Opinion ID: 496776
Heading Depth: 2
Heading Rank: 1

Heading: sufficiency of the evidence

Text: 6 Kaplan argues that the court erred in denying a motion for judgment of acquittal because the evidence was legally insufficient to sustain the verdict. There is no dispute here about the existence of a fraudulent scheme and the mailings as elements of mail fraud. The only issue is whether the jury had enough evidence to find beyond a reasonable doubt that Kaplan knowingly participated in the scheme. 7 For us to sustain the jury's determinations we need not find a smoking gun, in the sense that Kaplan had been told the bills are false, do not mail the claims. It is sufficient if from the admissible circumstantial evidence a jury can infer and conclude beyond a reasonable doubt that indeed he knew the falsity of these claims. United States v. Tierney, 760 F.2d 382, 384 (1st Cir.), cert. denied, 474 U.S. 843, 106 S.Ct. 131, 88 L.Ed.2d 108 (1985); United States v. Cincotta, 689 F.2d 238, 241 (1st Cir.), cert. denied, 459 U.S. 991, 103 S.Ct. 347, 74 L.Ed.2d 387 (1982). In reviewing for sufficiency, we consider the evidence in toto--together with all legitimate inferences that can be drawn from the evidence--in the light most beneficial to the government. See, e.g., United States v. Rothrock, 806 F.2d 318, 320 (1st Cir.1986). 8 The scheme apparently grew out of a 1973 contact between Rosenthal, a chiropractor, and Kaplan. Rosenthal testified under immunity that Kaplan had agreed to refer clients to him, and in consideration Kaplan would pay him two-thirds of his billings. The other one-third, Kaplan had said, would go back to his clients or would be used to thank those who referred business to him. Payments were made by money orders, apparently to facilitate income tax evasion and to encourage the medical providers to accept less than payment in full. Rosenthal also testified that he recruited Dr. Hershenow, an internist, and told him about the financial arrangements with Kaplan. According to Rosenthal, Kaplan got angry upon learning about this and told Rosenthal never again to discuss this subject matter with anyone. Yet Hershenow testified that he later met with Kaplan when the latter explained the importance of the $500 threshold for medical expenses in the third-party cases. Hershenow agreed to accept referrals and partial payments from Kaplan only if the patients were actually injured in an accident. During their conversations, Kaplan told him that one-third of his bill was payable to auto body shops and to insurance companies which referred clients to the law office. If Hershenow himself did the referrals, Kaplan would pay him one-hundred percent on the amount of his bills. 9 Not all doctors acquiesced in Kaplan's financial ideas. Dr. Taylor, a radiologist, testified under immunity that he complained to both Kaplan and Bernstein, Kaplan's office manager, that added fixed costs for radiological services had made it impossible for him to accept untimely and discounted payments. Taylor testified, uncontradicted by Bernstein's testimony at trial, that Kaplan had said that if he was unwilling to go along with it the office could refer clients to other more cooperative radiology services. Taylor said that subsequently Kaplan's referrals fell almost to zero. 10 The pervasiveness of the fraud and the nature of the cases under Kaplan's responsibility laid the foundation for a permissible inference of knowledge. For example, Rosenthal testified that from 1973 through part of 1980 he accepted some 500 referrals from Kaplan of which 250 had false bills and reports. As extracted by the government from Rosenthal's internal medical files, some cases were particularly egregious. Rosenthal said that in the Bella Kaplan case (appellant's mother) he had inflated the number of visits for treatment. Kaplan had called Rosenthal to inform him that an investigator from the fraudulent claims bureau had questioned him regarding his mother's claim. Although Kaplan urged Rosenthal to verify the records, he never questioned the bills. The evidence also shows that Kaplan filed a PIP application on behalf of his wife. Yet Kaplan did not include Rosenthal's bill with the application in spite of the fact that this additional bill would have entitled her to bring a third-party action for negligence. The jury could well have concluded that Kaplan did not include the bill because he knew it was false. 11 The Neubstadt case is a good illustration of Kaplan's seemingly deliberate aloofness to the scheme. In that case, the Boston Municipal Court expressly found that Rosenthal's medical expenses were unreasonable and unnecessary. Yet Kaplan continued to refer clients to Rosenthal without ever inquiring from Rosenthal about the court's findings. And the insurers themselves gave Kaplan sufficient reason to believe the existence of wrongdoing. In the Howsworth case a claims adjustor wrote to Kaplan in 1974 [i]n our opinion the injuries could not have been serious enough to warrant all treatment which Dr. Strauss has itemized. In spite of this, rather than investigating, in 1975 Kaplan ordered his assistant, Ina Brandt, to help Dr. Strauss prepare medical reports. Similarly, Rosenthal admitted to false billings in the Malgiolio-Pervutavich case in which Kaplan had written to his client on August 13, 1975: Dear Brian: 12 Please note that Charles Malgiolio was in my office this morning, and we discussed the accident that you both were involved in on June 26th, 1974. And before I start a suit on behalf of Charley, I wanted to clear things with you to confirm whether or not you want me to press a suit on your behalf. In as much as the [adjustor] informed my office that you went to his office and told his supervisor that you were not hurt as a result of the accident, and yet I have medical reports and bills from two doctors in my file. 13 Would you kindly contact my office and make an appointment to come in so that you may discuss the same with me in person. If I do not hear from you within the next ten days, I will assume that you no longer are interested in pursuing this matter, and I will, accordingly, close out this file. Regards, very truly yours. 14 (Emphasis ours). 15 On September 4, 1975, Kaplan wrote to Dr. Rosenthal: 16 ... enclosed herein find the self-explanatory letter of Brian Pervutavich dated August 13, 1975. In as much as I have not received a reply from him to date, I am, accordingly, closing out the file regarding his claim, and suggest that both of you and Dr. Stone contact Mr. Pervutavich direct. 17 Rosenthal testified that Kaplan neglected to ask him why he had issued a bill and report when his client, Pervutavich, had told the insurer he had not been injured in the accident. Kaplan simply implied in that letter Rosenthal, you handle it. 18 Kaplan's repeated failure to investigate took on overtones of willfulness in the Jenkins case. McLoughlin, a lawyer employed by Kaplan, testified on cross-examination that Jenkins had told him that a medical bill was false. Instead of investigating the allegation, Kaplan refused to represent the client any further. 19 In spite of the above, Kaplan suggests on appeal that his employees had no reason to suspect any wrongdoing. This is not borne out by the record. Rosenthal testified that Ina Brandt would call him for another $50 or $100 in order to get the medical expenses past the $500 threshold. This is corroborated by a handwritten note from Brandt in the file related to her husband's case handled by Kaplan which reads bills are now at 340. Rosenthal testified that subsequent to those conversations he would submit to Kaplan false addendum bills and reports. 20 Even Bernstein, Kaplan's office manager, suspected some wrongdoing, although he admitted never telling Kaplan about it. Bernstein testified that some bills showed an exaggerated number of visits in relation to the client's physical appearance and the nature of the (soft-tissue) injuries. We find it entirely permissible for the jury to have inferred that Kaplan was at least as suspicious about billing discrepancies as Bernstein. In the words of his associates, Kaplan was the boss. While assistants performed legal and clerical tasks, appellant's role in the office was crucial. He met with clients and referred them to various doctors, including doctors Rosenthal and Hershenow. These two doctors often sent false bills and reports directly and only to Kaplan. Kaplan then reviewed the client files, containing the bills, prior to disbursing an award to a client. Kaplan also had the final say on how much to charge clients in legal fees. At the disbursement conferences (at times handled personally by Kaplan) he paid the clients, recommended to clients an amount to pay on the bills, and completed and sent the money orders to the medical providers. For Kaplan now to hide behind the facade of a high-volume caseload to suggest lack of knowledge is surely disingenuous. 21 The money order arrangement also permitted the jury to infer a motive, i.e., Kaplan's direct economic interest from participating in the scheme. A bank officer testified that money orders were always issued sequentially (in serial numbers). Kaplan's legal assistants would purchase money orders from the bank and would give them in blank to Kaplan. The money orders were drawn from the client's trust fund account. The record shows a series of money orders, payable to medical providers, and then following the same sequence two money orders purchased by Kaplan for his personal use. This permits an inference that, when paying to medical providers two-thirds of their bills, Kaplan pocketed the difference. 22 The fact that files and documents were removed from Kaplan's storage area adds to the overwhelming evidence of guilty knowledge. On February 1980, postal inspectors searched the doctors' offices. A federal grand jury returned an indictment against them a year later. An employee of Kaplan's testified that after the investigation became public, he saw Kaplan, Brandt, and Bernstein remove carbon copies of money orders and transmittal letters to doctors from Kaplan's files. This was corroborated by the testimony of Kaplan's mail clerk who said he had been ordered by Bernstein to remove documents from a storage area. The postal inspector's testimony further supports the inference of guilty knowledge. The inspector testified that, upon executing the warrant of Kaplan's storage area in March 1984 for 850 to 855 client files, he was able to search only nine or ten because certain boxes had been removed from the shelves. Bernstein, the office manager, claimed to the inspector lack of knowledge about the missing files. 23 While the evidence may be subject to a reasonable hypothesis of innocence, the government need not refute every innocent explanation as long as the evidence is legally sufficient to support the guilty verdict. United States v. Rivera-Rodriguez, 808 F.2d 886, 890 (1st Cir.1986). Our perusal of the record confirms there is sufficient evidence for a jury to convict Kaplan as charged beyond a reasonable doubt.