United States v. Earnest Gibson, III, 875 F.3d 179

Background

Riverside General Hospital operated Partial Hospitalization Programs (PHPs) and billed Medicare for intensive outpatient psychiatric services; Earnest Gibson III was Riverside’s CEO and Earnest Gibson IV ran an affiliated offsite PHP, Devotions.
Medicare rules require physician presence, individualized treatment plans, minimum active-treatment hours, and prohibit payment-per-patient kickbacks and certain custodial/daycare services; audits and internal memoranda raised concerns about Riverside’s compliance.
A grand jury indicted the Gibsons and others for health-care fraud conspiracy, Anti‑Kickback Statute (AKS) conspiracy and substantive AKS violations, and conspiracy to commit money‑laundering promotion; several co‑defendants pleaded guilty and testified for the government.
At trial, cooperating witnesses and documentary and financial-tracing evidence (including internal memos, signed checks, and bank transfers to Devotions) showed billing for unperformed or ineligible services and cash/envelope kickback payments to recruiters.
A jury convicted Gibson III and Gibson IV on the conspiracy counts; Gibson III was also convicted on multiple substantive AKS counts and sentenced to 540 months’ imprisonment plus restitution; Gibson IV received 240 months and restitution.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Sufficiency of evidence for health‑care fraud conspiracy	Gov’t: cooperating witnesses, documents, admissions showed an agreement to submit false PHP claims	Gibsons: evidence insufficient; reliant on accomplice testimony and inference	Convictions affirmed — evidence (including admissions, audits, witness testimony) sufficient.
Sufficiency of evidence for AKS conspiracy and substantive AKS counts	Gov’t: recruiters’ testimony, cash payments, checks, familial/organizational links, Pinkerton liability	Gibsons: payments didn’t go to a “relevant decisionmaker” nor affect medical judgment	Convictions affirmed — statute covers payments to any person; Pinkerton supports substantive counts.
Sufficiency and timing for money‑laundering promotion conspiracy; Santos issue	Gov’t: traced Medicare proceeds, transfers to Devotions, withdrawals/payments to recruiters after FERA amendment	Gibsons: no proof funds were proceeds; Santos requires distinguishing receipts vs. profits; possible legitimate uses	Convictions affirmed — jury could find use of proceeds; FERA amended “proceeds” so Santos is not controlling; conspiracy requires no overt act.
Merger of money‑laundering conspiracy with health‑care fraud conspiracy	Gibsons: money‑laundering conspiracy merges because based on same underlying conduct	Gov’t: distinct agreement and intent — one to submit false bills, the other to use proceeds to promote further fraud	No plain error — two distinct inchoate conspiracies with different intents; no merger.
Limitation on cross‑examination / hearsay exclusion	Gibson III: exclusion of his out‑of‑court statement denied right to present defense and Rule 803(3) state‑of‑mind evidence	Gov’t: hearsay objection proper; court allowed eliciting substantially equivalent testimony about policy and his role	No reversible error — court permitted essentially same evidence; any error harmless.
Bruton objection to admission of co‑defendant confession	Gibson III: confession incriminated him in violation of Bruton	Gov’t: confession referenced Riverside generally, not Gibson III specifically	No Bruton violation — confession did not facially or obviously incriminate Gibson III; Richardson/Gray framework applies; Nanda controlling.
Deliberate‑ignorance jury instruction	Gibson III: instruction lacked support, lowered intent standard, and constructively amended indictment	Gov’t: evidence supported purposeful avoidance; instruction accurately tracked pattern jury instruction	Instruction proper and, even if marginal, harmless — sufficient evidence of deliberate ignorance/actual knowledge.
Restitution amount for Gibson IV	Gibson IV: restitution should be limited to transfers Riverside actually gave Devotions or offset for legitimate services	Gov’t: MVRA measures victims’ losses from the fraudulent scheme, not transfers between co‑conspirators	Restitution affirmed — court may order full victim loss; appellate review found no abuse of discretion.

Key Cases Cited

United States v. Willett, 751 F.3d 335 (5th Cir.) (inferring conspiracy knowledge from proximity and meetings)
United States v. Njoku, 737 F.3d 55 (5th Cir.) (AKS conspiracy elements and no overt‑act requirement for conspiracy)
United States v. Miles, 360 F.3d 472 (5th Cir.) (scope of AKS and mens rea; money‑laundering promotion focused on transactions promoting fraud)
Pinkerton v. United States, 328 U.S. 640 (1946) (co‑conspirator liability for foreseeable substantive offenses)
United States v. Santos, 553 U.S. 507 (2008) (discussion of ‘proceeds’ in money‑laundering statute; later narrowed by FERA amendment)
Whitfield v. United States, 543 U.S. 209 (2005) (conspiracy to commit money laundering requires no overt act)
Richardson v. Marsh, 481 U.S. 200 (1987) (redaction and Bruton narrow exception)
Gray v. Maryland, 523 U.S. 185 (1998) (facially incriminating redactions can violate Bruton)
Bruton v. United States, 391 U.S. 123 (1968) (pretrial confessions of non‑testifying co‑defendant and Confrontation/Bruton rule)
United States v. Nanda, 867 F.3d 522 (5th Cir.) (similar Bruton analysis where confession implicated an entity, not a particular defendant)
United States v. Kuhrt, 788 F.3d 403 (5th Cir.) (deliberate‑ignorance instruction should rarely be given; harmlessness where actual knowledge established)
United States v. Brown, 871 F.3d 352 (5th Cir.) (describing when deliberate‑ignorance instruction is appropriate)
United States v. Sanjar, 853 F.3d 190 (5th Cir.) (handling accomplice testimony, restitution, and deliberate‑ignorance/Pinkerton issues)