Unusual Finding of “Rehabilitation” After Insurance Fraud Sentence

May 6, 2016 | Appeals

Individuals and businesses engaging in insurance fraud can face significant civil penalties under various state and federal laws, including in appropriate cases under the federal Racketeer Influenced and Corrupt Organizations Act. The financial penalties that can result, however, may not truly be a deterrent for judgment-proof defendants.

Criminal laws—with the possibility of prison time—clearly can be more effective than civil penalties to punish and to deter insurance fraud.1 Yet there may be situations where a criminal conviction for insurance fraud and the resulting sentence lead to more than just deterrence and an appropriate level of punishment and create, instead, unfairness and excessive punishment.2

Generally speaking, though, once a prison sentence for insurance fraud is imposed, everyone moves on. Everyone, that is, except the defendant, who is tarred with the conviction forever.

In an unusual and rare case, Doe v. United States,3 decided by U.S. District Judge John Gleeson of the Eastern District of New York just days before leaving the bench, Judge Gleeson refused to simply “move on.” Gleeson—a thoughtful judge who has a well-deserved reputation for fairness—was asked by a defendant he had sentenced in 2003 to expunge her conviction for insurance fraud because of the difficulties it continued to cause her as she attempted to get on with her life.

Before issuing his 30-page opinion, the judge painstakingly reviewed each page of the defendant’s trial transcript, pre-sentence report, probation reports, deposition transcript, and other documents she and the government had provided to him to understand her “character and competency today.” Although he determined not to expunge her conviction, he clearly was troubled by the effect of the insurance fraud conviction on this particular defendant, and fashioned a creative remedy to address the situation.

Background

As Judge Gleeson explained, Jane Doe4—now, a 57-year-old unmarried, legal permanent resident of the United States with two children aged 29 and 24—had completed high school in Jamaica and also had pursued studies in the United States, where she had obtained both her GED and her nursing license. In July 2000, Doe’s adjusted annual gross income was less than $15,000. She was raising two young children on her own and receiving $80 per week in child support from their father.

Doe’s boyfriend at the time recruited her to participate in a staged car accident in order to fraudulently obtain benefits under New York’s no-fault insurance law.5 Toward that end, she picked him up in her car, along with two of their friends, and purposely drove through an intersection when another vehicle hit her car in the rear driver’s side. Three to four days after the accident, she allegedly felt stiffness in her neck and consulted a physician. Doe attended physical therapy twice a week from September to December 2000. Her auto insurance company was billed $2,604 and paid $1,190 for her no-fault claim, and it held a reserve of $5,500 for her bodily injury claim. Doe, however, did not receive any money from the offense.

A jury found Doe guilty of conspiring to commit and committing health care and mail fraud following her trial on Oct. 3, 2002. It was her first and only criminal conviction.

As a result of the conviction, Doe and her young children were evicted from her Queens apartment. She sent her children to live with their half-sister in Far Rockaway; Doe moved into her then-boyfriend’s aunt’s basement in a different part of Brooklyn.

On Feb. 21, 2003, Gleeson sentenced Doe to 15 months imprisonment, a three-year term of supervised release, and  $14,819 in restitution. She completed her prison sentence in 2004. In the meantime, she appealed her case and, on April 22, 2005, the U.S. Court of Appeals for the Second Circuit remanded for resentencing. Gleeson reduced Doe’s term of imprisonment to 11 months and amended her restitution amount to $7,409. Gleeson also determined that her three-year term of supervised released had been served and that no additional supervision was required.

Doe’s Motion

After her release from prison in 2004, Doe experienced periods of unemployment in the nursing field, which she attributed to her conviction. Moreover, in 2006, she was found guilty of professional misconduct by the New York State Office of Professional Discipline as a result of her conviction; her nursing license was suspended for two years (with the last year stayed), and she was placed on probation for an additional two years.

On June 23, 2015, Doe moved to expunge her 13-year-old insurance fraud conviction due to its adverse impact on her ability to work. She asserted that it was troublesome for her because it appeared in government databases and in the New York City Professional Discipline Summaries and, therefore, was visible to any prospective employer who conducted a criminal background check or examined her nursing license.

The federal government opposed Doe’s motion, contending that federal district courts did not have subject matter jurisdiction to expunge a conviction on equitable grounds.6

Judge Gleeson’s Decision

In his decision, Gleeson first explored in depth recent efforts at criminal justice reforms “to help those with criminal convictions get back on their feet and walk out of the cycle that leads people from conviction to unemployment and back into the criminal justice system.”

He then found that district courts had ancillary jurisdiction to consider expunging criminal convictions, citing the Second Circuit’s decision in U.S. v. Schnitzer.7

Next, Gleeson determined that Doe’s conviction should not be expunged because hers was not “the unusual or extreme case.” He acknowledged that Doe has had “significant trouble getting and keeping jobs as a result of her conviction.” He added that her status “as a single mother and a woman of color has made things even harder for her,” but found that reasons other than her conviction led Doe to lose jobs or to fail to be offered jobs.

Moreover, Gleeson wrote, it was not clear to him that expungement would significantly help Doe, as her conviction still would appear on her nursing license and in private criminal record databases.

He said, however, that although her situation did not present the “extreme circumstances” that warranted expungement, it did merit relief. He said that he had sentenced Doe to incarceration and supervision to punish her for committing a federal offense, to deter her from breaking the law again, and to help her achieve the latter goal, adding that it seemed the sentence “had its intended effect” because, aside from her conviction in this case, her record was “clean.” Gleeson found that there was “no longer a need to deprive Doe of her liberty interests in the way collateral consequences imposed by the law have been doing.” He stated that, as her sentencing judge, he owed it to Doe, to her family, and to the community “to do my part to lift any remaining hardship on her.”

He then ruled that Doe was “rehabilitated.” He observed that she had been convicted of committing the non-violent crimes of health care fraud and mail fraud; that she had not recruited others or played a supervisory role in those crimes; that she had not benefited monetarily from her crime; and that no one had been physically hurt except possibly for herself and her accomplices.

Gleeson also pointed out that, since her release from prison 12 years ago, Doe had not been convicted of another crime but, instead, had been “persistent in trying to find gainful employment and contribute to society meaningfully.” He concluded that Doe was fit not only to be hired by a nursing agency in need of a qualified employee, but also to be relieved “of the long list of collateral consequences she faces under state and federal law.”

Giver her rehabilitation, Gleeson decided to provide her with a “federal certificate of rehabilitation” to memorialize that conclusion “so that future employers may benefit from it.” He said that he hoped that future employers would give his “careful consideration” of Doe’s current suitability for employment “significant weight,” and decide that it far outweighed “the effect of her aberrant criminal conduct all those years ago.”

Gleeson noted that certificates of rehabilitation existed in certain states, including New York,8 but not in the federal system. He said that the federal system “has much to gain from adopting a certification system,” and he created one.

The top line of the certificate created by Judge Gleeson says “United States District Court for the Eastern District of New York.” The words “Certificate of Rehabilitation” follow, under which is the following text:

I, John Gleeson, United States District Judge for the Eastern District of New York, do hereby certify that [Jane Doe] who was convicted in this Court on October 3, 2002, is rehabilitated. I recommend her for employment, housing, benefits, and other opportunities as a full participant in society.

Below that text is “Presented This 7th Day of March 2016,” followed by the seal of the Eastern District of New York, surrounded by Judge Gleeson’s signature and the signature of Eileen Kelly, the district’s Chief U.S. Probation Officer.

Conclusion

Penalties for insurance fraud should be sufficient to deter and punish without being overly vindictive. It can be a tough line to draw, but other judges should look to Judge Gleeson’s Doe decision in the future to lessen the ongoing pain for the deserving.

Gleeson, however, will not be able to repeat his compassion, at least not as a judge. Not long after issuing this decision, Judge Gleeson left the bench after 22 years and became a partner at Debevoise & Plimpton in New York. His move to the private sector is a loss for the judiciary, to litigants in the Eastern District of New York, and to those of us who enjoyed practicing before him.

Endnotes:

1.  See, e.g., Evan H. Krinick, “Sentencing and Restitution Awards in Insurance Fraud Cases” (NYLJ, Nov. 6, 2015); “When Licensed Professionals Commit Insurance Fraud” (NYLJ, May 1, 2015); “State Legislatures Tackle Insurance Fraud” (NYLJ, Nov. 7, 2014).

2. In this regard, it is worth observing that, speaking on criminal justice reform at Rutgers University last fall, President Barack Obama said, “The goal is to prevent crime. The goal is to make sure that folks are fairly punished when they break the law. But the ultimate goal is to make sure that folks are law-abiding, self-sufficient, good citizens. And everything we do should be designed towards that goal. And if we’re doing a good job there, then crime will go down and it will stay down.” Remarks by the President on Criminal Justice Reform (Nov. 2, 2015), available at https://www.whitehouse.gov/the-press-office/2015/11/02/remarks-president-criminal-justice-reform.

3. Doe v. United States, No. 15-MC-1174 (JG) (EDNY March 7, 2016).

4. “Jane Doe,” of course, was a pseudonym obviously intended to prevent further damage to the woman from a rehashing of her problems in a publicly available court decision. Justice Louis B. York observed in Anonymous v. Anonymous, 191 Misc.2d 707 (Sup. Ct. N.Y. Co. 2002), that there is “a dearth of case law in New York speaking to a party’s right to proceed by a pseudonym.” The Supreme Court, New York County, in Doe v. Szul Jewelry, No. 604277/ 07 (Sup. Ct. N.Y. Co. May 13, 2008), reviewed the New York cases and the federal cases on the subject and stated that, “it is clear that courts have discretion in determining the issue and do so by balancing the privacy interests of the party seeking anonymity against the general presumption favoring open trials and the risk of prejudice to the opposing party.” (Citation omitted). In particular, the Szul Jewelry court said that the factors considered in permitting the use of a pseudonym included whether the justification asserted by the requesting party was merely to avoid the annoyance and criticism that might attend any litigation or was to preserve privacy in a matter of a sensitive and highly personal nature; whether the party seeking anonymity had an illegitimate ulterior motive; the extent to which the identity of the litigant had been kept confidential; whether identification posed a risk of mental or physical harm, harassment, ridicule, or personal embarrassment; whether the case involved information of the utmost intimacy; whether the action was against a governmental entity; the magnitude of the public interest in maintaining confidentiality or knowing the party’s identity; whether revealing the identity of the party would dissuade the party from bringing the lawsuit; whether the opposition to anonymity had an illegitimate basis; and whether the other side would be prejudiced by use of the pseudonym. The Szul Jewelry court concluded by stating that a “particularly relevant factor” was whether “the injury litigated against would occur as a result of the disclosure of the plaintiff’s identity.”

5. See N.Y. Ins. Law §§5101 et seq.

6. Judge Gleeson observed in his opinion that the government “might have responded by engaging in an effort to help Doe seek employment” but that it “chose instead to oppose Doe’s motion on the ground that I should not review it at all.”

7. U.S. v. Schnitzer, 567 F.2d 536 (1977).

8. New York offers two types of certificates: a Certificate of Relief from Disabilities, N.Y. Correct. Law §§701-03, and a Certificate of Good Conduct, N.Y. Correct. Law §§703-a, 703-b.

Reprinted with permission from the May 6, 2016 issue of the New York Law Journal.

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