                                                                                                                           Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


12-28-2006

USA v. Jones
Precedential or Non-Precedential: Precedential

Docket No. 05-4898




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                                         PRECEDENTIAL

         UNITED STATES COURT OF APPEALS
              FOR THE THIRD CIRCUIT

                   _________________

                      No. 05-4898
                   _________________


             UNITED STATES OF AMERICA

                             v.

                      AIMEE JONES,
                                              Appellant
                    ________________

                       Appeal from the
             United States District Court for the
              Western District of Pennsylvania
                   (D.C. No. 04-cr-00317)
        District Judge: The Honorable Alan N. Bloch
                     ________________

               Argued on September 27, 2006
                   ________________

     Before: MCKEE and AMBRO, Circuit Judges, and
                  RESTANI*, Judge

                (Filed: December 28, 2006)




________________________
       *Honorable Jane A. Restani, Chief Judge of the United
States Court of International Trade, sitting by designation.
Lisa B. Freeland, Esquire
Federal Public Defender
Renee Pietropaolo, Esquire (Argued)
Assistant Federal Public Defender
Karen S. Gerlach, Esquire
Office of Federal Public Defender
1001 Liberty Avenue
1450 Liberty Center
Pittsburgh, PA 15222

       Counsel for Appellant

Mary Beth Buchanan, Esquire
United States Attorney
Robert L. Eberhardt, Esquire (Argued)
Executive Assistant United States Attorney
Chief, Criminal Appeals
Laura S. Irwin, Esquire
Office of the United States Attorney
700 Grant Street
Suite 400
Pittsburgh, PA 15219

       Counsel for Appellee


                       ______________

                 OPINION OF THE COURT
                     ______________

RESTANI, Judge.

       Aimee Jones (“Jones”) appeals her conviction for health
care fraud in violation of 18 U.S.C. § 1347(2), arguing that the
Government did not establish the essential elements of the
crime. Jones also contests her sentence, including the
requirement to make restitution to her former employer,
Progressive Medical Specialists, Inc. (“Progressive”). We hold
that the Government did not establish the elements of health
care fraud in violation of § 1347(2) and we will reverse Jones’

                               2
conviction and vacate her sentence.

           I. Procedural and Factual Background

        In February 2001, Jones began working at a methadone
clinic operated by Progressive and located on Smallman Street
in Pittsburgh, Pennsylvania. The clinic provided methadone
treatments to clients in exchange for a fee. The clinic did not
accept insurance and on Mondays clients generally paid cash for
a week’s worth of services.

        At the clinic, Jones worked as one of the front counter
clerks, performing light clerical tasks. She was stationed at the
front of the clinic, signing in clients as they arrived and
collecting payments from them. After signing them in, she
would indicate on the sign-in sheet and the computer records
whether the client had paid and the method of payment.1 During
Monday mornings, Jones or another front counter clerk would
count the cash received alone in the back office of Annamarie
Roberto, project director of the clinic. A clerk would then go to
the bank to make a deposit. Later in the afternoon, a clerk
would make a second bank deposit.2 At the end of the day,
Jones and the other clerks would reconcile the amount indicated
as received on the sign-in sheets with the amount indicated as
received in the computer. They did not reconcile the amount
received with the amount deposited.

       In March 2004, Roberto noticed that there was a
discrepancy between the amount indicated as received on the
sign-in sheets and the computer records and the amount listed as
deposited on the deposit slips. She then analyzed the financial
records from February 2000 to March 2004 and discovered a
discrepancy of $451,000 between the amount received and the


       1
       After paying for the weekly services, the clients would
proceed to the nurse’s station to receive their dose of
methadone.
       2
      During the rest of the week, only one deposit would
be made per day.

                               3
amount deposited. After checking the dates on which the
discrepancies occurred, she found that they occurred on the
majority of the days on which Jones worked alone and did not
occur when Jones was absent from work.

       Subsequent investigations revealed that from August 23,
2001 to August 20, 2004, Jones had deposited $144,680 in cash
into her and her husband’s bank account, despite the fact that
their joint gross income from 2001 to 2003 was less than
$40,000 each year.3 Investigations also revealed that they had
made several large cash purchases in 2003 and 2004 totaling
$55,036.25.

       After the investigations, Jones was indicted on one count
of health care fraud in violation of 18 U.S.C. § 1347(2). A jury
found her guilty and the District Court sentenced her to twenty-
four months of imprisonment. The Court also imposed three
years of supervised release, ordered restitution to Progressive for
$240,076.33, and ordered forfeiture of $199,716.25 and a 2003
Honda motorcycle.

        On appeal, Jones argues that the Government did not
establish the elements of health care fraud in violation of §
1347(2) because the purported theft was not committed in
connection with the delivery or payment of health care benefits,
and because Progressive was not a health care benefit provider.
Jones also challenges her sentence, arguing that the District
Court did not give meaningful consideration to factors set forth
in 18 U.S.C. § 3553(a). Jones further claims that the Court
committed multiple errors when it ordered Jones to pay
restitution to Progressive. We agree that the Government has
not established the elements of a § 1347(2) violation and we do
not reach the remainder of Jones’ arguments.

           II. Jurisdiction and Standard of Review

       We have jurisdiction under 28 U.S.C. § 1291 to review


       3
        The record does not indicate Jones and her husband’s
joint gross income in 2004.

                                4
Jones’ claim that the Government did not establish the
elements of 18 U.S.C. § 1347(2).
        Because Jones did not raise the issue of whether the
Government established the elements of health care fraud in
violation of § 1347(2) in district court, we review for plain
error. United States v. Gaydos, 108 F.3d 505, 509 (3d Cir.
1997). Under plain error review, the appellate court can
correct an error not raised at trial if there is (1) an error, (2)
that is plain, (3) that affects substantial rights, and (4) that
seriously affects the fairness, integrity, or public reputation of
judicial proceedings. United States v. Cotton, 535 U.S. 625,
631 (2002) (citing Johnson v. United States, 520 U.S. 461,
466–67 (1997)). We have held previously that “affirming a
conviction where the government has failed to prove each
essential element of the crime beyond a reasonable doubt
‘affect[s] substantial rights,’ and seriously impugns ‘the
fairness, integrity and public reputation of judicial
proceedings.’” Gaydos, 108 F.3d at 509 (quoting United
States v. Olano, 507 U.S. 725, 732 (1993)).

                        III. Discussion

       At issue here is whether the Government established the
elements of health care fraud in violation of § 1347(2) by Jones.
Section 1347(2) states:

Health care fraud

Whoever knowingly and willfully executes, or attempts to
execute, a scheme or artifice--

...

(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 not more than 10 years, or both.

18 U.S.C. § 1347(2).

                                5
        In construing the elements of the statute, we begin with
the language of the statute because “the ordinary meaning of
that language accurately expresses the legislative purpose.”
Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 194
(1985). If the “language of a statute is clear . . . the text of the
statute is the end of the matter.” Steele v. Blackman, 236 F.3d
130, 133 (3d Cir. 2001). “[I]f the language is unclear, we
attempt to discern Congress’ intent using the canons of statutory
construction.” United States v. Cooper, 396 F.3d 308, 310 (3d
Cir. 2005).

        Here, Jones argues that the Government did not establish
the elements of a § 1347(2) violation because “[t]he purported
theft occurred only after the health care benefit was paid for and
delivered,” and thus the purported theft was not “in connection
with the delivery of or payment for health care benefits.”
Appellant’s Br. 20. In contrast, the Government argues that “a
fraudulent taking from a health care provider who is providing
a public or private plan or program is more than a theft from a
cash register” because the money allegedly taken by Jones was
intended to pay for a health care benefit program administered
by Progressive. Appellee’s Br. 16. We disagree with the
Government and hold that it did not establish a violation of 18
U.S.C. § 1347(2) because it did not show that Jones used false
or fraudulent pretenses, representations, or promises to obtain
money or property from Progressive in connection with the
delivery of, or payment for, health care benefits, items, or
services.4

       The plain language of the statute clearly prohibits health
care fraud by knowingly or willfully using “false or fraudulent
pretenses, representations, or promises” to obtain the money or
property of a health care benefit program in connection with the
delivery of, or payment for, health care benefits, items, or
services. See 18 U.S.C. § 1347(2). As we discussed in Nugent v.
Ashcroft, 367 F.3d 162, 170 (3d Cir. 2004), fraud is


       4
        In so holding, we do not reach the issue of whether
Progressive is a health care benefit program under 18 U.S.C.
§ 24(b), though we may refer to it as such.

                                 6
differentiated from theft. Under the common law and the Model
Penal Code, theft is synonymous to larceny – the taking of
another’s property by trespass with intent to deprive
permanently the owner of the property. Id. at 171. Fraud,
which did not exist at common law, “means to cheat or
wrongfully deprive another of his property by deception or
artifice,” id. at 178 (quoting United States v. Thomas, 315 F.3d
190, 200 (3d Cir. 2002)), and “implies deceit, deception, artifice,
trickery,” id. at 177 (citations and quotations omitted).5

        Here, the Government did not establish health care fraud.
Rather, the Government established only that: (1) from
February 2000 to March 2004, the amount deposited into
Progressive’s bank account was $451,000 less than the amount
received from clients; (2) the discrepancies between the amount
received and the amount deposited occurred on the majority of
the days on which Jones worked alone and did not occur when
Jones was absent from work; (3) Jones was one of the
employees that made bank deposits; and (4) Jones had made
cash deposits to her bank account and cash expenditures
exceeding her wages. The Government has not established, nor
did it seek to establish, any type of misrepresentation by Jones
in connection with the delivery of, or payment for, health care
benefits, items, or services.

       At oral argument, the Government claimed that Jones
obtained the money from Progressive through a false promise.
It argued that in accepting her responsibilities as a front counter
clerk, Jones implicitly promised to deposit the full amount
received by Progressive into its bank account. Essentially, the
Government is arguing that every employee makes an implicit




       5
        Note that we look to common law definitions where,
as here, “federal criminal statutes use words of established
meaning without further elaboration.” Nugent, 367 F.3d at
170 (quoting Moskal v. United States, 498 U.S. 103, 114
(1990)); Gilbert v. United States, 370 U.S. 650, 655 (1962).

                                7
promise not to steal from the employer.6

        The Government has stretched the statute to cover
activity beyond its plain words. There was simply no type of
misrepresentation made in connection with the delivery of, or
payment for, health care benefits, items or services. There is no
allegation that Jones said or did anything that affected the
delivery of, or payment for, health care benefits, items, or
services. The services were already properly paid for when
Jones failed to deposit all of the money collected, and instead
kept it.

        Further, if there were any ambiguity as to whether the
plain words of § 1347 covered the activity here, the canons of
construction clearly indicate that they do not. First, the
Government’s reading of § 1347 is inconsistent with the
statutory scheme of the Health Insurance Portability and
Accountability Act of 1996 (“HIPAA”), under which § 1347
was passed. See FDA v. Brown & Williamson Tobacco Corp.,
529 U.S. 120, 133 (2000) (“It is a fundamental canon of
statutory construction that the words of a statute must be read in
their context and with a view to their place in the overall
statutory scheme . . . . A court must therefore interpret the
statute ‘as a symmetrical and coherent regulatory scheme,’ . . .
and fit, if possible, all parts into an harmonious whole . . . .”)
(citations and quotations omitted); Nugent, 367 F.3d at 170 (For
ambiguous terms, “courts should look to the reading that ‘best
accords with the overall purposes of the statute’ . . . .”) (quoting
Moskal, 498 U.S. at 116–17)). The Act’s purpose was to
“combat waste, fraud, and abuse in health insurance and health
care delivery.” HIPAA, Pub. L. No. 104-191, 110 Stat. 1936.
Accordingly, the Whited Court also noted that the Act targeted
abuse of insurance payments through two statutorily distinct
clauses – one for fraud (18 U.S.C. § 1347), and one for theft (18


       6
        The Government also argues that the deposit slip was
a misrepresentation. In fact, there is no indication that the
deposit slip did not represent accurately the amount deposited.
The deposit slip argument is essentially the same argument as
the employee’s implicit promise argument, which we reject.

                                 8
U.S.C. § 669)7 – which carry the same penalties. United States
v. Whited, 311 F.3d 259, 268–70 (3d Cir. 2002) (citing HIPAA,
Pub. L. No. 104-191, 110 Stat. 1936). Given that Congress
passed an accompanying statute that explicitly covers theft, it
cannot be the case that Congress intended § 1347 to be
interpreted so broadly as to convert an instance of simple theft
into health care fraud merely because the theft was perpetrated
by an employee of a health care benefit program.

        Second, were we to read § 1347 so broadly as to cover
simple theft by an employee, § 669 itself would be rendered
“insignificant, if not wholly superfluous.” Cooper, 396 F.3d at
312.      Courts “construe statutory language to avoid
interpretations that would render any phrase superfluous.” Id.
(citing TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001) (“It is a
cardinal principle of statutory construction that a statute ought,
upon the whole, to be so construed that, if it can be prevented,
no clause, sentence, or word shall be superfluous, void, or
insignificant.”)); Ki Se Lee v. Ashcroft, 368 F.3d 218, 223 (3d
Cir. 2004) (“We start with the principle that if at all possible, we
should adopt a construction which recognizes each element of
the statute.”); Acceptance Ins. Co. v. Sloan, 263 F.3d 278, 283
(3d Cir. 2001) (“It is an axiom of statutory construction that
whenever possible each word in a statutory provision is to be
given meaning and not to be treated as surplusage.”). If a
phrase, clause, sentence, or word is not to be rendered
superfluous, surely a simultaneously enacted statute should not
suffer such a fate.



       7
        18 U.S.C. § 669 provides in relevant part:

Whoever knowingly and willfully embezzles, steals, or
otherwise without authority converts to the use of any person
other than the rightful owner, or intentionally misapplies any of
the moneys, funds, securities, premiums, credits, property, or
other assets of a health care benefit program, shall be fined
under this title or imprisoned not more than 10 years, or both.

18 U.S.C. § 669.

                                 9
        Finally, in a criminal case, a corollary principle to the
rule of lenity instructs us to “give[] precedence to the terms of
the more specific statute where a general statute and a specific
statute speak to the same concern.” Simpson v. United States,
435 U.S. 6, 15 (1978), superseded by statute, Comprehensive
Crime Control Act of 1984, Pub. L. No. 98-473, § 1005(a), 98
Stat. 2138–39, as recognized in United States v. Manna, 92 F.
App’x 880, 885 (3d Cir. 2004). Here, § 669 is the more specific
statute, as it directly addresses theft from a health care benefit
program while § 1347 addresses fraud in connection with the
delivery of, or payment for, health care benefits, items, or
services.8 Section 1347 is simply not the proper statute under
which Jones should have been charged.

       For the foregoing reasons, the Government has not
established that Jones committed health care fraud in violation
of 18 U.S.C. §1347(2).




       8
        For instance, § 669 has been used to indict criminal
activity similar to that at issue in this case. See Whited, 311
F.3d at 261 (upholding the indictment of a receptionist of a
chiropractic center for one count of embezzlement or theft
under § 669 for depositing payments received from the
center’s clients into her personal bank account). Meanwhile,
§ 1347 has been used to address instances of
misrepresentation in connection with the delivery of, or
payment for, health care benefits, items, or services. See
United States v. Lucien, 347 F.3d 45, 52 (2d Cir. 2003)
(upholding defendant’s conviction for staging automobile
accidents which resulted in insurance companies being billed
for medical services not received); United States v. Hickman,
331 F.3d 439, 441 (5th Cir. 2003) (concerning defendant’s
conviction for billing Medicare, Medicaid, and private
insurance companies for durable medical equipment that was
never ordered, and for health care services that never
occurred); United States v. Baldwin, 277 F. Supp. 2d 67, 69
(D.D.C. 2003) (upholding defendant’s indictment for
submitting false invoices to a health care provider).

                               10
                      IV. Conclusion

       Accordingly, because the Government has not established
health care fraud in violation of 18 U.S.C. § 1347(2), we will
REVERSE the judgment of conviction and VACATE Jones’
sentence.




                             11
