United States v. Keenan Ferrell
2015 U.S. App. LEXIS 19287
| 7th Cir. | 2015Background
- Ferrell, a licensed psychologist and Medicare provider, ran companies (Inner Arts, Take Action) that billed Medicare for psychotherapy sessions using his provider number; co-defendant Bryce Woods and others (including unlicensed students) actually provided many services. The scheme generated ~33,895 claims and about $1.5 million paid by Medicare.
- William Woods (brother of Bryce) left a voicemail and sent an email to Ferrell’s then-counsel asserting he was responsible for missed/delayed documentation, insisting Ferrell did nothing wrong, and offering to testify; Woods later became unavailable (asserted Fifth Amendment).
- Before trial the district court excluded Woods’s voicemail/email as hearsay not covered by Fed. R. Evid. 804(b)(3) (statements against interest), finding they were largely exculpatory or concerned negligent job performance and lacked corroborating trustworthy circumstances.
- The Government called Dr. Herbert Shriver, who had pleaded guilty to related healthcare fraud in Texas and cooperated; Shriver testified about conversations with Ferrell describing Ferrell’s multi-state practices, use of students/unlicensed people, and Ferrell’s financial problems.
- The district court admitted Shriver’s testimony primarily as direct evidence of the charged scheme and alternatively under Fed. R. Evid. 404(b) (other acts) as proof of intent, knowledge, and motive; Ferrell objected on hearsay and improper propensity grounds.
- The Seventh Circuit affirmed: the court found no abuse of discretion in excluding Woods’s statements under Rule 804(b)(3) and in admitting Shriver’s testimony under Rule 404(b)/as direct evidence.
Issues
| Issue | Plaintiff's Argument (Ferrell) | Defendant's Argument (Gov.) | Held |
|---|---|---|---|
| Admissibility of William Woods’s voicemail/email under Fed. R. Evid. 804(b)(3) (statement against interest) | Woods’s statements were against his penal interest and corroborated, so they should be admitted as hearsay exception | Woods’s statements were largely exculpatory, not individually self-inculpatory for fraud, and lacked corroborating trustworthy circumstances (close relationship, motive to help Ferrell) | Excluded: statements not sufficiently self‑inculpatory for fraud and corroboration insufficient; district court did not abuse discretion |
| Admission of Shriver’s testimony regarding Ferrell’s conduct in other states (Rule 404(b)/direct evidence) | Testimony impermissibly invited propensity inference (serial fraud) and was irrelevant to Illinois charges | Testimony was direct evidence of the scheme and, alternatively, admissible under Rule 404(b) to show knowledge, intent, and motive by a propensity‑free chain of reasoning; probative value outweighed prejudice | Admitted: testimony was direct evidence and, if treated as other‑act evidence, admissible to prove knowledge, intent, and motive; district court did not abuse discretion |
Key Cases Cited
- Williamson v. United States, 512 U.S. 594 (context required to determine whether a statement is self‑inculpatory)
- Jackson v. United States, 540 F.3d 578 (7th Cir.) (elements and corroboration requirement for Rule 804(b)(3))
- Gomez v. United States, 763 F.3d 845 (7th Cir.) (refined test for admissibility of other‑acts under Rule 404(b))
- Henderson v. United States, 736 F.3d 1128 (7th Cir.) (corroboration and relationship considerations in Rule 804(b)(3) analysis)
- Schmitt v. United States, 770 F.3d 524 (7th Cir.) (distinguishing propensity inference from permissible non‑propensity chain of reasoning)
- Lee v. United States, 724 F.3d 968 (7th Cir.) (Rule 403 and prejudicial effect of other‑act evidence)