Court Opinion

ID: 808838
Source: CourtListenerOpinion
Date Created: 2012-09-20 13:54:17+00
Date Added: 2024-06-11T18:00:32.299567
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 12a1022n.06

                                           No. 11-1360                                 FILED
                                                                                   Sep 20, 2012
                          UNITED STATES COURT OF APPEALS                     DEBORAH S. HUNT, Clerk
                               FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,                        )
                                                 )
       Plaintiff - Appellee,
                                                 ) ON APPEAL FROM THE UNITED STATES
v.                                               ) DISTRICT COURT FOR THE EASTERN
                                                 )       DISTRICT OF MICHIGAN
JUAN DE OLEO,                                    )
                                                 )              OPINION
       Defendant - Appellant.
                                                 )

       Before: COLE and KETHLEDGE, Circuit Judges, and THAPAR,* District Judge.

       AMUL R. THAPAR, District Judge. Juan De Oleo appeals his conviction for Medicare

fraud, conspiracy to commit Medicare fraud, and money laundering. We affirm.

                                                 I.

       De Oleo and his co-conspirators engaged in a lucrative form of Medicare fraud. They created

sham medical clinics by renting office space, furnishing it with enough equipment to make the clinic

appear legitimate, and hiring a doctor willing to participate in the fraud. After that, they bribed

Medicare beneficiaries to travel to the fraudulent clinic and submit their insurance information

without receiving treatment. To make the scheme profitable, the conspirators used that insurance

information to bill Medicare for expensive medications.

*
 Hon. Amul R. Thapar, United States District Judge for the Eastern District of Kentucky, sitting by
designation.
       De Oleo got his start with fraudulent clinics down in Florida. There, he worked as a medical

assistant at a clinic owned by Jose Rosario. After the government cracked down on fraud in Florida,

De Oleo and his co-conspirators, including his wife Rosa Genao, moved their conspiracy to

Michigan. While in Michigan, De Oleo partnered with Rosario to open Xpress Medical Center.

       A few weeks after Xpress began submitting its fraudulent bills to Medicare, Medicare began

investigating the clinic. That investigation led to the indictment of Rosario, De Oleo, Genao, and

a number of their co-conspirators. Many defendants pled guilty. But De Oleo, Genao, and medical

assistant Deirdre Teagan proceeded to trial. The jury ultimately convicted De Oleo and Genao and

acquitted Teagan of all but one count.

       This appeal followed.

                                                  II.

       De Oleo faults the district judge for two discretionary decisions: first, her dismissal of a juror

after the close of evidence, and, second, her admission of evidence about De Oleo’s and the

witnesses’ involvement in other fraudulent clinics.

A.     Excuse of Juror 12

       Juror 12 was a full-time student at Adrian College. During jury selection, she informed the

court that she did not want to miss the beginning of school. The district judge believed the trial

would be finished before classes began. During trial, however, the district judge realized that trial

would go longer than expected. Juror 12 immediately reiterated her desire not to miss classes. The

court assured her that she would not have to miss school, and no one objected. At the close of

evidence, it became clear that Juror 12 would likely miss the start of college classes if required to

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deliberate with the jury. As promised, the court excused her and replaced her with an alternate. De

Oleo objected. He did not explain the grounds for his objection except to state that it was important

to his client that Juror 12 not be dismissed.

       The district court’s dismissal of Juror 12 was reasonable. A district court may replace a juror

with an alternate when a juror is either “unable or disqualified to perform juror duties.” Fed. R.

Crim. Proc. 24(c)(1). The consent of the parties is not needed if the district court has “reasonable

cause” to replace the juror. United States v. Cantu, 229 F.3d 544, 550 (6th Cir. 2000); United States

v. Warren, 973 F.2d 1304, 1308 (6th Cir. 1992). We review the district court’s decision for an abuse

of discretion. Cantu, 229 F.3d at 550.

       De Oleo believes that Juror 12’s academic obligations were insufficiently serious to rise to

the level of reasonable cause. But even if De Oleo’s contention that “next to nothing is done the first

week of college classes” is true (and we are sure that academics nationwide would disagree, see e.g.,

The Paper Chase (Twentieth Century Fox, 1973) (Hart’s first day in Kingsfield’s class)), his

observation misses the point. In many cases, it is not the conflict’s objective seriousness but its

impact on a particular juror that matters. Jurors, like all people, “boil at different degrees.” Ralph

Waldo Emerson, 7 The Complete Works of Ralph Waldo Emerson 61 (Houghton, Mifflin, and

Company 1904) (1870). A conflict that one juror might brush aside might render another unable to

give a case due consideration. The district judge might believe that one juror can leave a family

conflict at the courthouse door, while another might be so “affected by the quarrel with her husband

[] that her ability to shoulder her responsibilities as a member of the jury [is] impaired.” United

States v. Brown, 571 F.2d 980, 985 (6th Cir. 1978). One juror might put jury service before family

obligations, while another might grow “impatient and disgruntled” when sitting on a lengthy trial

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while her niece is visiting. United States v. Shelton, 669 F.2d 446, 460 (7th Cir. 1982). Good cause

may encompass any of “the inevitable vagaries of the many trial participants’ complex lives.”

United States v. Nelson, 102 F.3d 1344, 1350 (4th Cir. 1996). These vagaries include a state court

appearance, United States v. Warren, 973 F.2d 1304, 1308–09 (6th Cir. 1992); difficulty

concentrating due to deaths in the juror’s family, United States v. Virgen-Moreno, 265 F.3d 276,

287–88 (5th Cir. 2001); holiday travel plans, Nelson, 102 F.3d at 1349–50; and taking a child to

college, United States v. McMillan, 64 F.3d 660, at *2 (4th Cir. 1995) (unpublished). Of course, the

district judge must balance any particular vagary against the preference for maintaining the originally

selected jury. See Nelson, 102 F.3d at 1350.

       Ultimately, district judges are in the best position to view a juror’s demeanor and determine

whether she is able to shoulder the obligations of jury service. Here, Juror 12 repeatedly raised her

academic obligations with the court. The district court apparently concluded from these statements

that missing class would distract Juror 12 from giving her full attention to the deliberations. Thus,

the court’s determination to excuse Juror 12 was reasonable.

       The court also made clear at the outset that it viewed a school conflict as legitimate and

would excuse the juror if the trial ultimately conflicted with the start of classes. Neither party

objected to Juror 12 when she was added to the jury under those conditions. Moreover, De Oleo has

failed to show that he was prejudiced by the substitution. See United States v. Powell, 15 F. App’x

337, 339 (6th Cir. 2001) (“A defendant claiming to be injured by the replacement of a juror is

entitled to a new trial only upon a clear showing of prejudice” (citing United States v. Warren, 973

F.2d 1304, 1308 (6th Cir.1992))). The court did not abuse its discretion by excluding Juror 12.

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B.     Other Acts Evidence

       During trial, the government introduced evidence regarding other fraudulent clinics

established in Florida and Michigan. De Oleo asserts that this information was irrelevant because

he did not commit crimes at these clinics, and that the trial court improperly admitted such evidence

under Federal Rule of Evidence 404(b). Whether De Oleo’s relevance objection is preserved is

unclear, but in any case the information was relevant to explain the witnesses’ involvement in the

broader fraudulent clinic scheme and their subsequent knowledge of or involvement in the Xpress

clinic. See, e.g., Transcript of Jury Trial, United States v. Briceno et al., No. 09-cr-20221-DPH (E.D.

Mich. Aug. 21, 2011), R. 264 at 15–17; id. at R. 274 at 45–47.

       De Oleo was involved in some of these previous clinics, and as to those clinics the district

court properly ruled that this evidence was admissible under Rule 404(b). The court permitted the

government to use the evidence to demonstrate De Oleo’s intent, knowledge, or plan to commit

Medicare fraud at the Xpress clinic. While we normally review evidentiary issues for abuse of

discretion, General Elec. Co. v. Joiner, 522 U.S. 136, 141–42 (1997), there is an intra-circuit conflict

over how best to review Rule 404(b) evidence. See United States v. Clay, 667 F.3d 689, 703 (6th

Cir. 2012) (Kethledge, J., dissenting) (noting the intra-circuit split). But De Oleo loses under even

de novo review.

       In evaluating Rule 404(b) evidence, courts employ a three-step process by reviewing: (1)

whether the other acts actually occurred, (2) whether they “were admissible for a permissible [Rule]

404(b) purpose,” and (3) whether the district court correctly determined that the acts’ probative value

was not substantially outweighed by the danger of unfair prejudice. Clay, 667 F.3d at 693; United

States v. James, No. 11-3711, 2012 WL 3608612, at *5 (6th Cir. Aug. 23, 2012).

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       The Other Acts Actually Occurred: De Oleo does not contest that the other acts actually

occurred. See Appellant’s Br. and Reply.

       Proper Purpose: The district court properly determined that the other clinics were relevant

to De Oleo’s knowledge, intent, or plan.

       Sacred Heart: Sacred Heart was a fraudulent medical clinic that Rosario operated in Florida.

De Oleo was the medical assistant there, so his involvement in this clinic is relevant to his

knowledge of Rosario’s fraudulent clinic scheme and his knowledge of how these clinics defrauded

Medicare. See Transcript of Jury Trial, Briceno et al., No. 09-cr-20221-DPH, R. 263 at 50.

       Lifetime Medical Center: De Oleo introduced Genao to Rosario, and this meeting spawned

Lifetime Medical Center. Id. at 52. Thus, evidence of this clinic can be introduced to show De Oleo

had knowledge of Rosario’s fraudulent clinic scheme and intended to participate in it. Lifetime also

used Genao to fabricate patients’ medical charts in a similar manner as Xpress, id. at 46, 52, so this

evidence was also probative of Xpress and De Oleo’s plan to defraud Medicare.

       Sacred Hope: De Oleo’s visit to Sacred Hope and examination of Sacred Hope’s patient files

demonstrates his knowledge of the way that Rosario’s Michigan clinics operated and his intent to

run the Xpress clinic in a similar manner. Id. at R. 279 at 186-90.

       De Oleo contends that the United States offered the other acts evidence before he put his

knowledge of the illegal activities at the Xpress clinic at issue. Reply at 13. De Oleo is mistaken.

The district court asked De Oleo before trial if he would be disputing knowledge and intent, and he

said that, “for now, the answer is yes.” Transcript of Jury Trial, Briceno et al., No. 09-cr-20221-

DPH, R. 262 at 19–23. And De Oleo’s counsel argued in his opening statement that De Oleo was

just an “acquaintance” of Rosario. Id. at R. 273 at 63–64. Even without these statements, it is clear

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that De Oleo’s knowledge of Xpress’s fraudulent activities and his intent to participate in them was,

as they say, the whole ballgame. See also id. at R. 262 at 23 (United States’ statement that what De

Oleo knew is “ultimately going to be the issue in this case”); United States v. Johnson, 27 F.3d 1186,

1192 (6th Cir. 1994) (explaining that “where there is thrust upon the government, [] by virtue of the

defense raised . . ., the affirmative duty to prove that the underlying prohibited act was done with a

specific criminal intent, other acts evidence may be introduced under Rule 404(b)”).

       Rule 403 Balancing: The evidence of De Oleo’s involvement in other fraudulent clinics was

more probative than prejudicial. As the district court noted in denying De Oleo’s motion for a new

trial, the admission of testimony about the other clinics “was crafted so as not to overly prejudice De

Oleo and Genao.” United States v. De Oleo, No. 09-20221, 2011 WL 836737, at *2 (E.D. Mich.

Mar. 9, 2011). The court also gave a limiting instruction, cautioning the jury to consider the other

clinics only for the limited purpose of assessing De Oleo’s intent, knowledge, and plan. Transcript

of Jury Trial, Briceno et al., No. 09-cr-20221-DPH, R. 273 at 24. Limiting instructions are one

factor that the district court can consider in conducting a 403 balancing test for other acts evidence.

See, e.g., United States v. Hardy, 643 F.3d 143, 153 (6th Cir. 2011). These instructions were

sufficient to prevent unfair prejudice to De Oleo.

       Additionally, the evidence of other fraudulent clinics in Florida and Michigan, if not

admissible under 404(b), would likely be admissible as background evidence. Background evidence

is a narrow category of evidence that typically provides context for the jury, either because it is

directly probative, acts as a prelude to the offense or arises from the same events, forms an integral

part of a witness’s testimony, or completes the story of the offense. United States v. Marrero, 651

F.3d 453, 471 (6th Cir. 2011) (admitting evidence under Rule 404(b) that “completes the story of[]

                                                   7
the charged offense”); see also United States v. Lamar, 466 F. App’x 495, 499 (6th Cir. 2012). Here,

when reviewed for abuse of discretion, see Clay, 667 F.3d at 697–98, the other clinics evidence was

an integral part of the various witnesses’ testimony. For example, the testimony explained how De

Oleo and Rosario met (Sacred Heart), how De Oleo introduced Genao to Rosario (Lifetime), why

Rosario moved to Michigan (Dearborn), and showed that De Oleo knew about Rosario’s scheme to

open fraudulent clinics in Michigan (Sacred Hope). Transcript of Jury Trial, Briceno et al., No. 09-

cr-20221-DPH, at R. 263 at 50–61, Id. at R. 279 at 186–90. And Rosario testified about his

involvement in the other clinics as part of telling the story about how he and his co-conspirators

moved from Florida to Michigan.

       Moreover, any error here was harmless. There was ample evidence to support De Oleo’s

conviction, and we can say with “fair assurance” that the jury’s verdict “was not substantially

swayed” by the evidence of the other fraudulent clinics. Kotteakos v. United States, 328 U.S. 750,

765 (1946).

       De Oleo’s conviction and sentence are affirmed.

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