Description: London, Kentucky criminal defense lawyer represented the Defendant charged with drug trafficking.

James Alvin Chaney (“Ace”) and Lesa Chaney owned and operated a highly profitable clinic in Hazard, Kentucky called Ace Clinique of Medicine. Eventually, the clinic attracted suspicion that it was a “pill mill”: a clinic that
distributes addictive prescription pills without a legitimate medical purpose. Law enforcement
obtained a warrant and searched Ace Clinique’s files, where they discovered evidence of many
crimes—some related to the suspected pill-mill operation, and some distinct. The Chaneys and
Ace Clinique were charged, convicted by a jury, and sentenced. They raise on appeal four
issues: (1) the constitutionality of the warrant that allowed the search of the clinic; (2) the
sufficiency of the evidence at trial; (3) whether jury misconduct occurred and whether it warrants
a new trial; and (4) whether the district court correctly calculated the guidelines range at
sentencing. For the reasons discussed below, we AFFIRM the district court on all grounds.

I. BACKGROUND

Ace and Lesa Chaney are a married couple who owned and operated Ace Clinique of
Medicine, LLC, in Hazard, Kentucky. R. 190 (Second Superseding Indictment at 1–2) (Page ID
#1877–78). Ace was a licensed physician in Kentucky; Lesa was the President and Chief
Executive Officer of Ace Clinique. Id.

The government started paying attention to Ace Clinique and the Chaneys in June 2010.
R. 71-2 (Warrant One at 5) (Page ID #658). An anonymous caller contacted Chris Johnson, an
investigator for the Kentucky Cabinet for Health and Family Services, and told him that Ace presigned prescriptions for use at Ace Clinique while absent. Id. Johnson, assisted by state law
enforcement, investigated the claims. Id.

The investigation revealed that Ace was out of town on the same day that several
prescriptions signed by Ace and dated that day were filled at a nearby pharmacy. Id. at 5–6
(Page ID #658–59). Officers interviewed Ace Clinique employees, who admitted to using pre-
signed prescription blanks, and the employees showed the officers three partial prescription pads
of pre-signed blanks. Id. at 6–7 (Page ID #659–60). The state officers contacted the DEA, and
investigators conducted multiple interviews of people who had worked for or with Ace Clinique,
as well as former patients. Id. at 21–37 (Page ID #674–91). The investigation led to warrants to
search Ace Clinique and the Chaneys’ home and airplane hangar for evidence of violations of
21 U.S.C. § 841(a)(1), which proscribes knowing or intentional distribution of controlled
substances, and 18 U.S.C. § 1956(h), which proscribes conspiracies to commit money
laundering. R. 71-2 (Warrant One) (Page ID #653).1

Eventually, a grand jury issued a 256-count indictment that charged Ace, Lesa, and Ace
Clinique with various offenses. R. 190 (Second Superseding Indictment) (Page ID #1877–1920).
The charges fell into three general categories: controlled substance charges (Counts 1–64),
money laundering charges (Counts 65 and 235–55), and fraud charges (Counts 66–234 and 256).
See Appellee Br. at 4–6.2

The defendants sought to suppress evidence seized pursuant to the warrants, but had only
partial success. R. 71 (Joint Mot. to Suppress) (Page ID #611); R. 159 (May 26, 2015 Order at
24) (Page ID #1760). The evidence seized from the airplane hangar was suppressed, as was
evidence seized from the clinic that dated to any time before March 2006. R. 159 (May 26, 2015
Order at 24) (Page ID #1760). The district court rejected the defendants’ arguments that the
warrants’ enumeration of “patient files” as an item to be seized was overly broad and
insufficiently particular. Id. at 10 (Page ID #1746).

A 25-day trial followed. Ultimately, the jury returned a mixed verdict. R. 281 (Verdict
Form) (Page ID #2954–2984); see also Appellee Br. at 4–6.

The defendants argue now that the trial was infected by jury misconduct. During the
trial, an alternate juror reported to court staff some “concerns about how serious[ly] the jury was
taking their duty,” and the staff reported those concerns to the district court. R. 371 (Sept. 30,
2016 Op. at 18) (Page ID #5925) (alteration in original) (quoting R. 291 (Apr. 20, 2016 Tr. at 3)
(Page ID #3028)). The district court told the jury that if any issues related to the jury instructions
arose they should report those to the court, but the court did not tell counsel that a juror had
raised concerns. Id. at 19 (Page ID #5926). After the entry of the verdict, the same alternate
juror—who did not participate in deliberations—contacted defense counsel to complain of
misconduct; defense counsel contacted the court, and the court conducted an in camera interview
with the alternate. R. 371 (Sept. 30, 2016 Op. at 20) (Page ID #5927). The defendants moved
for a new trial following the interview, but the district court denied their motions. R. 297 (Mot.
for New Trial [Lesa]) (Page ID #3246); R. 299 (Mot. for New Trial [Ace]) (Page ID #3279); R.
371 (Sept. 30, 2016 Op. & Order) (Page ID #5908).

Prior to sentencing, the district court conducted a two-day evidentiary hearing regarding
the drug quantity and loss amount that would be used to calculate the sentencing guidelines
range. R. 459 (Aug. 17, 2017 Tr. at 1) (Page ID #9443); R. 460 (Aug. 18, 2017 Tr. at 1) (Page
ID #9572). Put simply, the defendants argued that drug quantity and loss amount should be
calculated from the counts of conviction only; the government argued that every Schedule II or
III prescription drug Ace prescribed during the relevant time period and every billing to
Medicaid from Ace Clinique or a pharmacy filling an Ace Clinique prescription should be used
to calculate drug quantity and loss amount. R. 460 (Aug. 18, 2017 Tr. at 44–66) (Page ID
#9615–37); R. 459 (Aug. 17, 2017 Tr. at 10–11, 64–66) (Page ID #9452–53, 9506–08).
The Presentence Report (“PSR”) for each defendant used the government’s method to
calculate a guidelines range, and the defendants objected. At sentencing, the district court
refused to adopt wholesale either proposed method and instead found that 60 percent of the drugs
and billings the government used to calculate drug quantity and loss amount were fraudulent. R.
508 (Sentencing Tr. at 25–29) (Page ID #10066–69). The district court varied downward from
the guidelines-recommended life sentences for Ace and Lesa and sentenced Ace to a total
sentence of 180 months in custody and Lesa to a total sentence of 80 months in custody. Id. at
86–87, 98–99 (Page ID #10126–27, 10138–39). Ace Clinique was sentenced to five years’
probation. Id. at 103 (Page ID #10143).

Outcome: For the reasons discussed above, we AFFIRM the district court’s judgment regarding each defendant.

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