Opinion
No. 28629-7-II.
Filed: April 27, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of Pierce County. Docket No: 01-1-00067-7. Judgment or order under review. Date filed: 08/03/2001. Judge signing: Hon. Frederick B Hayes.
Counsel for Appellant(s), Lance M Hester, Attorney at Law, 1008 S Yakima Ave Ste 302, Tacoma, WA 98405-4850.
Counsel for Respondent(s), John Michael Sheeran, Attorney at Law, Pierce Cty Prosecutor S, 930 Tacoma Ave S Rm 946, Tacoma, WA 98402-2102.
Shahn Aaron Divorne appeals his conviction of 13 counts of first degree theft, one count of first degree conspiracy, and three counts of making false statements to the Department of Labor and Industries (LI). He argues that (1) there was insufficient evidence to support the convictions; (2) the trial court erred in calculating his offender score; (3) the trial court erred by failing to give a unanimity instruction when the charges involved multiple acts; and (4) two new life-threatening illnesses prevent his filing a pro se brief.
The State concedes that the evidence is insufficient to support Divorne's conviction on Count XIV. Finding no error in the other convictions, we affirm, except for Count XIV, which we reverse.
FACTS I. Overpayments
Divorne owned Ear-Tec, a company that provided LI claimants with hearing aids and related products. Divorne also owned Griffin Medical Laboratories, a company that repaired and manufactured hearing aids.
LI compensates workers who have suffered hearing loss as a result of their working conditions. LI also pays to replace hearing aids due to normal wear and tear or if the hearing aids cannot be repaired. If a hearing aid is still under a warranty, the hearing aid provider must repair or replace the hearing aid free of charge. LI will not pay for hearing aids lost or damaged in a non-work-related incident
Responding to complaints from current and former employees, LI audited Ear-Tec. A preliminary review of a random sampling of 50 Ear-Tec files revealed that Ear-Tec had received in excess of $26,000 in over-payments on the 50 files alone. The LI auditors (the 'Auditors') also began interviewing former Ear-Tec employees, who described the company's overbilling practices.
The Auditors enlisted the help of the Pierce County Sheriff, who obtained and served a search warrant and seized 236 additional Ear-Tec claimant files, bringing the total to 286. The Auditors determined that the total LI loss on these files was $269,667.81, with an average loss per file of $942.89. Multiplied by the total number of Ear-Tec's LI clients (2,603), the loss to LI would be nearly $2.5 million.
II. Procedure
The State charged Divorne with one count of leading organized crime, 15 counts of first degree theft, and one count of conspiracy to commit first degree theft. The State later dropped the organized crime charge and added three counts of making a false statement to LI. Theft Counts I and II, and conspiracy Count XV alleged conduct occurring over the 46-month period from March 1, 1996, through December 31, 1999. The remaining counts charged specific conduct on specific dates.
At trial, Ear-Tec employees testified that Ear-Tec employees and Divorne (1) had provided unnecessary hearing aids; (2) had made false statements to LI; and (3) had over-billed LI for parts, services, and batteries by charging for servicing hearing aids still under warranty or with questionable serial numbers, and by charging LI higher rates than it charged the general public. The employees also testified about a procedure called 'flipping' clients.
Rita Fernandez, a former Ear-Tec employee, testified that Ear-Tec would 'flip' clients from old hearing aids into new ones. According to Fernandez, the administrative staff was instructed to go through client records every three years to try to get clients new hearing aids. Staff tried to have clients come in once a month to check and clean their hearing aids. When the hearing aids came in, the hearing aid fitter dispensers would find something wrong with them. Fernandez witnessed a number of fitter dispensers, including herself, actually break hearing aids. The fitter dispensers took these actions to justify their billings.
Bonnie Guthrie also testified about the 'flip' process, in which she would seek authorization for new hearing aids after three years by telling LI that the old ones were not repairable. Guthrie testified that she employed this procedure and '[i]t didn't matter whether [the hearing aids] were [broken] or not.' Report of Proceedings (RP) at 144.
Two LI auditors, Sandra Eastwood and Ronald Knapp, also testified about Divorne's fraudulent practices. Eastwood detailed the contents of more than 100 files.
The State did not call medical experts to testify about the medical necessity of the hearing aids, products, and services Divorne billed to LI.
The jury instruction for the first degree theft in Count I required the jury to find beyond a reasonable doubt that 'Shahn Divorne, by color or aid of deception, fraudulently billed the Department of Labor and Industries for medically unnecessary hearing aides, add-ons and supplies.' Clerk's Papers (CP) at 251 (Jury Instruction No. 8). The instructions for Counts III-XII and XIV required the jury to find beyond a reasonable doubt that 'Shahn Divorne . . . by color or aid of deception, fraudulently provided medically unnecessary hearing aids.' CP at 253-62, 264 (Jury Instructions Nos. 10-19, 21). The instruction for Count II did not require any finding concerning medical necessity or non-necessity. CP at 252 (Jury Instruction No. 9). The trial court gave no instruction on the meaning of the term 'medically unnecessary,' nor did either party request such an instruction.
The jury convicted Divorne of 17 of the 18 charges. The trial court denied Divorne's motions for arrest of judgment and for a new trial.
The trial court imposed an exceptional sentence of 60 months based on six aggravating factors. Divorne appeals.
These six aggravating factors were that (1) the crimes were a substantial deviation from the normal crimes in the same category; (2) the crimes constituted a major economic offense; (3) Divorne fraudulently obtained money in excess of that in a typical theft; (4) the scheme Divorne used required a higher degree of planning and sophistication than is required for a typical theft; (5) Divorne violated a trust with the State of Washington; and (6) there were multiple victims. CP at 369-70.
ANALYSIS I. Sufficient evidence
Divorne argues that there is insufficient evidence to support Counts I-XII and XIV because the State failed to prove that the hearing aids, add-ons, and supplies were 'medically unnecessary.' Divorne also contends that there was insufficient evidence to convict on the conspiracy charge because the State failed to show any agreement between Divorne and any other person to commit theft. Finally, Divorne challenges the sufficiency of the evidence for the three counts of making false statements to LI, claiming that he did not make any false statements.
A. Standard of Review
The State carries the burden of proving every element of the crimes charged beyond a reasonable doubt. State v. McCullum, 98 Wn.2d 484, 488, 656 P.2d 1064 (1983). When reviewing a sufficiency of the evidence claim, we apply a standard of review that is deferential to the jury verdict, drawing all reasonable inferences from the evidence in favor of the State and interpreting the evidence most strongly against the defendant. State v. Joy, 121 Wn.2d 333, 339, 851 P.2d 654 (1993). A claim of insufficiency admits the truth of the State's evidence and all inferences that reasonably can be drawn therefrom. Br. of Respondent at 7 (citing State v. Barrington, 52 Wn. App. 478, 484, 761 P.2d 632 (1988), review denied, 111 Wn.2d 1033 (1989)). We defer to the jury on the credibility of witnesses and the persuasiveness of the evidence. State v. Bonisisio, 92 Wn. App. 783, 794, 964 P.2d 1222 (1998), review denied, 137 Wn.2d 1024 (1999).
B. Count XIV
At the outset, we accept the State's concession that there was insufficient evidence to convict Divorne on Count XIV. The State failed to show that the amount of money Divorne fraudulently obtained exceeded $1,500, an element of first-degree theft. RCW 9A.56.030(a). Accordingly, we reverse Divorne's conviction on Count XIV.
C. Counts I and III-XII 'Medically Unnecessary'
As threshold matters, Divorne's challenge to Count II fails because the jury instruction on Count II did not contain the disputed phrase 'medically unnecessary'; and Divorne does not allege any other infirmity with this instruction.
Divorne contends that the State failed to produce sufficient evidence of theft in Counts I-XII and XIV because it offered no competent, expert medical testimony that the hearing aids, add-ons, and supplies were 'medically unnecessary,' as required by the 'to convict' instructions for Counts I-XII, and XIV. Divorne does not challenge the trial court's failure to instruct the jury on the definition of 'medical necessity'; rather, he challenges only the sufficiency of the evidence.
Divorne argues that (1) there is a hearing-loss standard that fitter dispensers must follow; and (2) the State offered no expert medical testimony to the contrary. The State counters that (1) 'medically unnecessary' is a term of art defined in former WAC 296-20-01002 (1997); and (2) the director of LI or his or her designee, not the fact-finder, determines whether health services are 'medically unnecessary.'
Divorne responds that (1) this WAC definition of 'medically unnecessary' is not the appropriate standard in a criminal case; and (2) 'the purpose of the potential designation from this portion of the administrative code is to allow competent similarly qualified expert medical witnesses to review the work of their peers and to offer appropriate opinions that are consistent with the relevant standards of the profession.' Reply Br. of Appellant at 9. In support, Divorne cites two Washington cases where medical professionals made the 'medically unnecessary' determination after reviewing the work of their peers. See Dep't of Labor Ind. v. Allen, 100 Wn. App. 526, 997 P.2d 977, review denied, 142 Wn.2d 1009 (2000); Dep't of Labor Ind. v. Kantor, 94 Wn. App. 764, 973 P.2d 30, review denied, 139 Wn.2d 1002 (1999). While the reviewers in Allen and Kantor were physicians, neither case held that a 'competent similarly qualified expert medical witness' is required to make the determination of medical necessity.
The only trial testimony pertaining to the definition of the phrase 'medically unnecessary' was from Eastwood on cross examination. Eastwood explained that the WAC contains a definition of 'medically necessary.' Eastwood explained,
[The WAC] states when a service or procedure is deemed medically unnecessary and one of those items is, it's unnecessary if it's delivered for the convenience of the claimant, the claimant's provider or any other physician.
RP at 1145-46. Eastwood was apparently referring to former WAC 296-20-01002 (1997), which defined the term 'medically necessary' as follows:
Those health services are medically necessary which, in the opinion of the director or his or her designee, are:
(a) Proper and necessary for the diagnosis and curative or rehabilitative treatment of an accepted condition; and
(b) Reflective of accepted standards of good practice within the scope of the provider's license or certification; and
(c) Not delivered primarily for the convenience of the claimant, the claimant's attending doctor, or any other provider; and
(d) Provided at the least cost and in the least intensive setting of care consistent with the other provisions of this definition.
(Emphasis added.) This WAC does not require an expert medical witness to determine whether a health service is either medically necessary or unnecessary.
Taking all of the State's evidence as true and drawing all reasonable inferences therefrom in the State's favor, there was sufficient evidence for a jury to find that the health services Divorne provided, as alleged in Counts I and III through XII, were medically unnecessary.
1. Count I
The Auditors detailed extensive health services they deemed medically unnecessary. For example, Eastwood testified that Divorne provided new hearing aids to Kenneth Battey, who had been using his old hearing aids and did not want new ones; and Divorne provided hearing aids to Ingwer Clark, even though his old aids still functioned. These two claims alone totaled nearly $4,000, well in excess of the $1,500 required to convict Divorne of first degree theft. In addition, Eastwood testified that at least three dozen other files showed billings for medically unnecessary hearing aids and add-ons.
2. Counts III-XII
Sufficient evidence also supports the jury's guilty verdict for first degree theft in Counts III through XII. The Auditors testified about ten Ear-Tec clients whose hearing aids were replaced, even though their old ones were still functioning, or where Ear-Tec charged LI for repairs or replacement of hearing aids still covered under their warranties. A deferential review of this voluminous amount of evidence reveals that there was sufficient evidence for the jury to have reasonably concluded beyond a reasonable doubt that these health services were medically unnecessary and that Divorne was guilty of first degree theft when he sought and obtained unjustified payment for these services from LI.
D. Conspiracy
Divorne argues that there is insufficient evidence to show an actual agreement between himself and one or more persons to commit theft. We disagree.
To prove a conspiracy, it is not necessary to show a formal agreement. State v. Smith, 65 Wn. App. 468, 471, 828 P.2d 654, review denied, 119 Wn.2d 1019 (1992). The agreement may be shown by a "concert of action, all the parties working together understandingly, with a single design for the accomplishment of a common purpose." State v. Casarez-Gastelum, 48 Wn. App. 112, 116, 738 P.2d 303 (1987) (quoting Marino v. United States, 91 F.2d 691, 693-98 (9th Cir. 1937)). Moreover, circumstantial evidence may provide proof of a conspiracy. State v. Brown, 45 Wn. App. 571, 579, 726 P.2d 60 (1986).
Although there may not have been a formal agreement to commit theft, there was sufficient evidence for the jury to conclude that there was a conspiracy. There was evidence that at least one Ear-Tec hearing-aid fitter dispenser, Fernandez, looked for ways to find problems with clients' hearing aids and even purposely damaged the hearing aids to justify fraudulent billing to LI for the repair or replacement.
Another Ear-Tec employee, Guthrie, similarly testified that (1) she had hearing aids declared unrepairable so that they could be replaced and billed to LI; (2) she tried to 'flip' clients' old hearing aids to new ones, regardless of whether they needed replacement; (3) Divorne and Fernandez had trained her to use these fraudulent techniques; (4) on one occasion, Divorne had agreed to put 'corrosion' on a hearing aid to render it unrepairable; and (5) Guthrie knew that these practices were illegal.
Taking this evidence as true and drawing all inferences in favor of the State, as we must, the record shows that Divorne and at least two of his employees were acting in concert with a single design for the accomplishment of the common purpose to defraud LI by billing for unnecessary health services in order to increase business. See Casarez-Gastelum, 48 Wn. App. at 116. Accordingly, there was sufficient evidence to support the jury's conspiracy conviction of Divorne.
E. Making False Statements
Divorne asserts that he never made false statements to LI. But as the State correctly counters, it did not need to prove that Divorne made the statements himself. Rather, the jury could convict if the evidence showed Divorne had caused someone else to make the false statements to LI.
1. Count XVI
Count XVI alleged that Divorne made or caused to be made false statements to LI that Fred Dietz's hearing aids were unrepairable. Tracy Ingram testified that Michelle Sloan made false statements to LI alleging that Dietz's hearing aids were not repairable. The evidence showed that although Divorne may not have made the statements to LI, he controlled Ear-Tec policies and procedures, and Divorne caused Sloan to make the false statements in conformance with Divorne's policy of lying to LI.
2. Count XVII
Count XVII charged that Divorne made or caused to be made false statements to LI that George Fenton's hearing aids were not repairable. Ingram testified that Ear-Tec billed LI for new hearing aids for Fenton, even though a check of his hearing aids revealed that the left aid worked fine and the right aid needed only some repair. But before the repair was complete, 'an administrative person' with Ear-Tec called LI for authorization of two new hearing aids for Fenton. In short, although one of Fenton's hearing aids was in the process of being repaired and the other needed no repair, an Ear-Tec representative told LI that both hearing aids were unrepairable and needed to be replaced.
As noted above, LI will authorize replacement only of unrepairable hearing aids.
Thus, there was sufficient evidence of Divorne's ongoing scheme to defraud LI by submitting false claims for the jury to conclude that Divorne caused Carrie Smith to make this false statement to LI.
3. Count XVIII
Count XVIII involved Divorne billing LI for repairs on hearing aids with certain serial numbers belonging to Cleotis Davies. But Divorne's records and Ron Knapp's testimony show that the hearing aids Divorne repaired did not have serial numbers on them; thus, it was impossible to tell whether the repaired aids actually belonged to Davies. Although Ingram testified that the serial numbers on the billing sheet were the same numbers as those billed for, Divorne did not explain why those numbers did not appear on the hearing aids themselves.
Again, taking the evidence in the light most favorable to the State, there was sufficient evidence for the jury to conclude that Divorne made false statements to LI about which hearing aids he was repairing, in order to bill LI for additional work and pay.
II. Offender Score
Divorne challenges his offender score of 16, claiming that the trial court should have viewed his convictions as part of the 'same criminal conduct,' which would have resulted in a lower offender score. But Divorne had signed a stipulation agreeing to the accuracy of his prior record and his offender score of 16 on all counts. And he failed to raise the 'same criminal conduct' at sentencing below. Thus, he waived his right to challenge the offender score calculation on appeal.
Although the general rule is that a defendant cannot waive a challenge to a miscalculated offender score, this rule is limited to alleged legal errors. In re the Personal Restraint Petition of Goodwin, 146 Wn.2d 861, 874, 50 P.3d 618 (2002). '[W]aiver can be found where the alleged error involves an agreement to facts, later disputed, or where the alleged error involves a matter of trial court discretion.' Goodwin, 146 Wn.2d at 874.
In State v. Nitsch, Division One recognized that our Supreme Court has yet to address the issue of whether the same criminal conduct issue may be raised for the first time on appeal. 100 Wn. App. 512, 521, 997 P.2d 1000, review denied, 141 Wn.2d 1030 (2000). Nitsch entered into a plea agreement with the State and filed a presentence report in which he 'affirmatively alleged' that the standard range sentence for his convictions would be 111-147 months and 26-34 months; agreeing to these standard ranges implicitly established his offender score as two. 100 Wn. App. at 522. Later, Nitsch argued that in calculating his offender score, the trial court, sua sponte, should have found that his two crimes were part of the same criminal conduct. 100 Wn. App. at 520.
Nitsch involved a plea agreement rather than a stipulation to a prior criminal history and offender score, as is the case here. 100 Wn. App. at 517. In Goodwin, however, our Supreme Court noted that 'a defendant can waive any challenge to a miscalculated offender score by agreeing to that score (or to criminal history on which the score is based) in a plea agreement or by other stipulation.' 146 Wn.2d at 873 (emphasis added).
Division One rejected Nitsch's argument, holding that he had waived his right to raise the issue for the first time on appeal. 100 Wn. App. at 521-22. The court expressed 'grave reservations about permitting review in this context,' noting:
This is not an allegation of pure calculation error. . . . Nor is it a case of mutual mistake regarding the calculation mathematics. Rather, it is a failure to identify a factual dispute for the court's resolution and a failure to request an exercise of the court's discretion.
Nitsch, 100 Wn. App. at 523, 520 (footnote omitted). We apply the Nitsch holding here.
Divorne expressly stipulated to his offender score of 16 on each and every count. Thus, there was neither a calculation error nor a mutual mathematics mistake. Rather, as in Nitsch, Divorne failed to identify to the trial court a factual dispute concerning his offender score. Thus, Divorne's circumstances fall squarely within the Goodwin exception recognizing waiver of any alleged error. Goodwin, 146 Wn.2d at 874.
Holding that Divorne waived his right to raise the 'same criminal conduct' issue on appeal, we do not address it further.
III. Unanimity Instruction
Divorne also contends that he was entitled to a unanimity instruction for Counts I, II, and XV.
Divorne notes that he did not propose a unanimity instruction at trial, but correctly points out that the issue may be raised for the first time on appeal because of its constitutional implications. RAP 2.5(a)(3); State v. Fiallo-Lopez, 78 Wn. App. 717, 725, 899 P.2d 1294 (1995) (citations omitted).
The general rule for giving a unanimity instruction is as follows:
When the facts show two or more criminal acts which could constitute the crime charged, the jury must unanimously agree on the same act to convict the defendant. State v. Petrich, 101 Wn.2d 566, 569, 683 P.2d 173 (1984), modified, State v. Kitchen, 110 Wn.2d 403, 411, 756 P.2d 105 (1988). The State therefore must elect the specific criminal act on which it is relying for conviction, or the trial court must instruct the jury that all the jurors must agree that the same underlying criminal act was proven beyond a reasonable doubt. Kitchen, 110 Wn.2d at 411.
State v. Fiallo-Lopez, 78 Wn. App. 717, 723-24, 899 P.2d 1294 (1995).
But an exception to this rule provides: '[T]he State need not make an election and the trial court need not give a unanimity instruction if the evidence shows the defendant was engaged in a 'continuing course of conduct.'' Fiallo-Lopez, 78 Wn. App. at 724 (citing State v. Handran, 113 Wn.2d 11, 17, 775 P.2d 453 (1989); State v. Craven, 69 Wn. App. 581, 587, 849 P.2d 681, review denied, 122 Wn.2d 1019 (1993)).
We review the facts in a 'commonsense manner' to determine whether criminal conduct constitutes a 'continuing course of conduct,' considering a number of factors. Fiallo-Lopez, 78 Wn. App. at 724 (citations omitted). "A continuing course of conduct requires an ongoing enterprise with a single objective." State v. Garman, 100 Wn. App. 307, 313, 984 P.2d 453 (1999) (quoting State v. Love. 80 Wn. App. 357, 361, 908 P.2d 395, review denied, 129 Wn.2d 1016 (1996)), review denied, 141 Wn.2d 1030 (2000).
We agree with the State that no unanimity instruction was required here. This case is similar to State v. Campbell, in which the State charged the defendants with one count of welfare fraud based on 21 separate incidents spanning approximately 14 months. Campbell, 69 Wn. App. 302, 311-13, 848 P.2d 1292 (1993), reversed on other grounds, 125 Wn.2d 797 (1995). The Campbell defendants argued that they were entitled to a Petrich unanimity instruction. 69 Wn. App. at 311. But the court disagreed and found no error, reasoning that '[t]he evidence showed that [the defendants] engaged in a sophisticated and broad scheme involving numerous acts but in furtherance of a single goal.' 69 Wn. App. at 312.
Similarly, here, Divorne's elaborate scheme to defraud LI was an ongoing enterprise: He created a system in which he used his hearing aid clients to file myriad fraudulent claims with LI, spanning a period of nearly four years. He encouraged his employees to do whatever they could to find problems with hearing aids in order to establish a history of repairs, which would justify authorization to purchase new hearing aids. The objective remained the same throughout to seek compensation for medically unnecessary hearing aids, parts, and services, in order to increase Ear-Tec's business and income.
A commonsense look at the evidence shows that Divorne's actions constituted a continuing course of conduct. No unanimity instruction was required.
IV. Additional Grounds
Divorne filed a statement of additional grounds (SAG) under RAP 10.10, which reads: 'Since my incarceration, August 3, 2001, I have come down with two additional life threatening medical conditions. Coupled with the fact I now have poor vision it is impossible for me to prepare a 'pro se brief.'' But Divorne's SAG alleges no trial court or sentencing errors for us to address. Accordingly, we do not further consider his SAG. RAP 10.10(c) ('[C]ourt will not consider a defendant/appellant's statement of additional grounds for review if it does not inform the court of the nature and occurrence of alleged errors.').
Accordingly, we reverse Count XIV and affirm all other Counts.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
MORGAN, A.C.J. and BRIDGEWATER, J., concur.