IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 09-60750 c/w

No. 09-60613

Summary Calendar

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 threeUnited States Court of Appeals

Fifth Circuit

F I L E D

October 20, 2010

Lyle W. Cayce

Clerk

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.

Case: 09-60750 Document: 00511268434 Page: 1 Date Filed: 10/20/2010
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

Case: 09-60750 Document: 00511268434 Page: 2 Date Filed: 10/20/2010
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

Case: 09-60750 Document: 00511268434 Page: 3 Date Filed: 10/20/2010
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

Case: 09-60750 Document: 00511268434 Page: 4 Date Filed: 10/20/2010