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United States v. Ferris

United States District Court, W.D. Oklahoma

August 20, 2019



          Timothy D. DeGiusti Chief United States District Judge.

         On July 30, 2019, the Court conducted a James[1] 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.

         At the 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 issue.[2]

         The statements at issue are ones made by the three Defendants - Dr. James M. Ferris, M.D., Katherine Dossey, and Sherry Isbell.[3] 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.


         To show 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.

         “[I]n 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)).

         It is 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).

         “Statements 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).

         Finally, 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 joint enterprise.”).


         The 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.

         Dr. 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.

         According to the Indictment and Superseding Information against Isbell, [4] in 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.

         Sometime 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. Id.

         According 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).[5] Refilling a Schedule II drug is prohibited ...

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