Tuesday, May 26, 2015

Pretrial motions improperly reduced government's ability to put on case

US v. Bajoghli:  In this interlocutory appeal, the Fourth Circuit analyzed the propriety of a district court’s decisions on certain pretrial motions.  The Fourth Circuit panel reversed and remanded, and found that the evidence the defendant attempted to strike or exclude was relevant to the government’s ability to prove its case, and it was an abuse of the district court’s discretion to “unduly restrict the latitude reasonably necessary for the government to carry its burden of proof.”

Bajoghli stands accused of healthcare fraud.  The government has alleged that over a three-and-one-half-year period, Bajoghli, a dermatologist, orchestrated a scheme of falsely diagnosing patients with cancer, and performing unnecessary procedures on his unsuspecting patients.  Bajoghli would also direct “unqualified” medical assistants to perform a variety of procedures without supervision, but he would bill healthcare benefits programs as if he, himself, had performed them, billing the programs at a higher rate.

The government argued in its appeal that in order to prove a healthcare fraud scheme existed, it must be able to prove the “entire scheme,” with evidence that may not be directly related to the 53 charges, yet was relevant to proving the scheme.  The district court had ruled that evidence presented at trial must relate to one of the 53 instances of fraud named in the indictment, and Bajoghli argued that evidence of uncharged conduct would only be “loosely relevant” to the charged offenses and should be excluded under Rule 403 as unfairly prejudicial as well as under Rule 404(b)’s notice requirement, as “other acts” evidence.  The Fourth Circuit found that evidence of the entire scheme is relevant to proving the 53 charged acts, in proving the “boundaries” of the scheme.  Additionally, the Fourth Circuit found that since evidence of conduct not charged in a specific execution may be relevant to the healthcare fraud scheme, Rule 404(b) does not regulate it as “other bad acts.”

The district court ruled that post-scheme conduct should be excluded as “prior bad acts evidence” governed by 404(b), for which the government failed to provide adequate notice to Bajoghli.  The district court also excluded this evidence under Rule 403.  In his appeal, Bajoghli argued that Rule 404(b) does apply to this evidence because it would not be “intrinsic” to any of the charged executions of healthcare fraud.  However, the Fourth Circuit agreed with the government that this evidence was probative of Bajoghli’s knowledge and intent, which are elements of healthcare fraud, and since Rule 404(b) does not apply to conduct that is “intrinsic” to the charged crime, it was an error for the district court to use it as a basis for the exclusion of this evidence.  The district court further misapplied Rule 403 here, according to the panel, because it reflects a misunderstanding of what constitutes unfair prejudice, i.e., evidence that would “lure the factfinder into declaring guilt on a ground different from proof specific to the offense charged.” [Emphasis in original].

Lastly, with respect to the financial gain Bajoghli allegedly earned by charging his healthcare benefits providers for work that Bajoghli allegedly sent off to outside contractors (who completed the work at a fraction of what Bajoghli purportedly received), the Fourth Circuit and the government concurred again, in that this evidence of financial gain was probative of intent to defraud.

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