United States v. Canon

No. 04-5310
File Name: 05a0523n.06
Filed: June 17, 2005
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, )
)
Plaintiff-Appellee, )
) ON APPEAL FROM THE
v. ) UNITED STATES DISTRICT
) COURT FOR THE EASTERN
ROBERT M. CANON, M.D., ) DISTRICT OF TENNESSEE
)
Defendant-Appellant. )
Before: NELSON and BATCHELDER, Circuit Judges, and O’MALLEY, District
Judge.*
DAVID A. NELSON, Circuit Judge. A jury found the defendant, a medical doctor,
guilty of submitting fraudulent healthcare claims and making false statements in relation to
healthcare matters. The defendant was sentenced to imprisonment for 41 months, and he has
appealed the judgment of conviction and sentence .
The defendant raises five issues: (1) whether the district court abused its discretion
by posing questions from jury members to one of the government’s expert witnesses and
allowing the government to recall the expert as a rebuttal witness; (2) whether the court
abused its discretion by admitting certain evidence; (3) whether the cumulative effect of the
*
The Honorable Kathleen M. O’Malley, United States District Judge for the Northern
District of Ohio, sitting by designation.
No. 04-5310
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court’s allegedly erroneous evidentiary rulings was to deprive the defendant of a fair trial;
(4) whether there was sufficient evidence to support the defendant’s convictions for making
false statements; and (5) whether enhancement of the defendant’s sentence on the basis of
judicially determined facts violated the Sixth Amendment right to a jury trial.
We are not persuaded that the district court committed any error requiring reversal of
the conviction. Under United States v. Booker, 543 U.S. ___, 125 S. Ct. 738 (2005), and
United States v. Oliver, 397 F.3d 369 (6th Cir. 2005), however, the enhancement of the
defendant’s sentence was plainly erroneous and requires a remand for resentencing.
I
The defendant, Robert M. Canon, M.D., is an orthopedic surgeon. He operated an
office-based clinic for the management of neck and back pain. Dr. Canon’s practice
consisted primarily of giving injections of anti-inflammatory medications and steroids.
In September of 2002 a federal grand jury handed up an indictment charging Dr.
Canon with 50 counts of healthcare fraud (violations of 18 U.S.C. § 1347) and 45 counts of
making false statements in relation to healthcare matters (violations of 18 U.S.C. § 1035).
The fraud counts charged that Dr. Canon billed Medicare and other healthcare benefit
programs for “nerve block” injections when he had in fact administered “trigger point”
No. 04-5310
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injections.1 Medicare pays physicians significantly less for the latter procedure than for the
former. The “false statement” counts charged that Dr. Canon misrepresented, through his
use of billing codes and modifiers, the extent of the services he had provided to several
patients. The total amount of Dr. Canon’s fraudulent billings, according to the indictment,
was $3,858,750.38.
A jury found Dr. Canon guilty of all charges. The doctor moved for a judgment of
acquittal, arguing that the evidence was insufficient to support the jury’s verdict, and for a
new trial, arguing that the verdict was against the weight of the evidence and that several of
the district court’s evidentiary rulings were erroneous. The motions were denied.
At sentencing the government presented evidence that the total amount of Dr. Canon’s
fraudulent billings came to $3,183,710. The district court accepted that figure. The result
was a 13-level increase in Dr. Canon’s base offense level under U.S.S.G. § 2F1.1(b)(1)(N)
(2000 edition). The court also found that Dr. Canon’s offenses involved more than minimal
planning and had more than one victim. These findings resulted in an additional two-level
increase under § 2F1.1(b)(2) of the guidelines. The adjusted offense level yielded a guideline
sentence range of imprisonment for 37 to 46 months. The court denied a defense motion for
a downward departure and sentenced Dr. Canon to 41 months, the mid-point of the guideline
range.
1
A nerve block injection delivers medication directly to the affected nerve. It involves
the insertion of a needle into or very near the joint between adjacent vertebrae. A trigger
point injection delivers medication into muscular tissue.
No. 04-5310
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Dr. Canon perfected a timely appeal. He is free on bond pending the completion of
the appellate process.
II
Stephen Minore, M.D., testified at trial as an expert witness for the prosecution. After
describing how he himself performs nerve blocks, Dr. Minore expressed the opinion, based
on a review of patients’ records, that the procedures performed by Dr. Canon were trigger
point injections and not nerve blocks.
After a break in Dr. Minore’s direct examination, the district court announced that
some jurors had volunteered that they would like to ask questions. The court said that it
would allow jurors to submit written questions, and that the court would then pose any
questions it determined to be “appropriate.”
Later, after Dr. Minore had been cross-examined but before any re-direct, the district
court informed the parties’ lawyers at sidebar that the jury had submitted questions for the
witness. Over objection from counsel for Dr. Canon, the court asked Dr. Minore two quite
pertinent questions “distilled” from those submitted by the jury. The parties were permitted
to ask follow-up questions, and the defense did so. Dr. Canon now argues that the district
court abused its discretion by posing the jury’s questions to Dr. Minore.
This court has held that “allowing jurors to ask questions during criminal trials is
permissible and best left to the discretion of the trial judge,” although “the routine practice
No. 04-5310
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of juror questioning should be discouraged.” United States v. Collins, 226 F.3d 457, 461 (6th
Cir. 2000), cert. denied, 531 U.S. 1099 (2001). A number of precautions should be taken if
a district court decides to allow questioning by the jury:
“When a court decides to allow juror questions, counsel should be promptly
informed. At the beginning of the trial, jurors should be instructed that they
will be allowed to submit questions, limited to important points, and informed
of the manner by which they may do so. The court should explain that, if the
jurors do submit questions, some proposed questions may not be asked
because they are prohibited by the rules of evidence, or may be rephrased to
comply with the rules. The jurors should be informed that a questioning juror
should not draw any conclusions from the rephrasing of or failure to ask a
proposed question. Jurors should submit their questions in writing without
disclosing the content to other jurors. The court and the attorneys should then
review the questions away from the jurors’ hearing, at which time the attorneys
should be allowed an opportunity to present any objections. The court may
modify a question if necessary. When the court determines that a juror
question should be asked, it is the judge who should pose the question to the
witness.” Id. at 464.
In the case at bar the initiative for allowing juror questions came from the jurors
themselves, not from the court. The request was dealt with in a manner consistent with
Collins, a case where the initiative had came from the court.
When jurors in the case at bar indicated that they would like to ask questions, the
court promptly notified the parties that it would entertain such questions. The court then told
the jurors that they could submit “really important” questions in writing, and it warned them
that some questions might not be appropriate because of “the rules of evidence.” The court
reviewed the jury’s questions with the lawyers away from the jury’s hearing, and the lawyers
No. 04-5310
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were given an opportunity to object. Finally, the court itself posed the questions to the
witness.
Dr. Canon argues that the Collins safeguards are insufficient when the witness is an
expert testifying for the prosecution. Emphasizing that the jury did not submit questions for
any other witness, he contends that juror questioning of Dr. Minore “could only have tended
to forge a sort of ‘alliance’ between Dr. Minore and the jury.”
We do not think the risk of such an “alliance” was so great that the district court could
not reasonably choose to allow the questioning. Neither do we think that the court abused
its discretion by posing the jury’s questions before the government’s re-direct of Dr. Minore.
Dr. Canon argues further that the alleged error of allowing juror questioning was
compounded by the district court’s letting the government recall Dr. Minore as a rebuttal
witness. But Dr. Canon concedes that “the recall of Dr. Minore may not have been reversible
error viewed in isolation,” and given the fact that there was no error to compound as far as
jury questioning was concerned, the decision to allow Dr. Minore to be recalled did not
necessitate the granting of a new trial.
No. 04-5310
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III
A
Joan Syler, an investigator for Blue Cross-Blue Shield of Tennessee, testified at trial
about a telephone conversation she had with Ellen Harrison, a billing consultant who had
been hired by Dr. Canon. According to Ms. Syler, Ms. Harrison said that Dr. Canon was
“upcoding” his office visits and did not seem to listen to Harrison’s recommendations.
Objections to this testimony under Rules 404(b) and 802, Fed. R. Evid., were overruled.
Ms. Syler’s testimony does not appear to have been offered as “other acts” evidence
in violation of Rule 404(b). The testimony was offered, rather, to show that Dr. Canon
engaged in a continuing fraudulent scheme of which the specific billings listed in the
indictment were a part. Significantly, the conversation between Ms. Harrison and Ms. Syler
occurred within the time period during which the fraudulent scheme was alleged to have been
in operation. We see no violation of Rule 404(b) here.
On the other hand, it is a little hard to see why Ms. Syler’s testimony should not have
been excluded as hearsay under Rule 802. The government cites Rule 801(d)(2)(D), Fed. R.
Evid., which provides that a statement is not hearsay if (1) it is offered against a party, (2)
it is a statement by that party’s agent or servant, (3) it concerns a matter within the scope of
the agency or employment, and (4) it was made during the existence of the relationship. But
it is far from clear to us that Ms. Harrison, an outside consultant, was Dr. Canon’s agent.
No. 04-5310
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We need not resolve that question, however, because Dr. Canon has not shown that
he was significantly prejudiced by the admission of Ms. Syler’s testimony. The defense
called Ms. Harrison as a witness, and she gave her own account of the conversation with Ms.
Syler. As we have said elsewhere, “[t]he hearsay dangers underlying out-of-court statements
offered for their truth – sincerity, memory and not under oath – are not present when the
declarant takes the stand as a witness.” Moore v. KUKA Welding Systems & Robot Corp.,
171 F.3d 1073, 1081-82 (6th Cir. 1999). Ms. Harrison’s testimony at trial was sufficient to
cure any error in the admission of the out-of-court statements.
B
Lana Lasater, a sometime Canon clinic employee who had gone on to work for
another orthopedic surgeon, testified that the other surgeon occasionally performed the same
sort of procedures that Dr. Canon performed. Ms. Lasater was then asked how those
procedures were billed by the other surgeon. An objection on relevance grounds was
overruled. Ms. Lasater testified that the other surgeon billed the procedures as trigger point
injections.
Ms. Lasater’s testimony strikes us as plainly relevant. Evidence that the procedures
Dr. Canon billed as nerve blocks were billed by another orthopedic surgeon as trigger point
injections makes it more probable that Dr. Canon’s billings were fraudulent. See Fed. R.
Evid. 401 (defining “relevant evidence”).
No. 04-5310
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On appeal, Dr. Canon argues that Ms. Lasater was not qualified to testify that the
differently-billed procedures were in fact the same. This argument was not presented to the
district court. (Indeed, Dr. Canon did not object at all when Ms. Lasater was asked whether
the other surgeon performed the same procedures.) Moreover, we think that Ms. Lasater
could properly testify to her perception that the procedures were the same. This was factual
testimony about what she saw, not technical or scientific testimony. Finally, any flaws in
Ms. Lasater’s perception could have been probed on cross-examination. We see no abuse
of discretion in allowing Ms. Lasater to testify as she did.
C
The testimony of Amanda Smith, another former employee of Dr. Canon’s clinic, was
admitted at trial in the form of a videotaped deposition. Dr. Canon objected before trial to
the admission of numerous portions of Ms. Smith’s testimony, but the district court sustained
only one of the objections. In the testimony that was admitted Ms. Smith said, among other
things, that she took x-rays and performed physical therapy for Dr. Canon despite having
only minimal training; that Dr. Canon’s “bank called a lot;” and that she did not mention Dr.
Canon’s billing practices when interviewed by an investigator because she did not want to
be fired. Dr. Canon argues that the admission of this testimony violated Rules 404(b) and
403, Fed. R. Evid.
No. 04-5310
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It seems to us that none of the evidence in question was Rule 404(b) evidence, i.e.,
evidence of other acts offered “to prove the character of a person in order to show action in
conformity therewith.” None of challenged testimony relates to other instances of fraud or
the making of false statements.
On the other hand, the testimony concerning Ms. Smith’s job duties and Dr. Canon’s
bank had little probative value, and it might have unfairly prejudiced Dr. Canon because of
its tendency to suggest that he provides substandard care and does not pay his debts. The
challenged testimony could probably have been excluded under Rule 403. That strikes us
as a close call, however, and we are not prepared to say that the district court abused its
discretion in allowing the testimony to come in.
As for Ms. Smith’s testimony that she had kept quiet about Dr. Canon’s billing
practices to avoid being fired – testimony elicited by Dr. Canon’s own lawyer – exclusion
was not required. Dr. Canon contends that the testimony was non-responsive, but we think
that the witness was entitled to explain her answer when asked repeatedly whether she had
mentioned Dr. Canon’s billing practices to the investigator. Again, we are not persuaded that
there was an abuse of discretion.
IV
Dr. Canon argues that the cumulative effect of the district court’s evidentiary rulings
was to deny him a fair trial. It is true that “trial-level errors that would be considered
No. 04-5310
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harmless when viewed in isolation of each other might, when considered cumulatively,
require reversal of a conviction.” Campbell v. United States, 364 F.3d 727, 736 (6th Cir.
2004), cert. denied, 125 S. Ct. 987 (2005). As we have indicated, however, we think that
only one of the district court’s evidentiary decisions – its decision to admit Joan Syler’s
testimony as non-hearsay – may have been in error. Absent additional errors, there can be
no prejudicial cumulative effect. See id. (holding that an “accumulation of non-errors” will
not warrant a new trial).
V
Dr. Canon challenges the sufficiency of the evidence that he billed for unperformed
services on the specific dates, and for the specific patients, listed in the false-statement counts
of the indictment (counts 51 through 95). Our task is to determine “whether, after viewing
the evidence in the light most favorable to the prosecution, any rational trier of fact could
have found the essential elements of the crime beyond a reasonable doubt.” Jackson v.
Virginia, 443 U.S. 307, 319 (1979).
To establish Dr. Canon’s guilt as to counts 51 through 95, the government had to
prove that he knowingly and willfully made false statements “in connection with the delivery
of or payment for health care benefits, items, or services” and in a “matter involving a health
care benefit program.” 18 U.S.C. § 1035(a)(2). More specifically, the government had to
No. 04-5310
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prove that Dr. Canon knowingly overstated the extent of the services he provided on the
dates listed in the indictment.
The government focused on Dr. Canon’s use of a particular billing code, 99214-25.
The first part of the code, 99214, denotes a “level four” office visit, with level one being the
least extensive and level five being the most. The “-25" modifier denotes an additional,
separate service performed during the office visit. At trial, Dr. Canon admitted that he knew
he should not bill for both an injection and an office visit – i.e., use billing code 99214-25
– unless he had provided a significant service that was separate from the injection. He
maintained that he nearly always performed a separate service when seeing a patient to
administer a shot. But one of the government’s expert witnesses, Joanne Mehmert, testified
that she had reviewed Dr. Canon’s patient records for the dates listed in the indictment and
that the documentation did not support Dr. Canon’s use of the 99214-25 billing code on those
dates. Her opinions were summarized in a chart that was admitted into evidence.
This evidence was sufficient, we believe, to support the jury’s verdict. Dr. Canon
argues that proof of a failure to document separate services does not amount to proof of a
failure to perform those services. We think, however, that a rational jury could infer a failure
to perform from a failure to document. Such an inference is supported by the testimony of
other witnesses concerning the importance of chart documentation, as well as Dr. Canon’s
own testimony that he knew he needed to document any additional services. A finding that
Dr. Canon did not perform all of the services for which he billed is consistent, moreover,
No. 04-5310
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with Dr. Minore’s testimony that the 99214-25 billing code is rarely used in a typical pain-
management practice.
The government’s case on counts 51 through 95 would have been stronger, to be sure,
had the government presented unequivocal patient testimony to the effect that Dr. Canon did
no more than administer injections on the dates in question. Speculation as to the availability
of additional evidence, however, does not render the existing evidence insufficient. The
government’s case might not have been overwhelming, but we are satisfied that it was
enough to support a verdict of guilty on counts 51 through 95.
VI
In United States v. Booker, 543 U.S. ___, 125 S. Ct. 738 (2005), the Supreme Court
held that the Sixth Amendment forbids judicial determination of “[a]ny fact (other than a
prior conviction) which is necessary to support a sentence exceeding the maximum
authorized by the facts established by a plea of guilty or a jury verdict . . . .” Booker, 125 S.
Ct. at 756. In the case at bar the district court’s factual determinations were necessary to
support the 41-month sentence that the court imposed; absent those determinations, Dr.
Canon’s guideline sentence range would have been zero to six months. See U.S.S.G. Ch. 5,
Pt. A (2000). Accordingly, Dr. Canon’s sentence violates the Sixth Amendment as construed
in Booker.
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Dr. Canon did not make a Sixth Amendment argument in the district court. But our
court has recently held that a Sixth Amendment violation under Booker constitutes “plain
error” that may be corrected on appeal despite its forfeiture below. See United States v.
Oliver, 397 F.3d 369, 378-81 (6th Cir. 2005). Under Oliver, this case must be remanded to
the district court for resentencing. See id. at 381.
On remand, of course, the district court will be free to consider again enhancing Dr.
Cannon’s offense level under the guidelines as long as the resultant sentencing range is
treated as advisory rather than mandatory. And in determining what constitutes a reasonable
sentence for this defendant under 18 U.S.C. 3553(a), the district court may consider all of
the facts that led to the enhancements imposed originally.
Dr. Canon’s convictions are AFFIRMED, his sentence is VACATED, and the case
is REMANDED for resentencing.