Opinion ID: 702500
Heading Depth: 1
Heading Rank: 3

Heading: False Statements Conviction

Text: 23 Counts Four through Eight charged Coyle with making false statements on documents required by ERISA in violation of 18 U.S.C. Sec. 1027. That section, which can be read and understood more easily with some editorial emphasis and bracketed numerical insertions, reads: 24 Whoever, in any document required by title I of the [ERISA] to be published, or kept as part of the records of any employee welfare benefit plan or employee pension benefit plan, or certified to the administrator of any such plan, makes any false statement or representation of fact, knowing it to be false, or knowingly conceals, covers up, or fails to disclose any fact the disclosure of which is required by such title or is necessary to verify, explain, clarify or check for accuracy and completeness any report required by such title to be published or any information required by such title to be certified, shall be fined under this title, or imprisoned not more than five years, or both. 25 18 U.S.C. Sec. 1027 (emphasis and bracketed numbers added). This court has previously stated that the three elements necessary to sustain a conviction under section 1027 are (1) the defendant made a false statement; (2) knowing it to be false; and (3) in a document required by ERISA. United States v. Furst, 886 F.2d 558, 568 (3d Cir.1989), cert. denied, 493 U.S. 1062, 110 S.Ct. 878, 107 L.Ed.2d 961 (1990). 26 Coyle does not argue that the government failed to prove that he made false statements knowing them to be false. Instead he argues that the district court erred in refus[ing] to give the instruction proposed by the defense limiting the jury's consideration to only those factual disclosures on the Schedule A forms which were legally compelled. Appellant's Brief at 20. In another, but related contention, Coyle argues that the indictment charged only one of the disjunctive methods of violating 18 U.S.C. Sec. 1027, but that the court instructed the jury about both, and that this led to a fatal variance. 27 Generally, we review the district court's refusal to give certain jury instructions under an abuse of discretion standard although where, as here, the question is whether the jury instructions stated the proper legal standard, our review is plenary. See Government of the Virgin Islands v. Isaac, 50 F.3d 1175, 1180 (3d Cir.1995). As on all occasions when we consider jury instructions we consider the totality of the instructions and not a particular sentence or paragraph in isolation. In re Braen, 900 F.2d 621, 626 (3d Cir.1990), cert. denied, 498 U.S. 1066, 111 S.Ct. 782, 112 L.Ed.2d 845 (1991). 28 Each of the five false statement counts alleges that Coyle in a document required to be published by ERISA ... and required to be kept as part of an employee welfare benefit plan by ERISA unlawfully and knowingly caused the making of a false statement and representation of fact, and that those acts violated 18 U.S.C. Secs. 1027 and 2 (emphasis added). Each of the false statements counts unambiguously charges that the false information consisted of the amounts of claims paid, [HCA's payments to the physician and dentist providers], administrative service or other fees and total retention. Each false statement count unambiguously charges that the false reports with which Coyle is charged appeared in the Schedules A prepared by HCA and filed by or on behalf of the Fund as part of the Forms 5500. 29 We discern what appear to be several different threads to Coyle's challenge to his false statements conviction, none of which are convincing. We do not understand Coyle to argue that the documents, i.e., the Schedules A, were not documents that were required by ERISA to be published or kept. He argues instead, in somewhat abbreviated fashion, that HCA does not fall within the statutory sections that impose the obligation to make the factual disclosures that were proven to be false. However, inasmuch as the false factual statements were in documents required by ERISA to be published or kept, Coyle's argument misses the mark. 30 29 U.S.C. Sec. 1023 requires an annual report to be published and filed with the Secretary of Labor for every covered employee benefit plan, and that it contain specified information. Subsection (a)(2)(A) requires that if some of the information that the administrator, here the Fund Trustees, needs to submit the annual report and to comply with title I of ERISA is maintained by an insurance carrier or other organization which provides some or all of the benefits under the plan, or holds assets of the plan in a separate account, that organization must transmit and certify the accuracy of such information to the administrator. (Emphasis added). See also 29 C.F.R. Sec. 2520.103-5(a). Subsection (e) requires that information as to, inter alia, total claims paid, commissions paid, and administrative fees paid be enumerated on a statement included in the annual report (the Schedule A) [i]f some or all of the benefits under the plan are purchased from and guaranteed by an insurance company, insurance service, or other similar organization. (emphasis added). 31 Coyle contends that HCA is not an other similar organization. The district court instructed the jury that as a matter of law HCA was a medical service provider and therefore subject to the obligation to transmit and certify information needed by the administrator to file its annual report. In doing so, the court relied on our decision in United States v. Martorano, 767 F.2d 63 (3d Cir.) (per curiam), cert. denied, 474 U.S. 949, 106 S.Ct. 348, 88 L.Ed.2d 296 (1985). In Martorano, a welfare fund had contracted with AMMA Health Center, Inc. to provide outpatient medical coverage to union members. Id. at 64. The Fund requested that AMMA prepare utilization reports which it needed to complete Form 5500. Martorano, who prepared AMMA's reports, significantly understated its profits on the utilization reports, and was indicted under 18 U.S.C. Sec. 1027 for making false statements in documents required by ERISA. 32 We rejected Martorano's argument that 18 U.S.C. Sec. 1027 applies only to fiduciaries of union pension and welfare funds and does not apply to medical service providers. We held that by selling medical services to the Fund, AMMA fell under the statutory coverage of 29 U.S.C. Sec. 1023(e) of ERISA. Id. Therefore, the understatement of profits by a health care organization that furnishes outpatient medical coverage to members of a health and welfare fund governed by ERISA constitutes a violation of [18 U.S.C. Sec. 1027]. Id. at 64; see also United States v. Sarault, 840 F.2d 1479 (9th Cir.1988) (false statements made by attorney representing an assetless insurance company). We concluded that the language in 18 U.S.C. Sec. 1027 is broad enough to cover medical service providers and reasoned that such a construction would promote the goals of ERISA because [i]f medical service providers are not sanctioned for providing false information, plan participants will suffer. Martorano, 767 F.2d at 65. 33 Although AMMA, unlike HCA, itself provided the medical services, it was HCA that undertook to design, contract for and administer the dental and vision care benefit plans for Local 286's Fund, and it was only HCA that maintained the records and was in the position to supply the Fund with the information to which 29 U.S.C. Secs. 1023(e) and 1023(a)(2)(A) refer. Moreover, it was HCA which held the premiums, i.e., the assets of the plan as referred to in the statute, in a separate account. See Transcript of Jury Trial, Nov. 30, 1993 (9:30 a.m.) at 140 (Testimony of Jack Klein). Therefore, we agree with the district court that HCA had the reporting and record-retaining obligations that ERISA imposes. 34 Coyle also seems to argue that the false statements can be excused because they were made in response to questions on Schedules A that apply only if the contracts were experience-rated, and Coyle contends the Fund's plans were not because they did not set group premiums by evaluating participant utilization of medical services. This is a red herring. Coyle admits that HCA completed the Schedules A on behalf of the Fund for the years in question as though the contracts were experience-rated, and that the figures for claims paid and administrative costs retained in the responses to those questions were false. Coyle's argument on the experience-rated issue seems based on his premise that the crime charged was that of making false statements as to factual disclosures which were required, but as discussed above the crime charged and proven was that the false statements appeared on ERISA-required documents. 35 Moreover, the Fund specifically requested that HCA prepare the Schedules A. HCA was obliged by the statute to certify the accuracy of its statements. See 29 U.S.C. Sec. 1023(a)(2)(A). It also had an obligation under title I of ERISA to maintain records which provide in sufficient detail information from which required documents might be verified and checked for accuracy and completeness. See 29 U.S.C. Sec. 1027. HCA purported to comply with its obligations by reporting to the Fund on the Schedules A it prepared. Even if HCA erred by completing the section for experience-rated contracts, the information it did provide was proven false, thus violating the prohibition of 18 U.S.C. Sec. 1027 against making any false statement or representation of fact, knowing it to be false in a document ERISA requires be published or kept. 36 Coyle offers no authority to support the implicit and rather bold proposition that one may make false statements or supply information to the government on required forms, but avoid liability if the false information voluntarily supplied may have been more than required. Such an argument would undercut one of the purposes of section 1023 of ERISA, which is to enable the Department of Labor to use the annual reports and the Schedules A to carry out its statutory responsibilities, including the initiation and conduct of investigations to assure the integrity of the individual plans and the $205 trillion estimated to be in ERISA plan assets. We thus reject Coyle's contention that the court should have limited the jury's consideration to required factual disclosures. 37 Coyle's other argument, i.e., that the instruction the court did give was erroneous because the indictment charged only one of the two methods of violating 18 U.S.C. Sec. 1027 but the court charged as to both, also stems from Coyle's preoccupation with the disclosure language. Admittedly, in this respect the indictment could have been more carefully drawn, but we see no reversible error in the charge. 38 To understand we return to the statute, and the disjunctive crimes set forth in 18 U.S.C. Sec. 1027. The statute as read by this court, and as read by Coyle, is set forth in the Appendix to this opinion. 39 The district court's comprehensive charge correctly delineated both crimes. The court explained that the indictment charged Coyle, inter alia, with false statements and concealment of facts in relation to documents required by [ERISA]. App. at 422-23 (emphasis added). After explaining that the jury must find that the Fund fell within ERISA, the court stated that the Government must prove beyond a reasonable doubt that the defendant made or caused the making of a false statement or representation of fact knowing it to be false or knowingly concealed, covered up or failed to disclose any fact, the disclosure of which is necessary to verify, explain, clarify or check for accuracy and completeness any Form 5500 Schedules A published by the Local 286 Paper Converters Welfare Trust Fund. App. at 423 (bracketed material and emphasis added). The court then told the jury it must find that the Schedules A submitted by Coyle to the Fund were documents required by ERISA, and that Coyle acted knowingly. 40 Coyle reads the statute to set out the following two methods of violation, i.e., [t]he first method is by making a false statement of fact (or by covering up or failing to disclose such fact) the disclosure of which fact is required by Title I of ERISA, Appellant's Brief at 19, and the second method is making a false statement of fact, the disclosure of which is not required by ERISA, but is nonetheless necessary to verify, explain, clarify or check the accuracy or completeness of reports which are required to be filed. Id. at 20. Coyle misreads the statute. 41 The court correctly told the jury that to establish a violation the government must prove (1) the knowing making of a false statement or representation of fact in an ERISA-required document or (2) the knowing concealment, cover-up, or failure to disclose any fact the disclosure of which is required or is necessary to verify, explain, etc. One violation deals with the making of a false statement, the other with the omitting or concealment of relevant facts. They are separated by an or with verbs on either side, i.e., makes any false statement or knowingly conceals ... The statute would charge a violation in grammatical terms even if the language describing one or the other prong were completely eliminated. In contrast, Coyle's reading of the statute erroneously divides the violations in an ungrammatical manner. This is evident from the Appendix to this opinion. 42 Coyle's theory of a variance between the indictment and the charge may stem from the fact that the indictment contained surplus language relating to facts the disclosure of which is required by ERISA, added to what we have referred to as the making false statement prong of 18 U.S.C. Sec. 1027. That language more appropriately belongs with the knowing concealment prong of 18 U.S.C. Sec. 1027, i.e., concealment or nondisclosure of a fact disclosure of which is required ... or is necessary to verify, etc. The indictment does not expressly charge that second violation, although it is arguable that the concealment of a necessary fact is but the mirror image of supplying false statements of fact, i.e., not disclosing or concealing the true facts. 43 Coyle is not entitled to a reversal because of the inclusion of the unnecessary disclosure of which is required language which, at most, is mere surplusage. It is a longstanding principle of criminal procedure that [a] part of the indictment unnecessary to and independent of the allegations of the offense proved may normally be treated as 'a useless averment' that 'may be ignored.'  United States v. Miller, 471 U.S. 130, 136, 105 S.Ct. 1811, 1815, 85 L.Ed.2d 99 (1985) (quoting Ford v. United States, 273 U.S. 593, 602, 47 S.Ct. 531, 534, 71 L.Ed. 793 (1927)). Moreover, if the additional language created any confusion, the explanation following the that is language of the same sentence made absolutely clear what the charge against Coyle was. Three false statement counts ended with the language, that is, that defendant caused the filing of a Schedule A with the IRS reporting falsely the amounts of claims paid, administrative service or other fees, and total retention, knowing these amounts to be false. App. at 16. The other two are similar in respects relevant here. These charges were supported by substantial evidence. 44 Because Coyle contends there was a lack of proof that the factual disclosures were required, he frames an argument of a fatal variance between the indictment and the proof. This is a far cry from the classic fatal variance case on which Coyle relies. In Stirone v. United States, 361 U.S. 212, 80 S.Ct. 270, 4 L.Ed.2d 252 (1960), the Court held that the trial evidence and the instruction so broadened the possible bases for conviction that they destroyed the defendant's substantial right to be tried only on charges presented in an indictment returned by a grand jury. Id. at 217, 80 S.Ct. at 273. 45 Here, the concealed facts were the very facts that were the subject of the false statements, i.e., the accurate facts as to payments to doctors and dentists and HCA's administrative costs. Thus, the court's instruction did not prejudice Coyle. See United States v. Pelullo, 964 F.2d 193, 216 (3d Cir.1992). In order to convict Coyle for the crime charged, under both the indictment and the court's instructions the jury would have had to find that there were false statements made on the Schedules A. The indictment identified the false statements made in the Schedules A with the requisite specificity. See Fed.R.Crim.P. 7. There were no other allegedly false documents before the jury. Therefore, the variance, if any, did not alter the elements of the offense charged. See United States v. Asher, 854 F.2d 1483, 1497 (3d Cir.1988), cert. denied, 488 U.S. 1029, 109 S.Ct. 836, 102 L.Ed.2d 969 (1989). See also Turner v. United States, 396 U.S. 398, 420, 90 S.Ct. 642, 654, 24 L.Ed.2d 610 (1970) ([W]hen a jury returns a guilty verdict on an indictment charging several acts in the conjunctive ... the verdict stands if the evidence is sufficient with respect to any one of the acts charged.). 46 We reject Coyle's contention that the evidence was insufficient to sustain a conviction or that the district court erred in its instruction.