United States District Court, W.D. Oklahoma
Timothy D. DeGiusti Chief United States District Judge.
30, 2019, the Court conducted a James hearing to
determine the admissibility of certain out-of-court
statements to be offered by the government at trial as
alleged coconspirator statements under Fed.R.Evid.
801(d)(2)(E). This hearing was requested by all three
Defendants [Doc. Nos. 40, 41, 47, 48, 71], and the United
States agreed that the Court should make a pretrial
determination of the admissibility of certain coconspirator
statements [Doc. Nos. 62-65]. The statements at issue are
described in the Second Amended Notice of Co-Conspirator
Hearsay Statements [Doc. No. 97] filed by the United States.
James hearing, the United States offered evidence
(Gov't Ex. Nos. 1-3, Demonstratives A, B), which the
Court admitted for the limited purpose of the hearing. The
United States also offered the testimony of Special Agent
Randall House, an agent with the Office of Inspector General
for the United States Department of Health and Human
Services, who investigated the alleged crimes at
statements at issue are ones made by the three Defendants -
Dr. James M. Ferris, M.D., Katherine Dossey, and Sherry
Isbell. Defendants are charged in a 103-count
Indictment with distributing controlled substances outside
the usual course of professional medical practice, in
violation of 18 U.S.C. § 841(a)(1), and Medicare fraud,
in violation of 18 U.S.C. § 1347. Although Defendants
are not charged with conspiracy, they are charged with the
substantive crimes and with aiding and abetting the
substantive crimes of each other. 18 U.S.C. § 2. The
time frame of the alleged scheme set forth in the Indictment
is September 1, 2015 through December 9, 2015.
the admissibility of statements under Fed.R.Evid.
801(d)(2)(E), the United States must establish by a
preponderance of the evidence that (1) “‘a
conspiracy existed, (2) the declarant and the defendant were
both members of the conspiracy, and (3) the statements were
made in the course of and in furtherance of the
conspiracy.'” United States v. Owens, 70
F.3d 1118, 1123 (10th Cir. 1995) (quoting
United States v. Urena, 27 F.3d 1487, 1490
(10th Cir. 1994)). In making its determination,
the Court “may consider and rely on the actual
coconspirator statements the government seeks to admit to
determine whether a predicate conspiracy existed within the
meaning of Fed.R.Evid. 801(d)(2)(E).” Owens,
70 F.3d at 1124.
deciding whether the offering party has satisfied its burden
at a James hearing, the district court has the
discretion to consider any evidence not subject to a
privilege, including both the coconspirator statements the
government seeks to introduce at trial and any other hearsay
evidence, whether or not that evidence would be admissible at
trial.” Id. Some independent evidence, other
than the statements themselves, must be presented linking the
defendant to the conspiracy. See Id.; see also
United States v. Martinez, 825 F.2d 1451, 1453
(10th Cir. 1987). “Such independent evidence
may be sufficient even when it is not
‘substantial.'” United States v.
Lopez-Gutierrez, 83 F.3d 1235, 1242 (10thCir.
1996) (quoting United States v. Rascon, 8 F.3d 1537,
1541 (10th Cir. 1993)).
not necessary that a conspiracy be charged in the Indictment
for the United States to take advantage of Fed.R.Evid.
801(d)(2)(E). See United States v. Maldonado-Rivera,
922 F.2d 934, 962 (2d Cir. 1990); see also Fed. R.
Evid. 801 advisory committee's note (“While the
rule refers to a coconspirator, it is this committee's
understanding that the rule is meant to carry forward the
universally accepted doctrine that a joint venturer is
considered as a coconspirator for the purposes of this rule
even though no conspiracy has been charged.”);
James, 590 F.2d at 585 n. 1 (Tjoflat J. &
Ainsworth J., specially concurring) (noting that the
majority's rule affects any prosecution implicating
“scheme-type criminal conduct, ” including aiding
and abetting under 18 U.S.C. § 2).
by a conspirator are in furtherance of the conspiracy when
they are ‘intended to promote the conspiratorial
objectives.'” United States v. Townley,
472 F.3d 1267, 1273 (10th Cir. 2007) (quoting
United States v. Reyes, 798 F.2d 380, 384
(10th Cir. 1986)). “Such promotion occurs
through statements that explain events of importance to the
conspiracy in order to facilitate its operation, statements
between coconspirators which provide reassurance, which serve
to maintain trust and cohesiveness among them, or which
inform each other of the current status of the conspiracy,
and statements of a coconspirator identifying a fellow
coconspirator.” Townley, 472 F.3d at 1273
(internal quotations and citations omitted).
a “conspiracy for the purpose of the hearsay exclusion
need not be unlawful; the statement may be made in
furtherance of a ‘lawful joint undertaking.'”
United States v. Nelson, 732 F.3d 504, 516
(5th Cir. 2013) (quoting United States v.
El-Mezain, 664 F.3d 467, 502 (5th Cir.
2011)); see also United States v. Bucaro, 801 F.2d
1230, 1232 (10th Cir. 1986) (it is not necessary
for the government to prove that the conspiracy was for
unlawful purposes, but merely that a combination existed
between the defendant and third parties); United States
v. Brockenborrugh, 575 F.3d 726, 735-736 (D.C. Cir.
2009) (“Rule 801(d)(2)(E) allows for admission of
statements by individuals acting in furtherance of a lawful
Indictment sets forth the alleged business relationship
between Dr. Ferris, Isbell and Dossey. [Doc. No. 1 at 5-8].
At the James hearing, SA House testified about their
relationship, and Government's Demonstratives A and B
provide further clarification. Dr. Ferris, a licensed
physician, was a salaried employee of Physicians at Home
(“PAH”), a home health care company located in
Wellston, Oklahoma. PAH was owned and operated by Isbell. Dr.
Ferris also practiced medicine at Mid-Oklahoma Medical Access
Clinic (“MOMAC”), which was located across the
street from the PAH office in Wellston. MOMAC was also owned
and operated by Isbell. Dossey, a licensed pharmacist, owned
and operated Wellston Clinic Pharmacy, which was in the same
building as MOMAC. Dossey owned the building which housed the
Wellston Clinic Pharmacy and MOMAC.
Ferris was the only physician employed by PAH in the fall of
2015. PAH employed several mid-level practitioners (e.g.,
physician's assistants and nurse practitioners), who Dr.
Ferris supervised. In the fall of 2015, PAH had about 2, 000
patients. Similarly, Dr. Ferris was the only physician at
MOMAC. He oversaw several mid-level practitioners at MOMAC.
MOMAC had about 300 patients in the fall of 2015.
to the Indictment and Superseding Information against Isbell,
early 2015, Isbell and Dossey agreed to a business model in
which the Wellston Clinic Pharmacy would fill prescriptions
for Schedule II controlled substances and deliver those
prescriptions to PAH patients. [Doc. No. 1 at ¶ 24; Doc.
No. 88 at ¶ 24]. To facilitate this business model,
Isbell gave Dossey access to the medical records of PAH
patients. [Doc. No. 88 at ¶ 25]. Isbell also gave Dossey
access to the medical records of MOMAC patients. Id.
at ¶ 26. On November 1, 2015, Isbell sent a letter to
all PAH patients advising them that all Schedule II
prescriptions would be filled at the Wellston Clinic Pharmacy
“unless otherwise requested by the patient and approved
by PAH.” Gov't Ex. No. 3.
in November 2015, Isbell learned that Dr. Ferris was
providing pre-signed, blank prescription pads to Dossey, and
Dossey was writing those prescriptions for Schedule II drugs,
filling the prescriptions, and delivering them to PAH and
MOMAC patients. [Doc. No. 88 at ¶ 30]. After learning
about Dr. Ferris and Dossey's conduct, Isbell did not
make any attempt to stop or modify the agreed business
practice. Id. Rather, she continued to employ Dr.
Ferris; continued to permit Wellston Clinic Pharmacy to fill
prescriptions for PAH and MOMAC patients; continued the
policy that PAH patients' prescriptions would be filled
at the Wellston Clinic Pharmacy; and continued to provide
Dossey with medical records for PAH and MOMAC patients.
to SA House, in Oklahoma, only a licensed physician with a
DEA registration number can prescribe Schedule II controlled
substances. Dr. Ferris had a DEA registration number and is
licensed by the State of Oklahoma. SA House described the
proper protocol for issuing scheduled drug prescriptions
under the Code of Federal Regulations. Prior to prescribing a
scheduled drug, a physician should conduct a thorough
examination of the patient. The prescription must be dated
and signed by the physician on the same day it is issued, and
it “shall bear the full name and address of the
patient, the drug name, strength, dosage form, quantity
prescribed, directions for use, and the name, address and
registration number of the practitioner.” 21 C.F.R.
§ 1306.05(a). Although a nurse or assistant may help a
physician write out a prescription, the physician must have
an opportunity to review the accuracy of the prescription
before he signs it. 21 C.F.R. §
1306.05(f). Refilling a Schedule II drug is prohibited