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U.S. v. TILLER

April 26, 2001

THE UNITED STATES OF AMERICA
v.
FREDA TILLER.



The opinion of the court was delivered by: Brody, J.

MEMORANDUM AND ORDER

On August 17, 1999, defendant Freda Tiller ("Tiller") was charged with forty-one counts of federal mail fraud under 18 U.S.C. § 1341. The government withdrew twenty-three counts before submitting the case to a jury. A jury convicted Tiller of the remaining eighteen counts of mail fraud. Now before me are the defendant's post-trial motions. The defendant moves pursuant to Federal Rule of Criminal Procedure 29(c) for the entry of a judgement of acquittal on all counts. In the alternative, the defendant moves pursuant to Federal Rule of Criminal Procedure 33 for a new trial. On January 16, 2001, I heard oral argument on the motions. During the argument, I ordered the parties to submit supplemental briefs on the issue of whether the mailings were in furtherance of the scheme of fraud.*fn1 I will now rule on the motions.

• Summary of the Facts

Tiller was charged under an indictment stating that, "[f]rom on or about February 21, 1994 to on or about November 6, 1995, defendant FREDA TILLER devised and intended to devise a scheme and artifice to defraud [Philadelphia Housing Authority] and to obtain money and property by means of false and fraudulent pretenses, representations and promises." Indictment at 3, ¶ 10. During the 21 month period covered by the indictment, Tiller was employed as a managed care caseworker at Villanova Rehabilitation Consultants, Inc. (VRC). VRC is a medical managed care consulting firm, offering the service of monitoring the medical care provided under insurance policies, to ensure that the medical care being received is appropriate and necessary.

VRC contracted to provide this service to Philadelphia Housing Authority (PHA), to monitor the medical treatments covered by PHA's workers' compensation insurance policies. The essence of the service being provided by VRC to PHA is in-person, on-site monitoring of the medical care administered by health care providers to PHA employees ("claimants") who are receiving treatment for on-the-job injuries. Individual PHA claimants are assigned to caseworkers employed by VRC. Caseworkers meet with the claimants at the offices of doctors and therapists and then prepare a detailed written report describing the condition of the claimant, the course and propriety of the medical care being provided, and the prognosis for the claimant's return to work.

VRC bills PHA for its services on a per-visit basis. When a caseworker submits a report, VRC prepares an invoice from the report. The invoice parses the activity for which PHA is being charged, including travel time, time spent with the doctors, therapists, and claimants, and any incidental expenses such as telephone calls. VRC then sends the invoice to Crawford and Company ("Crawford"), the third party administrator for the PHA workers' compensation policy. Crawford mails payment to VRC based on the invoice.

VRC caseworkers are paid, above and beyond their salary, on an incentive basis, $40 for every visit made and reported in excess of six visits per week. In addition to the report for each visit, caseworkers are also required to document their activities on VRC records known as Weekly Activity Summaries and Expense Reports. The Weekly Activity Summaries track the number of visits the caseworker made for each two-week pay period. Caseworkers receive bi-weekly pay checks that include any incentive bonuses.

During the life of the scheme, Tiller, in her position as caseworker at VRC, prepared and submitted reports that falsely stated that she had visited PHA claimants, when in fact she had not. Tiller's reports identified the claimants as PHA employees. In many instances, PHA was named as a carbon-copy recipient of the report. VRC then prepared an invoice based on each of Tiller's false reports. VRC submitted the invoices to Crawford. Crawford mailed checks for payment to VRC. The indictment charged that the relevant mailings for mail fraud were the "[c]hecks mailed by Crawford, which included fees charged by VRC for visits claimed to have been made by defendant FREDA TILLER, which visits defendant FREDA TILLER had not made." Indictment at 5, ¶ 19. Tiller submitted such false reports over the course of 21 months.

At trial, the government introduced into evidence copies of Tiller's reports, Weekly Activity Summaries, and invoices prepared by VRC. Tiller testified at trial that she is aware that all companies use the mails as part of their business.

• Rule 29(c) Motion for Judgement of Acquittal

Federal Rule of Criminal Procedure Rule 29(c) provides that "if the jury returns a verdict of guilty," the court may on such motion set aside the verdict and enter judgement of acquittal." The only basis for a judgement of acquittal is insufficiency of the evidence at trial to sustain conviction. See United States v. Clemons, 658 F. Supp. 1116 (W.D.Pa. 1987), aff'd, 843 F.2d 741 (3rd Cir. 1988), cert. denied, 488 U.S. 835 (1988). "When the sufficiency of the evidence at trial is challenged," a court must view the evidence "in the light most favorable to the government." United States v. Coyle, 63 F.3d 1239, 1243 (3rd Cir. 1995) (citing Glasser v. United States, 315 U.S. 60 (1942)). A court must affirm the convictions, "if a rational trier of fact could have found defendant guilty beyond a reasonable doubt, and the verdict is supported by substantial evidence." Id.

The defendant moves pursuant to Federal Rule of Criminal Procedure 29(c) for a judgement of acquittal on the ground that the government failed to establish the mailing element of federal mail fraud as required under 18 U.S.C. § 1341. There are two prongs to the mailing element. The statute provides in relevant part:

"Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises . . . for the purpose of executing such scheme or artifice or attempting to do so . . . knowingly causes to be delivered by mail . . . any such matter or thing, shall be [guilty of the offense]."

18 U.S.C. § 1341. Based on the statute, the defendant must "cause" the mails to be used "for the purpose of executing" the scheme of fraud. Id. Federal mail fraud reaches "only those limited instances in which the use of the mails is part of the execution of the fraud." Kann v. United States, 323 U.S. 88, 95 (1944). Causation is satisfied "where one does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended." Pereira v. United States, 347 U.S. 1, 8-9 (1954). Thus, the mailing element is satisfied if: (1) the mailings were part of the execution of the fraud; and (2) either (a) the defendant had knowledge that use of the mails would follow in the ordinary course of business or (b) it was reasonably foreseeable that the mails would be used.*fn2

As the defendant correctly states, the government is required to prove the mailing element as set forth in the indictment. See United States v. Lebovitz, 669 F.2d 894, 896 (3rd Cir. 1982) ("The completion of the scheme must depend in some way on the mailings charged"). See also, United States v. Smith, 934 F.2d 270, 273 (11th Cir. 1991) ("We do not believe the bare fact that large organizations mail communications between offices brings every fraud against such entities within the federal mail fraud statute"); United States v. Walters, 997 F.2d 1219 (7th Cir. 1993). The indictment in this case charged that the relevant mailings were the "[c]hecks mailed by Crawford, which included fees charged by VRC for visits claimed to have been made by defendant FREDA TILLER, which visits defendant FREDA TILLER had not made." Indictment at 5, ¶ 19. Thus, the government was required to prove that the mailing of these checks by Crawford to VRC was both part of the execution of the scheme of fraud and reasonably foreseeable. The defendant asserts that the evidence produced at trial is insufficient on both grounds.

The defendant first argues that the mailing element was not satisfied because the evidence was insufficient for the jury to find that the charged mailings were part of the execution of the scheme of fraud. The defendant contends that the scheme of fraud was successfully completed prior to any mailing and that the mailings charged involved merely post-fraud accounting among potential victims of the scheme. See Defendant, Freda Tiller's Omnibus Memorandum ...


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