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United States v. Gibson

United States Court of Appeals, Fifth Circuit

November 7, 2017

UNITED STATES OF AMERICA, Plaintiff - Appellee

         Appeals from the United States District Court for the Southern District of Texas

          Before WIENER, HIGGINSON, and COSTA, Circuit Judges.


         "The trouble with conspiracies is that they rot internally."[1] According to the government's cooperating witnesses, the appellants-Earnest Gibson, III (Gibson III) and his son, Earnest Gibson, IV (Gibson IV)-participated in three: one to defraud Medicare, another to pay unlawful kickbacks, and a third to launder money. A jury convicted the Gibsons for each, plus several substantive kickback counts. On appeal, the Gibsons advance sufficiency challenges and assert that the health care fraud and money laundering conspiracies merged. For his part, Gibson III argues that the district court infringed his constitutional rights by limiting one of his cross-examinations and by admitting a co-conspirator's confession, in violation of the Bruton doctrine. He also faults the trial court for giving the jury "deliberate ignorance" instructions on charges requiring specific intent. In turn, Gibson IV posits that the district court imposed too much restitution. Both appellants also invoke the cumulative error doctrine, claiming that the trial court's alleged mistakes infected the verdict. We find no reversible error and thus affirm.


         This case presents another instance of Medicare fraud involving Partial Hospitalization Programs (PHPs). PHPs are outpatient programs designed to provide daily, intensive treatment for patients suffering from an "acute exacerbation" of a chronic mental disorder. Houston's Riverside General Hospital (Riverside) ran PHPs, both onsite and at satellite locations. Riverside's Chief Executive Officer, president, and administrator was Gibson III. His son, Gibson IV, operated an affiliated, offsite PHP, Devotions Care Solutions (Devotions).

         In 2006, Medicare approved Riverside and its PHPs to submit reimbursement claims. Not surprisingly, a PHP costs more to operate than does a standard outpatient service. So it is also unsurprising that Medicare attached several strings to its PHP coverage.

         One condition was patient eligibility. To bill Medicare for PHP services, a physician needed to certify that the Medicare beneficiary required treatment comparable with inpatient care. Naturally, a patient must have had "the ca- pacity for active participation in all phases of the multidisciplinary and multi-modal program." Patients diagnosed with Alzheimer's or dementia, for example, would raise "red flag[s]" for Medicare.

         The type of treatment mattered, too. A doctor must have certified that the PHP services would be "furnished while the individual [wa]s under the care of a physician" according to "an individualized written plan of care." Expressly excluded from Medicare coverage were, to name a few: "services to hospital inpatients and meals, self-administered medications and transportation"; "custodial or respite care"; "programs attempting to maintain psychiatric well-ness"; "daycare programs for the chronically mentally ill"; and "services to a nursing facility resident that should be expected to be provided by the nursing facility staff." And if a hospital operated an offsite PHP-like Gibson IV's Devotions-treatment must have occurred under a licensed physician's "direct supervision." That meant the physician had to be "physically present" in the office suite housing the offsite PHP and "immediately available to provide assistance and direction throughout the time the employee is performing services."

         Medicare also imposed timing requirements. A PHP patient needed to receive "active treatment" at least four days and twenty hours a week. And if a patient's condition "improve[d] or stabilize[d], " or if she could not benefit from "the intensive multimodal treatment available in the PHP, " the PHP had to discharge her.

         In 2006-and again in 2008, 2009, and 2011-Gibson III certified that Riverside's PHPs complied with "the laws, regulations and program instructions of the Medicare program." That, according to the government, turned out to be false. As the prosecutors put it, Riverside submitted on behalf of its PHPs $160, 336, 451.90 in Medicare bills, and Medicare paid $46, 753, 180.04 before realizing it had been swindled.

         On October 1, 2012, a grand jury in the Southern District of Texas indicted Gibson III, Gibson IV, and five others on thirteen counts, alleging various illegal schemes relating to Riverside PHPs. Facing the prospect of a jury trial, three defendants pleaded guilty. Two of them turned government's witnesses to testify against the Gibsons. By contrast, the Gibsons put the government to its burden.

         Thus ensued a month-long trial. On October 20, 2014, a jury convicted Gibson III of conspiracy to commit healthcare fraud (Count 1), conspiracy to defraud the government and violate the Anti-Kickback Statute (AKS) (Count 2), seven substantive kickback offenses (Counts 3, 4, 5, 7, 9, 11 & 12), and conspiracy to commit money laundering promotion (Count 13).[2] The jury found Gibson IV guilty on each conspiracy charge (Counts 1, 2 & 13) and two substantive kickback offenses (Counts 11 & 12). Soon after, the district court sentenced Gibson III to 540 months' imprisonment and $46, 753, 180.04 in restitution. On Gibson IV the court imposed a 240-month prison term and $7, 518, 480.11 in restitution.

         The Gibsons now assert nearly a dozen grounds for reversal.[3] None is persuasive.


         We first consider whether the government submitted enough evidence to support the convictions. It did.

         We take a de novo look at preserved sufficiency-of-the-evidence challenges. United States v. Davis, 735 F.3d 194, 198 (5th Cir. 2013). In doing so, we "review[] the record to determine whether, considering the evidence and all reasonable inferences in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Vargas-Ocampo, 747 F.3d 299, 303 (5th Cir. 2014) (en banc). To suffice, "[t]he evidence need not exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt[.]" United States v. Grant, 683 F.3d 639, 642 (5th Cir. 2012) (quotation marks omitted). "The jury retains the sole authority to weigh any conflicting evidence and to evaluate the credibility of the witnesses." Id. (quotation marks omitted). Even "the 'uncorroborated testimony of an accomplice or of someone making a plea bargain with the government' can support a conviction." United States v. Chapman, 851 F.3d 363, 378 (5th Cir. 2017) (quoting United States v. Shoemaker, 746 F.3d 614, 623 (5th Cir. 2014)).


         A rational juror could find beyond a reasonable doubt that the Gibsons joined a health care fraud conspiracy (Count 1).

         That crime comprises three elements: that (1) two or more persons made an agreement to commit health care fraud;[4] (2) the defendant knew the unlawful purpose of the agreement; and (3) the defendant joined in the agreement willfully, that is, with the intent to further the unlawful purpose. United States v. Willett, 751 F.3d 335, 339 (5th Cir. 2014) (quotation marks omitted). The jury need not find that the defendants "actually submitted the fraudulent documentation" to convict. United States v. Umawa Oke Imo, 739 F.3d 226, 235 (5th Cir. 2014). In fact, the government need not show an overt act at all. United States v. Njoku, 737 F.3d 55, 67-68 (5th Cir. 2013). Nor must the prosecution show direct evidence of the conspiracy; "each element may be inferred from circumstantial evidence." Willett, 751 F.3d at 339 (quotation marks omitted). The illegal agreement may even be "silent and informal." Id. (quotation marks omitted). Still, a conviction must rest on sturdier legs than mere inference or supposition. United States v. Grant, 683 F.3d 639, 642 (5th Cir. 2012) ("[T]he government must do more than pile inference upon inference upon which to base a conspiracy charge." (quotation marks omitted)).

         The government equipped the jury with enough evidence to conclude that the Gibsons unlawfully agreed to bill Medicare for unnecessary or unperformed services. For starters, the evidence against Gibson IV was as robust as it was simple. Take, for instance, the testimony of a behavioral technician who said Gibson IV instructed her to bill Medicare for unperformed services. Or the FBI agent who reviewed with the jury Riverside's internal compliance memoranda-incriminating documents showing that Gibson IV's PHP billed Medicare for never-performed treatment.

         The evidence against Gibson III was similarly powerful. One PHP supervisor explained that he and Gibson III entered two contracts; one to pay the supervisor a percentage of Riverside's Medicare returns, and another to pay him $16, 000 each month he referred 26 to 30 Medicare patients to a Riverside PHP. The supervisor further admitted to paying marketers to meet his patient quota. What is more, he testified that Gibson III tracked those marketers' locations with a spreadsheet. According to the supervisor, Gibson III also talked about the "census"-the number of billable patients in a PHP-"all the time." The instructions were to "keep [the] census up, " else Gibson III would terminate their contract. And this was no rare threat. The boss sent several letters warning the supervisor to bring in more patients to increase Riverside's "market share."

         That supervisor was one of many informants who implicated Gibson III. A patient recruiter explained how Gibson III skirted Medicare rules by directing PHPs to keep beneficiaries for 90 days, put them in onsite "aftercare" programs to watch television for a few weeks, and then readmit those patients to avoid losing them to competitor-PHPs. A behavioral-health technician testified that the PHPs often admitted ineligible patients and rendered bogus treatment. The jury also learned that Gibson III heard complaints that the only on-duty psychiatrist was often absent and failed to fill out necessary patient forms. But those complaints fell on deaf ears and into obstructive hands. When an exasperated PHP supervisor finally replaced that psychiatrist with someone willing to do the work, Gibson III pulled rank and reinstated the absentee doctor.[5]

         The testimony unveiled similar shenanigans at other Riverside PHPs. One worker revealed that his PHP's assigned psychiatrist showed up only once a week. Another testified that some patients waited a fortnight in a cafeteria before seeing a doctor. And the patients themselves grew impatient; they consistently complained that they couldn't see a doctor. Still more evidence showed that Devotions violated Medicare rules by permitting nurse practitioners to admit and discharge patients.

         Even Gibson III's own testimony supported the verdict. He admitted he knew that Medicare required a psychiatrist to be present full-time at every PHP, and that one psychiatrist was assigned to be at two places at once. He conceded he also knew Medicare had reimbursed Riverside for "false claims, " but failed to alert Medicare or fire the people responsible. He further acknowledged he reviewed compliance memoranda and internal audits exposing fraud, but the conduct continued. Faced with so much evidence, a rational juror could have found that Gibson III declined to act because he was part of the conspiracy. See, e.g., Imo, 739 F.3d at 236-37 (inferring a defendant's (1) knowledge of a health care fraud conspiracy from his proximity to unlawful acts and (2) complicity from the continued unlawful activities); Willett, 751 F.3d at 340 (inferring knowledge of a health care fraud conspiracy from the defendant's "proximity to the fraudulent activities" and frequent meetings with his alleged co-conspirator).

         To be sure, throughout trial Gibson III professed ignorance and stressed his steps to stem misconduct. He also shifted blame to supposedly rogue subordinates. A rational juror, however, could have disbelieved his account and credited instead the cooperating co-conspirators'. And a successful sufficiency challenge cannot hinge on such credibility calls. United States v. Sanjar, 853 F.3d 190, 212 (5th Cir. 2017) ("To the extent [appellants] identify inconsistencies in the . . . testimony, that credibility determination is for the jury to make."), cert. denied, No. 17-5340, 2017 WL 3184826 (U.S. Oct. 2, 2017); see also United States v. Burns, 526 F.3d 852, 860 (5th Cir. 2008) ("[I]t is up to the jury to judge the credibility of witnesses who receive favorable treatment from the Government to testify.").

         Put succinctly, a juror could rationally draw from the evidence a simple conclusion: that the Gibsons knew of and willfully joined a conspiracy to submit false PHP claims and pilfer Medicare money.


         A reasonable juror could also find that the Gibsons conspired to violate- and actually violated-the AKS.

The statute provides that
whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person . . . to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, . . . shall be guilty of a felony . . . .

42 U.S.C. § 1320a-7b(b)(2)(A). In other words, the AKS "criminalizes the payment of any funds or benefits designed to encourage an individual to refer another party to a Medicare provider for services to be paid for by the Medicare program." United States v. Miles, 360 F.3d 472, 479 (5th Cir. 2004). To prove an AKS conspiracy, the government must show "(1) an agreement between two or more persons to pursue an unlawful objective; (2) the defendant's knowledge of the unlawful objective and voluntary agreement to join the conspiracy; and (3) an overt act by one or more of the members of the conspiracy in furtherance of the objective of the conspiracy." Njoku, 737 F.3d at 64 (quotation marks omitted); see also 18 U.S.C. § 371. The defendant must have "acted willfully, that is, with the specific intent to do something the law forbids." Miles, 360 F.3d at 479 (quotation marks omitted).

         Here, too, multiple witnesses exposed Gibson IV at trial, testifying that through February 2012 he agreed to pay them for referrals. One recruiter described it as an "illegal deal" involving cash paid "under the table."

         Some evidence was indeed devastating. A recruiter described how Gibson IV twice paid $1, 000 in cash, in a restaurant bathroom, after circling the block to ensure no one had followed them. That first bathroom handoff, according to the recruiter, was for "partial payment of the patients that was [sic] going to Devotions." As for the second payment, Gibson IV said that "he had to get it approved from his pops" and "was going to the bank to get it, " and that "he didn't know how much his pops was going to approve, but he was going to ...

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