United States Court of Appeals Fifth Circuit F I L E D UNITED STATES COURT OF APPEALS May 16, 2003 FIFTH CIRCUIT Charles R. Fulbruge III ____________ Clerk No. 02-20174 ____________
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
JOYCE LEE HICKMAN, also known as Joyce Saunders
Defendant - Appellant,
______________________________________________________ Case No. 02-20196
JOYCE LEE HICKMAN,
Defendant - Appellant.
Appeals from the United States District Court for the Southern District of Texas Before HIGGINBOTHAM, EMILIO M. GARZA, and DENNIS, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
Joyce Lee Hickman, also known as Joyce Saunders, was indicted for thirty-two counts of
health care fraud, in violation of 18 U.S.C. § 1347, by two separate grand juries. The two cases were
consolidated for trial and a jury convicted Hickman on all counts. Her convictions were based on a
series of fraudulent transactions billed from 1995 to 2001, by her umbrella company, Total Medical
Management, to Medicare, Medicaid, and private insurance companies. During this period, Hickman
fraudulently billed over $29 million, and received over $9 million, for durable medical equipment
(“DME”) that was never ordered and inpatient doctor visits and health care services that never
occurred. Hickman was sentenced to two concurrent 120-month terms of imprisonment (on counts
one to seventeen of the first indictment and one to fourteen of the second indictment, respectively)
and one consecutive 90-month term for count 15 of the second indictment. The court also imposed
three years of supervised release, to run concurrently on all counts. Finally, the district court ordered
Hickman to pay restitution in the amount of $9,348,654.49 for each case, to run concurrently.
Hickman timely appeals, challenging her sentences on five separate grounds. Specifically, she
argues that: (1) the district court’s instructions to the jury omitted two elements of the offense and
failed to properly charge a third element, and these errors constitute plain error; (2) the district
court’s removal of one prospective juror for cause constitutes reversible error; (3) her convictions
under the first three counts of the first indictment violate the Ex Post Facto Clause; (4) the district
court’s written and oral sentences were inconsistent and thus the written judgments must be amended;
and (5) the district court committed plain error by enhancing her offense level under U.S.S.G. §
2F1.1(b)(8)(B) in light of United States v. Soileau, 309 F.3d 877 (5th Cir. 2002). Because we find
-2- that Hickman’s convictions on three counts violate the Ex Post Facto Clause and remand for
resentencing, we do not reach the fourth and fifth issues.1
The charges arose out of a series of transactions involving Total Medical Management
(“TMM”), a company owned by Hickman.2 TMM included a billing service for physicians, a DME
company, and a medical and dental clinic. Hickman ran virtually every aspect of TMM: among other
things, she made every business decision, signed the checks and authorized payments, had
reimbursement payments sent directly to her, opened all business mail, and exclusively handled the
DME billing.
The first three counts of the first indictment involved electronic claims that were submitted
by TMM to Palmetto Government Benefit Administrators (“Palmetto GBA”), the entity that
processed Medicare DME claims from various states including Texas. In the fall of 1995, TMM
submitted a claim for beneficiary Lee Perkins for a lymphedema pump that was never prescribed or
authorized by the treating physician. In fact, the designated physician testified that his signature had
been forged and the diagnosis was false. In the spring of 1996, TMM submitted a claim for
beneficiary Joyce Richardson for various DME that had never been prescribed. Again the physician
listed on the claim testified that her name was listed incorrectly, that she had not authorized the claim,
and that she had not treated Joyce Richardson. Around the same time, TMM submitted a similarly
fraudulent claim for beneficiary Agatha Moore. Palmetto GBA paid TMM $3,820.54 in Medicare
1 We do, however, note that the fifth issue presented by Hickman is novel and the district court should consider the impact of Soileau upon remand. We take no position on the merits of this issue. 2 Ms. Hickman created and operated a number of companies. She applied for a Medicare provider number in March 1995 under the name Total Medical Management. She later created (and may have incorporated) various other companies, including T.M.M. Medical Group; Total Medical Management, Inc.; Classic Medical and Dental Clinic Downtown, Inc.; and V.I.P. Medical Clinic, Inc.
-3- funds for the Lee Perkins claim and $2,579.60 in Medicare funds for the Joyce Richardson and
Agatha Moore claims. Hickman endorsed both checks and deposited them in TMM’s bank account.
Counts four to seventeen of the first indictment involved claims for fictitious inpatient doctor
visits. Hickman’s TMM Medical Group submitted the claims on behalf of doctors LaVerne Natalie
Carroll and Warren Dailey. These claims involved Medicare, Medicaid, and crossover claims
(submitted to both Medicare and Medicaid) processed by Trailblazers Health Enterprise, L.L.C., the
Medicare carrier for Texas, and National Heritage Insurance Company, the Medicaid contractor for
Texas. The Government presented evidence that Hickman submitted fraudulent claims for at least
fourteen different patients, for a total of at least 731 fictitious visits and more than $109,000 in billed
charges. Virtually all of this money was deposited in TMM’s account, over which Hickman had
exclusive access. Hickman’s estranged husband testified that they regularly used this account to pay
their personal expenses.
The remaining fifteen counts, charged in the second indictment, involved various bogus
claims. Dr. Nwannem Obi-Okoye worked as an independent contractor for Hickman at the VIP
Medical Clinic. Obi-Okoye testified that Hickman had obtained a second Medicare provider number
in Obi-Okoye’s name without her permission. Under this second provider number, Hickman
fraudulently billed over $74,000 worth of inpatient hospital visits for six different patients to
Medicare.
Hickman also submitted over $27,000 worth of chemotherapy claims to Guardian Insurance
Company of America for beneficiary Jenazare Placek. Jenazare Placek testified that she had visited
-4- Hickman’s clinic once, but that she had never received chemotherapy at the clinic.3 Likewise, VIP
Medical Clinic submit ted at least three false claims for beneficiary Bridgett Roberson to CNA,
Roberson’s insurance provider, for over $19,000 worth of physical therapy that never occurred.
Finally, Hickman billed over $68,000 in claims to UTMB Health Care Systems and NYLCare, the
insurance providers for Texas state employees, on behalf of beneficiary Dena Lee for chemotherapy
services that never happened.
We now consider each of Hickman’s claims of trial error. Hickman first argues that the
district court’s instructions to the jury were erroneous for several reasons. Hickman concedes,
however, that because she failed to object below, the appropriate standard of review is plain error.
United States v. Daniels, 281 F.3d 168, 183 (5th Cir. 2002). Error is plain only when it is clear or
obvious and it affects the defendant’s substantial rights. United States v. Cotton, 535 U.S. 625, 631
(2002). A defendant’s substantial rights are only affected if the error “affected the outcome of the
district court proceedings.” United States v. Olano, 507 U.S. 725, 734 (1993). If these conditions
are met , then we will only reverse the error if it seriously affects the “fairness, integrity, or public
reputation of judicial proceedings.” Cotton, 535 U.S. at 631-32 (citation omitted).
Hickman points out that the district court did not charge two elements of the offense in the
instructions, and failed to properly charge a third element. First, Hickman was charged with violating
3 In fact, Placek testified that she has never had cancer. Not surprisingly, several of the beneficiaries listed on Hickman’s fraudulent claims were nowhere near a ho spital during the time frames covered by the claims. One, Elvatous Peters, was incarcerated during the months Hickman listed him as an inpatient at St. Joseph’s Hospital. Hickman was also willing to use family in her schemes. Dena Lee, Hickman’s niece, was completely unaware that Hickman had billed her visits to the clinic as chemotherapy services.
-5- 18 U.S.C. § 1347, which makes it a crime to defraud a “health care benefit program.”4 The jury was
not instructed, however, that a “health care benefit program” is defined as “any public or private plan
or contract, affecting commerce, under which any medical benefit, item, or service is provided to any
individual . . . .” 18 U.S.C. § 24(b) (emphasis added). Hickman contends that the district court’s
failure to charge the jury on the “affecting commerce” requirement is reversible error, because this
requirement constitutes a jurisdictional element, and thus an essential element of the offense. See
United States v. Pierson, 139 F.3d 501, 503 (5th Cir. 1998) (indicating that the words “affecting
commerce” create a jurisdictional element).
Hickman is correct that a defendant is entitled to have all the essential elements of a charged
offense submitted to a jury and proven beyond a reasonable doubt. United States v. Gaudin, 515
U.S. 506, 510 (1995). Likewise, Hickman is probably correct that the jurisdictional element of
§ 1347 is an essential element of that offense. See, e.g., United States v. Westbrook, 119 F.3d 1176,
1191 (5th Cir. 1997) (stating that the “government must provide proof of some effect on interstate
commerce” to show that the defendants’ actions violated a statute that has an “affecting commerce”-
like requirement); United States v. Parker, 104 F.3d 72, 73 (5th Cir. 1997) (en banc) (implying that
the “affecting commerce” requirement of the Hobbs Act, 18 U.S.C. § 1951, is an essential element
4 In pertinent part, 18 U.S.C. § 1347 reads as follows: Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice– (1) to defraud any health care benefit program; or (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned . . . .
-6- of the crime). We need not affirmatively decide this issue though, because, regardless, Hickman has
not shown plain error.
The jury found Hickman guilty of defrauding Medicare and Medicaid on multiple occasions,
as well as large private insurance companies. Hickman does not argue that Medicare and Medicaid
are not “health care benefit programs” with the meaning of § 24(b). And it cannot seriously be
contended that these institutions and their functions do not affect commerce. Hickman argues only
that the word “commerce” was never used at trial. Even if we assume, arguendo, that this error was
plain and affected Hickman’s substantial rights, the final prong of the plain error standard is not
satisfied. The evidence clearly shows that the district court’s failure to invoke this word in the jury
instructions did not affect the fairness or integrity of judicial proceedings. See Johnson v. United
States, 520 U.S. 461, 469-70 (1997) (holding that, even though the materiality element of the offense
at issue was not submitted to the jury, the evidence of materiality was strong enough that the error
did not seriously affect the fairness, integrity or public reputation of judicial proceedings); United
States v. Allen, 129 F.3d 1159, 1164 (10th Cir. 1997) (reaching a similar conclusion when the
defendant argued that the jury instructions did not require the jury to make the necessary finding on
the interstate commerce element of the offense at issue).
Second, Hickman asserts that the district court erred when it failed to instruct the jury that
§ 1347 requires that the defendant’s fraud be “in connection with the delivery of or payment for
health care benefits, items, or services.” Again, Hickman cannot demonstrate plain error. The district
court did not use the exact statutory language, but it did instruct the jury that it was required to find,
beyond a reasonable doubt, that the defendant’s purpose was to defraud t he health care benefits
programs out of a “direct economic benefit like money or property” and that the defendant “used or
-7- tried to use the plan to get paid from a health care benefits program.” As a whole, these statements
are more than enough to undermine Hickman’s argument that the omission constitutes plain error.
In addition, the Government presented evidence that Hickman fraudulently billed for DME that was
never ordered and health care services that never occurred. Thus, the evidence of this element that
was presented to the jury was so overwhelming that we cannot conclude that any shortcoming in the
instruction created plain error. See Johnson, 520 U.S. at 469-70.
Third, Hickman argues that, although the district court instructed the jury that it was required
to find that she acted “willfully,” it did not require that this finding be “beyond a reasonable doubt.”
The district court first instructed the jury, in the general instructions, that the jury needed to decide
“whether the government has proved beyond a reasonable doubt that the defendant committed the
offense” and that the “defendant must be found to have acted knowingly and willfully.” The general
instructions also defined “knowingly” and “willfully.” Later, in the special instructions, the court
again emphasized that the jury needed to decide, beyond a reasonable doubt, that the defendant acted
knowingly, but it did not specifically use the word “willfully.”
Hickman contends that this “untethered” the willfulness requirement from the other elements
of the offense and reduced the constitutionally-required burden of proof for this element. This
argument is not persuasive. The first set of instructions defined “willfully” to mean that “an act was
done with a conscious purpose to violate the law.” The second, special instructions required the jury
to find, beyond a reasonable doubt, that “the purpose of the defendant’s plan was to defraud—trick
or cheat—a health care benefits program out of . . . money or property.” Thus, the special instruction
-8- incorporated “willfully.” We find no plain error on this ground.5
Hickman next argues that the district court’s removal of a venireperson, for cause, was
reversible error. Hickman objected to this removal at trial, so we would normally review the district
court’s decision under an abuse of discretion standard. See United States v. Duncan, 191 F.3d 569,
574 (5th Cir. 1999). There is no reason to engage in this analysis, however, because Hickman
concedes that a defendant who appeals a district court’s decision to exclude a potenti al juror for
cause cannot obtain a reversal of his conviction unless he shows the jury actually selected was biased.
See United States v. Prati, 861 F.2d 82, 87 (5th Cir. 1988). Hickman admits that she cannot make
this showing. Accordingly, we find no reversible error with respect to this issue.
Finally, Hickman asserts that counts one through three of the first indictment allege fraudulent
acts that occurred before August 21, 1996, the effective date of the health care fraud statute, 18
U.S.C. § 1347. See Health Insurance Portability and Accountability Act, Pub. L. No. 104-191, §
242(a)(1), 110 Stat. 1936, 2016 (1996). Accordingly, Hickman contends that these counts violate
the Ex Post Facto Clause.
A law violates the Ex Post Facto Clause if it (1) punishes as a crime an act previously
committed which was no t a crime when done; (2) makes more burdensome the punishment for a
crime after it has been committed; or (3) deprives a defendant of any defense available according to
the law at the time the charged act was committed. Collins v. Youngblood, 497 U.S. 37, 52 (1990).
Since Hickman did not make this argument in district court, we review it only for plain error. United
States v. Todd, 735 F.2d 146, 149 (5th Cir. 1984).
5 Hickman also argues that the cumulative effect of these three errors rises to the level of automatically reversible, structural error. We find this argument to be meritless.
-9- The heart of Hickman’s argument is that the counts one, two, and three are impermissible
because they are premised on fraudulent claims which were submitted to Medicare and paid before
the statute was enacted—in other words, Hickman contends that all the necessary elements of the
offense were complete before the critical date. The Government responds that health care fraud is
a continuing offense and that Hickman’s scheme to defraud Medicare with false DME claims was not
complete until she submitted her last false DME claim in January 1997.
To resolve this issue, we must determine what constitutes health care fraud under § 1347.
Again, § 1347 punishes one who “knowingly and willfully executes, or attempts to execute, a scheme
or artifice . . . to defraud any health care benefit program . . . or . . . to obtain, by means of false or
fraudulent pretenses . . . any of the money or property . . . of . . . any health care benefit
program . . . .” Although there is a paucity of case law interpreting this provision, its language and
structure are almost identical to the bank fraud statute, 18 U.S.C. § 1344.6 In United States v.
Lemons, 941 F.2d 309 (5th Cir. 1991), we interpreted § 1344 to punish “each execution of the
scheme.” Id. at 318. We contrasted this with the mail and wire fraud statutes, which punish “each
act in furtherance, or execution, of the scheme.” Id.; see also United States v. Hord, 6 F.3d 276, 281
(5th Cir. 1993) (affirming Lemons’s construction of § 1344); United States v. Heath, 970 F.2d 1397,
1402 (5th Cir. 1992) (same). This proposition is now well-settled law. See, e.g., United States v.
De La Mata, 266 F.3d 1275, 1287 (11th Cir. 2001) (“The unit of the offense created by § 1344 is
6 The bank fraud statute reads, in pertinent part: Whoever knowing executes, or attempts to execute, a scheme or artifice . . . to defraud a financial institution . . . or . . . to obtain any of the moneys . . . of . . . a financial institution, by means of false or fraudulent pretenses . . . shall be fined . . . . 18 U.S.C. § 1344.
-10- each execution or at tempted execution of the scheme to defraud, not each act in furtherance
thereof.”); United States v. Longfellow, 43 F.3d 318, 323 (7th Cir. 1994) (holding that the bank fraud
statute punishes execution); United States v. Molinaro, 11 F.3d 853, 860 (9th Cir. 1993) (same). We
hold, by analogy, that the health care fraud statute, § 1347, punishes executions or attempted
executions of schemes to defraud, and not simply acts in furtherance of the scheme.7 Of course,
although the crime of health care fraud is complete upon the execution of a scheme, any scheme can
be executed a number of times, and each execution may be charged as a separate count. See Lemons,
941 F.2d at 317; De La Mata, 266 F.3d at 1287.
Obviously, the next question is what constitutes an “execution” of the scheme. In Hord, we
considered a check-kiting scheme. We noted that the term “scheme to defraud” was not “capable of
precise definition” but that each deposit of a false check constituted an execution because this was
the act that put the bank at risk of loss. 6 F.3d at 281 (citation omitted); see also De La Mata, 266
F.3d at 1288 (holding that “each part of the scheme that creates a separate financial risk” is a separate
execution). In De La Mata, the Eleventh Circuit conducted an even more thorough analysis of this
issue, noting that transactions that have a common purpose but involve separate and independent
obligations to be truthful may also constitute separate executions. 266 F.3d at 1288 (citations
omitted). The De La Mata court concluded that:
Ultimately, the decision of whether a particular transaction is an “execution” of the scheme or merely a component of the scheme will depend on several factors including the ultimate goal of the scheme, the nature of the scheme, the benefits intended, the
7 At this point, we jump ahead of ourselves to note that this holding alone highlights the inconsistency in the Government’s position. If, in fact, Hickman is guilty of one large scheme to defraud Medicare through false DME claims, then each false claim would be an act in furtherance of the scheme, not an execution. As such, these claims would not be separately chargeable offenses and should not have been listed as separate counts in the first indictment.
-11- interdependence of the acts, and the number of parties involved.
Id. This test highlights the fact that the definition of an execution is inextricably intertwined with the
way the fraudulent scheme is defined. To resolve the Ex Post Facto issue presented by this case, we
must decide how to characterize Hickman’s fraudulent scheme. With regard to this endeavor, the
abovementioned De La Mata factors are instructive.
The nature of Hickman’s scheme was to submit false claims to health insurers. The benefit
was the money rendered by the insurer to TMM/Hickman after each false claim was processed,
accepted, and paid. Financial gain was also the ultimate goal. In the end, Hickman defrauded several
parties, but she primarily targeted Medicare and Medicaid. Although these factors are not particularly
illuminating in this case, we find that the remaining factor—the interdependence of the acts—is
dispositive. Hickman submitted each claim separately. Although she may have grouped them for
efficiency, each claim was individually considered and approved. And, with each claim submission,
Hickman owed a new, independent obligation to be truthful to the insurer. Hickman’s scheme was,
in essence, a check-kiting scheme in the health care industry. We see no reason to treat it differently
from those in the bank fraud context. See Hord, 6 F.3d at 282 (explicitly accepting that each
fraudulent check constitutes a separate execution in the bank fraud context).8
8 We reiterate that the process of defining a scheme and/or execution is a fact-intensive one. In United States v. Farmigoni, 934 F.2d 63 (5th Cir. 1991), we held that a loan officer’s creation of a fraudulent letter of credit from his employer and subsequent involvement with the use of that letter of credit constituted two separate offenses. Id. at 65-66. In United States v. Heath, we held that a land-swapping transaction that involved two separate loans to two borrowers from the same savings and loan institution resulted in only one execution. 970 F.2d at 1402. Neither of these cases involve facts similar to the present one, and they are not inconsistent with our analysis.
The Government’s argument that health care fraud is a continuing offense is correct. See United States v. Nash, 115 F.3d 1431, 1440-41 (9th Cir. 1994). It is also inapplicable. A single scheme to defraud is a continuing offense until the offender has executed it. Nothing in this opinion
-12- As we explained above, Hickman submitted the claims that form the basis of these three
counts in the fall of 1995 and the spring of 1996. The exhibits submitted by the Government indicate
that Medicare issued a check for the Lee Perkins claim (count one) in October 1995, and Hickman
deposited the check later that month. The evidence also indicates that Medicare paid both the Joyce
Richardson and Agatha Moore claims with one check issued in July 1996, and Hickman deposited
the check within two weeks. The Government does not dispute that these acts, which constituted
three separate executions of Hickman’s fraudulent scheme, were all committed before the health care
fraud statute became effective. See Hord, 6 F.3d at 281-82 (holding that the deposit of fraudulently
obtained funds completes the execution); United States v. Gregg, 179 F.3d 1312, 1315 (11th Cir.
1999) (same). Accordingly, Hickman’s convictions on counts one through three of the first
indictment violate the Ex Post Facto Clause.
We must now determine whether these violations are plain error. Hickman argues, without
much elaboration, that an Ex Post Facto error is reversible error. To the extent she is arguing that
it is error and obviously so, we agree. Unfortunately, she does not give any indication of how the
error has affected her substantial rights. The extra counts do not appear to have affected the length
of her sentence because the district court ordered 120-month sentences for thirty-one of the thirty-
two counts, to run co ncurrently. Thus, vacating her convictions for three of the counts will not
change the amount of time she spends in jail.
The district court, however, also ordered Hickman to pay restitution for her crimes in the
amount of $9,348,654.59, pursuant to 18 U.S.C. § 3663. This amount of rest itution included
contradicts this aspect of Nash. See id. at 1441 (holding that bank fraud is a continuing offense and then analyzing the facts to determine whether the execution of the scheme extended past the critical date).
-13- $6,400.14 for counts one through three of the first indictment. In Hughey v. United States, 495 U.S.
411 (1990), the Supreme Court held that the Victim and Witness Protection Act of 1992, which is
the statutory basi s of § 3663, authorized an award of restitution “only for the loss caused by the
specific conduct that is the basis of the offense of conviction.” Id. at 413 (emphasis added); see also
United States v. Barndt, 913 F.2d 201, 203 (5th Cir. 1990) (remanding a case for proper calculation
of restitution under Hughey when the district court improperly sentenced the defendant to an amount
of restitution that was broader than the offense for which the defendant was convicted). If Hickman
had been sentenced to this amount of restitution without being convicted of counts one through three,
the resulting sentence would be illegal and thus plain error. Compare Hughey, 495 U.S. at 420
(stating that “the loss caused by the conduct underlying the offense of conviction establishes the outer
limits of a restitution order”) with United States v. Sias, 227 F.3d 244, 246 (5th Cir. 2000) (holding
that a sentence that exceeds the statutory limitations is an illegal sentence and constitutes plain error).
Extending this reasoning, we hold the Ex Post Facto error affected Hickman’s substantial rights
because it affected the outcome of the district court proceedings. See United States v. Quackenbush,
No. 00-4433, 2001 WL 574649, at *1-2 (4th Cir. May 29, 2001) (unpublished) (agreeing that there
was plain error in part of a restitution order because some of the losses counted were not the basis
of the defendant’s offenses); see also United States v. Wainwright, 938 F.2d 1096, 1098 (10th Cir.
1991) (holding that imposition of restitution for losses not related to the crime of conviction was plain
error).
Although Hickman’s actions prior to the creation of the health care fraud statute were
indefensible, unconscionable, and undoubtedly criminal, we conclude that it is unfair, under Hughey
and its progeny, to hold her accountable for restitution for Ex Post Facto convictions.
-14- Thus, we REVERSE Hickman’s convictions on counts one through three of the first
indictment, but AFFIRM the remaining twenty-nine counts. Because the district court imposed the
same amount of restitution, $9,348,654.49, to run concurrently in both cases and because the order
for restitution is part and parcel of each overall sentence, both sentences are VACATED and the case
is REMANDED for resentencing not inconsistent with this opinion. See United States v. Hayes, 32
F.3d 171, 173 (5th Cir. 1994).
AFFIRMED IN PART; REVERSED IN PART; VACATED; REMANDED.
-15-