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United States v. Stephen Chalker (11th Cir. July 2020)

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Sufficiency of the Evidence/Conspiracy to Commit Healthcare Fraud – There is sufficient evidence to support a conviction under 18 U.S.C. § 1349 if witnesses testify about numerous red flags concerning a pharmacy’s business practices and the defendant’s knowing and voluntary participation in the conspiracy.

Sufficiency of the Evidence/Substantive Healthcare Fraud – There is sufficient evidence to support a conviction under 18 U.S.C. § 1347 if witnesses testify that they were given unnecessary medicine and if the district court instructs the jury about the relationship between conspiracy to commit healthcare fraud and substantive healthcare fraud.

Indictment/Sufficient Detail – An indictment is proper if it includes the essential elements of the charge, provides notice to the defendant of the charges he must defend against, and enables the defendant to claim double jeopardy in future prosecutions.

Evidence/Witness Testimony – A witness that testifies to her educational and professional background is not automatically qualified as an expert and may still opine as a lay witness.

Evidence/Expert Witnesses – It is not per se prejudicial for a party to replace one expert witness with another within thirty days of trial if the subject matter and content of the testimony remains the same.

Motions for Continuance – A district court does not err when denying a motion for continuance if there is no relevant, non-cumulative evidence that would be presented, if there is no specific, substantial prejudice, and if the outcome would not be different.

Restitution/Loss Amount – A district court properly calculates loss amount if the calculation is supported by evidence and the defendant does not contest it.

Stephen Chalker was convicted of one count conspiracy to commit healthcare fraud under 18 U.S.C. § 1349 and two counts of substantive healthcare fraud under 18 U.S.C. § 1347. He was sentenced to 78 months’ imprisonment, 36 months’ supervised release, and $4,980,679.50 in restitution.

Chalker appealed, challenging the sufficiency of the evidence and the indictment, arguing that the district court erred in admitting lay and expert witness testimony, arguing that the court erred in denying his request for a continuance, and arguing against the calculation of the loss amount.

The Court disagreed, holding that “the government introduced sufficient evidence to support Chalker’s conspiracy conviction” based on the testimony of multiple witnesses that noticed “red flags” when conducting audits of Chalker’s pharmacy. These red flags included a majority of pharmacy customers coming from out of state, the high price of the prescriptions, complaints from patients, and discrepancies in the billing and the pharmacy’s inventory. The Court also held that there was “more than enough evidence to establish that Chalker knowingly and voluntarily participated in the conspiracy.” The Court further held that Chalker’s decision to testify also supported the jury’s conviction since the jury was entitled to disbelieve his denials.

The Court also held that there was sufficient evidence to “support[] Chalker’s substantive convictions for healthcare fraud” because witnesses testified that they were given medically unnecessary medicine. The Court noted that the district court, over no objection, gave a Pinkerton instruction to the jury, thereby instructing the jury about the relationship between Chalker’s conspiracy and substantive commission of healthcare fraud.

The Court held that Chalker’s indictment was not insufficient because it “literally tracked the relevant statutory language” and “set forth the manner and means of the conspiracy in some detail.” The Court held that, because the indictment included the essential elements of the charge, notified Chalker of the charges, and enabled him to plead double jeopardy in future prosecutions, “the district court did not err in declining to dismiss it.”

The Court also held that the district court did not err when it permitted an FBI forensic accountant to testify as a lay witness because the witness was not offered as an expert. Although the witness testified about her educational and professional background, the Court held that that alone did not mean the witness’s subsequent answers were expert opinions.

The Court also held the district court did not err when it permitted expert testimony from another witness who had replaced the government’s initial expert witness. The Court held that, although the government informed Chalker it was replacing its expert witness less than thirty days before trial, Chalker “cannot show that he suffered any prejudice from the government’s swap” because the subject matter and content of the proposed expert remained the same as the original one.

The Court also held that there was no error in the district court’s denial of Chalker’s continuance. The Court held that Chalker failed to show specific, substantial prejudice in the district court’s denial, he was unable to provide relevant, non-cumulative evidence he would have presented, and nothing in the record indicated the result would have been different had the motion been granted.

The Court also held that there was no error in the district court’s calculation of loss amount since Chalker did not dispute the “calculation of the total loss amount before the district court” and the “trial record amply supports the district court’s calculation.”

Appeal from the Southern District of Florida

Opinion by Marcus, joined by Wilson and Thapar (by designation from 6th Cir.)

Click here to read the opinion.

Tom Church - Tom is a trial and appellate lawyer focusing on criminal defense and civil trials. Tom is the author of "The Federal Docket" and is a contributor to Mercer Law Review's Annual Survey in the areas of federal sentencing guidelines and criminal law. Tom graduated with honors from the University of Georgia Law School where he served as a research assistant to the faculty in the areas of constitutional law and civil rights litigation. Read Tom's reviews on AVVO. Follow Tom on Linkedin.

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