United States v. Allan Hearne

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 20, 2010
No. 09-60750 c/w
No. 09-60613 Lyle W. Cayce
Summary Calendar Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee
v.
ALLAN K. HEARNE,
Defendant-Appellant
Appeals from the United States District Court
for the Southern District of Mississippi
USDC No. 3:08-CR-164-1
Before REAVLEY, DENNIS, and CLEMENT, Circuit Judges.
PER CURIAM:*
Following a jury trial, Allan K. Hearne was convicted of one count of
conspiracy to defraud Medicare by obtaining the payment of false claims; four
counts of health care fraud; one count of falsifying documents with the intent of
impeding or obstructing an investigation by the Federal Bureau of Investigation;
and one count of making a fraudulent statement to the Social Security
Administration. He was sentenced to 73 months of imprisonment and a three-
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 09-60750 c/w 09-60613
year term of supervised release. We are now presented with Hearne’s appeal
from his convictions and sentence.
Hearne argues that the district court erred by denying his motion for a
new trial. He asserts that the Government violated the Jencks Act by failing to
timely produce a transcript of grand jury testimony given by a Government
witness in support of the superseding indictment in this case. Hearne contends
that the Government’s belated production of the transcript prejudiced his
defense, which he contends was premised upon the allegations in the original
indictment; Hearne maintains that he discovered only after reviewing the
transcript that the superseding indictment alleged new claims. He argues that
he consequently was denied the opportunity to prepare an adequate defense.
The Jencks Act requires the Government to disclose prior recorded witness
statements in its possession relating to the subject matter of that witness’s
testimony. 18 U.S.C. § 3500. The failure to produce Jencks Act material is
subject to harmless error analysis. United States v. Montgomery, 210 F.3d 446,
451 (5th Cir. 2000). “We strictly apply harmless error analysis and determine
whether the error itself had a substantial influence on the judgment in addition
to determining whether there was sufficient evidence to support the conviction.”
Id. We must decide “whether there is or is not a reasonable possibility that the
absence of [the] grand jury testimony affected the outcome of the case or
handicapped [the defendant] or his counsel in their presentation or defense.”
United States v. Keller, 14 F.3d 1051, 1054 (5th Cir. 1994) (alterations in
original) (quoting United States v. Rivero, 532 F.2d 450, 461 (5th Cir. 1976))
(internal quotation marks omitted).
Here, while the Government admittedly did not turn over the grand jury
transcript, the error was harmless. The record shows that there was no
significant difference between the witness’s grand jury testimony and his trial
testimony. See Montgomery, 210 F.3d at 451-52. Moreover, the record shows
that Hearne had available to him the information that he needed to develop a
2
No. 09-60750 c/w 09-60613
defense to the charged offenses and to cross-examine the witness with respect
to those charges. Thus, Hearne has not shown that the district court erred by
denying his motion for a new trial.
Hearne also argues that the district court erred in calculating the intended
loss for his offenses for purposes of sentencing. He contends that the district
court improperly determined that the intended loss was the total amount of the
claims that he falsely filed with Medicare rather than the amount that he was
actually reimbursed for those claims. Hearne maintains that there was no
evidence that he intended to recover from Medicare the total amount that he
billed. He argues that he is a highly educated health care provider with an
understanding of Medicare reimbursement procedures, and that he therefore
knew that Medicare would reimburse him only a fixed rate.
Under U.S.S.G. § 2B1.1, the offense level for defendants convicted of fraud
is increased commensurate with the amount of loss involved in the fraud. The
commentary to § 2B1.1 indicates that “loss” for purposes of the guideline is “the
greater of the actual loss or intended loss.” U.S.S.G. § 2B1.1 cmt. n.3(A).
“Actual loss” is the reasonably foreseeable pecuniary harm resulting from the
offense, and “intended loss” is the pecuniary harm that was intended to result
from the offense. Id. § 2B1.1 cmt. n.3(A)(i), (ii). “Intended loss” includes
“intended pecuniary harm that would have been impossible or unlikely to occur
(e.g., as in a government sting operation, or an insurance fraud in which the
claim exceeded the insured value).” Id. § 2B1.1 cmt. n.3(A)(ii).
The district court’s calculation of the amount of intended loss is reviewed
for clear error; its method of determining the amount of intended loss is
reviewed de novo. See United States v. Harris, 597 F.3d 242, 251 n.9 (5th Cir.
2010). “[O]ur case law requires the government prove by a preponderance of the
evidence that the defendant had the subjective intent to cause the loss that is
used to calculate his offense level.” United States v. Conroy, 567 F.3d 174, 179
(5th Cir. 2009) (alteration in original) (quoting United States v. Sanders, 343
3
No. 09-60750 c/w 09-60613
F.3d 511, 527 (5th Cir. 2003) (internal quotation marks omitted). The amount
fraudulently billed to Medicare is “prima facie evidence of the amount of loss [the
defendant] intended to cause,” but “the parties may introduce additional
evidence to suggest that the amount billed either exaggerates or understates the
billing party’s intent.” United States v. Miller, 316 F.3d 495, 504 (4th Cir. 2003).
There was evidence that Hearne lacked knowledge of the billing
procedures for Medicare and therefore did not understand the amounts that
Medicare likely would pay. Hearne’s trial testimony indicated that he left
responsibility for Medicare claims to his staff, and his testimony at sentencing
showed that he generally was uninformed about how Medicare reimbursements
work. While Hearne at sentencing showed some knowledge of the difference
between the amounts he would bill to Medicare and the amounts that Medicare
would pay, the district court found this self-serving testimony not to be credible.
“[W]e exercise great deference to a district court’s credibility findings.” United
States v. Alaniz-Alaniz, 38 F.3d 788, 791 (5th Cir. 1994). The district court
concluded, “[I]t appears that he indiscriminately submitted false and fictitious
bills in an effort to maximize reimbursements. It does not appear that he was
focused on the mechanics of the program and, instead, was focused on [the]
number of claims. Thus, even if he has some notion about caps and understood
that full reimbursement was unlikely or impossible, the defendant still
submitted claims with the intent that they would be paid.” This factual finding
was supported by the evidence. Therefore, the district court did not clearly err
in determining that the amount of intended loss was the amount Hearne falsely
billed to Medicare rather than the amount he was reimbursed.
Accordingly, the judgment of the district court is AFFIRMED.
4