United States District Court, D. Maine
ORDER ON JOINT MOTION TO DISMISS INDICTMENT
Brock Hornby United States District Judge
a criminal prosecution centered on health care fraud
charges in connection with the MaineCare
program. The two individual defendants, Kristen and
Robert Zuschlag, husband and wife, owned companies (Freeport
Transit (FTI) and C3 Transport) that provided medical
transportation services for MaineCare members. The federal
prosecution started with a two-count indictment against
Kristen Zuschlag on November 15, 2016 (ECF No. 1). Since
then, there have been four superseding indictments. The
Fourth Superseding Indictment filed on November 28, 2017 (ECF
No. 113), contains fifteen counts and two forfeiture
allegations. The defendants have moved to dismiss the first
four Counts, namely, false statement relating to a health
care benefit program (Count One, Kristen Zuschlag);
obstruction of a federal audit (Count Two, Kristen Zuschlag);
conspiracy to commit health care fraud (Count Three, both
defendants); and health care fraud (Count Four, both
defendants). They seek dismissal of all four Counts on
account of prosecutorial delay; and counts Three and Four on
account of “duplicity” because, they say, each of
those Counts charges three single and distinct crimes as a
single offense, and two of the three are barred by the
statute of limitations. None of the parties has requested
oral argument. I Deny the motion to dismiss
so far as it is based on prosecutorial delay. I do need
further explanation, however, of the relationship and
significance of the most recent addition of an additional
object for the conspiracy, a change in the date the
conspiracy began, and additional manner and means-
particularly, allegedly false testimony by both defendants at
a state administrative hearing in March of 2010, conduct that
would otherwise be barred from criminal prosecution by the
statute of limitations. The Clerk's Office shall schedule
oral argument on that remaining issue.
defendants recognize that to secure a Fifth Amendment due
process dismissal of an indictment for prosecutorial delay
when the statute of limitations has not expired, they must
show that “the delay (1) caused substantial prejudice
to the accused's rights to a fair trial, and (2) was an
intentional maneuver by the government to gain a tactical
advantage over the accused.” Defs.' Mot. 11 (ECF
No. 137) (citing United States v. Lovasco, 431 U.S.
783, 790 (1977); United States v. Marion,
404 U.S. 307, 324 (1971); and United States v.
DeCologero, 530 F.3d 36, 78 (1st Cir. 2008)). The
defendants devote most of their argument to the substantial
prejudice element and conclude: “In this case, the
Defense has established actual prejudice. The government
should now be called to explain the delay between the
completion of the investigation and the bringing of criminal
charges.” Defs.' Mot. 20.
for the defendants, the burden on both elements
rests with them, United States v. Irizarry-Colon,
848 F.3d 61, 70 (1st Cir. 2017), as they recognize in their
brief. Defs.' Mot. 11. In this case they have advanced no
showing of an intentional government maneuver to gain a
tactical advantage. They do cite an earlier 2015 decision
where the First Circuit stated in dictum that “there
may be instances when prosecutorial delay will be
sufficiently egregious to support a due process violation
even absent tactical purpose.” United States v.
Ramos-Gonzalez, 775 F.3d 483, 491 (1st Cir. 2015)
(citing Lovasco, 431 U.S. at 795 n.17). They then
cite Fourth, Seventh, and Ninth Circuit cases that, they say,
allow dismissal for “negligence or reckless disregard
for the circumstances as the prosecutor knew them to
be” without showing an improper tactical purpose.
Defs.' Mot. 19-20. But the 2015 First Circuit decision
did not involve an egregious delay, and the court did not
define the term. Instead, in its later 2017 decision,
Irizarry-Colon, the First Circuit dropped any
reference to that possibility and reverted to its usual
language that a defendant must prove tactical delay by the
government to justify dismissal. 848 F.3d at 70. I apply the
Irizarry-Colon analysis and conclude that in the
absence of any assertion that the government's
conduct here was an intentional maneuver to gain a tactical
advantage, the motion to dismiss for prosecutorial delay must
should dispose of this part of the motion. But in the event
that the First Circuit decides that in some cases defendants
need not show that the government engaged in an intentional
maneuver to gain a tactical advantage, I assess the
defendants' substantial prejudice assertions as well. I
certainly understand the defendants' frustration over the
delay here. In 2010 they won a contested recoupment hearing
where the State had attempted to recover $283, 000 against
them for improper billing from 2004 to 2009. MaineCare
officials were upset with the ruling, calling it
“difficult to accept, ” Defs.' Ex. 2 (ECF No.
137-2), and in 2012 an auditor, Michael Bishop, referred the
matter to the Maine Attorney General for criminal
prosecution. But in May 2013 the Maine Attorney General's
Office declined to prosecute (“no chance that we could
pursue any criminal case in this matter, ” Reply Ex. 5
(ECF 148-5)). Bishop then referred the matter to federal
authorities later in 2013, where the matter languished
because of backlogs in the U.S. Attorney's office. After
consenting to two extensions of the statute of
limitations in the hope that federal prosecution would
be declined, the defendants refused further extensions and on
November 15, 2016, the first indictment (against Kristen
Zuschlag) was filed.
despite the frustrations of this chronology for the
defendants, they have not established substantial prejudice
resulting from the delay, as I now describe.
One and Two
Counts One and Two, the defendants acknowledge that Kristen
Zuschlag (the only defendant on those two counts) “is
at least partially able to defend the allegation that Mrs.
Zuschlag provided false documents, with the use of expert
testimony.” Defs.' Mot. 11. But they say that
“the unavailability of common carrier shipping records,
due to the passage of time, severely hampers Mrs.
Zuschlag's ability to defend the factual claim that she
provided false documents to [MaineCare's Program
Integrity Unit].” Id. at 11-12. This seems to
be an argument that because the Indictment filed on November
15, 2016, asserts that she provided false documents on
November 15, 2011, an earlier shipping date would be a
defense to that charge and, moreover, that an earlier
shipping date would provide a complete statute of limitations
defendants acknowledge that Bishop says that he received the
allegedly false documents on November 16, 2011, id.
at 2, 8, and that there is a date stamp for that date,
id. at 9; Defs.' Reply 4 (ECF No. 148).
Presumably the defendants would like common carrier records
to show that the allegedly false documents were actually
shipped November 14 or earlier. But, they say, common
carriers do not have records going back that far. Defs.'
Mot. 9 & n.3; Decl. of Kristen Zuschlag ¶ 13,
Defs.' Ex. 6 (ECF No. 137-6) (“After I was
initially indicted, on November 15, 2016, I attempted to
obtain records from UPS and Federal Express that would show
the dates of documents having been shipped to Michael Bishop
of the MaineCare Program Integrity Unit . . . I was advised
that such records were no longer available.”).
government asserts that “[o]n November 15, 2011, the
auditor [Bishop] spoke with Kristen Zuschlag who informed the
auditor that she had mailed the requested documents, ”
Gov't Resp. 7 (ECF No. 144), and it provides an
auditor's log in support of the assertion. Gov't Ex.
7 (ECF No. 145-6). The defendants have not directly responded
to this assertion in their reply memorandum. Of course,
Bishop's statement as the government reports it does not
state that Kristen Zuschlag told Bishop when she had
shipped the documents in question. But nowhere do the
defendants assert that Kristen Zuschlag or anyone else will
testify that she actually shipped them earlier than November
15. The defendants say only that “there is no objective
evidence of when the documents were shipped, which
is the critical fact that Mrs. Zuschlag is missing due to the
government's delay.” Defs.' Reply 4 (emphasis
in original). That is not enough to support substantial
prejudice on these two Counts. On this record I have no basis
to conclude that common carrier records, if they existed,
would show an earlier shipping date. The person most likely
to know the actual shipping date is the defendant Kristen
Zuschlag. She can still assert her statute of limitations
defense on these two Counts at trial.
Three and Four
Three and Four are the conspiracy and health care fraud
charges against both defendants over allegedly fraudulent
billing for MaineCare members whom the defendants'
companies transported. The Fourth Superseding Indictment
¶ 7 charges a conspiracy going back to July 2009. The
defendants argue that the passage of time makes it difficult
to identify the riders in question and the riders'
medical needs at that time (the period from 2009 through
2013). Defs.' Mot. 13, 16. They argue that they no longer
have enough of their own relevant records and that MaineCare
regulations required them to keep their records only for
three years. Decl. of Robert Zuschlag ¶¶ 8-11,
Defs.' Ex. 5 (ECF No. 137-5); Decl. of Kristen Zuschlag
¶¶ 10-12, 14, Defs.' Ex. 6. But the government
points to their MaineCare provider agreements that required
them to keep their records for at least five years
and, beyond then, until the end of an audit, if later.
Gov't Resp. 15; Gov't Ex. 1 (ECF No.145). The
government asserts that audits were initiated in 2011 and
2013 that did not end, but led instead to the criminal
investigation that resulted in this criminal prosecution.
Gov't Resp. 15. In their Reply, the defendants have not
responded to this assertion, and they recognize in their
motion that an audit occurred in 2011. Defs.' Mot. 12.
If, in the face of recordkeeping obligations, the defendants
failed to keep relevant records,  I do not attribute any
resulting prejudice to the prosecution's delay, since the
government could reasonably assume that the defendants would
comply with their recordkeeping obligations. Cf.
United States v. Carruth, 699 F.2d 1017, 1019 (9th
Cir. 1983) (“To allow [the defendant's] prejudice
claim here would be to hold that those under criminal
investigation have a right to destroy documents and then to
argue that they are prejudiced because the documents are
unavailable to support their defense. This we refuse to
defendants also argue that because of the passage of time,
other comparable companies no longer have records that could
support the defendants' practices as generally
acceptable, Defs.' Mot. 14-15. As the government points
out, however, those companies also stated that they did not
engage in the same activity as the defendants' companies,
and therefore their records would not be helpful to the
defendants. Gov't Resp. 13; see also Defs.'
Mot. 14-15 (same). The defendants attempt to thwart this
argument by saying that such statements by other companies
were made “presumably out of fear that they would
become the target of a PIU investigation.” Defs.'
Mot. 14. This “presumably” comment is only
speculation that does not support a finding of substantial
defendants also assert, without support, that they cannot
admit into evidence information from a Regional
Transportation Program (RTP) computer database concerning the
referral of ambulatory riders to wheelchair companies like
their company and that they need the underlying documents,
which are no longer available. Defs.' Mot. 13-14. The
government disagrees. Gov't Resp. 13. It cites
Fed.R.Evid. 902(13)-(14), and the summary evidence rule (Rule
1006), and states that it intends to introduce some of the
data itself. The defendants' mere assertion that they
cannot get information from the RTP database into evidence
does not-without explanation why that is so-establish
the defendants argue that a favorable witness who, they say,
approved their billing practices for MaineCare, has died.
Defs.' Mot. 15. But they attach the Hearing Officer's
Report of the 2010 hearing that stated that even in 2010 this
witness could not recall making that representation.
Defs.' Ex. 1 at 5, 7, 8 (ECF No. 137-1). The
government has attached a partial transcript of the hearing
where the defendants' then-lawyer said the same thing
about the witness. Tr. at 38:7, Gov't Ex. 2 (ECF No.
145-1). The defendants have given no indication that her
testimony would have changed had she lived.
short, the defendants' assertions, both singly and
collectively, fail ...