Court Opinion

ID: 3012073
Source: CourtListenerOpinion
Date Created: 2015-10-13 21:05:22.737984+00
Date Added: 2024-06-11T11:46:42.169439
License: Public Domain

Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

8-20-2002

USA v. Tiller
Precedential or Non-Precedential: Precedential

Docket No. 01-2791

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2002

Recommended Citation
"USA v. Tiller" (2002). 2002 Decisions. Paper 521.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/521

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2002 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
PRECEDENTIAL

       Filed August 20, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 01-2791

UNITED STATES OF AMERICA

v.

FREDA TILLER
a/k/a
FREDA TOLLIVER,

       Appellant

ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

District Court Judge: Honorable Anita B. Brody
(D.C. No. 99-cr-00485)

Argued: May 6, 2002

Before: NYGAARD, ALITO, and ROSENN, Circuit Ju dges

(Opinion Filed: August 20, 2002)

       ARTHUR THOMAS DONATO, JR.
       211-213 North Olive Street
       Media, Pennsylvania 19063

       MARY E. WELCH (Argued)
       117-119 North Olive Street
       Media, Pennsylvania 19063

       Co-Counsel for Appellants

       PATRICK L. MEEHAN
        United States Attorney
       LAURIE MAGID
        Deputy United States Attorney for
       Policy and Appeals
       ROBERT A. ZAUZMER
        Assistant United States Attorney
        Senior Appellate Counsel
       JOEL D. GOLDSTEIN (Argued)
        Assistant United States Attorney
       Room 1250
       615 Chestnut Street
       Philadelphia, Pennsylvania 19106

       Counsel for Appellee
OPINION OF THE COURT

ALITO, Circuit Judge:

In this appeal, Freda Tiller challenges her conviction on
18 counts of mail fraud. Tiller argues that the evidence at
trial was insufficient to satisfy the mailing element of the
statute, that the trial court erred in instructing the jury
concerning this element, that the prosecutor was allowed to
make inaccurate statements about this element in closing
argument, and that the trial judge erred in calculating the
amount of loss for sentencing purposes. We affirm.

I.

During the 21-month period covered by the indictment,
Freda Tiller was employed as a managed care caseworker
by Villanova Rehabilitation Consultants ("VRC"), a medical
managed-care consulting firm. VRC employed caseworkers
such as Tiller to monitor the medical care provided under
insurance policies. The Philadelphia Housing Authority
("PHA") contracted with VRC to monitor the medical
treatments covered by PHA’s workers’ compensation
insurance policies. The service for which PHA bargained
was in-person, on-site monitoring of the medical care
administered by health care professionals to PHA

                                2

employees ("claimants") who received treatment for on-the-
job injuries. Individual PHA claimants were assigned to
VRC caseworkers, who were responsible for meeting with
claimants at the doctors’ or physical therapists’ offices and
then preparing detailed written reports. When a caseworker
first met with a claimant, the caseworker prepared a report
entitled "PHA Initial Assessment," and subsequent contacts
with a claimant resulted in the preparation of "Follow Up"
reports. In addition to preparing these reports, caseworkers
were required to document their activities on VRC records
known as "Weekly Activity Summaries and Expense
Reports," which tracked the number of visits the
caseworker made for each two-week pay period.

VRC billed PHA for its services on a per-visit basis.
Caseworkers submitted their reports to VRC, which in turn
prepared an invoice. The invoice broke down the activity for
which PHA was being charged, including travel time, time
spent on the visit, and any incidental expenses (e.g.,
telephone calls). VRC then sent the invoice to Crawford and
Company ("Crawford"), the third-party administrator for the
PHA workers’ compensation program. Based on the invoices
and reports received from VRC, Crawford prepared checks
payable to VRC. These checks were mailed from Crawford’s
office in Broomall, Pennsylvania, to VRC in Wayne,
Pennsylvania.

VRC paid Tiller a base salary, as well a $40 bonus for
every visit made and reported in excess of six visits per
week. Caseworkers received bi-weekly pay checks from VRC
that included any bonuses.

Tiller devised and executed a scheme to obtain additional
bonuses by stating that she had visited PHA claimants
when in fact she had not. Unaware of this fraud, VRC then
billed PHA for these visits in invoices that it submitted to
Crawford, and Crawford mailed VRC checks as payment for
visits that had never taken place.

Tiller was charged with 41 counts of mail fraud under 18
U.S.C. S 1341. After the government withdrew 23 counts,
the case was submitted to the jury, which convicted Tiller
of the remaining 18 counts. Tiller’s post-trial motions were
denied, and she was sentenced to a term of 15 months of

                                3

imprisonment and three years of supervised release, and
was ordered to pay $5,000 in restitution. This timely appeal
followed.

II.

A.

Tiller argues on appeal that the evidence at trial was
insufficient to establish the mailing element of the federal
mail fraud statute. Specifically, Tiller contends that (1) the
success of the scheme had been achieved prior to the
mailings, and (2) the mailings were not reasonably
foreseeable to her. We disagree.1 First, we hold that the
mailings were incident to an essential part of the ongoing
scheme. Second, we hold that the mailings were reasonably
foreseeable under the circumstances.

1. The federal mail fraud statute provides:

       Whoever, having devised or intending to devise any
       scheme or artifice to defraud, or for obtaining money or
       property by means of false or fraudulent pretenses,
       representations, or promises . . . for the purpose of
       executing such scheme or artifice or attempting so to
       do . . . knowingly causes to be delivered by mail or
       such carrier according to the direction thereon, or at
       the place at which it is directed to be delivered by the
       person to whom it is addressed, any [matter or thing
       whatever to be sent or delivered by the Postal Service
       or a private or commercial interstate carrier] shall be
       [guilty of the offense].

18 U.S.C. S 1341.

The Supreme Court has stated that the purpose of the
mail fraud statute is "to prevent the post office from being
used to carry [fraudulent schemes] into effect." Durland v.
_________________________________________________________________

1. The proper standard of review is whether, viewing the evidence in the
light most favorable to the government, together with all reasonable
inferences to be drawn therefrom, there is sufficient evidence to prove
guilt beyond a reasonable doubt. See Glasser v. United States, 315 U.S.
60, 80 (1942).

                                4

United States, 161 U.S. 306, 314 (1896); Parr v. United
States, 363 U.S. 370, 389 (1960). The Court has cautioned
that the federal mail fraud statute "does not purport to
reach all frauds, but only those limited instances in which
the use of the mails is a part of the execution of the fraud,
leaving all other cases to be dealt with by appropriate state
law." Kann v. United States, 323 U.S. 88, 95 (1944).

Two statutory requirements for the mailing2 element are
at issue on appeal. First, the mailing must be "for the
purpose of executing the scheme, as the statute requires,"
Kann, 323 U.S. at 94. However, "[i]t is not necessary that
the scheme contemplate the use of the mails as an
essential element"; the mailing suffices if it is"incident to
an essential part of the scheme." Pereira v. United States,
347 U.S. 1, 8 (1954). We must therefore inquire whether
the mailings in this case were "sufficiently closely related"
to the scheme to bring the conduct within the statute.
United States v. Maze, 414 U.S. 395, 399 (1974).

Second, the defendant must "knowingly cause" the use of
the mails. The Pereira Court clarified that the necessary
intent in a mail fraud prosecution is the defendant’s intent
to engage in the scheme to defraud. Although a defendant
must cause a mailing in furtherance of a fraud, that
mailing may be incidental to the fraud, and the defendant
need not personally send the mailing or even intend that it
be sent. A defendant "causes" the mails to be used where
the defendant "does an act with knowledge that the use of
the mails will follow in the ordinary course of business, or
where such use can reasonably be foreseen, even though
not actually intended . . . ." Pereira, 347 U.S. at 8-9.

a. We turn first to the question whether a reasonable
jury could have concluded that the mailings in this case
were "incident to an essential part of the scheme," Pereira,
347 U.S. at 8, or, put another way, whether the charged
mailings were "sufficiently closely related" to the scheme to
bring Tiller’s conduct within the federal mail fraud statute,
Maze, 414 U.S. at 399. We conclude that there was
_________________________________________________________________

2. We use the term "mail" and "mailing" to include any mode of delivery
covered by the mail fraud statute.

                                5

sufficient evidence in the record for a reasonable jury to
have so found.

Tiller argues that this case is like Kann v. United States,
323 U.S. 88 (1944), Parr v. United States, 363 U.S. 370
(1960), and United States v. Maze, 414 U.S. 395 (1974). In
Kann, corporate officers and directors were accused of
having set up a dummy corporation through which to divert
corporate profits to their own use. The defendants were
accused of fraudulently obtaining checks payable to them
and cashing or depositing those checks at a bank that then
mailed the checks for collection against the drawee bank.
Holding that the fraud was completed at the point at which
the defendants cashed their checks, the Supreme Court
stated:

       The scheme . . . had reached fruition. The persons
       intended to receive the money had received it
       irrevocably. It was immaterial to them, or to any
       consummation of the scheme, how the bank which
       paid or credited the check would collect from the
       drawee bank. It cannot be said that the mailings in
       question were for the purpose of executing the scheme,
       as the statute requires.

Kann, 323 U.S. at 94.

In Parr, the defendants were charged with having
obtained gasoline and other products and services for their
own purposes by the unauthorized use of a gasoline credit
card issued to their employer. The oil company that
furnished products and services to the defendants mailed
invoices to the employer for payment, and the employer’s
payment was made by check sent in the mail. Relying on
Kann, the Supreme Court held in Parr that there was not
a sufficient connection between the mailings and the
execution of the defendants’ scheme because it was
immaterial to the defendants how the oil company went
about collecting its payments.

In Maze, the defendant stole his roommate’s credit card
and used it to obtain food and lodging while driving across
the country. The Supreme Court held that the defendant’s
scheme had reached fruition when he checked out of each
motel. The success of the scheme in no way depended upon

                                6

the mailings, the Court reasoned. Maze, 414 U.S. at 402.
Rather, the mailings simply determined "which of[the
defendant’s] victims ultimately bore the loss." Id. The Court
concluded that "the mailings [ ] were directed to the end of
adjusting accounts between the motel proprietor, the[ ]
bank, and [the roommate], all of whom had to a greater or
lesser degree been the victims of respondent’s scheme." Id.

These cases are distinguishable from the case at bar. Had
Tiller submitted a single false report to VRC, been paid for
her work by VRC, and then moved on to other employment,
Tiller’s argument would have greater force. But Tiller’s was
an ongoing fraud, similar to the scheme in Schmuck v.
United States, 489 U.S. 705 (1989). There, the defendant
over a period of years sold cars with rolled-back odometers
to a group of dealers at prices that were artificially inflated
by the low-mileage readings. The unwitting dealers then
predictably resold the cars to customers at even higher
prices. The dealers mailed title forms to the state to
complete the sales. The indictment charged that the
defendant’s fraud was directed at the ultimate buyers of the
cars, who overpaid for the vehicles. In Schmuck , the
mailings were essential to obtain new and apparently
"clean" certificates of title for the purchaser. If clean
certificates of title had not been obtained, the cars would
not have been marketable, and the scheme ultimately
would not have been successful. Therefore, the Court held
that "although the registration-form mailings may not have
contributed directly to the duping of either the retail dealers
or the customers, they were necessary to the passage of
title, which in turn was essential to the perpetuation of
Schmuck’s scheme." Schmuck, 489 U.S. at 712.

Here, Tiller is in much the same position as Schmuck;
VRC’s position is akin to the retail car dealers’; and the
position of PHA and Crawford resembles that of the retail
car customers. As in Schmuck, it was essential to the
continuation of Tiller’s scheme that each transaction be
completed in an orderly fashion. We agree with the
government that a rational jury could have concluded that
Tiller’s fraud depended on her continued harmonious
relationship and good reputation with her employer, which
in turn depended on her employer’s ability to continue to

                                7

receive payment from Crawford by mail for the claims that
Tiller submitted. Just as Schmuck’s scheme "would have
come to an abrupt halt if the dealers either had lost faith
in Schmuck or had not been able to resell the cars obtained
from him," Schmuck, 489 U.S. at 712, Tiller’s ongoing
scheme would have quickly ended if VRC had not received
checks from Crawford for Tiller’s work. We, therefore, hold
that the government adequately proved that the mailings
were sufficiently closely related to the scheme to defraud.

b. Next, we address the question whether Tiller
"knowingly caused" Crawford to use the mails. Nothing in
the record demonstrates that Tiller actually knew that
Crawford would mail the checks to VRC. Tiller argues that
the government’s own witnesses testified that she would
not have had any knowledge regarding the PHA/VRC
contract, the billing procedures, billing rates, or accounting
procedures. Moreover, Tiller argues that the only evidence
concerning her knowledge of the use of mails came during
the defendant’s case, namely, when Tiller stated during
cross-examination that she supposed that all businesses
probably use the mails in some way. Appellant’s Br. at 19.

As we noted above, however, under Supreme Court
precedent, subjective intent or knowledge regarding the use
of the mail is not required; reasonable foreseeability is
sufficient. This is an objective, not subjective, test. As the
government states in its brief, "[w]here a person is working
for a monitoring service, knowing that her employer has
been retained by the benefit provider, it is obvious that the
mailing of payment by the provider to the employer for its
service is reasonably foreseeable to an objective observer."
Appellee’s Br. at 18. Although the prosecution was required
to prove that Tiller specifically intended to defraud, the
prosecution was not obligated to show that she planned a
mailing or even knew that mailings would occur. All that
was required was proof that a mailing (or other covered
delivery by an interstate carrier) would have been
reasonably foreseeable to an objective observer. Taking all
inferences in the government’s favor, we conclude that
there was sufficient evidence to support the jury’s verdict.

                                8

B.

Tiller argues that the District Court abused its discretion
in its charge to the jury.3 The District Court gave the
following jury instruction with respect to the mailing
element:

       [1] The third element of mail fraud requires that the
       Government prove beyond a reasonable doubt that the
       United States mails were used in furtherance of the
       scheme to defraud.

       [2] Under the law, when a defendant does an act with
       knowledge that the use of the mails will follow in the
       ordinary course of events, or where such use of the
       mails can reasonably be foreseen, even though not
       actually intended, then he or she causes the mails to
       be used.

       [3] Therefore, if you are satisfied beyond a reasonable
       doubt that the defendant engaged in the scheme to
       defraud as charged in the indictment, and that the use
       of the mails was a reasonably foreseeable consequence
       of this scheme and that the individual mailings
       charged in the indictment contributed to the carrying
       out of the scheme, the mailing element of the offense is
       satisfied and you may find the defendant guilty of mail
       fraud.

       . . .

       [4] The Government must prove, however, that the use
       of the mails furthered, advanced or carried out in some
       way the scheme to defraud.

       [5] Once participation in a scheme to defraud is
       established, a knowing participant is liable for any
_________________________________________________________________

3. The standard of review of a district court’s ruling on points for charge
is abuse of discretion. See United States v. Fischbach & Moore, Inc., 750
F.2d 1183, 1195 (3d Cir. 1984). We must "determine whether the charge,
taken as a whole and viewed in the light of the evidence, fairly and
adequately submits the issues in the case to the jury." Ayoub v. Spencer,
550 F.2d 164, 167 (3d Cir. 1977). We do not isolate particular language,
but rather examine it in the context of the entire jury charge. See United
States v. Turley, 891 F.2d 57, 62 (3d Cir. 1989).

                                9

       mailing that subsequently takes place in connection
       with the scheme, whether or not the participant
       actually knows of or agrees to that specific mailing.

Tiller contends that this instruction was in error because
the third paragraph did not contain any reference to
"specific knowledge that the check from Crawford . . .
would be placed in the mail pursuant to the normal course
of business." Def. Motion for a New Trial at 12. Tiller
submits that the third paragraph should have read as
follows:

       Therefore, if you are satisfied, beyond a reasonable
       doubt, that the defendant engaged in the scheme to
       defraud as charged in the indictment, and that the use
       of the mails was a reasonably foreseeable consequence
       of this scheme or that the mail followed in the normal
       course of business of which the defendant had
       knowledge, and that the individual mailings charged in
       the indictment contributed to the carrying out of that
       scheme, the mailing element of the offense is satisfied
       and you may find the defendant guilty of mail fraud.

Id. at 11. Tiller also argues that the jury should have been
instructed "as to the factors they should consider in
determining whether or [not] the specific mailings as
charged in the indictment were reasonably foreseeable to
the defendant." Def. Motion at 14.

We reject these arguments. First, although the italicized
language relating to "actual knowledge" was not included in
the third paragraph quoted above, the District Court did
instruct the jury regarding actual knowledge in the second
paragraph. Moreover, the second paragraph of the District
Court’s instruction was almost a direct quotation of the
Pereira Court’s definition of the foreseeability requirement.
Thus, we conclude that the jury was not misinformed as to
how the mailing element could be met.

Second, with respect to the omission of language
discussing "factors" that could be considered in deciding
whether the mailings were reasonably foreseeable, we
conclude that the District Court did not err. After both
sides gave their closing argument and immediately before
the court’s charge, Tiller requested that the court alter its

                                10

charge on the foreseeability of the charged mailings using
language from United States v. Smith, 934 F.2d 270 (11th
Cir. 1991). Tiller wanted the court to instruct the jury
concerning the factors that it might consider in determining
whether Tiller was liable for the charged mailing, factors
that Tiller’s counsel had argued in closing.

It is well settled that a trial judge has substantial
discretion to select the language to be used in instructing
the jury on the law so long as the judge’s instructions are
correct and do not omit essentials. See Douglas v. Owens,
50 F.3d 1226, 1233 (3d Cir. 1995); Harrison v. Otis Elevator
Co., 935 F.2d 714, 717 (5th Cir. 1991) (trial court has
broad discretion to compose jury instructions, as long as
they are fundamentally accurate and not misleading); see
also Wright & Miller, Federal Practice & Procedure: Civil 2d
S 2556 ("The particular form of jury instructions used in a
given situation generally is within the trial court’s
discretion."). Here, as we have noted above, the District
Court’s charge correctly stated that a defendant causes the
mails to be used when she "does an act with knowledge
that the use of the mails will follow in the ordinary course
of events, or where such use of the mails can reasonably be
foreseen." The District Court did not err when it chose not
to mention factors that another circuit finds useful in
evaluating mail fraud claims. Taken as a whole, the jury
instructions correctly stated the legal standard for the
mailing element, and we conclude that there is no basis for
finding an abuse of discretion.

C.

Next, Tiller contends that the District Court erred in
allowing the government to make an allegedly improper
closing argument. Tiller complains that "the government
argued to the jury that the mailing element of 18 U.S.C.
S 1341 was satisfied because of a generalized knowledge
that all companies use the mail and therefore it was
reasonably foreseeable to defendant that Crawford[ ] would
mail checks to [VRC] for payment." Appellant’s Br. at 34.
Tiller objects to the following statement:

       The standard for the element of the use of the mails is
       satisfied if the defendant engaged in a scheme as

                                11

       charged in the indictment and that the use of the mails
       was a reasonably foreseeable consequence of the
       scheme. I suggest to you, ladies and gentlemen, on this
       evidence that that element is easily satisfied.

       The defendant went to work for a company that is
       involved in the cost containment in the field of
       medicine. They’re obviously in business, they do
       correspondence, it is certainly, ladies and gentlemen,
       reasonably foreseeable that the mails will be used.

As the District Court noted in denying Tiller’s post-trial
motion, Tiller did not make a contemporaneous objection to
the government’s closing argument. Failure to object at
trial, absent plain error, constitutes a waiver of the issue
for post-trial purposes. See United States v. Young, 470
U.S. 1, 15 (1985). Moreover, the District Court correctly
noted, even if Tiller had objected during the closing, there
would have been no basis for a new trial because the
government did not misstate the law. The government did
not argue that the foreseeability of the mailings in this case
was established by the fact that all companies use the mail,
but rather that use of the mails was reasonably foreseeable
in the circumstances of this case. The prosecutor’s closing
addressed the specific evidence in this case, which
demonstrated that Tiller worked for a company that she
knew used the mails, and that in the particular business in
which she was involved -- provision and billing for cost
containment services -- it was reasonably foreseeable that
the mails would be used. Therefore, we conclude that Tiller
cannot show any plain error on this record.

D.

Finally, Tiller argues that the District Court erred in
calculating the amount of the loss used in determining the
base-level offense for the purpose of sentencing. 4 Based on
the amount that PHA paid for fraudulent Tiller visits, the
_________________________________________________________________

4. Sentencing findings are reviewed for clear error. See United States v.
Gibbs, 190 F.3d 188, 203 (3d Cir. 1999). The burden of proof in the
District Court is on the government, and the standard of proof is a
preponderance of reliable evidence. Id.

                                12

District Court found the loss for guideline purposes was
between $70,000 and $120,000. This total reflects the
amount PHA paid for invoices tied to fraudulent Tiller
reports in connection with the witnesses who testified at
trial plus the probable loss sustained in connection with
other claimants interviewed in the investigation and
identified in discovery.

On appeal, Tiller does not argue that the District Court
incorrectly determined the amount of money that PHA paid
for invoices that billed for visits that she did not make.
Rather, Tiller asserts that PHA suffered no actual loss
because, she claims, her reports accurately set forth
medical information about the claimants. The fact that this
information was gleaned from medical reports, rather than
from personal visits with claimants and doctors, did not, in
her submission, cause PHA any loss. Tiller argues that
because PHA did not suffer any actual loss, the loss for
purposes of sentencing should be based on the amount of
incentive pay (i.e., bonuses) that she received for the
fraudulent reports submitted.

Tiller’s argument ignores the critical fact that PHA
bargained and paid for in-person, on-site monitoring of
claimants, but was fraudulently deprived of this service.
James Sredzinski, the former risk manager at PHA, testified
at trial that (1) the purpose of hiring VRC was to make sure
that medical care was appropriate and that the claimants
were not perpetrating frauds or malingering, App. at 292-
93; (2) PHA’s expectation was for VRC to "actually
physically visit with the claimant while the claimant was at
the provider’s office or place of service", App. at 294; and (3)
this aspect of VRC’s service was "very, very important" to
PHA, App. at 298.

If PHA had been paying for VRC to distill information
contained in claimant medical files, then there would have
been no fraud. But, the indictment charged:

       It was part of the scheme and artifice that defendant
       FREDA TILLER prepared and caused to be prepared
       "PHA Initial Assessment" and "Follow Up Reports"[ ],
       which falsely stated that she had met claimants at the
       offices of doctors and therapists (including industrial

                                13

       health clinics), and at the homes of claimants, when in
       fact she had not.

App. at 58. Consequently, the scheme for which Tiller was
convicted was not the preparation and submission of
reports that misstated the substance of the medical care
being provided to claimants. Rather, Tiller was convicted of
reporting that she had met with claimants when in fact she
had not. The District Court correctly found that"[t]here is
no question that PHA sustained a financial loss when it
paid for visits that defendant never actually made. The loss
is properly calculated based on the amount paid by PHA for
visits with claimants that the defendant never made."
Appellee’s Br. at 33.

PHA’s situation here is analogous to that of a person who
contracts and pays for any other service that is intended to
prevent some sort of damage before it occurs. Examples
that come readily to mind are a termite inspection of a
home prior to purchase, a contract for central monitoring of
a burglar alarm system, or a medical test to detect the
presence of a disease at an early stage. If a person
contracts and pays for such services and the services are
not furnished, the loss to the person who contracted for the
services is the amount that the person paid. Just because
it turns out that the house is not infested with termites, no
burglars break into the house, and the person does not
have the disease, it does not follow that the person has not
suffered a loss. The person has paid for a service that the
person did not receive. And the amount of the loss is the
value of the service to the person in question, considering
that person’s level of risk aversion, which is to say the
amount that the person paid. We therefore hold that the
District Court did not err, much less commit a plain error,
in its calculation of the loss in this case.

For the foregoing reasons, we affirm Tiller’s conviction on
all 18 counts for federal mail fraud under 18 U.S.C.S 1431.
A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

                                14