedly provided on November 26,
1997. The office submitted two EKG reports as supporting
documentation for both alleged dates of service, but the
affidavit stated that “the documentation provided for the
November 24th date of service appears to be altered because a
‘4’ is handwritten over where the typewritten ‘6’ appears to be
in the date ‘11/26/1997,” The two Echocardiography Reports
27
appear to be identical with the exception of the handwritten
‘4.’”
At the 2006 hearing, Srivastava did not contend that this
section of the affidavit was false. Instead, Srivastava claimed
that Agent Marrero failed to include exculpatory information
provided by Srivastava’s longtime billing manager, who denied
any improprieties. The billing manager insisted that “Dr.
Srivastava had never asked [her] to do anything improper about
the billing,” and expressed the view that the alterations were
“mistakes and corrections.” Srivastava also claimed that at
least one set of documentation revealed that Dr. Srivastava had
in fact performed two different tests that yielded different
results. Srivastava claimed that these omissions were intended
to mislead the magistrate into viewing these altered records as
attempts at double billing for the same procedure.
The district court found that the affidavit was accurate
because the records were altered and found that this section of
the affidavit was included to show alteration, not to
demonstrate double-billing. The court did not find anything
that is misleading or comes close to the reckless disregard for
the truth standard under Franks with regard to the reference to
the altered medical records. The district court found that it
certainly appeared that these records were altered.
28
In his motion for reconsideration, Srivastava claimed that
Agent Marrero had an obligation to disclose exculpatory
assertions by the billing manager. Srivastava further claimed
that the November 3, 1998 results were different from the
November 2, 1998 results, proving that two sets of tests had
been performed. Because this evidence did not negate the
essential point made by this section of the affidavit—that the
dates on records had been altered, providing additional evidence
that the medical practice was engaged in fraud—the district
court denied the motion.
On appeal, Srivastava acknowledges that this section of the
affidavit accurately recites that his office billed CareFirst
twice for procedures or services for patients S.H. (alleged
dates of service November 2 and 3, 1998) and O.B. (alleged dates
of service November 24 and 26, 1997), and that in each instance,
the second claim contained a handwritten alteration of the date
on a medical record. The affidavit included these two paragraphs
as a fifth and final category of evidence that Srivastava’s
medical office was engaged in fraud. However, Srivastava argues
that Marrero implied that the changes had been made so as to
permit submission of two claims for only one set of underlying
services, and then argues that Marrero intentionally omitted,
with the intent to mislead, records indicating that two sets of
procedures were conducted with respect to S.H., as well as
29
exculpatory information provided by Srivastava’s longtime
billing assistant. Srivastava argues that without those pieces
of omitted information the Affidavit leaves a reviewing judge
with the misleading impression that the alterations were
suspicious.
We find that, with respect to this part of the affidavit,
Srivastava failed to make a preliminary showing that Agent
Marrero omitted information “with the intent to make, or in
reckless disregard of whether they thereby made, the affidavit
misleading.” Stated otherwise, Srivastava has failed to make a
preliminary showing that the omission was “designed to mislead”
or was made “in reckless disregard of whether [it] would
mislead.” Rather, in this section of the affidavit, Agent
Marrero accurately recounts the facts of how Srivastava’s office
altered medical records by changing the dates on the records.
Srivastava claims that this section is misleading because it
implies double-billing without providing an exculpatory
statement by Srivastava’s employee and without providing records
that, in fact, two procedures were performed on patient S.H.
However, nothing in the affidavit states that the altered
medical records are evidence of double-billing. Additionally,
this Court’s rulings in Colkley and Jeffus make clear that not
all information which might constitute Brady material at a later
30
stage of the criminal process needs to be included in a search
warrant affidavit.
Therefore, after reviewing all sections of Agent Marrero’s
affidavit, we find that the district court properly denied a
Franks hearing. As explained in detail above, the district
court correctly found Srivastava failed to make a preliminary
showing that there were false statements or omissions in the
affidavit that were made by Agent Marrero with the intent to
mislead the magistrate. Additionally, even if we were to find
some of the various omissions mentioned above to have been made
intentionally or in reckless disregard for the truth, the
excision of one or even two of them under the circumstances of
this case would not undermine the finding of probable cause from
this affidavit, considered as a whole.
III.
The District Court initially granted Srivastava suppression
of the evidence seized pursuant to the search warrants on the
ground that the officers acted with “flagrant disregard” for the
terms of the warrants in executing them. On the government’s
earlier interlocutory appeal, however, a panel of this Court
reversed the district court’s decision, holding that the
“flagrant disregard” doctrine was inapplicable. Srivastava I,
540 F.3d 277. Srivastava again raises this issue in this appeal;
31
however, under the law-of-the-case doctrine, we are foreclosed
from revisiting the earlier panel’s holding. See United States
v. Aramony, 166 F.3d 655, 661 (4th Cir. 1999)(rulings that
constitutes law of the case “should continue to govern the same
issues in subsequent stages in the same case”).
IV.
Lastly, we address Srivastava’s contention that the
district court improperly excluded Srivastava’s proffered
testimony as to the issue of intent in the tax evasion case. As
part of the tax evasion case presented at trial, the Government
had to show that Srivastava acted willfully when he allegedly
failed to disclose certain capital gains on his tax returns. As
part of proving that willfulness, the Government presented
evidence that Srivastava made multiple transfers to bank
accounts in India. Specifically, on July 16 and 21, 1999, with
his broker Sohan Aggarwal’s assistance, Srivastava sent outgoing
wire transfers of $440,000 and $465,000 from Bentley-Lawrence
accounts for deposit in his accounts in India. In December 1999
and January 2000, Srivastava sent four wire transfers from the
U.S. to India.
In regard to the evidence of wired transfers to India,
Srivastava wished to introduce testimony from his broker,
Aggarwal, that Srivastava told him “during the period of the
32
rising market in 1998 and 1999” that he “went to India and then
he said, hey, guys, look, why—I have decided to build a charity
hospital. Okay, fine. Where is the money? Well, you tell me
when you want to send the money, I’ll send the money.” Joint
Appendix 1961. Srivastava wished to introduce this testimony to
controvert the Government’s argument that Srivastava was
transferring money to India to purposefully evade taxes.
The district court excluded this testimony because it found
that it was hearsay not subject to an exception. Srivastava
argues that the district court erred by not applying Rule
803(3), a hearsay exception, in order to allow the testimony.
We review decisions to admit or exclude evidence for abuse
of discretion. United States v. Forrest, 429 F.3d 73, 79 (4th
Cir. 2005). Under that standard, we may not substitute our
judgment for that of the district court; rather, we must
determine whether the district court’s exercise of discretion,
considering the law and facts, was arbitrary or capricious.
United States v. Mason, 52 F.3d 1286, 1289 (4th Cir. 1995).
Whether reviewed only for abuse of discretion or de novo, any
error in the admission or exclusion of evidence is subject to
the harmless error test. See Delaware v. Van Arsdall, 475 U.S.
673, 680-84 (1983).
Rule 803(3) provides an exception for hearsay statements
when the statement represents “a statement of the declarant’s
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then existing state of mind, emotion, sensation, or physical
condition (such as intent, plan, motive, design, mental feeling,
pain and bodily health).” Fed. R. Evid. 803(3). The threshold
requirements for invoking this hearsay exception are that (1)
the statement must be contemporaneous with the mental state
sought to be proven; (2) there must be no suspicious
circumstances suggesting a motive for the declarant to fabricate
or misrepresent his or her thoughts; and (3) the declarant’s
state of mind must be relevant to an issue in the case. United
States v. Neely, 980 F.2d 1074, 1083 (7th Cir. 1992); United
States v. Faust, 850 F.2d 575, 585 (9th Cir. 1988). On the
question of relevance, “the declarant’s statement of mind must
be relevant to some issue in the case before such testimony can
be admitted under Rule 803(3).” United States v. Veltmann, 6
F.3d 1483 (11th Cir. 1993). “Where state of mind itself is in
issue [as intent was in this case], the court must determine if
the declarant’s state of mind at the time of the declaration is
relevant to the declarant’s state of mind at the time at issue.”
United States v. Ponticelli, 622 F.2d 985, 991 (9th Cir. 1980)
(emphasis added).
The district court excluded the proffered testimony on
three grounds: (1) failure to satisfy the requirement of
contemporaneousness, because Srivastava’s statement to Aggarwal
preceded the largest transfers to India and the filing of the
34
1998 tax return by months and preceded the filing of the 1999
and 2000 tax returns by years; (2) irrelevance of the evidence
to the intent issues in a tax evasion case; and (3) pursuant to
the balancing test of Rule 403.
We find that district court properly concluded that the
statement was irrelevant to the core issue in the case—whether
Srivastava willfully evaded income taxes on $40 million of
capital gains. As stated by the United States in its brief
“[t]he intended end use of the $5 million in untaxed income once
it reached India, however, had no bearing on Srivastava’s
specific intent to commit tax crimes. A person who is required
by law to accurately declare his income and pay taxes cannot
evade that requirement by promising to use the fruits of tax
evasion for a good cause. It made no difference whether
Srivastava transmitted funds to India with the intent to open a
hospital, build a vacation home, or finance a software company.
Srivastava’s claim that his stated intent to build a hospital
‘rebutted the government’s contention that the purpose was
instead to hide the transferred funds from the IRS’ is simply
without merit.” Because we find the statements to be irrelevant
to the intent issue in the tax evasion case, the testimony does
not meet the requirements for a hearsay exception under Rule
803(3). Therefore, we affirm the district court’s exclusion of
this testimony.
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V.
For the foregoing reasons, we affirm the district court’s
denial to conduct a Franks hearing; refuse to reconsider any
arguments about the previously appealed motion to suppress under
the law-of-the-case doctrine; and affirm the district court’s
exclusion of proffered hearsay testimony.
AFFIRMED
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