United States v. Juan Oleo , 697 F.3d 338 ( 2012 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 12a1022n.06
No. 11-1360 FILED
Sep 20, 2012
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, )
)
Plaintiff - Appellee,
) ON APPEAL FROM THE UNITED STATES
v. ) DISTRICT COURT FOR THE EASTERN
) DISTRICT OF MICHIGAN
JUAN DE OLEO, )
) OPINION
Defendant - Appellant.
)
Before: COLE and KETHLEDGE, Circuit Judges, and THAPAR,* District Judge.
AMUL R. THAPAR, District Judge. Juan De Oleo appeals his conviction for Medicare
fraud, conspiracy to commit Medicare fraud, and money laundering. We affirm.
I.
De Oleo and his co-conspirators engaged in a lucrative form of Medicare fraud. They created
sham medical clinics by renting office space, furnishing it with enough equipment to make the clinic
appear legitimate, and hiring a doctor willing to participate in the fraud. After that, they bribed
Medicare beneficiaries to travel to the fraudulent clinic and submit their insurance information
without receiving treatment. To make the scheme profitable, the conspirators used that insurance
information to bill Medicare for expensive medications.
*
Hon. Amul R. Thapar, United States District Judge for the Eastern District of Kentucky, sitting by
designation.
De Oleo got his start with fraudulent clinics down in Florida. There, he worked as a medical
assistant at a clinic owned by Jose Rosario. After the government cracked down on fraud in Florida,
De Oleo and his co-conspirators, including his wife Rosa Genao, moved their conspiracy to
Michigan. While in Michigan, De Oleo partnered with Rosario to open Xpress Medical Center.
A few weeks after Xpress began submitting its fraudulent bills to Medicare, Medicare began
investigating the clinic. That investigation led to the indictment of Rosario, De Oleo, Genao, and
a number of their co-conspirators. Many defendants pled guilty. But De Oleo, Genao, and medical
assistant Deirdre Teagan proceeded to trial. The jury ultimately convicted De Oleo and Genao and
acquitted Teagan of all but one count.
This appeal followed.
II.
De Oleo faults the district judge for two discretionary decisions: first, her dismissal of a juror
after the close of evidence, and, second, her admission of evidence about De Oleo’s and the
witnesses’ involvement in other fraudulent clinics.
A. Excuse of Juror 12
Juror 12 was a full-time student at Adrian College. During jury selection, she informed the
court that she did not want to miss the beginning of school. The district judge believed the trial
would be finished before classes began. During trial, however, the district judge realized that trial
would go longer than expected. Juror 12 immediately reiterated her desire not to miss classes. The
court assured her that she would not have to miss school, and no one objected. At the close of
evidence, it became clear that Juror 12 would likely miss the start of college classes if required to
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deliberate with the jury. As promised, the court excused her and replaced her with an alternate. De
Oleo objected. He did not explain the grounds for his objection except to state that it was important
to his client that Juror 12 not be dismissed.
The district court’s dismissal of Juror 12 was reasonable. A district court may replace a juror
with an alternate when a juror is either “unable or disqualified to perform juror duties.” Fed. R.
Crim. Proc. 24(c)(1). The consent of the parties is not needed if the district court has “reasonable
cause” to replace the juror. United States v. Cantu, 229 F.3d 544, 550 (6th Cir. 2000); United States
v. Warren, 973 F.2d 1304, 1308 (6th Cir. 1992). We review the district court’s decision for an abuse
of discretion. Cantu, 229 F.3d at 550.
De Oleo believes that Juror 12’s academic obligations were insufficiently serious to rise to
the level of reasonable cause. But even if De Oleo’s contention that “next to nothing is done the first
week of college classes” is true (and we are sure that academics nationwide would disagree, see e.g.,
The Paper Chase (Twentieth Century Fox, 1973) (Hart’s first day in Kingsfield’s class)), his
observation misses the point. In many cases, it is not the conflict’s objective seriousness but its
impact on a particular juror that matters. Jurors, like all people, “boil at different degrees.” Ralph
Waldo Emerson, 7 The Complete Works of Ralph Waldo Emerson 61 (Houghton, Mifflin, and
Company 1904) (1870). A conflict that one juror might brush aside might render another unable to
give a case due consideration. The district judge might believe that one juror can leave a family
conflict at the courthouse door, while another might be so “affected by the quarrel with her husband
[] that her ability to shoulder her responsibilities as a member of the jury [is] impaired.” United
States v. Brown, 571 F.2d 980, 985 (6th Cir. 1978). One juror might put jury service before family
obligations, while another might grow “impatient and disgruntled” when sitting on a lengthy trial
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while her niece is visiting. United States v. Shelton, 669 F.2d 446, 460 (7th Cir. 1982). Good cause
may encompass any of “the inevitable vagaries of the many trial participants’ complex lives.”
United States v. Nelson, 102 F.3d 1344, 1350 (4th Cir. 1996). These vagaries include a state court
appearance, United States v. Warren, 973 F.2d 1304, 1308–09 (6th Cir. 1992); difficulty
concentrating due to deaths in the juror’s family, United States v. Virgen-Moreno, 265 F.3d 276,
287–88 (5th Cir. 2001); holiday travel plans, Nelson, 102 F.3d at 1349–50; and taking a child to
college, United States v. McMillan, 64 F.3d 660, at *2 (4th Cir. 1995) (unpublished). Of course, the
district judge must balance any particular vagary against the preference for maintaining the originally
selected jury. See Nelson, 102 F.3d at 1350.
Ultimately, district judges are in the best position to view a juror’s demeanor and determine
whether she is able to shoulder the obligations of jury service. Here, Juror 12 repeatedly raised her
academic obligations with the court. The district court apparently concluded from these statements
that missing class would distract Juror 12 from giving her full attention to the deliberations. Thus,
the court’s determination to excuse Juror 12 was reasonable.
The court also made clear at the outset that it viewed a school conflict as legitimate and
would excuse the juror if the trial ultimately conflicted with the start of classes. Neither party
objected to Juror 12 when she was added to the jury under those conditions. Moreover, De Oleo has
failed to show that he was prejudiced by the substitution. See United States v. Powell, 15 F. App’x
337, 339 (6th Cir. 2001) (“A defendant claiming to be injured by the replacement of a juror is
entitled to a new trial only upon a clear showing of prejudice” (citing United States v. Warren, 973
F.2d 1304, 1308 (6th Cir.1992))). The court did not abuse its discretion by excluding Juror 12.
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B. Other Acts Evidence
During trial, the government introduced evidence regarding other fraudulent clinics
established in Florida and Michigan. De Oleo asserts that this information was irrelevant because
he did not commit crimes at these clinics, and that the trial court improperly admitted such evidence
under Federal Rule of Evidence 404(b). Whether De Oleo’s relevance objection is preserved is
unclear, but in any case the information was relevant to explain the witnesses’ involvement in the
broader fraudulent clinic scheme and their subsequent knowledge of or involvement in the Xpress
clinic. See, e.g., Transcript of Jury Trial, United States v. Briceno et al., No. 09-cr-20221-DPH (E.D.
Mich. Aug. 21, 2011), R. 264 at 15–17; id. at R. 274 at 45–47.
De Oleo was involved in some of these previous clinics, and as to those clinics the district
court properly ruled that this evidence was admissible under Rule 404(b). The court permitted the
government to use the evidence to demonstrate De Oleo’s intent, knowledge, or plan to commit
Medicare fraud at the Xpress clinic. While we normally review evidentiary issues for abuse of
discretion, General Elec. Co. v. Joiner, 522 U.S. 136, 141–42 (1997), there is an intra-circuit conflict
over how best to review Rule 404(b) evidence. See United States v. Clay, 667 F.3d 689, 703 (6th
Cir. 2012) (Kethledge, J., dissenting) (noting the intra-circuit split). But De Oleo loses under even
de novo review.
In evaluating Rule 404(b) evidence, courts employ a three-step process by reviewing: (1)
whether the other acts actually occurred, (2) whether they “were admissible for a permissible [Rule]
404(b) purpose,” and (3) whether the district court correctly determined that the acts’ probative value
was not substantially outweighed by the danger of unfair prejudice. Clay, 667 F.3d at 693; United
States v. James, No. 11-3711, 2012 WL 3608612, at *5 (6th Cir. Aug. 23, 2012).
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The Other Acts Actually Occurred: De Oleo does not contest that the other acts actually
occurred. See Appellant’s Br. and Reply.
Proper Purpose: The district court properly determined that the other clinics were relevant
to De Oleo’s knowledge, intent, or plan.
Sacred Heart: Sacred Heart was a fraudulent medical clinic that Rosario operated in Florida.
De Oleo was the medical assistant there, so his involvement in this clinic is relevant to his
knowledge of Rosario’s fraudulent clinic scheme and his knowledge of how these clinics defrauded
Medicare. See Transcript of Jury Trial, Briceno et al., No. 09-cr-20221-DPH, R. 263 at 50.
Lifetime Medical Center: De Oleo introduced Genao to Rosario, and this meeting spawned
Lifetime Medical Center. Id. at 52. Thus, evidence of this clinic can be introduced to show De Oleo
had knowledge of Rosario’s fraudulent clinic scheme and intended to participate in it. Lifetime also
used Genao to fabricate patients’ medical charts in a similar manner as Xpress, id. at 46, 52, so this
evidence was also probative of Xpress and De Oleo’s plan to defraud Medicare.
Sacred Hope: De Oleo’s visit to Sacred Hope and examination of Sacred Hope’s patient files
demonstrates his knowledge of the way that Rosario’s Michigan clinics operated and his intent to
run the Xpress clinic in a similar manner. Id. at R. 279 at 186-90.
De Oleo contends that the United States offered the other acts evidence before he put his
knowledge of the illegal activities at the Xpress clinic at issue. Reply at 13. De Oleo is mistaken.
The district court asked De Oleo before trial if he would be disputing knowledge and intent, and he
said that, “for now, the answer is yes.” Transcript of Jury Trial, Briceno et al., No. 09-cr-20221-
DPH, R. 262 at 19–23. And De Oleo’s counsel argued in his opening statement that De Oleo was
just an “acquaintance” of Rosario. Id. at R. 273 at 63–64. Even without these statements, it is clear
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that De Oleo’s knowledge of Xpress’s fraudulent activities and his intent to participate in them was,
as they say, the whole ballgame. See also id. at R. 262 at 23 (United States’ statement that what De
Oleo knew is “ultimately going to be the issue in this case”); United States v. Johnson, 27 F.3d 1186,
1192 (6th Cir. 1994) (explaining that “where there is thrust upon the government, [] by virtue of the
defense raised . . ., the affirmative duty to prove that the underlying prohibited act was done with a
specific criminal intent, other acts evidence may be introduced under Rule 404(b)”).
Rule 403 Balancing: The evidence of De Oleo’s involvement in other fraudulent clinics was
more probative than prejudicial. As the district court noted in denying De Oleo’s motion for a new
trial, the admission of testimony about the other clinics “was crafted so as not to overly prejudice De
Oleo and Genao.” United States v. De Oleo, No. 09-20221, 2011 WL 836737, at *2 (E.D. Mich.
Mar. 9, 2011). The court also gave a limiting instruction, cautioning the jury to consider the other
clinics only for the limited purpose of assessing De Oleo’s intent, knowledge, and plan. Transcript
of Jury Trial, Briceno et al., No. 09-cr-20221-DPH, R. 273 at 24. Limiting instructions are one
factor that the district court can consider in conducting a 403 balancing test for other acts evidence.
See, e.g., United States v. Hardy, 643 F.3d 143, 153 (6th Cir. 2011). These instructions were
sufficient to prevent unfair prejudice to De Oleo.
Additionally, the evidence of other fraudulent clinics in Florida and Michigan, if not
admissible under 404(b), would likely be admissible as background evidence. Background evidence
is a narrow category of evidence that typically provides context for the jury, either because it is
directly probative, acts as a prelude to the offense or arises from the same events, forms an integral
part of a witness’s testimony, or completes the story of the offense. United States v. Marrero, 651
F.3d 453, 471 (6th Cir. 2011) (admitting evidence under Rule 404(b) that “completes the story of[]
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the charged offense”); see also United States v. Lamar, 466 F. App’x 495, 499 (6th Cir. 2012). Here,
when reviewed for abuse of discretion, see Clay, 667 F.3d at 697–98, the other clinics evidence was
an integral part of the various witnesses’ testimony. For example, the testimony explained how De
Oleo and Rosario met (Sacred Heart), how De Oleo introduced Genao to Rosario (Lifetime), why
Rosario moved to Michigan (Dearborn), and showed that De Oleo knew about Rosario’s scheme to
open fraudulent clinics in Michigan (Sacred Hope). Transcript of Jury Trial, Briceno et al., No. 09-
cr-20221-DPH, at R. 263 at 50–61, Id. at R. 279 at 186–90. And Rosario testified about his
involvement in the other clinics as part of telling the story about how he and his co-conspirators
moved from Florida to Michigan.
Moreover, any error here was harmless. There was ample evidence to support De Oleo’s
conviction, and we can say with “fair assurance” that the jury’s verdict “was not substantially
swayed” by the evidence of the other fraudulent clinics. Kotteakos v. United States, 328 U.S. 750,
765 (1946).
De Oleo’s conviction and sentence are affirmed.
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