## Facts

- Medical Therapy Sciences, Inc., a medical-equipment supplier, operated from Connecticut and through a New York branch and billed Medicare carriers for equipment and supplies.
- Medicare reimbursement depended on where services were rendered; certain claims for Connecticut patients should have been submitted to the Connecticut carrier rather than the New York carrier.
- The government alleged a multi-year scheme (1971–1976) to obtain improper reimbursements by double billing two carriers for the same patients, claiming more expensive equipment than provided, and billing for supplies not delivered or not needed.
- Stanley Berman, the owner and operator, was charged with filing false Medicare claims, conspiring to file such claims with others (including employee Barbara Russell), and committing perjury before a federal grand jury investigating Medicare-related misconduct.
- Russell, an unindicted co-conspirator and billing supervisor, testified that Berman knew the billing practices were fraudulent.
- On direct examination, the prosecution disclosed Russell’s prior fraud-related convictions and drug addiction history.
- The defense cross-examined Russell about her fraud convictions and suggested she stole patients and equipment to start a competing business; the defense also offered testimony implying she encouraged theft and possessed Medical Therapy equipment.
- In rebuttal, the government offered reputation witnesses to support Russell’s character for truthfulness over defense objection.
- A jury in the Southern District of New York convicted Medical Therapy and Berman on the false-claims and conspiracy counts, and convicted Berman of perjury; defendants appealed.

## Issues

1. Whether the evidence was sufficient to support a conspiracy conviction, including proof of an agreement between Berman and Russell (and others).
2. Whether Berman could be convicted of perjury when he claimed he was not adequately informed of the nature of the grand jury’s inquiry.
3. Whether, under Federal Rule of Evidence 608(a), the government could introduce reputation evidence supporting Russell’s truthfulness after the defense impeachment and cross-examination.

## Decision

- The Second Circuit affirmed all convictions.
- The court held the conspiracy conviction was supported by sufficient circumstantial evidence permitting an inference of agreement.
- The court upheld the perjury conviction because Berman was informed the grand jury was investigating possible Medicare abuses, was advised of rights, and had an opportunity to consult counsel.
- The court found no abuse of discretion in admitting rebuttal character evidence for Russell’s truthfulness because the defense attacks constituted an attack on her veracity within Rule 608(a).
- The court noted that guilt was supported by evidence beyond Russell’s testimony, including documents and other witnesses, reducing any claim of prejudicial impact from the credibility rebuttal.

## Legal Principles

- A conspiracy agreement may be proven by circumstantial evidence and reasonable inferences from coordinated conduct over time.
- A perjury prosecution may proceed where the witness is sufficiently informed of the general subject of the grand jury investigation and testifies after being advised of rights and given an opportunity to consult counsel.
- Under Federal Rule of Evidence 608(a), evidence of a witness’s reputation for truthfulness is admissible only after the witness’s character for truthfulness has been attacked.
- Vigorous impeachment suggesting dishonesty—including examination about fraud-related convictions and the presentation of evidence implying theft or similar dishonest conduct—can qualify as an attack on veracity that opens the door to rebuttal character evidence.
- Whether an attack sufficient to trigger Rule 608(a) has occurred, and whether to admit credibility evidence that may be cumulative, lies largely within the trial court’s discretion.

## Conclusion

The Second Circuit sustained Medicare-fraud, conspiracy, and perjury convictions and held that defense impeachment portraying the government’s key witness as dishonest permitted rebuttal reputation evidence for truthfulness under Rule 608(a), subject to the trial judge’s discretion.


United States v. Medical Therapy Scis., Inc., 583 F.2d 36 (2d Cir. 1978)