Opinion
Case No. 1:01-CR-238
July 22, 2002
OPINION
This matter is before the Court on Defendants' motions to dismiss. On consideration of the motions, the Court determines that oral argument is unnecessary.
BACKGROUND
Defendant United Memorial Hospital (hereafter "UMH") is a not-for-profit corporation which provides hospital services in Greenville, Michigan. Defendant Daniel Seward, M.D., is a licensed physician and the former Chief of Emergency Medicine at UMH. Defendant Matthew DeWys, D.O., is a licensed physician and the former Chief of Staff at UMH. Jeffrey Askanazi, M.D., is a physician and anesthesiologist who was previously convicted by jury in this District (Case No. 1:98-CR-130) on 34 of 37 counts of mail fraud in connection with his billings for unnecessary medical services. His conviction was affirmed on appeal in July 2001.
On October 4, 2001, a grand jury of this District returned a thirty-one count Indictment against all three Defendants. UMH was named in all thirty-one counts. Defendants Seward and DeWys were named only in Count 1, which charged each of the Defendants with participation in a conspiracy from 1995 to June 1997 to commit mail and wire fraud in billing Medicare, Medicaid and private insurance companies for unnecessary medical services provided by Dr. Askanazi.
On December 5, 2001, the grand jury returned a Second Superseding Indictment against Defendants. The Second Superseding Indictment did not state additional charges against Defendants, but did include reference to four additional overt acts.
On March 7, 2002, the grand jury returned a Third Superseding Indictment against Defendants. The Third Superseding Indictment stated only 29 counts against UMH. It also differed from the Second Superseding Indictment in that the date of the conspiracy was extended until the year 2000, the objects of the conspiracy were expanded to include the receipt of payments from patients for unnecessary medical services performed by Dr. Askanazi, and three additional overt acts were alleged (relating to the expanded purpose, collection of fraudulent billings directly from patients).
Timing of the charges was affected in part by an agreement between UMH and the assigned Assistant United States Attorney (Barbara Tanase), which waived a delay of three months for limitations purposes at the request of UMH. (United States' Response at 21; United States' Exhibits J and K.)
Defendants have since filed motions to dismiss arguing: (1) that the Superseding Indictments should be dismissed because the grand jury was impermissibly used for discovery; (2) that the statute of limitations has run as to the conspiracy charge (Count 1); (3) that the mail and wire fraud and conspiracy charges are unconstitutionally vague; (4) that the mail and wire fraud and conspiracy charges, as applied, are unconstitutionally vague; and (5) that the United States cannot prove that Defendant UMH committed offenses because of the conduct of former Chief Executive Officer Michael Mihora in that Mihora's acts were not done on behalf of UMH.
LEGAL ANALYSIS 1. Grand Jury Abuse
Parties to this action recognize that the grand jury process cannot be used by the government to investigate previously filed charges. See United States v. Woods, 544 F.2d 242, 249 (6th Cir. 1976). However, the filing of the initial Indictment does not foreclose further grand jury investigation provided that the later investigation does not have as its dominant purpose the investigation of previously filed charges. United States v. George, 444 F.2d 310, 314 (6th Cir. 1971); see also United States v. Rugiero, 20 F.3d 1387, 1395 (6th Cir. 1995); United States v. Brietkreutz, 977 F.2d 214, 217 (6th Cir. 1992). Furthermore, even if the dominant purpose is investigation, relief is not warranted provided that the abuse of the grand jury process does not materially prejudice the defendant. See Brietkreutz, 977 F.2d at 217; United States v. Streebing, 987 F.2d 368, 372 (6th Cir. 1993); Woods, 544 F.2d at 250. Finally, in making these assessments, the district court must afford a strong presumption to the regular use of the grand jury process and to the absence of any prejudice from its use. Id.
Given the presumption of regularity and given that the great majority of the grand jury investigation was concluded before the filing of the first Indictment, it does not appear to this Court either that the dominant purpose of the later grand jury investigation was obtaining discovery concerning earlier filed charges or that prejudice resulted from the later investigation. The Court notes that Defendants have also cited no precedent for their argument that grand jury investigation is improper to supersede an indictment only as to overt acts. This practice appears proper, as in this case, when the additional investigation is focused on enlarging the focus of the investigation (to include new victims and later overt acts). The Court also finds that the Defendants have not been prejudiced by the later grand jury investigation given the absence of evidence of prejudice. In particular, the effect of the further grand jury action has been to provide Defendants with greater notice of the charges. The Superseding Indictments have not greatly delayed the prosecution.
2. Statute of Limitations
Pursuant to 18 U.S.C. § 3282, the period of limitations for a conspiracy to commit mail or wire fraud is five years. Moreover, federal precedent has, through the years, laid down various rules for computing limitations in a conspiracy case. In a conspiracy case, the limitation period begins to run from the date of the last charged overt act. United States v. Smith, 197 F.3d 225, 227-28 (6th Cir. 1999) (citing Pinkerton v. United States, 145 F.2d 252 (5th Cir. 1944) and Brown v. Elliott, 225 U.S. 392, 401, 32 S.Ct. 812, 56 L.Ed. 1136 (1912)). A defendant who joins a conspiracy is responsible for foreseeable overt acts of a co-conspirator absent withdrawal from the conspiracy. United States v. Lash, 937 F.2d 1077, 1084 (6th Cir. 1991). Under the United States Supreme Court's holding in Hyde, withdrawal is a jury question and requires proof both that a defendant affirmatively withdrew from a conspiracy and took action to "neutralize the effect of his former [conduct]." Hyde v. United States, 225 U.S. 347, 371 (1912); see also Lash, 937 F.2d at 1083 (stating that to prove withdrawal a defendant "must show that he took affirmative action to defeat or disavow the purpose of the conspiracy. Mere cessation is insufficient."). Once an initial indictment is filed, the limitation period is then tolled as to the charges filed in the indictment. Smith, 197 F.3d at 227 (citing United States v. Grady, 544 F.2d 598, 601 (2nd Cir. 1976)).
In this case, the original Indictment alleged the last overt act (a request for payment by UMH) in June 1997. Thus, even apart from the agreement by UMH to toll the limitation period for three months, the Indictment was filed within five years of the conclusion of the continuing offense. The subsequent Indictments were thus timely in light of the timeliness of the original Indictment. Moreover, even without considering the earlier filed Indictments, the Third Superseding Indictment was timely since it contained the allegation of an overt act occurring on September 11, 2000. ( See Third Superseding Indictment at 19, ¶ PP.) The various statements of Defendants Seward and DeWys that they withdrew from the conspiracy pose affirmative defenses which may be proven to a jury, but do not warrant the dismissal of the Indictment in advance of trial.
3. Vagueness of the Criminal Charges
Defendants each argue that the criminal charges as written are unconstitutionally vague. This type of challenge raises the Defendants' interests under the Sixth Amendment to the United States Constitution in understanding the charges and preventing successive prosecutions.
Generally, an indictment is sufficient to satisfy the Sixth Amendment vagueness standards when it "contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecution for the same offense." Hamling v. United States, 418 U.S. 87, 117 (1974); see also Russell v. United States, 369 U.S. 749, 763-64 (1962); United States v. Salisbury, 983 F.2d 1369, 1373 (6th Cir. 1993); United States v. Piccolo, 723 F.2d 1234,1238 (6th Cir. 1983) (en banc).
Stated differently, an indictment which describes the offense in terms of the words of the criminal statute, together with the approximate place and time of the offense, is generally sufficient. See United States v. Middleton, 246 F.3d 825, 841 (6th Cir. 2001); United States v. Hanna, 198 F. Supp.2d 236, 243 (E.D.N.Y. 2002) (citing United States v. Pirro, 212 F.3d 86, 92 (2nd Cir. 2000)); see also United States v. Fruehauf Corp., 577 F.2d 1038, 1071 (6th Cir. 1998) (holding in conspiracy case that charges were sufficient where they identified the object of the conspiracy and referred to the specific statutory sections involved).
Upon review of the criminal charges filed in this case, and particularly those contained in the Third Superseding Indictment, the Court finds that the criminal charges sufficiently charge the offenses of conspiracy to commit mail and/or wire fraud, mail fraud and wire fraud. The charges detail the elements of each of the offenses and particularly describe the object of the conspiracy ( i.e, to profit from billings for unnecessary medical services). Furthermore, the charges provide enough detail in terms of the time, place and manner of the offenses to allow Defendants to exercise their double jeopardy rights in later proceedings. As such, the charges are not unconstitutionally vague under the Sixth Amendment.
4. As-Applied Vagueness Challenge
Defendants also argue that the criminal statutes, as applied, are unconstitutionally vague and deprive Defendants of due process. This kind of argument is adjudicated under the Fifth Amendment's due process standards. In connection with this argument, Defendants also argue that the criminal charges do not sufficiently describe their specific criminal intent and that specific criminal intent was scarcely possible at the time of the alleged offense because there were neither federal regulations or national standards relating to what was or was not medically necessary pain relief treatment.
In United States v. Edwards, 182 F.3d 333, 335 (5th Cir. 1999), the Fifth Circuit ably summarized the appropriate Fifth Amendment standards:
A criminal statute survives our vagueness review if it "define[s] the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement." See United States v. Gray, 96 F.3d 769, 776 (5th Cir. 1996) (citing Posters N' Things, Ltd. v. U.S., 511 U.S. 513, 525, 114 S.Ct. 1747, 128 L.Ed.2d 539 (1994)). Additionally, when a vagueness challenge does not involve First Amendment freedoms, we examine the statute only in light of the facts of the case at hand. See id. (citing United States v. Mazurie, 419 U.S. 544, 550, 95 S.Ct. 710, 42 L.Ed.2d 706 (1975) and Chapman v. United States, 500 U.S. 453, 467,111 S.Ct. 1919, 114 L.Ed.2d 524 (1991)).Id.
Furthermore, since this kind of review necessarily depends upon the particular facts of a criminal prosecution, which are not known until trial, several federal courts have held that pre-trial review of a vagueness challenge is premature and inappropriate. United States v. Reed, 114 F.3d 1067, 1070 (10th Cir. 1997); United States v. Ferguson, 142 F. Supp.2d 1350, 1355 (S.D.Fla. 2000); United States v. Bastian, 112 F. Supp.2d 378, 380 (S.D.N.Y. 2000); see also Peoples Rights Organization, Inc. v. City of Columbus, 152 F.3d 522, 530 (6th Cir. 1998) (stating that in a previous case void-for-vagueness challenges were not fit for judicial resolution prior to final agency action).
Accordingly, the Court determines that this pre-trial challenge to the vagueness of the federal statutes at issue is premature and should be raised, if at all, under Federal Rule of Criminal Procedure 29. In so ruling, though, the Court does not encourage Defendants to pursue this argument. This Court is doubtful, for the reasons stated in the United States' briefs, that such a challenge could succeed. The conspiracy and mail fraud and wire fraud statutes have in the past sustained vagueness challenges in federal cases. Also, federal convictions under these statutes for billings for medically unnecessary services have been previously upheld by the Sixth Circuit (including the conviction of Jeffrey Askanazi).
5. Conduct of Michael Mihora
Defendant UMH argues that it cannot be held criminally responsible for the acts of Michael Mihora and that, as such, the charges against it must be dismissed. The United States asserts that UMH can be held responsible for the acts of Mihora (as well as its employees and officers in general) and that, in any event, this motion is not a proper use of a motion to dismiss under Rule 12.
It is patent under Rule 12 that "[a] motion to dismiss the indictment cannot be used as a device for a summary trial of the evidence. The sole function of this type of motion is to test the sufficiency of the indictment to charge an offense." United States v. Marra, 481 F.2d 1196, 1199-1200 (6th Cir. 1973); see also United States v. Boren, 278 F.3d 911, 914 (9th Cir. 2002); United States v. Jensen, 93 F.3d 667, 669 (9th Cir. 1996); United States v. Nukida, 8 F.3d 665, 670 (9th Cir. 1993); United States v. Mann, 517 F.2d 259, 267 (5th Cir. 1975). Justice Harlan stated the matter more succinctly in his dissent in United States v. Russell, 369 U.S. 749, 791 (1962): namely, "There is no such thing as a motion for summary judgment in a criminal case."
Because this defense relates to the sufficiency of the evidence (which has already been tested as a preliminary matter before the grand jury), it is not properly asserted under Rule 12.
CONCLUSION
For the reasons stated, an order shall enter denying the motions to dismiss.
ORDER
In accordance with the Opinion of this date;
IT IS HEREBY ORDERED that Defendant United Memorial Hospital's Motion to Dismiss (Dkt. No. 85), Defendant Daniel Seward's Motions to Dismiss (Dkt. Nos. 82 and 88), Defendant Matthew DeWys's Motion to Dismiss (Dkt. No. 87), and Defendant DeWys's Joinder and Concurrence in Motions to Dismiss (Dkt. No. 106) are DENIED.