### IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 10-60944

UNITED STATES OF AMERICA, Plaintiff–Appellee v. TELANDRA GAIL JONES; THEDDIS MARCEL PEARSON, Defendants–Appellants

Consolidated with 11-60159 UNITED STATES OF AMERICA, Plaintiff–Appellee v. THEDDIS MARCEL PEARSON, Defendant–Appellant

Appeals from the United States District Court for the Southern District of Mississippi
Before SMITH, PRADO, and ELROD, Circuit Judges. EDWARD C. PRADO, Circuit Judge: This appeal arises out of the nearly month-long trial of Telandra Jones, Theddis Pearson, and five other defendants for Medicare fraud and related United States Court of Appeals

Fifth Circuit 

### F I L E D December 15, 2011 Lyle W. Cayce ClerkNo. 10-60944

2 crimes stemmi ng from the practices of their business, Statewide Physical Medicine Group. The Appellants used unauthorized personnel to perform physical rehabilitation on Medicare patients and then billed Medicare at an inflated rate for those treatments. The jury convicted Pearson of five counts of health care false statements and one count each of theft of government funds and money laundering. Jones was convicted only of theft of government funds and money laundering. Because we find that the verdict form used by the district court lowered the level ofmens rea required toconvict Pearson ofhealth
care false statements, we REVERSE his convictions on those counts. On all other claims raised by the Appellants, we find no reversible error and therefore A FFIRM Jones’s and Pearson’s convictions for theft of government funds and money laundering. I. BACKGROUND A. Factual Background I n June 2000, Telandra Jones and Theddis Pearson (collectively, the “Appellants”) along with Jones’s brother, Alonzo Williams, opened Statewide Physical Medicine Group (“Statewide”) in Mississippi. Pearson became the chief executive officer and was in charge ofsetting up the business and overseeing the day-to-day operations. Jones, who worked out of Dallas, Texas, became the chief financial officer and was in charge of billing. Statewide operated as a physical rehabilitation provider for Medicare patients. Since Statewide operated in Mississippi, Cahaba, Medicare’s regional fiscal carrier for Mississippi, oversaw the claims submitted by Statewide. Statewide’s business model was to have doctors evaluate patients to see whether they had a need for therapeuticexercise. If such treatment was ordered by the doctor, then Statewide would have its personnel go into the patient’s home and provide the treatment. The treatment was administered generally by kinesiotherapists (“KTs”) hired by Statewide. KTs typically have four-yearNo. 10-60944

3 college degrees but there were at least three Statewide employees who provided treatment whodid not have a four-year degree. The physicians who ordered the treatment were not physically present w hen Statewide’s employees went into patients’ homes and provided the treatment. In providing treatment in this way, the Appellants sought to rely on Medicare’s general supervision exception. Section 410.26ofTitle 42 ofthe Code ofFederal Regulations requires that, in order tobill Medicare, either a physician must render the service provided or the service provided must be performed under a physician’s direct supervision. According to section 410.32, direct supervision does not mean that the physician must be present in the same room with the rendering personnel, but the physician must be present in the building and immediately available to provide assistance and direction throughout the time the renderi ng personnel is performing services. There is one relevant exception to this requirement of direct supervision. Where either (1) the provider is serving homebound patients in medically underserved areas where there are no available home health services or (2) the service is an individual or intermittent service performed by personnel meeting pertinent state requirements and the service is an integral part ofthe physician’s service to the patient, only “general supervision” is required. That is, the physician need not be physically present at the patient’s residence when the service is performed; however, the service must be performed under his/her overall supervision and control. Though there were home health services available in the areas that Statewide served, the Appellants claim that they were permitted to provide general supervision treatment under another exception that allowed treatment in spite ofthe existenceofhome health serviceswhere the patient has exhausted home health benefits under Medicare. After an in-home treatment was provided, the Statewide employee who provided the treatmentwould preparea “treatment sheet,” which the doctor whoNo. 10-60944

4 ordered the treatment would later review and approve. Secretaries in the individual Statewide offices—Laurel, Jackson, Moss Point, Meridian, and Hattiesburg, Mississippi and York, Alabama—would enter the treatment data from the treatment sheets into a billing sheet by adding up the number of checkmarks, each of which indicated a treatment administered. The billing sheet was sent to Jones in Dallas, where she reviewed it and sent it on to Cahaba. Jones billed Medicare for the treatments provided based on the area of the body treated and not by time intervals. B. Proceedings Below The Government indicted the Appellants in the Jackson Division of the Southern District of Mississippi in February 2009. On October 15, 2009, the Government obtained a Rule 48(a) dismissal from the Jackson Division. Five days later, the Government obtained an indictment against the Appellants, Williams, and four doctors associated with Statewide in the Hattiesburg Division. Appellants were charged with conspiracy to commit Medicare fraud (Count 1), Medicare fraud (Counts 2–6), healthcare false statements (Counts 7–11), theft ofgovernment funds (Count 12), and money laundering (Count 13). The prosecution focused primarily on two issues. First, the Government alleged that Statewide had billed for services to patients in their homes by persons who
were not sufficiently licensed or qualified to provide services at a time when a doctor was not physically present. And second, the Government alleged that it was impermissible for Statewide to bill certain services by area of the body, as opposed to by time unit. After the Government rested, the Appellants moved for a judgment of acquittal, which the district court denied. Appellants renewed their motions after the close of their evidence, and the district court again denied them. The jury found Pearson guilty ofmaking health care false statements (Counts 7–11) and Jones and Pearson guilty of theft of government funds (Count 12) andNo. 10-60944

5 money laundering (Count 13). Both Jones and Pearson were acquitted of the remaini ng counts, as were the other defendants. Jones was sentenced to 120 months ofimprisonment for each ofCounts 12 and 13, to run concurrently, to be followed by three years of supervised release. Jones was ordered to pay $18,064,447.73 in restitution and a $200.00 special assessment. Pearson also
was sentenced to a total of 120 months of imprisonment: 60 months for Counts 7–11, 120 months for each of Counts 12 and 13, to run concurrently, to be followed by three years of supervised release. Pearson was ordered to pay $18,064,447.73 in restitution and a $700.00 special assessment. The district court also entered a forfeiture order as to both defendants. The Appellants timely appealed, invoking our jurisdiction under 28 U.S.C. § 1291. II. DISCUSSION A. Dismissal of the First Indictment The Appellants argue that it was error for the district court to have permitted the Government to dismiss the First Indictment against them because they claim the Government sought the dismissal in bad faith. Additionally, they claim it was erroneous for the district court to have dismissed the First Indictmentwithout giving theAppellants notice and an opportunity to be heard. Rule 48(a) ofthe Federal Rules ofCriminal Procedure allows the government to dismiss an indictment “with leave of court.” This “leave of court” requirement “has been interpreted ‘to allow the courts to exercise discretion over the propriety of a prosecutorial motion to dismiss.’” U nited States v. Welborn, 849 F.2d 980, 983 (5th Cir. 1988) (quoting United States v. Salinas, 693 F.2d 348, 351 (5th Cir. 1982)). The primary intent of the “leave of court” requirement is to “protect the defendant against prosecutorial harassment.” U nited States v. Hamm, 659 F.2d 624, 628 (5th Cir. 1981) (en banc). We review the district court’s decision to grant the Government’s request for a dismissal under Rule 48(a) for abuse ofdiscretion. U nited States v. Salinas, 701 F.2d 41, 42 (5th Cir.No. 10-60944

6 1983). But, we have noted that “[t]he exercise of [the Executive’s] discretion with respect to the termination of pending prosecutions should not bejudicially disturbed unless clearly contrary to manifest public interest.” U nited States v. Cowan, 524 F.2d 504, 513 (5th Cir. 1975). 1. Bad Faith Appellants allege that the Government acted in bad faith when, instead of seeking a superseding indictment in the J ackson Division of the Southern District of Mississippi, it filed a Second Indictment in the Hattiesburg Division. Appellants contend that this was done to obtain a whiter jury pool; Pearson is African-American. “Bad faith arises when the prosecution is motivated by considerations clearly contrary to the public interest and the public interest is not served by harassing a defendant. When a court considers a prosecutor’s motion to dismiss it must begin with the presumption that the prosecutor acted in good faith.” Welborn, 849 F.2d at 983 (internal quotation marks and citations omitted). “Although the burden of proof is not on the prosecutor to prove that dismissal is in the publicinterest, the prosecutor is under an obligation tosupply sufficient reasons[—]reasons that constitute more than a mere conclusory interest.” Salinas, 693 F.2d at 352 (internal quotation marks and footnotes omitted). In the Second Indictment, the Government added five additional defendants and the geographic scope of the prosecution widened. The Governmentjustified thedismissal based on the geographic center of the charges after the Second Indictment being in Hattiesburg. This rationale is more than
a “mere conclusory interest.” It was, therefore, not an abuse of discretion for the district court to have allowed the dismissal of the First Indictment. 2. Procedural Due Process The Appellants claim that their procedural due process rights were violated because the district court allowed the Government to dismiss the First Indictment without affording the Appellants notice of or a hearing on theNo. 10-60944

7 dismissal. The framework for a procedural due process inquiry is a familiar
one. We first ask “‘whether there exists a liberty or property interest which has been interfered with by the State.’” Meza v. Livingston, 607 F.3d 392, 399 (5th Cir. 2010) (quoting Ky. Dep’t ofCorr. v. Thompson, 490 U.S. 454, 460 (1989)). If such a liberty or property interest exists, we then consider “‘whether the procedures attendant upon that deprivation were constitutionally sufficient.’” Id

. (quoting Thompson, 490 U.S. at 460). In assessing whether the procedures were constitutionally sufficient, we evaluate three factors: (1) private interest, (2) risk of error, and (3) governmental interest. I d

. at 402 (citing Mathews v. Eldridge

, 424 U.S. 319, 335 (1976)). The Appellants claim that the liberty interest embodied in Rule 48(a) is
one to be free from prosecutors “charging, dismissing and re-charging without placing a defendant in jeopardy.” United States v. Cox, 342 F.2d 167, 171 (5th Cir. 1965)). Assuming arguendo that this is a liberty interest protected by the Due Process Clause, such an interest would only be implicated on re-indictment, not at dismissal. Once the government obtains a dismissal from the district court, the question remains as to whether the government will re-file. If it does not re-file, then the only consequence to the defendant ofdismissal is that there
are no longer charges pending. If the government does re-file, the claimed liberty interest to be free from “prosecutorial harassment” once again attaches, but at the time ofthe dismissal, there is no negative consequence that can befall the defendant. See United Statesv. Comeaux, 954 F.2d 255, 261 (5th Cir. 1992); see also Parr v. United States, 351 U.S. 513, 516–17 (1956). I n this case, the Government dismissed the First Indictment in the Jackson Division of the Southern District of Mississippi and then f iled the Second Indictment five days later in the Hattiesburg D ivision. Appellants challenged the Second Indictment in Hattiesburg by moving totransfer the case back to the Jackson Division. The district court held a hearing on Appellants’No. 10-60944

8 argument that the First Indictment was dismissed in bad faith and found that there was no cause to transfer the case and also that there was no bad faith. This was constitutionally sufficient process. See Wisconsin v. Constantineau, 400 U.S. 433, 437 (1971). Therefore, there was no deprivation of the Appellants’ procedural due process rights. B. Evidentiary Rulings The Appellants argue that it was error for the district court to have excluded three Government Accountability Office (“GAO”) reports that they sought to use in their defense and that the district court erred in admitting the Government’s summaries of the Appellants’ bank records. We review evidentiary rulings for abuse of discretion, subject to harmless error review. United Statesv. Jackson, 636 F.3d 687, 692 (5th Cir. 2011). This same standard applies to our review of alleged errors in the administration ofdiscovery rules. United States v. Holmes, 406 F.3d 337, 357 (5th Cir. 2005). 1. Exclusion of the GAO Reports Twice during the course of the trial, the Appellants tried to use the GAO reports that discussed information Medicare and its regional fiscal carriers gave to Medicare providers. None of the reports specifically discussed Cahaba, Statewide’s regional fiscal carrier. The first time the Appellants tried to introduce the reportswas assubstantive evidence during the cross-examination ofa Government witness

. The district court denied the reports’ admission based on a lack of relevance. Though relevance is a low threshold to meet, United States v. Frick, 588 F.2d 531, 537 (5th Cir. 1979), not all evidence is relevant evidence. Evidence is relevant “if it tends to prove the point or fact for which it is offered (probativeworth) and ifthe point or fact counts in thecase (materiality).” Christopher B. Mueller & Laird C. Kirkpatrick, Federal Evidence § 4:2; seealso Fed. R. Evid. 401. Appellants claim that the GAO reports tended to show thatNo. 10-60944

9 the information that was given Medicare providers was often “incomplete, confusing, out-of-date, and/or incorrect.” They contend that this tends to show that they acted in good faith as opposed towith criminal intent. Perhaps it could be argued that the GAO reports have some probative worth, but such probative worth is lessened considerably by the fact that they do not contain statements by Cahaba. SeeEason v. Fleming Cos., No. 92-1390, 1993WL 360736, at *5 (5th Cir. 1993); see also United States v. Wiszowaty, 506 F.3d 537, 540–41 (7th Cir. 2007). In light of the reports’ limited probative worth, we cannot say that the district court abused its discretion by excluding the GAO reports as substantive evidence. The Appellants later tried to establish that their Medicare expert relied
on the GAO reports in forming his opinion. The district court denied the Appellants the ability toquestion their expert on them because the district court found that the Appellants had failed to disclose the GAO reports to the Government in violation of Federal Rule of Criminal Procedure 16. Rule 16 states that if the defendant requests expert disclosure from the government, then the defendant must, in turn, provide the government with “a written summary of any testimony that the defendant intends to use under Rules 702, 703, or 705 of the Federal Rules of Evidence as evidenc e at trial . . . . This summary must describe the [expert] witness’s opinions, the bases and reasons for thoseopinions, and thewitness’squalifications.” Fed. R. Crim. P. 16(b)(1)(C). Pearson’s attorney admi tted at trial that the GAO reports were not listed as somethi ng his expert would rely on in forming his opinions. Therefore, there
was no error in finding the Appellants’ Rule 16 disclosures insufficient. The Appellants also contend that it was an abuse of discretion to exclude the GAO Reports as a sanction for non-compliance with Rule 16. Any error on this front is, like with the GAO Reports exclusion as substantive evidence, harmless. The GAO Reports had, at best, limited probative worth; moreover, there wasNo. 10-60944

1 The Appellants claim that they also objected to the admission of the bank record summaries on the basis ofhearsay because the Government never proved that the underlying bank records satisfied the business records exception to hearsay. Although the underlying evidence need not be admitted, evidence underlying a summary needs to be admissible. See Hackett v. Hous. Auth. of City of San Antonio, 750 F.2d 1308, 1312 (5th Cir. 1985). The objection here, however, was not specific enough to preserve the alleged error for our review. Fed. R. Evid. 103(a)(1). “The trial court must be apprised of the basis for objection with sufficient particularity to allow an informed decision to be made on the legal issue involved.” United States v. Greenfield, 554 F.2d 179, 186 (5th Cir. 1977). The Appellants failed to sufficiently particularize their hearsay objection such that the district court was apprised of the issue. 10 overwhelming additional evidence of Appellants’ guilt on theft of government funds (Count 12) and money laundering (Count 13), including testimony about the improper billing by area ofthe body and the bank recordsshowing the money transfers from Statewide’s account through subsidiaries and eventually into Jones’sand Pearson’s personal accounts. Therefore, the district court’s exclusion of the GAO Reports is not reversible error. 2. Admission of the Government’s Summaries of the Appellants’ Bank Records Appellants argue that the district court erred in admitting the Government’s summaries oftheAppellants’ bank records under Federal Rule of Evidenc e 1006. Rule 1006 allows for “[t]he proponent may use a summary, chart, or calculation to prove the content ofvoluminous writings, recordings, or photographsthat cannot be conveniently examined in court.” Fed. R. Evid. 1006. The Appellants’ objection was that for a summary to be admitted, all of the evidence that the summary intends to summarize must also be admitted. This is incorrect. U nited States v. Valencia, 600 F. 3d 389, 417 (5th Cir. 2010) (explaining that evidence underlying a summary need not actually be admitted). Therefore, the district court’s admission of the summaries of the Appellants’ bank records was not error. 1No. 10-60944

2 In addition to the sufficiency challenges discussed below, Pearson also claims that there was insufficient evidence to convict him on health care false statements (Counts 7–11). In light ofour decision regarding the lowered mens rea on Pearson’s verdict form with respect to Counts 7–11, see infra II.D.2.a., we decline to consider Pearson’s arguments on this issue. 11 C. Sufficiency of the Evidence Appellants contend that there was insufficient evidence to support any of their convictions. 2 “In considering whether there is sufficient evidence to support a verdict, this court asks only whether thejury’s decision was rational, not whether it was correct.” U nited States v. Rodriguez, 553 F.3d 380, 389 (5th Cir. 2008). “[T]his court examines whether a rational jury, viewing the evidence in the light most favorable to the prosecution, could have found the essential elements ofthe offense to be satisfied beyond a reasonable doubt. In reviewing the evidence presented at trial, we drawall reasonable inferences in favor ofthe jury’s verdict.” U nited States v. Miles, 360 F.3d 472, 476–77 (5th Cir. 2004) (citations omitted). 1. Appellants’ Convictions on Count 12 for Theft of Government Funds Both ofthe Appellants were convicted oftheft ofgovernment funds under 18 U.S.C. § 641. Specifically, the Government alleged that the Appellants knowingly billed Medicare for servic es they knew were rendered improperly and/or for which they overbilled. To convict the Appellants of theft of government funds, the jury would have needed to find that the Appellants (1) converted (2) funds that belonged to Medicare, which (3) they knew were not theirs, and (4) did so with the intent to permanently deprive the United States ofsaid funds. See18 U.S.C. § 641. This requires that the claims submitted were false and that at the time the Appellants submitted the claims, they knew the claimswerefalse. Although § 641 only requires a “knowingly” standard, defined by the Supreme Court as “knowledge of the facts that constitute the offense,” Bryan v. United States, 524 U.S. 184, 193 (1998), § 641 imposes knowledge ofNo. 10-60944

12 non-entitlement or knowledge ofwrongfulness, which makesthe mensrea closer to “willfully.” See id

. at 191–92 (“[I]n order to establish a willful violation of
a statute, the Government must prove that the defendant acted with knowledge that hisconductwas unlawful.” (internal quotation marksomitted)). Appellants claim that they reasonably believed that their use of unlicensed KTs and their billing by area of the body were legal. Therefore, to show that the Appellants knowingly converted the funds, the Government must showthat theAppellants knew that their claims were false by proving the Appellants’ interpretation of the law was not reasonable. U nited States v. Whiteside , 285 F.3d 1345, 1351 (11th Cir. 2002) (citing U nited States v. Migliaccio, 34 F.3d 1517, 1525 (10th Cir. 1994); United States v. Johnson, 937 F.2d 392, 399 (8th Cir. 1991); United States v. Race

, 632 F.2d 1114, 1120 (4th Cir. 1980)). Though there was some ambiguity in the Medicare regulations involving the use of unlicensed KTs to provide treatment without the direct supervision of a physician, the G overnment’s proof as to the improper billing by area was sufficient to support the Appellants’ convictions. The Appellants were provided
a billing manual that laid out the codes for billing Medicare for treatments
rendered. For example, the code for Therapeutic Activities (# 97530) states, “Therapeutic activities, direct, one or more, by the provider, use of dynamic activities to improve functional performance, each 15 minutes.” The Government’s witness as to Medicare’s billing protocols gave uncontroverted testimony that the word “each” in the billing codes referred to unit ofservice and not area ofthe body. She also said that she did not believe that billing by areas
was a reasonable interpretation and that the codes were clear. Moreover, there
was other testimony about howStatewide’s method ofbilling resulted in billing Medicare for ten hours of treatment in a single session, even though the treatment sessions were generally only one hour. Taking the evidence in the l ight most favorable to the jury’s verdict, the Government sufficiently provedNo. 10-60944

13 that the Appellants’ interpretation of the codes tojustify billing by area of the body was not a reasonable one. Therefore, improper billing supports the Appellants’ Count 12 convictions for theft of government property. Cf. United States v. Prince

, 273 F. App’x 346, 348–49 (5th Cir. 2008) (sustaining a conviction under 18 U.S.C. § 1347 where the defendant claimed that billing by area of the body was embraced by the codes). 2

. Appellants’ Convictions on Count 13 for Money Laundering The Appellants also contend that there was insufficient evidence to
support the jury’s guilty verdict for both Appellants as to money laundering (Count 13). To convict the Appellants of money laundering, the jury would have needed tofind that they (1) conducted financial transactionswith (2) knowledge that the subject of the transactions was the proc eeds from unlawful activity/crime—here, proceeds from submitting false Medicare claims—and (3) knowledge that the transactionsweredesigned toconceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds. See 18 U.S.C. § 1956(a)(1)(B)(i); see also United States v. Odiodi o, 244 F.3d 398, 403 (5th Cir. 2001). The Government’s theory as to money laundering was that because an investigator came to an in-home treatment session by Statewide, “flashed her badge,” and asked some questions, the Appellants tried to move money out of Statewide’s account. The Government’s witness testified, based on the bank record summaries, that about a month after the agent showed up to a Statewide treatment, two million dollars were transferred from Statewide’s bank account to another Statewide account belonging to Statewide Rehabilitation Services. The funds were then transferred to Premier Dialysis, a Statewide subsidiary, and finally, one million dollars each were transferred to Jones’s and Pearson’s personal accounts. The Government witness also testified that this was the first time that Jones and Pearson paid themselves through this roundabout method.No. 10-60944

14 As stated above, the Government sufficiently proved that the Appellants had knowledge that they were improperly billing Medicare based on areas ofthe body. Additionally, from the evidence about the way the Appellants moved this two million dollars between various accounts, the jury could infer that these transactionswere designed toconceal or disguise the source ofthe proceeds. See United States v. Burns, 162 F.3d 840, 848–49 (5th Cir. 1998) (“Evidence that may be considered w

hen determining whether a transaction was designed to conceal includes

. . . depositing illegal profits in the bank account of a legitimate business.”); U nited States v. Willey, 57 F.3d 1374, 1386 (5th Cir. 1995) (“Evidence that the defendant commingled illegal proceeds with legitimate business funds has been held to be sufficient to support the design element.”). T herefore, there was sufficient evidence to convict the Appellants of money laundering. D. Jury Issues 1. Jury Instructions The Appellants further claim error because of the district court’s jury instructions. A district court’s failure to give a proposed jury instruction is reviewed for abuse ofdiscretion, subject to harmless error review. U nited States
v. Edelkind, 525 F.3d 388, 397 (5th Cir. 2008). “The district court retains substantial latitude in formulating its jury charge, and we will reverse only if the requested instruction is substantially correct; was not substantially covered in the charge as a whole; and if the omission of the requested instruction seriously impaired the defendant’s ability to present a given defense.” I d

. (internal quotation marks omitted). The Appellants claim that it was error for the district court to have improperly instructed the jury as to the requisite knowledge; to have not instructed the jury on entrapment by estoppel, ambiguity, and good faith; and to have not included a limiting instruction as to one of the Government witness’s testimony.No. 10-60944

15 a. Knowledge The Appellants each assert, though for different reasons, that they were entitled to a more specific instruction as to the defi nition of “knowingly,” and that it was error for the district court to have instructed the jury on deliberate indifference. Pearson argues that because he did not deal with billing, he did not have the requisite knowledge about the claim submissions. Jones argues that shewas only responsiblefor billing, and therefore, she did not have the requisite knowledge about the allegedly improper methods oftreatment Statewide used. With respect to Jones, w e have found that there was sufficient evidence to sustain her convictions based on her improper billing; therefore, the lack of a specificinstruction about her knowledgeabout the allegedly improper treatment is harmless. E delkind, 525 F.3d at 397. As to Pearson, there was testimony that he was actively involved in all aspects of Statewide’s operations such that he knew how Medicare was being billed. Therefore, his requested instruction was not substantially correct and thus, there was no error in not submitting that instruction to the jury. Id

. The district court gave an instruction on deliberate indifference as a part ofitschargeon “knowingly,” which wasconsistentwith this circuit’s pattern jury instructions. SeeFifth Circuit Pattern Jury Instructions: Criminal § 1.37 (2001). “In reviewing whether an instruction was supported by the evidence, we view the evidence and all reasonable inferences that may be drawn from the evidence in the light most favorable to the Government.” United States v. Wofford, 560 F.3d 341, 352–53 (5th Cir. 2009) (internal quotation marks omitted). “[T]he i nstruction is proper where the evidence shows (1) subjective awareness of a high probability of the existence of illegal conduct, and (2) purposeful contrivanc

e to avoid learning of the illegal conduct.” I d

. at 352. Such circumstances are “rare,” United States v. Mendoza-Medina, 346 F.3d 121, 132 (5th Cir. 2003), because “the district court should not instruct the jury onNo. 10-60944

3 The Appellants also urge error based on the lack of a balancing i nstruction to counteract thedeliberate indifference instruction. Though in U nited Statesv. Farfan-Carreon, 935 F.2d 678, 681 n.5 (5th Cir. 1991), we voiced our approval for such a balancing instruction, the Farfan-Carreon court, notably, did not reverse for failure to include such a balancing instruction. In this case, the deliberate indifference instruction was tempered by the fact that the district court instructed the jury that “knowledge on the part of the defendant cannot be established merely by demonstrating that the defendant was negligent, careless, or foolish.” Therefore, there was no error in not giving the jury the Appellants’ proposed balancing instruction. 16 deliberate ignorance when the evidence raises only the inferences that the defendant had actual knowledge or no knowledge at all ofthe facts in question.” United States v. Conner, 537 F.3d 480, 487 (5th Cir. 2008) (internal quotation marks omitted). Deliberate indifference instructions are inappropriate in the usual case, where the evidence presents a simple choice “between a version of the facts in which the defendant had actual knowledge, and one in which the defendant was no more than negligent or stupid.” I d

. (quoting United States v. Lara-Velasquez, 919 F.2d 946, 951 (5th Cir. 1990)). The key evidence that must be present for a deliberate indifference instruction to be appropriate is evidence of conscious action to avoid knowledge of illegal conduct, L ara-Velasquez, 919 F.2d at 951, because “[t]he purpose ofthe deliberate [indifference] instruction is to inform the jury that it may consider evidence of the defendant’s charade of ignorance as circumstantial proof of guilty knowledge.” Id.; see also United States v. Nguyen, 493 F.3d 613, 618 (5th Cir. 2007). That said, where as here, there is “substantial evidence ofactual knowledge,” the inclusion ofa deliberate indifference cannot be reversible error. Wofford, 560 F.3d at 354 (i nternal quotation marks omitted). As discussed above, there was substantial evidence of the Appellants’ actual knowledge; therefore even assuming that there was
error in instructing thejury as to deliberate indifference, such error is harmless. 3

b. Entrapment by Estoppel Appellants claim error based on the district court’s rejection of their proposed instruction as to entrapment by estoppel. They argue that Cahaba’sNo. 10-60944

17 letter to Dr. Dunk Ellis, one of the doctors affiliated with Statewide, which stated that information gleaned from Cahaba’s probe would help Cahaba develop
a “Progressive Corrective Action Plan,” led them to believe that absent
notification from Cahaba, their conduct was permissible. “The defense of entrapment by estoppel is applicable w hen a government official or agent
ac tively assures a defendant that certain conduct is legal and the defendant reasonably relies on that advice and continues or initiates the conduct.” U nited States v. Spires, 79 F.3d 464, 466 (5th Cir. 1996). Even assuming that Cahaba is an “authorized agent of the federal government who has been granted the authority from the f

ederal government to render such [claimed erroneous] advice,” id

. at 467, there is no evidence that the Appellants actually relied on this letter. Absent this evidentiary predicate, it was not error for the district court to refuse this instruction.

c. Ambiguity Appellants argue that the district court erred in failing to include their proposed ambiguity instruction in the charge to thejury. Though the thrust of theAppellants’ defense was that the Medicare regulations were ambiguous, the proposed ambiguity instruction is not a substantially correct statement of the law. Appellants’ instruction would have required the Government to go farther than the lawrequires as it would have instructed thejury that “the government must rule out the possibility that the defendant was acting in reliance on [a claimed reasonable] interpretation [ofthe law].” The law only requires that “[i]n
a case where the truth or falsity of a statement centers on an interpretive question of law, the government bears the burden of proving beyond a reasonable doubt that the defendant’s statement is not true under a reasonable interpretation ofthe law.” Whiteside , 285 F.3d at 1351. This standard does not speak to ruling out defendant’s reliance on the interpretation; it only speaks to ruling out that it was a reasonable one. Because Jones’s and Pearson’sNo. 10-60944

4 Pearson also claims that it was error for the district court to use a more limited good faith instruction as to the health care false statements (Counts 7–11). The district court rejected Pearson’s proposed instruction because it f ound that its grant of a more limited instruction and the other instructions substantially covered what the proposed instruction sought. In light of our decision regarding the lowered mens rea on Pearson’sverdict form with respect to Counts 7–11, see infra II.D.2.a., we decline to consider Pearson’s arguments on this point of error. 18 instruction was not a substantially c orrect statement of the law, the district court did not err in refusing to include it. Edelkind, 525 F.3d at 397.

d. Good Faith Appellants next claim error based on the district court’s denial of a good faith instruction as to theft ofgovernment funds and money laundering (Counts 12 and 13, respectively). 4 Like the ambiguity instruction discussed above, s ee supra II.D.1.c

., the Appellants’ proposed instruction was not a substantially correct statement ofthe law. The instruction the Appellants proposed stated, “If in good faith the defendant[s]

. . . believed that [their] statements or representationswere not false or fraudulent, then [they] cannot be guilty.” This instruction dealswith theAppellants’ beliefabout the law, but the burden on the Government was only to show that the belief that the Appellants relied on was not reasonable. See Whiteside , 285 F.3d at 1351. This instruction would have allowed the jury to acquit even if the Appellants relied on an unreasonable interpretation of the Medicare regulations so long as it was sincerely held. Therefore, it was not error for the district court not to include a good faith instruction on Counts 12 and 13.

e. Limiting Instruction In response tothe testimony by a Governmentwitness about the interplay ofthe Medicare regulations, state requirements under those regulations, and the federal crimeswith which theAppellantswerecharged, theAppellants asked for
a limiting instruction. The goal of the limiting instruction was to ensure that the jury kept the issue of state requirements separate from the federal crimesNo. 10-60944

19 charged. The district court decided against issuing a limiting instruction because it felt that such an instruction would have been an unreasonable comment on the evidence. We have previously “recognized the value of limiting instructions in attenuating any improper effect ofsuch evidence when used for
a permissible purpose.” U nited Statesv. Brechtel , 997 F.2d 1108, 1115 (5th Cir. 1993). Jury instructions, however, must be considered as a whole. Conner, 537 F.3d at 486. In the final instructions to the jury, the district judge cautioned, “You[, the jury] are here to decide whether the government has proved beyond
a reasonable doubt that the def endant’s [sic] are guilty of the crime charged. The defendants are not on trial for any act, conduct, or offense not alleged in the indictment.” This instruction sufficiently articulated to the jury that they were only to consider the federal crimes charged and not any of the state rules and regulations that were discussed. Therefore, the lack of the inclusion of the Appellants’ requested limiting instruction did not “seriously impair[] the [Appellants’] ability to present a given defense,” and it was not error for the district court to have denied the Appellants’ requested limiting instruction. Edelkind, 525 F.3d at 397. 2. Verdict Form Review of verdict form issues by this Court is for abuse of discretion, Travelers Cas. & Sur. Co. ofAm. v. Ernst & Young LLP, 542 F.3d 475, 489 (5th Cir. 2008), subject to harmless error review. U nited Statesv. Nguyen, 493 F.3d 613, 622 (5th Cir. 2007).

a. K nowledge on Counts 7–11 (Health Care False Statements) as to Pearson Pearson contends that the language used on his verdict form with respect to the health care false statement counts (Counts 7–11) was erroneous. Section 1035 ofTitle 18 of the United States Code defines the mens rea for the crime of health care false statements as “knowingly and willfully,” 18 U.S.C. 1035, butNo. 10-60944

20 the verdict form charged that thejury could find Pearson guilty if he “knew, or should have known, that the services billed by [Statewide], were not provided by
a physician or under the direct supervision of a physician, as required by Medicare.” Therefore, the level ofmens rea included on theverdict form was less than required by § 1035. Compare Bryan, 524 U.S. at 191–92 (defining “willfully”) with United States v. Garrett, 984 F.2d 1402, 1412 (5th Cir. 1993) (describing “should have known” as “the minimum level ofscienter”). This is an abuse of discretion. See McClurev. Ashcroft, 335 F.3d 404, 408 (5th Cir. 2003) (stating that it is an abuse of discretion to “rel[y] on erroneous conclusions of law”). Moreover, this was not an error that can be considered harmless because this case centered on proving that Pearson had the requisite knowledge that his billing under the Medicare regulations was illegal to convict him of fraud. Therefore, the lowered mens rea on theverdict form with respect toCounts 7–11 was reversible error.

b. Level of Detail on Count 13 (Money Laundering) The Appellants argue that the inclusion ofsome ofthe language from the indictment without including any cautionary language made the verdict f orm amount to a peremptory instruction. A peremptory instruction is “[a] court’s explicit direction that a jury must obey, such as an i nstruction to return a verdict for a particular party.” Black’s Law Dictionary 936 (9th ed. 2009). It is clear that the issuance of a peremptory instruction in a criminal case is wrong, see United Bhd. of Carpenters & Joiners of Am. v. United States, 330 U.S. 395, 408 (1947), but the language included on the Appellants’ verdict form was not
a peremptory instruction. The Appellants cite U nited States v. Overholt, 307 F.3d 1231 (10th Cir. 2002), for the proposition that “[t]he purpose ofthe verdict form is not to repeat the elements of the offense,” but there, the Tenth Circuit found that “[t]hejury could not possibly have been misled into believing that it could ignore the elements instruction.” I d

. at 1248. The same is true here. TheNo. 10-60944

21 language on the verdict form about what the financial transactions were could not have so misled the jury such that they would ignore their charge from the district court. This is factually distinct from the situation with the lowered level of mens rea on Counts 7–11 because there, the verdict form expressly contradicted what the district court said in its charge. Because the district court included additional detail on the verdict form but did not change the requisite prooftoconvict the Appellants ofmoney laundering, we find no reversible error.

c. Both Appellants on a Single Form Finally, with respect to the verdict from, the Appellants urge error based
on the fact that both of the Appellants’ names appeared on the same verdict form. While the issuance of “limiting instructions and[/or] separate verdict forms for each defendant [may help] to minimize any prejudice,” United States
v. Angwin, 271 F.3d 786, 796 (9th Cir. 2001), theAppellants can point to nocase where the failure to issue separate verdict forms constituted reversible error. Here, the verdict forms were specifically and clearly labeled as applying to only
one defendant, and therefore, we find no abuse of discretion on this basis. 3. Jury Interaction Appellants claim that the district court erred by communicating ex parte with the jury on four separate instances. Although we have not explicitly articulated the standard of review for such claims, the language of our precedentssuggests that the standard is abuse ofdiscretion, subject to harmless
error review, and we now hold that it is. U nited Statesv. Bieganowski , 313 F.3d 264, 293 (5th Ci r. 2002) (applying harmless error analysis to the review of improper ex partejury communications); United States v. Cantu, 185 F.3d 298, 305–06 (5th Cir. 1999) (“The district court enjoys wide latitude in deciding how to respond toquestionsfrom ajury.”). In determining that the standard is abuse of discretion, we do not, however, abandon our previous statement that the controlling law “affords little tolerance for any ex parte meeting between judgeNo. 10-60944

22 and juror during deliberations, and statements that seem inno cuous at first glance may[—]in the law’s eye[—]be improperly influential.” U nite d States v. Peters, 349 F.3d 842, 848 (5th Ci r. 2003) (remarking about U nited States v. Gypsum Co., 438 U.S. 422 (1978), and United Statesv. Cowan, 819 F.2d 89 (5th Cir. 1987)). Thefirst instance ofex partecommunication occurred when thejury asked about Statewide’s business model. The jury sent out a note asking: “‘Is there a copy of [Statewide’s] business model in evidence? If so, where can we find it?’” The district court responded by stating: “Ifit is not in the evidence, then it is not available for your use. I cannot point you to any specific evidence, but you should consider all of the evidence presented, including the testimony presented.” Pearson’s counsel objected once he was informed about it. The second instance occurred after thejury sent out a note describing the troubles they were having coming to a verdict as to each Appellant on Counts 2–12. During a conference with the attorneys about this note, the district judge excused himself to try to address the question. The district judge returned two minutes later and told the attorneys: “I asked thejury. They walked around and everybody w

as calm. And I said, do y’all still need me to respond to your question? And one of the ladies said, we have got a system where we are talking. So I’m leaving it like that. They don’t have a question anymore. So we will continue.” The next day, the district court received another note from thejury. This
one said, “‘Sir, I would like to talk to you about an issue I’m having with one of thejurors.,” towhich the district court responded, “I stuck my head in and said, I cannot talk to any jurors. I will have to bring you back in the courtroom.” Later that day, the final court-jury communication occurred. The district court told counsel the following:No. 10-60944

23 I knocked on the door and asked the jury about how long they wanted to work tonight, thinking about supper and all, and they said, we think we are ready to go home. They said, we will not finish tonight and may not finish tomorrow. . . . So with that said, I’m going to bring the jury back in and I’m send [sic] them home for the night.”
We reemphasize that ex partecommunications betweenjudgeandjury are to be avoided because as the Supreme Court warned in United Statesv. Gypsum Co., “[a]ny ex parte meeting or communication between the judge and the foreman ofa deliberatingjury is pregnant with possibilities for error.” 438 U.S. at 460. In this case, the communications alleged as error by the Appellants are harmless. Unlike Gypsum Co., Cowan, and Peters, there is absolutely nothing in the record that raises even an inference of prejudice. Therefore, although we again caution district judges against engaging in any communication with the jury absent the defendant or counsel present, none of these communications rises to the level of reversible error. 4. Submission of Forfeiture The Appellants claim that in its Motion to Bifurcate, the Government requested that the jury determine the forfeiture issue per Federal Rule of Criminal Procedure 32.2(b)(5) but then later failed to have the jury determine the forfeiture issue. The Government contends that the Motion to Bifurcate did not, in fact, request this. Looking at the language of the motion, it does not appear that the Government made a request under Rule 32.2 such that thejury would have to determine the forfeiture issue as well. The motion only asks that the guilt and f

orfeiture phases of the trial be bifurcated “[i]n the interests of judicial economy and avoiding confusion on the part of the jury.” It never a requests under Federal Rule of Criminal Procedure 32.2(b)(5)(A) to retain the jury to decide the forfeiture issue. It instead states that “unless and until the jury returns a guilty verdict on these counts, there is no basisfor thejury to thenNo. 10-60944

24 consider the issue ofcriminal forfeiture.” It also reminds the district court that “Rule 32.2(b) providesthat thisfactual determination shall be made by the court unless a party requests that thejury determine the issue.” This language likely would not appear if the Government had actually intended to make a request through this motion. E. Sentencing Issues Issues related to a defendant’s sentence are reviewed for reasonableness. United States v. Cisneros-G utierrez, 517 F.3d 751, 764 (5th Cir. 2008). This reasonableness determination takes the form ofabuse ofdiscretion review. I d

. There is a two-step process for this review: “first[,] ensure that the district court committed no significant procedural error” and second, “consider[] the substantive reasonableness of the sentence imposed.” I d

. (internal quotation marks omitted). In going through this two-step process, “a district court’s interpretation or application of the Sentencing Guidelines is reviewed de novo, and its factual f

indings are reviewed for clear error.” I d

. (internal quotation marks omitted). 1. Sentencing Entrapment The Appellants claim that their sentence was greater because the Government, through Cahaba, failed to inform them of their illegal practices when it decided the practices were irregular in December 2001. “Sentencing entrapment or sentence factor manipulation occurswhen a defendant, although predisposed to commit a minor or lesser offense, is entrapped in committing a greater offensesubject togreater punishment.” U nited Statesv. Staufer, 38 F.3d 1103, 1106 (9th Cir. 1994) (internal quotation marks omitted). “Although this Court apparently has not expressly determined whether we have accepted the concept of sentencing factor manipulation, [it has] addressed a similar contention in the context of a due process claim.” United States v. Tremelling, 43 F.3d 148, 151 (5th Cir. 1995) (internal quotation marks omitted). There is,No. 10-60944

25 however, no proof that Cahaba did anything besides follow routine practice of referring determinations of “potential fraud” for investigation. This is not the type of “overbearing and outrageous conduct” that we considered as a potential basis for a finding of sentencing entrapment. I d.; see also United States v. Washington, 44 F.3d 1271, 1279–80 (5th Cir. 1995) (refusing to decide on the merits of the “trendy” claim of sentencing entrapment). Therefore, though we decline to decide whether or not sentencing entrapment is an acceptable basis
on which to c

hallenge a conviction, we find that even if we did accept it, the Appellants cannot meet its requirements so as to merit relief. 2. Sentencing Miscalculation Lastly, the Appellants urge error because the district court refused to credit any of the alleged value provided by Statewide’s treatments against the loss that the district court found. See U.S. Sentencing Guidelines Manual § 2B1.1 cmt. n.3(E) (2010). They argue that the factual finding that Statewide’s treatment had no value was clearly erroneous. The district court based its guidelines calculation for both Appellants on the entire $18,068,447.73 that Medicare paid Statewide. It did so because the treatments “had no monetary value insofar as the Medicare and Medicaid laws are concerned.” The Appellants claim that their treatment provided value to their patients, but this confuses who the victim is for the purposes of the offense charged. Here, the Appellants were convicted ofdefrauding the government (Medicare); therefore, the government is the relevant victim for Note 3(E) to § 2B1.1. Medicare pays for treatments that meet its standards, and the Appellants’ treatments using unlicensed KTs did not meet these standards. Consequently, Medicare received
no value from the Appellants’ treatments and the district court did not err in calculating the loss amount.No. 10-60944

26 III. CONCLUSION For theforegoing reasons, we AFFIRM the Appellants’ convictions for theft ofgovernment funds and money laundering (Counts 12and 13, respectively) but REVERSE Pearson’s convictions for health care false statements (Counts 7–11) due to lowered level of mens rea on the verdict form.