Eleventh Circuit Caps off the Week (Part II)

Friday in the Eleventh Circuit brought a host of opinions, including one on sanctions against a government for repeatedly violating the automatic stay in bankruptcy; two white collar criminal cases involving both sufficiency and sentencing issues; a habeas case on the AEDPA statute of limitations; and an appeal of a drug smuggling conviction.

First, in the Bureaucratic Persistence Department, we have Florida Department of Revenue v. Omine. The dispute centers around the Florida DOR's attempts to collect a Hawaii welfare payment to Omine's ex-wife and children. Omine and his second wife, now living in Florida, declared bankruptcy, and the automatic stay went into effect; the Hawaii debt obligation was part of their Chapter 13 plan. Nevertheless, the Florida DOR continued its collection efforts. Each time, the DOR would agree to stop collection efforts in view of the stay, but a short time later, the DOR would initiate yet another collection effort. After five of such incidents, the Omines filed a motion for sanctions, which the bankruptcy court granted, and the district court's order leaving the sanctions ruling in place (albeit modifying the relief awarded) was affirmed by the Eleventh Circuit.

Not deterred, the DOR sent two additional collection letters, and the Omines again filed  motions for sanctions. The bankruptcy court (after finding he obligation was not in the nature of a support obligation), and held (again) that the DOR willfully violated the stay. The DOR continued to assert on appeal both that it was entitled to collect the obligation, and that the sanctions were not permitted due to its sovereign immunity. 

The Eleventh Circuit, applying the Supreme Court's recent decision in Central Virginia Community College v. Katz (and recognizing the Eleventh Circuit's own precedent in this area had been overruled), held the sanctions were not barred by sovereign immunity, in particular because DOR waived such immunity by filing a proof of claim. However, the relief against a government entity was limited by 11 USC § 106(a)(3) to attorneys fees and expenses as dictated by the Equal Access to Justice Act, and additional sanctions could not be imposed because the statute forbids award of punitive damages.

The Eleventh Circuit issued two white collar cases addressing both sufficiency and sentencing issues, affirming one and reversing the other. In USA v. Johnson, Bertram Johnson was convicted of making false statements during an investigation of Jeffrey Balch for violations of the Clean Water Act. Evidently Johnson was acting as a "consultant" to Balch, the owner of some "bay bottom" land, when he dumped fill dirt onto his land (which Balch then pushed into the water) without the requisite permits -- but then Johnson claimed he had no idea that Balch was pushing the fill dirt into the water. Unfortunately for him, those statements were made to a grand jury, and Johnson got 24 months as a result (conviction and sentence affirmed).

In USA v. Medina, a health care fraud case, the Eleventh Circuit reversed several of the defendants' convictions and sentences. Apparently the defendants were involved in several schemes involving kickbacks paid for recruiting patients to obtain prescription medical devices, which were reimbursed by Medicare. The companies filling the prescriptions would get half of the profit after reimbursement, and the recruiter and the patient would split the other half. An orthotic fitter got $25 a patient, and an individual who was "in the business of money laundering" would accept checks, purportedly for "advertising," and receive back cash (less a 8% cut for his check cashing service). The defendants were convicted and the district court found that every single one of the Medicare claims was fraudulent and should count as part of the total loss (resulting in totals for each defendant ranging from $1.86 million to $9.4 million). The defendants got 48 to 99 months in prison.

The Eleventh Circuit found that simply because the defendants paid kickbacks did not establish that every single prescription was fraud. While some of the defendants had signed documents expressly acknowledging Medicare's rule that kickbacks not be paid (and that benefits would not be paid if there were kickbacks), other defendants did not, and there was no evidence that these defendants knew the prescriptions were not legitimate.  The court vacated one defendant's conviction as to all counts, and the other defendants' convictions were partially vacated. The Eleventh Circuit also held that there was insufficient evidence in the record that any prescription was not medically necessary or was not delivered to the patient, and reversed the district court's calculation of loss on that basis.

In another of a series of Eleventh Circuit cases applying the one-year statute of limitations on habeas actions in AEDPA, Outler v. USA, Outler argued that the year should have begun to run from the date Castro v. United States, 540 U.S. 375 (2003), issued. Castro established a set of procedures for when a district court recharacterizes a pro se pleading as a 28 USC § 2255 motion, and if they are not followed, the recharacterized pleading cannot be considered a prior motion for the purposes of "second or successive" restrictions. Outler originally filed a Rule 33 pleading that the district court (before Castro) recharacterized as a § 2255 motion; his second 2255 motion, filed after Castro, was initially dismissed as a successive application, but after appeal based on Castro, the district court dismissed it instead as untimely. Outler argued that the statute of limitations should have begun to run when Castro issued because, prior to that case issuing, he was deterred from filing the second § 2255 motion. The Eleventh Circuit rejected these arguments, noting that Outler did not challenge the recharacterization when it occurred, and there was no evidence it deterred him from filing another § 2255 motion.

Finally, in USA v. Edouard, the Eleventh Circuit affirmed the conviction of a Haitian cocaine smuggler over a host of objections, including failure to provide an interpreter, a Batson challenge, admission of 404(b) evidence, variance from the indictment (and a related jury charge), sufficiency of the evidence, failure to continue a sentencing hearing, and failure to consider an untimely objection to Edouard's PSI.