USA v. Gerlay

Filing 158

Order on Motion in Limine

UNITED STATES DISTRICT COURT
DISTRICT OF ALASKA

UNITED STATES OF AMERICA
Plaintiff,
vs.
GARY S. GERLAY,
Defendant.

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3:09-cr-00085 JWS
ORDER AND OPINION
[Re:

Motions at dockets
128, 130, 132, and 134]

I. MOTION PRESENTED
At dockets 128, 130, 132, and 134 defendant Gary S. Gerlay asked the court to
foreclose presentation of certain testimony and information at trial. He filed supporting
memoranda at dockets 129, 131, 133, and 135. Plaintiff filed a combined response at
docket 152. Oral argument was not requested and would not assist the court.
II. BACKGROUND
Defendant Gary S. Gerlay was at all relevant times a practicing physician. He
purchased a pain management clinic, Aurora Pain Management, from another
physician. Gerlay operated the clinic from November of 2002 through April of 2005.
Gerlay is charge with 64 counts of illegally distributing controlled substances and aiding
and abetting such distribution in violation of 21 U.S.C. §§ 841(a)(1), 841(b)(1)(C),
841(b)(2), and 2. He is also charged with 33 counts of health care fraud in violation of
18 U.S.C. §§ 1347(1) and 2.1

1

Indictment at doc. 2.

III. DISCUSSION
A. Rules 402, 403, and 404(b)
Each of the pending motions requires the court to consider and apply Federal
Rules of Evidence 402, 403, and 404(b). Rule 402 provides that evidence which is not
relevant shall be excluded. Evidence is relevant if it has “any tendency to make the
existence of any fact that is of consequence to the determination of the action more
probable or less probable than it would be without the evidence.”2
Rule 403 instructs that relevant evidence is to be excluded when its “probative
value is substantially outweighed by the danger of unfair prejudice, confusion of the
issues, or by misleading the jury, or by considerations of undue delay, waste of time, or
needless presentation of cumulative evidence.” Obviously, the rule requires the court to
balance the probative value of the evidence offered against any of the listed factors
which might require its exclusion. Consideration of undue prejudice requires, among
other things, evaluation of the possibility that the evidence might induce the jury to
decide the case on a purely emotional basis.3
Rule 404(b) provides in pertinent part:
Evidence of other crimes, wrong, or acts is not admissible to prove the
character of a person in order to show action in conformity therewith. It
may, however, be admissible for other purposes such as proof of motive,
opportunity, intent, preparation, plan, knowledge, identity, or absence of
mistake or accident . . . .
The Ninth Circuit considers Rule 404(b) to be a rule permitting the inclusion of evidence,
rather than a rule necessarily requiring the exclusion of evidence.4 Unless the evidence
tends to prove only a propensity to do something, it is admissible.5 However, evaluating
whether evidence is admissible under Rule 404(b) also requires the court to consider

2

Fed. R. Evid. 401.

3

See, Fed. R. Evid. 403, 1972 Advisory Committee Notes.

4

E.g., Boyd v. City and County of San Francisco, 576 F.3d 938, 947 (9th Cir. 2009).

5

United States v. Jackson, 84 F.3d 1154, 1159 (9th Cir. 1996).

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whether it should be excluded under the Rule 403 balancing test.6 Moreover, the Ninth
Circuit has explained that to be admissible, evidence of a prior act must be probative of
a material point, must be supported by enough proof to allow the jury to conclude that
the defendant actually did engage in the prior act, must not be too remote in time, and
must exhibit sufficient similarity to conduct involved in committing the crime charged.7
B. Motion at Docket 128
In his first motion to exclude evidence, Gerlay asks the court to exclude
“Testimony that Dr. Gerlay kept, carried, or possessed a firearm on the premises of
Aurora Pain Management [and testimony that he] kept, carried, or possessed a baseball
bat on the premises of Aurora Pain Management.”8 Gerlay contends that this evidence
should be excluded under Fed. R. Evid. 402, 403, and 404(b).
The court turns first to Gerlay’s assertion that the evidence should be excluded
under Rule 402, because it is not relevant. Both parties recognize that in the most
fundamental sense the government’s case against Gerlay depends on proving that
when prescribing controlled substances Gerlay acted in the capacity of an illegal drug
dealer rather than a physician.9 The government says that the evidence at trial will
show that Gerlay kept large amounts of cash on the premises of the Aurora Pain
Management clinic, that many of his patients/customers were drug addicts, and that like
other drug dealers, Gerlay kept weapons to defend himself and his money. Assuming
the government can show cash was kept on the premises and that drug-addicted
persons came to the clinic to obtain drugs, the evidence that Gerlay kept a gun and a

6

United States v. Mayans, 17 F.3d 1174, 1183 (9th Cir. 1994).

7

United States v. Hollis, 490 F.3d 1149, 1153 (9th Cir. 2007).

8

Doc. 128 at p. 1.

9

In his trial brief Gerlay puts it this way: “The government must prove beyond a
reasonable doubt that the physician intended to act as a drug pusher rather than as a doctor
attempting in good faith to treat a medical condition.” Doc. 153 at p. 2. The government sums
up its burden in these words: “In other words, the government must prove that Gerlay was just a
drug dealer.” Doc. 152 at p. 3.

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baseball bat at the clinic is relevant to the proposition that he was operating a drug
distribution business, not a medical clinic.
Gerlay argues that even if relevant, the evidence should be excluded under
Rule 403, because of “the danger of unfair prejudice, undue delay and waste of time.”10
Here, where the government is attempting to prove beyond a reasonable doubt the
remarkable proposition that a practicing physician stooped to the level of illicit drug
dealing, it is obvious that the prosecution’s case must be made methodically and
thoroughly. In that context, Gerlay’s possession of the firearm and the baseball bat at
the clinic has fairly significant probative value. The testimony required to establish
these facts would not be very lengthy. The risk of undue delay and waste of time does
not substantially outweigh the probative value of the evidence. Gerlay’s concern about
undue prejudice presents a closer question. Nevertheless, the court concludes that
Gerlay’s possession of these means of self defense would not cause the jury to form an
unfairly prejudicial opinion of Gerlay, much less consider convicting him because of an
emotional reaction to the fact that he kept the weapons on the premises. While the
evidence does support the inference the government will ask the jury to draw about
Gerlay’s activities, it is also entirely consistent with perfectly legal and rational behavior.
The possession of weapons, especially firearms, as a means of self defense is widely
accepted in Alaska as a fundamental right of all citizens, and it is a right which is
frequently exercised. The evidence is not excludable under Rule 403.
Defendant’s rule 404(b) objection also fails. The evidence is relevant to Gerlay’s
possible intent to profit from the illicit distribution of drugs, as well as his preparation and
plan for dealing with circumstances which might easily arise from doing so. The
evidence is material to the proposition that Gerlay was a drug dealer. Gerlay does not
assert that the government cannot present sufficient evidence to show that he
possessed the weapons. The conduct challenged is not remote in time–indeed, it is
contemporaneous. Finally, the challenged conduct is sufficiently similar to the conduct

10

Doc. 129 at p. 6.

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to be expected of one dealing illicit drugs. If Gerlay requests an appropriate limiting
instruction concerning this evidence, the court will give it.
C. Motion at Docket 130
Defendant Gerlay’s second motion in limine asks the court to exclude the
following evidence:
Testimony alleging suspicions that persons in the lobby and in the parking
lot of Aurora Pain Management engaged in drug dealing;
Testimony that tends to characterize the patients of Aurora Pain
Management as drug dealers and drug addicts;
Testimony that tends to characterize Aurora Pain Management as an easy
place to obtain controlled substances.11
In its response the United States implicitly concedes the merits of Gerlay’s request to
exclude reputation and character evidence of those who frequented the premises of
Aurora Pain Management: The government represents that in its case in chief it will not
put on evidence of any “suspicions,” nor will it put on any evidence of the reputation or
character of Gerlay or his clinic.
The government does assert that if in his own case Gerlay presents evidence of
his good character or reputation, the government might then choose to present contrary
character evidence on that topic in rebuttal. Presentation of such evidence in rebuttal
would be subject to Rule 404(a). That is not a matter which must be addressed in the
context of the present motion.
Gerlay’s motion is susceptible to a broader reading, because direct evidence that
some of his patients/customers were drug dealers or addicts would support inferences
about the nature of Aurora Pain Management. Recognizing the potential reach of the
motion, the government says it plans to offer direct testimony that Gerlay’s
patients/customers included drug dealers and drug addicts and urges that such
testimony should be admissible.

11

Doc. 130 at p. 1.

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Such testimony would be relevant, for it would tend to make it more likely that
Gerlay himself was a drug dealer. A Rule 402 objection to the evidence therefore lacks
merit.
The court next considers Rule 403. Evidence that Gerlay’s patients/customers
included drug dealers and addicts would have significant probative value, in the context
of this case. The court will not permit excessively lengthy testimony or cumulative
evidence on these points, so there is no risk of undue delay or waste of time. Nor would
such testimony risk confusing or misleading the jurors, for it is easy enough to separate
the concept that some of the patients/customers were drug dealers or addicts from the
central question, which is whether Gerlay was a drug dealer. The evidence is not
inflammatory or unfairly prejudicial. The fact that Gerlay accepted drug dealers and
addicts as patients supports unsavory inferences about his activities, but the evidence is
also consistent with a physician’s duty to care for those who suffer, regardless of the
fact that they are not nice people. Gerlay has not shown that direct testimony that some
of his patients were drug dealers and addicts is freighted with sufficient prejudice to
substantially outweigh the probative value of the evidence.
With respect to Rule 404(b), the testimony would be material to a determination
of whether or not Gerlay was a drug dealer. Defendant does not contend that sufficient
proof to show such persons were accepted in his practice is unavailable. The evidence
would relate to facts that are not remote in time. In substance the evidence is
sufficiently similar in nature to conduct associated with the charge that Gerlay was just a
drug dealer. Direct evidence that Gerlay accepted drug dealers and addicts as
patients/customers would tend to show opportunity, intent, plan, and absence of
mistake in connection with the provision of controlled substances. If Gerlay requests an
appropriate limiting instruction, the court will give it.
D. Motion at Docket 132
Defendant Gerlay’s motion at docket 132 asks the court to exclude the following
evidence:
Testimony that Dr. Gerlay was rude and/or abusive to Aurora Pain
Management uncharged patients;
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Testimony that Dr. Gerlay was rude and/or abusive to Aurora Pain
Management staff;
Testimony that patients were sometimes required to remain in the waiting
room for long periods of time;
Testimony that patients were sometimes required to remain in the waiting
room for long periods of time to obtain prescriptions without seeing
Dr. Gerlay.12
The testimony that Gerlay was rude or abusive to his staff is not relevant and will be
excluded under Rule 402. It is common knowledge (at least among those with any
significant contact with members of the medical community) that the treatment of nurses
and other staff by a few physicians is curt and demanding to the point of appearing rude
or even abusive. That Gerlay may have been a member of that subset of doctors has
no bearing on whether he was practicing medicine or simply dealing drugs. No
testimony will be admitted in the government’s case in chief on the topic of Gerlay’s
mistreatment of staff.13
Gerlay’s allegedly rude and abusive behavior toward his patients/customers and
neglect or disdain for the value of their time is relevant. Such behavior would support
an inference that Gerlay had no interest in treating patients, but rather was interested
only in exchanging access to illegal controlled substances for his customers’ money.
Rule 402 does not preclude admission of this testimony.
Turning to Rule 403, it is noted that Gerlay’s rude, abusive, and disdainful
behavior toward his patients/customers has significant probative value. Were Gerlay a
drug dealer, this is how one would expect him to often treat his customers. Were
Gerlay actually practicing medicine, his interest in promoting and maintaining his
medical practice would be inconsistent with such conduct.

12

Doc. 132 at p. 1.

13

The court assumes that if Gerlay’s former staff members testify against him, defense
counsel might wish to pursue Gerlay’s treatment of staff on cross-examination. Of course, if
that were to occur, the government could touch on the topic in re-direct.

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Gerlay argues that evidence putting him in a bad light regarding his handling of
his patients/customers “would be prejudicial because it would invoke an emotional
response from a jury that Dr. Gerlay is an abusive or rude person.”14 He cites United
States v. Bradley15 and United States v. Hodges16 to support his argument. In Bradley,
the defendants were charged with conspiracy to kill a witness set to testify against one
of their associates in a federal criminal trial. The Court of Appeals found the trial judge
abused his discretion in admitting evidence of the defendants’ involvement in a prior
homicide, concluding that the evidence about the prior slaying had little probative value,
was “vague,” as to one defendant was almost without any factual link, and related to a
motive dissimilar to the motive allegedly behind the pending charge against the
defendants.17 In Hodges the appellate court found the evidence at issue to have
“attenuated” probative value, to be somewhat remote in time, and to be ambiguous
while having substantial potential to unfairly prejudice the defendant.18 Their facts being
so different from the case at bar, neither Bradley nor Hodges offers guidance helpful to
resolving the instant motion.
The court agrees that evidence Gerlay was rude, abusive, and disdainful may put
him in a bad light with the jury. However, the fact that he may have exhibited such
characteristics is hardly so damning as to support the proposition that the jury would be
misled or confused, much less convict him on the basis of an emotional reaction to the
behavior. There are plenty of people who are rude and abusive in their personal
relationships who are not criminals. Jurors have enough common sense to understand
that. Any prejudice associated with this evidence does not substantially outweigh its

14

Doc. 133 at p. 6.

15

5 F.3d 1317, 1321 (9th Cir. 1993).

16

770 F.2d 1475, 1480 (9th Cir. 1985) (quoting United States v. Bailleaux, 685 F.2d
1105, 1111 (9th Cir. 1982)).
17

Bradley, 5 F.3d at 1320-21.

18

Hodges 770 F.2d at 1479-80.

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probative value. Under the balancing test required by Rule 403, this evidence is
admissible.
The evidence at issue tends to show Gerlay intended to run a drug dealing
operation, not a medical clinic. It also tends to show that he did not just make an
occasional mistake in prescribing controlled substances. Thus, the evidence is
probative of material points. Gerlay does not argue the government lacks sufficient
proof to show that Gerlay behaved in the manner alleged. The evidence relates to
behavior that is not too remote in time, and it is evidence that is sufficiently similar to the
behavior of one engaged in the charged criminal activity. This evidence is admissible
under Rule 404(b). If defendant asks for an appropriate limiting instruction, the court
will give it.
E. Motion at Docket 134
In his motion at docket 134, Gerlay cites Rules 402, 403, and 404(b) as the basis
for his request that the court exclude three categories of evidence:
Testimony regarding Dr. Gerlay’s billing practices;
Testimony that Dr. Gerlay billed for patient office visits when the patient
did not see Dr. Gerlay;
Testimony that Dr. Gerlay imposed fines for patients who allegedly
misused or abused medication.19
In his motion papers Gerlay asserts that the evidence in question falls far beyond
“[t]he central question to be resolved by the jury [which] is whether the prescriptions
given to the four patients named in the indictment were intentionally issued outside the
usual course of professional practice and were intentionally issued for no legitimate
medical purpose.”20 That is correct, but presents a somewhat stilted description of what
this case is all about. As previously noted, both parties consider the government’s
fundamental burden in this case to be proving beyond a reasonable doubt that Gerlay
was acting as a drug dealer rather than a doctor.
19

Doc. 134 at p. 1.

20

Doc. 135 at p. 5.

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The evidence which falls within the categories Gerlay seeks to exclude has been
fleshed out by the government:
Staff and patients will testify that Gerlay almost universally billed code
99213, which they and the government’s expert will say is a level of
service rarely if ever provided by Gerlay and one not reflected in the
patient files. Patients who were never even seen by Gerlay were charged
$150-$200 for an office visit that either never took place–even according
to Gerlay’s records–or was a fleeting superficial “meeting” lasting a few
moments which always resulted in a prescription for controlled
substances. As the defense knows, the government’s expert has said that
this is clearly outside the usual course of professional practice.
The same expert was shocked by Gerlay’s practice of “fining” patients who
exhibited addictive behavior, such as urinalyses not showing prescribed
drugs, showing illegal drugs, and offering drug–seeking excuses for early
refills such as lost or stolen medicine. Uncharged patients will say that
this practice was widespread, and that Gerlay ignored their behavior and
wrote for additional drugs anyway.21
This evidence tends to support the proposition that Gerlay was operating the clinic to
make money by providing access to controlled substances for money, rather than
providing medical care. It is directly relevant to the charges of illegally distributing
controlled substances and will not be excluded under Rule 402. This evidence may not
provide direct support for the health care fraud charges as Gerlay contends. However,
because the evidence is obviously relevant to the distribution charges, it will not be
excluded under Rule 402. Moreover, the evidence provides context within which the
fraud charges should be considered. It gives the context within which the government
contends Gerlay was acting–operating a business to make money rather than engaging
in the legitimate practice of medicine.
With respect to Rule 403, it must be noted that these matters are highly probative
of what Gerlay was doing. His argument that this evidence “could confuse the jury by
introducing evidence about billing practices unrelated to preauthorization for payment

21

Doc. 152 at p.7.

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for controlled substances ”22 goes only to the health care fraud charges, and if an
appropriate limiting instruction is requested, the court will give it. With respect to the
distribution charges, Gerlay urges that an extensive examination of the billing practices
would waste time and divert the jury’s attention from whether the prescriptions for the
four named patients were legitimate. To be sure, it is possible that the government
might attempt to present too much information on the matter, but the court can and will
control the extent of testimony. Objecting that getting into these areas at all is a waste
of time and will mislead the jury is so lacking in merit as to be nearly frivolous. This
evidence will not be excluded under Rule 403.
The evidence easily passes muster under Rule 404(b). It is probative of Gerlay’s
motive, intent, preparation, and plan for the operation of the clinic. It also tends to show
the absence of mistake or accident in writing the prescriptions. The evidence therefore
is correctly described as going to material matters. Far from suggesting that the
government cannot present enough proof to establish these matters, Gerlay’s papers
display concern that there is too much proof. The activities in question are
contemporaneous to the charged conduct. Finally, the evidence is virtually identical to
conduct one would expect to see in the course of committing the distribution charges
set out in the indictment within the context of a business disguised as a medical
practice.
IV. CONCLUSION
For the preceding reasons:
1.

The motion at docket 128 is DENIED;

2.

The motion at docket 130 is GRANTED in part and DENIED
in part as discussed in Section III. C;

22

Doc. 135 at p. 6.

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3.

The motion at docket 132 is GRANTED in part and DENIED
in part as discussed in Section III. D; and

4.

The motion at docket 134 is DENIED.

DATED at Anchorage, Alaska, this 19th day of July 2010.

/s/ JOHN W. SEDWICK
UNITED STATES DISTRICT JUDGE

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