Opinion ID: 312171
Heading Depth: 1
Heading Rank: 2

Heading: The Computerized Statistical Evidence

Text: 32 Appellant has mounted a broad attack on the admission by the court of the 1967 annual statistical run of Blue Shield of Michigan. In the first place it is claimed that this evidence does not qualify as a business record under 28 U.S.C. Sec. 1732(a), the Federal Business Records Act. That statute establishes the admissibility in federal courts of any writing or record, made as a memorandum or record of an act or transaction, as evidence of such act or transaction if made in the ordinary course of business. This is an exception to the hearsay rule. The uncontradicted testimony of two witnesses established that the 1967 statistical run was a regularly maintained business record of Blue Shield and was made in the ordinary course of business. It was also shown that this record was relied upon by the company in conducting its business, particularly with reference to its auditing and actuarial procedures. The appellant maintains that the annual statistical run is not the record of any act or transaction and that only the original DSR's should have been admitted to prove the act of payment for medical procedures. 33 Computer printouts are not mentioned in the Federal Business Records Act. However, no court could fail to notice the extent to which businesses today depend on computers for a myriad of functions. Perhaps the greatest utility of a computer in the business world is its ability to store large quantities of information which may be quickly retrieved on a selective basis. Assuming that properly functioning computer equipment is used, once the reliability and trustworthiness of the information put into the computer has been established, the computer printouts should be received as evidence of the transactions covered by the input. No evidence was introduced which put in question the mechanical or electronic capabilities of the equipment and the reliability of its output was verified. The procedures for testing the accuracy and reliability of the information fed into the computer were detailed at great length by the witnesses. The district court correctly held that the trustworthiness of the information contained in the computer printout had been established. 34 The appellant also maintains that the computer printout should not have been received in evidence because it was not prepared at the time the acts which it purports to describe were performed or within a reasonable time thereafter as required by 28 U.S.C. Sec. 1732(a). However, the evidence clearly shows that a record of payment was made at the time each DSR was paid by Michigan Blue Shield and that this record was referred to as the paid claims file. This file consisted of reels of magnetic tape which reflected every payment to a doctor in the year 1967. Since the computer printout is just a presentation in structured and comprehensible form of a mass of individual items, it is immaterial that the printout itself was not prepared until 11 months after the close of the year 1967. It would restrict the admissibility of computerized records too severely to hold that the computer product, as well as the input upon which it is based, must be produced at or within a reasonable time after each act or transaction to which it relates. 35 The Federal Business Records Act was adopted for the purpose of facilitating the admission of records into evidence where experience has shown them to be trustworthy. It should be liberally construed to avoid the difficulties of an archaic practice which formerly required every written document to be authenticated by the person who prepared it. Gilbert v. Gulf Oil Corporation, 175 F.2d 705 (4th Cir. 1949); Gradsky v. United States, 342 F.2d 147 (5th Cir. 1965), vacated and remanded on other grounds, 383 U.S. 265, 86 S.Ct. 925, 15 L.Ed.2d 737 (1966). The Act should never be interpreted so strictly as to deprive the courts of the realities of business and professional practices. Harris v. Smith, 372 F.2d 806 (8th Cir. 1967). 36 Appellant insists that the 1967 statistical record was a summary which is not admissible, citing Melinder v. United States, 281 F.Supp. 451 (W.D.Okl.1968). That case involved an exhibit prepared by an Internal Revenue agent for use at the trial of an income tax case. It was not a record produced in the ordinary course of business and was merely a recapitulation of certain information which had not been introduced to verify it in the case. The annual statistical run of Blue Shield of Michigan is not a summary, since it contains a record of every claim paid by the organization during a given year. The information contained in it is arranged in a predetermined manner and classified according to medical procedures. However, all paid claims are included and all compensable procedures are covered. It is important to distinguish the entire printout of the 1967 annual statistical run from a separate item of evidence consisting of a summary of portions of the printout. The witness Smith did summarize portions of the annual statistical record and did relate these summaries to the individual doctor's profiles of the defendants. Nevertheless, the entire statistical run was produced by the prosecution as a business record prepared in the ordinary course of business long before the time of the trial. Although summaries may or may not be admissible in evidence according to the circumstances of a particular case, we hold that the computer printout offered in evidence in this case was an original record and not a mere summary. 37 The appellant maintains that no proper foundation was laid for the admission of the 1967 annual statistical record. We disagree. The witnesses Smith and Mrachina were qualified as experts by education, training and experience and they showed a familiarity with the use of the particular computers in question. The mechanics of input control to assure accuracy were detailed at great length as was the description of the nature of the information which went into the machine and upon which its printout was based. In United States v. De Georgia, 420 F.2d 889 (9th Cir. 1969), the computerized records of Hertz Corporation were admitted for the purpose of showing that a particular automobile was not involved in any rental or lease activity during a certain period of time. An employee of Hertz was permitted to testify, based on the computer information, that an automobile found in the custody of the defendant at the time of his arrest was stolen from the Hertz lot since it had not been rented or leased. As the opinion points out, the foundation for admission of such evidence consists of showing the input procedures used, the tests for accuracy and reliability and the fact that an established business relies on the computerized records in the ordinary course of carrying on its activities. The defendant then has the opportunity to cross-examine concerning company practices with respect to the input and as to the accuracy of the computer as a memory bank and retriever of information. The concurring opinion in De Georgia emphasizes the necessity that the court be satisfied with all reasonable certainty that both the machine and those who supply its information have performed their functions with utmost accuracy. 420 F.2d at 895. This opinion goes on to say that the trustworthiness of the particular records should be ascertained before they are admitted and that the burden of presenting an adequate foundation for receiving the evidence should be on the parties seeking to introduce it rather than upon the party opposing its introduction. We believe that in this case the prosecution proved the essential elements upon which the district court could, and did, conclude that the annual statistical run of Blue Shield of Michigan was a trustworthy record which was entitled to be received in evidence under the Federal Business Records Act. Two well-reasoned state court opinions support this conclusion. See Transport Indemnity Company v. Seib, 178 Neb. 253, 132 N.W.2d 871 (1965); King v. State ex rel. Murdock Acceptance Corporation, 222 So.2d 393 (Miss.1969). 38 Appellant also complains that he was not given an opportunity to prepare his defense to the computerized material used by the prosecution. In United States v. Stifel, 433 F.2d 431 (6th Cir. 1970), cert. denied, 401 U.S. 994, 91 S.Ct. 1232, 28 L.Ed.2d 531 (1971), this Court held that if the Government uses highly sophisticated scientific evidence (in that case, neutron activation analysis) involving time consuming and expensive laboratory tests, it must allow time for a defendant to make similar tests. The Manual for Complex and Multidistrict Litigation deals at some length with the use of computer evidence. Its admissibility is strongly defended where the records have been kept in the regular course of business and its reliability has been demonstrated. The Manual further states, 39 It is essential that the underlying data used in the analyses, programs and programming method and all relevant computer inputs and outputs be made available to the opposing party far in advance of trial. This procedure is required in the interest of fairness and should facilitate the introduction of admissible computer evidence. Such prodecure provides the adverse party and the court with an opportunity to test and examine the inputs, the program and all outputs prior to trial. (p. 88). 40 On March 22, 1971 appellant filed a request for particulars in which he sought information about the evidence which would be used in support of the charges against him. On April 27, 1971 the government filed its response and forwarded to the attorneys for appellant a number of documents relating to the request for particulars. At the same time the Assistant U. S. Attorney forwarded to the attorneys for the appellant certain documents, including-[A] statistical summary for 1967 compiled from the records of Blue Shield of Michigan. It compares the number of claims filed for certain services by the defendants as against the total number filed by all doctors in the State of Michigan. So far as the record shows, no discovery steps were taken by the appellant between the time of the disclosure by the prosecution of the nature of this particular evidence and the beginning of the trial on September 14, 1971 despite the fact that Rule 16(b) Fed.R.Crim.P. provides for discovery and inspection by a defendant in a criminal case. At the trial Charles Smith's testimony compared the number of claims made by Drs. Russo and Lieberwitz for five particular medical procedures with those made by all of the doctors in Michigan. This summary was prepared by the witness from two sources. The number of claims paid to Drs. Russo and Lieberwitz was determined from the individual doctor's profiles prepared for each one of the defendants concerning which there is no contention on appeal. The information as to the total number of claims paid all doctors in Michigan in the five categories of medical procedures was based on the annual statistical run which was offered and accepted in evidence. In view of the enclosure of the identical summary in the letter of April 27, there was no surprise or sudden, unexpected production of this evidence. Mr. Smith was cross-examined vigorously as to the manner in which the annual statistical run was produced. 41 Furthermore, on the third day of the trial, September 16, 1971, there was a discussion between the court and counsel concerning exhibits. The prosecuting attorney referred to the fact that he had furnished statistics to counsel for the defendant pursuant to the court's pretrial order and stated that statistics showing the volume of claims in certain categories by the defendants would be compared with the total volume of such claims paid to all doctors throughout Michigan. On September 24, 1971 the witness Smith was recalled for the purpose of testifying about individual doctor's profiles and the annual statistical run of his employer. The court recalled to the attorneys that there had been a previous discussion of this offer of proof and that he had requested attorneys to be prepared to offer authority for their positions. When counsel for appellant complained that the information included in the annual statistical run was exclusively in the control of Blue Shield the court reminded him that he had a right to get an order which would have permitted him to go into the plant and study the whole process, and had not done so. The court ruled that the summary evidence offered by the witness Smith could be introduced because the primary evidence upon which the summary was based was in the courtroom and available for inspection and use in cross-examination by appellant. The prosecuting attorney pointed out again that the original of the computer run for the 1967 annual statistical report was available to counsel for the defendants, that the doctors' profiles and the vouchers from which they were constructed were also available for examination by counsel. 42 In cross-examining the witness Smith on September 28, 1971 the defense for the first time asked about other information that Blue Shield might furnish from its computer for comparison with the statistics included in his testimony. At no time prior to the trial or after the September 14th conference with the court did the defense make any effort to require the prosecution or Blue Shield to make its computers available to the defendants or to an expert employed by them or even to provide other information from the computers which was not then available. The computerized annual statistical run was not introduced into evidence and presented to the jury until September 30, 1971. Defense counsel were given an opportunity to examine the exhibit and to cross-examine both Mr. Smith and Mr. Mrachina extensively concerning it. The prosecuting attorney stated that the reason for introducing the annual statistical run as an exhibit was to provide a foundation for the testimony of Mr. Smith. The court pointed out that the annual statistical run itself was not a summary but a primary and original record constantly used by the company and was admissible in support of the testimony relating to portions of the exhibit by the person under whose supervision it was prepared. 43 In United States v. Kelly, 420 F.2d 26 (2d Cir. 1969), despite a motion for discovery of scientific tests which would be relied upon, the Government failed to inform the defendant of a neutron activation test which it had performed and the defendant only became aware of it at the trial when the Government sought to introduce its exhibits. The defendant objected and requested a month's continuance in the trial to carry out its own neutron tests. The court held that fairness requires a disclosure, in advance, of the results of a scientific test in order to give the defendant an opportunity to conduct his own tests. The present case differs from Kelly in several respects. In the first place, in that case there was a motion for discovery as to scientific tests and secondly, there was a motion for a continuance to permit the defendants to conduct their own tests. Neither of these steps was taken by appellant. We conclude, as did the trial judge, that appellant had ample notice of the nature of the statistical evidence which the prosecution planned to use and chose to attempt to discredit this evidence by means of cross-examination rather than availing himself of discovery and the use of expert witnesses of his own choosing. It was within the discretion of the trial judge to admit the expert testimony of the witness Smith and to permit the introduction of supporting evidence in the form of the annual statistical run after proper foundation had been laid by Smith and the witness Mrachina. Much of the objection to admission of the computerized statistics was held by the trial judge to go to the weight of the evidence rather than its admissibility. This ruling was correct in view of the language contained in 28 U.S.C. Sec. 1732(a)- 44 All other circumstances of the making of such writing or record, including lack of personal knowledge by the entrant or maker, may be shown to affect its weight, but such circumstances shall not affect its admissibility. 45 Appellant also complains that the computerized information did not bear directly on the question of guilt or innocence and encouraged the jury to draw unwarranted inferences. The trial court ruled, and we agree, that the testimony of Smith supported by the computerized statistics, when considered in connection with the testimony of Dr. Thompson, furnished an inference from which the jury could properly conclude that the defendants did not actually perform the extremely large numbers of certain designated medical procedures for which they were paid in the year 1967. It is also contended that the court failed to give a qualifying instruction with respect to the statistical evidence. The record discloses that the court instructed the jury that the summaries prepared by the witness Smith and admitted in evidence were not in and of themselves evidence or proof of any facts and were used only as a matter of convenience. The court further instructed that If and to the extent that you find they are not in truth summaries of facts or figures shown by the evidence in the case, you may disregard them entirely. The court also gave a comprehensive instruction on the right to draw reasonable inferences from established facts and charged that inference might not be built upon inference. We believe that the instructions, read as a whole, fairly and adequately charged the jury on all of the issues in the case. Kowalchuk v. United States, 176 F.2d 873 (6th Cir. 1949).