United States v. Norton , 17 F. App'x 98 ( 2001 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.  No. 00-4879
RICHARD CHARLES NORTON,
Defendant-Appellant.

Appeal from the United States District Court
for the Western District of Virginia, at Big Stone Gap.
James P. Jones, District Judge.
(CR-99-78)
Submitted: July 31, 2001
Decided: August 20, 2001
Before LUTTIG, WILLIAMS, and GREGORY, Circuit Judges.
Affirmed in part and vacated and remanded in part by unpublished
per curiam opinion.
COUNSEL
E. Duncan Getchell, Jr., Howard C. Vick, Jr., Thomas M. Beshere,
III, MCGUIREWOODS, L.L.P., Richmond, Virginia, for Appellant.
Ruth E. Plagenhoef, United States Attorney, Thomas J. Bondurant,
Jr., Assistant United States Attorney, Thomas E. Booth, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellee.
2 UNITED STATES v. NORTON
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Dr. Richard Charles Norton appeals his convictions for conducting
and participating in racketeering and conspiracy to conduct a racke-
teer influenced and corrupt organization in violation of 18 U.S.C.A.
§§ 1962(c), (d) (West 2000), mail fraud in violation of 18 U.S.C.A.
§§ 1341, 1346, 2 (West 2000), illegal remunerations in violation of 42
U.S.C.A. § 1320a-7b(b)(1)(B) (West Supp. 2000), federal program
bribery in violation of 18 U.S.C.A. §§ 666(a)(1)(B), 2 (West 2000),
interstate transportation of fraudulently obtained funds in violation of
18 U.S.C.A. § 2314 (West 2000), and conspiracy to commit money
laundering in violation of 18 U.S.C.A. § 1956(h) (West 2000 & Supp.
2001). We affirm his convictions, except as to the conviction on
Count One for racketeering, which we vacate.
Norton, James Davis, Michael Redman, and Charles Fugate were
indicted for their involvement in Medicare kickback schemes. Davis,
Redman, and Fugate entered plea agreements. For Norton’s involve-
ment in a scheme wherein he paid kickbacks to Davis, a federal jury
convicted Norton of racketeering, racketeering conspiracy, mail fraud,
illegal remunerations in violation of the Medicare Anti-Kickback Act,
federal program bribery, transportation of fraudulently obtained
funds, and money laundering conspiracy. Norton filed a timely
Motion for Entry of Judgment of Acquittal, or in the Alternative, for
a New Trial. The district court denied Norton’s post-trial motions and
sentenced him to sixty months imprisonment, three years supervised
release, a $25,000 fine, and $800,581.64 in restitution. Norton
appealed his conviction and sentence.
First, we reject Norton’s contention that the district court abused its
discretion in admitting evidence of a separate kickback scheme
involving Davis, the former administrator of Lee County Community
Hospital (LCCH), and Redman, the owner of a physical therapy pro-
UNITED STATES v. NORTON 3
vider at LCCH, and in denying Norton’s motion for new trial based
upon the admission of the evidence.
Rule 402 of the Federal Rules of Evidence provides that all rele-
vant evidence is admissible, except as otherwise provided. Rule 401
defines relevant evidence as "evidence having any tendency to make
the existence of any fact that is of consequence to the determination
of the action more probable or less probable than it would be without
the evidence." Fed. R. Evid. 401. Rule 403 provides:
Although relevant, evidence may be excluded if its proba-
tive value is substantially outweighed by the danger of
unfair prejudice, confusion of the issues, or misleading the
jury, or by considerations of undue delay, waste of time, or
needless presentation of cumulative evidence.
Fed. R. Evid. 403. Decisions regarding the admission or exclusion of
evidence are committed to the sound discretion of the district court
and will not be reversed absent an abuse of that discretion. United
States v. Lancaster, 96 F.3d 734, 744 (4th Cir. 1996) (citing United
States v. Bostian, 59 F.3d 474, 480 (4th Cir. 1995)). A racketeering
charge under § 1962(c) requires proof that the defendant conducted or
participated in the conduct of the affairs of an enterprise engaged in
interstate commerce through a pattern of racketeering activity. Salinas
v. United States, 522 U.S. 52, 62 (1997).
Davis admitted he was guilty of taking kickbacks from Norton,
Redman, and LCCH. Redman’s company provided physical therapy
services for the hospital for which Redman’s company paid Davis six
percent, a small portion of which was for marketing services, but the
bulk of which was a kickback. Davis also received from Norton one-
third of the profits generated by Norton’s industrial medicine pro-
gram, totaling $884,506.64 from 1992 to 1998, of which a small por-
tion represented accounting and consulting fees, but the majority of
which was a kickback. Redman briefly testified about his involvement
in a kickback scheme with Davis, but stated that his paying a kick-
back to Davis had absolutely nothing to do with Norton. Because we
find the evidence of the Davis-Redman scheme relevant and not
unduly prejudicial, we find the district court’s admission of the evi-
dence was not an abuse of discretion.
4 UNITED STATES v. NORTON
Next, we address the district court’s instructions to the jury on the
racketeering and Medicare kickback counts. Finding Norton suffi-
ciently objected to the disputed jury instructions, this Court’s review
is for abuse of discretion. United States v. Whittington, 26 F.3d 456,
462 (4th Cir. 1994) (citing United States v. Russell, 971 F.2d 1098,
1107 (4th Cir. 1992)). The district court’s refusal to give a requested
instruction is reversible error only if the instruction was correct, was
not substantially covered by the court’s charge to the jury, and dealt
with some point in trial so important that failure to give the requested
instruction seriously impaired the defendant’s ability to conduct his
defense. United States v. Patterson, 150 F.3d 382, 388 (4th Cir. 1998)
(citing United States v. Lewis, 53 F.3d 29, 32 (4th Cir. 1995)). An
error in jury instructions will mandate reversal of a judgment only if
the error was prejudicial, based on a review of the record as a whole.
Wellington v. Daniels, 717 F.2d 932, 938 (4th Cir. 1983).
Norton requested a jury instruction as to Count 1, the racketeering
charge, providing that the Government was required to show that
Norton conducted or participated directly or indirectly in the conduct
of the enterprise’s affairs. The proposed instruction was in accord
with the controlling Supreme Court precedent as set forth in Reves v.
Ernst & Young, 507 U.S. 170, 185 (1993) (holding that, to be crimi-
nally responsible under 18 U.S.C.A. § 1962(c), a defendant must
"participate in the operation or management of the enterprise itself").
The district court rejected this instruction, and instead instructed the
jury that it could convict Norton if he merely performed acts that were
necessary or helpful to the enterprise, even if he was merely a servant
of the enterprise with no role in the management or share of the prof-
its. We find that the district court’s jury instruction was improper in
light of Reves. Further, we find the erroneous jury instruction was
unfairly prejudicial to Dr. Norton because the evidence of guilt on this
charge was not so overwhelming as to deem the improper Reves
instruction harmless. Thus, we vacate Norton’s conviction on Count
One for racketeering.
We further find that because the district court gave adequate
instruction on the specific intent required, a separate instruction on
good faith was not necessary. See United States v. Mancuso, 42 F.3d
836, 847 (4th Cir. 1994) (citing United States v. Fowler, 932 F.3d
306, 317 (4th Cir. 1991)). Furthermore, the district court’s rejection
UNITED STATES v. NORTON 5
of Norton’s proposed instruction that defined kickback was not an
abuse of discretion because defining a term within the common
understanding of the jury, such as kickback, was unnecessary. See
United States v. Brito, 136 F.3d 397, 407 (5th Cir. 1998); United
States v. Lignarolo, 770 F.3d 971, 980 (11th Cir. 1985).
We further find that the district court’s refusal to present Norton’s
proposed "safe harbor" instruction based on 42 C.F.R. § 1001.952(d),
which outlines the requirements for payments under permissible per-
sonal service and management contracts that are exempted from cov-
erage under the anti-kickback statute, was not an abuse of discretion
because the written agreement between Norton and Davis, about
which Mrs. Davis testified, did not meet the seven requirements of
§ 1001.952(d). Because Norton failed to present sufficient evidence
of this affirmative defense, the district court did not have to instruct
the jury on that defense. See Bailey v. United States, 444 U.S. 394,
414-15 (1980); United States v. Sarno, 24 F.3d 618, 621 (4th Cir.
1994). Thus, we find no abuse of discretion as to these jury instruc-
tions.
Accordingly, we vacate the conviction on Count One for racketeer-
ing in violation of 18 U.S.C.A. § 1962(c) and affirm the remainder of
Norton’s convictions. We remand this case to the district court for
entry of a new judgment. We dispense with oral argument because the
facts and legal contentions are adequately presented in the materials
before the court and argument would not aid the decisional process.
AFFIRMED IN PART, VACATED AND
REMANDED IN PART