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United States of v. Wynell Gray

August 8, 2011


Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. 2:07-cr-00166-JTM-APR-2-James T. Moody, Judge.

The opinion of the court was delivered by: Posner, Circuit Judge.


Before POSNER, KANNE, and HAMILTON, Circuit Judges.

A jury convicted Wynell Gray of Medicaid fraud, 18 U.S.C. § 1347, and conspiracy to defraud the U.S. government, id., § 371, and the judge sentenced her to 33 months in prison and ordered her to pay restitution of $846,115 to Indiana Medicaid. Her appeal presents a variety of issues, with emphasis on the government's alleged violation of the Brady rule, which requires prosecutors in some circumstances to provide exculpatory evidence in their actual or constructive possession to the defendant.

Randy Suddoth, a high school dropout and convicted felon charged with the fraud along with Gray, pleaded guilty, was sentenced to 24 months in prison, and testified for the government at Gray's trial. A doorman at the Drake Hotel in Chicago, Suddoth had decided in 2001 to start a company that he called "Dovies Medicar" to transport patients to hospitals and doctor's offices. He enlisted the aid of his friend Gray, the only college graduate he knew (she has a bachelor's degree in psychology and a master's degree in social work). He bought two vans and leased office space in Indiana, and while he and a cousin drove the vans Gray-Suddoth's second in command-ran the office.

Most of Dovies' clients were covered by Medicaid, and the fees for the services that Dovies provided to them were billed directly to Indiana Medicaid, the state agency that administers the federal-state Medicaid program in Indiana. According to the government's evidence, Gray both set up the billing system for the Medicaid services that the company rendered and did the billing, which was electronic. After her husband became ill in the summer of 2002, she worked mainly from home, mainly on Medicaid billing. Billing for services to other clients, particularly clients not on Medicaid, was handled in Dovies' office by another employee.

The company struggled until, according to Suddoth's testimony, Gray hit on the idea of billing Indiana Medicaid in accordance with the Medicaid billing codes for ambulance services-even though Dovies had no ambulances-because the billing rates for those services are much higher than the rates for van services. Dovies' revenues soared as a result of the change in billing. Gray testified that the change was Suddoth's idea, not hers, and that she didn't know that Dovies had no ambulances.

The company's revenues soon rose tenfold; by the end of the first quarter of 2004 Indiana Medicaid had reimbursed Dovies more than $550,000 for nonexistent ambulance services. But then EDS, a private company that Indiana Medicaid has hired to process and pay Medicaid claims, altered its electronic billing program so that firms like Dovies that were not certified to provide ambulance services could not bill for them electronically. Dovies adapted by filing Medicaid claims for nonexistent trips in its vans-one claim was for trans-porting a child more than 90 times when the actual number was in all probability three.

Dovies' surging revenues from Medicaid were deposited in a bank account to which both Suddoth and Gray had access. Gray withdrew hundreds of thou-sands of dollars that she used to buy a Subway franchise and a Curves franchise (Curves is a fitness chain). She worked mainly at the franchise outlets (whether because her husband was better or the financial opportunities provided by the franchises were irresistible), but continued billing Medicaid from her home after hours for services supposedly rendered by Dovies. She testified that the franchises weren't really hers, that she was fronting for Suddoth, who couldn't be listed as the owner because he was a felon.

Eventually Indiana Medicaid tumbled to the fraud, and Dovies closed its doors in May 2005. Suddoth then created a new medical transportation company, also fraudulent, with Gray again doing the billing, but it was soon shut down.

Gray testified that she had been ignorant of the fraud, that Suddoth had given her the billing codes and the phony bills and she had never known that she was billing for nonexistent services, whether ambulance services or van services. She testified that she never submitted a bill for which she hadn't been given a seemingly authentic trip ticket signed by a driver employed by Dovies; therefore any false billing must have been done by some other employee of Dovies.

Before the trial began, Gray's lawyer asked the government for Dovies' Medicaid billing records, so that she could determine the date, amount, and patient identification on each bill and the nature and date of the service billed for. The government obtained the information from EDS and gave a copy to Gray's lawyer.

At trial a dispute arose over how long it took to bill Medicaid for a transportation service (whether ambulance or van). The question was relevant because there were many thousands of billings, yet according to her testimony Gray was doing most of her billing at home, at night, devoting no more than eight to ten hours a week to the task. How long it took to bill for each service rendered (or pretended to be rendered) would affect Gray's claim that not she but other employees had done the billing for the nonexistent services. She testified that it took her about three minutes to bill for each service and at that rate she could not have billed for all the phony services in eight to ten hours a week. An expert witness for the defense who had studied the EDS data handed over by the government concurred in Gray's estimate, but the prosecutor contended that it took Gray only 40 seconds to bill for a service.

The government had not studied the EDS data, which in the form supplied by EDS was intelligible only to a software technician, and was surprised when the defense expert, having extracted from the data not only the number of bills but also the dates, found that at three minutes a bill it would have taken one person 71 hours to do all the billing that EDS's data showed Dovies had submitted to Medicaid on July 15, 2004. That would be feasible on Pluto, which has a 153-hour day, but not on our fast-spinning planet. So the government asked EDS whether it could determine not only the day on which, but also the ...

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