United States of America v. Jesse Cornell Sanders
749 F.2d 195 (1984)
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Rule of Law:
Computer data compilations are admissible as business records under Federal Rule of Evidence 803(6) if the underlying data was entered into the computer in the ordinary course of business at or near the time of the transaction, even if the physical printouts of that data are created later specifically for litigation.
Facts:
- Jesse Cornell Sanders owned and operated North Side Pharmacy, which served many Medicaid patients.
- To receive payment for prescriptions filled for Medicaid patients, Sanders submitted claim forms to Southwestern Drug Company.
- Acting as Sanders' authorized agent, Southwestern Drug transferred the claim information onto magnetic tape.
- Southwestern Drug submitted the magnetic tape to the Texas Department of Human Resources (TDHR).
- TDHR loaded the data from the tape into its computers, used the data to verify claims and issue reimbursement checks to Sanders, and maintained the data in its computer systems as a record of the transactions.
- Sanders was charged with submitting claims for reimbursement for fraudulent prescriptions that were never actually filled between 1978 and 1981.
Procedural Posture:
- Jesse Cornell Sanders was charged in a federal district court with Medicaid fraud, controlled substance violations, and tax violations.
- At trial, the government offered into evidence computer printouts from the Texas Department of Human Resources (TDHR) detailing Sanders' claims and payments.
- Sanders objected to the admission of the printouts, arguing they were inadmissible hearsay prepared for litigation and should be treated as summaries under Fed. R. Evid. 1006.
- The district court overruled the objection and admitted the computer printouts as business records under Fed. R. Evid. 803(6).
- Sanders was convicted on multiple counts.
- Sanders (appellant) appealed his conviction to the U.S. Court of Appeals for the Fifth Circuit, challenging only the district court's evidentiary ruling admitting the computer printouts.
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Issue:
Do computer printouts of data, generated specifically for litigation, qualify as admissible business records under Federal Rule of Evidence 803(6) when the underlying electronic data was compiled and stored in the ordinary course of business?
Opinions:
Majority - Patrick E. Higginbotham
Yes. Computer printouts qualify as admissible business records when the underlying data was compiled in the ordinary course of business. The court found that the TDHR computer records met the three-part test for admissibility of computer business records. First, the data was kept pursuant to a routine procedure designed to ensure accuracy, as testified by employees of both Southwestern Drug and TDHR. Second, the data was created for motives that tend to ensure accuracy—specifically, for the business purpose of processing and paying claims—not for litigation. The critical point is that the data was entered at or near the time of the events, even if the printouts were generated much later for trial. Third, the records were not mere accumulations of hearsay; the claims submitted by Sanders were admissions of a party-opponent through his agent (Southwestern) under Fed. R. Evid. 801(d)(2)(C), and TDHR's notations were made by its employees in the ordinary course of business. The court also rejected the argument that the printouts were summaries under Rule 1006, finding them to be complete retrievals of original records, not selective compilations.
Analysis:
This case clarifies the application of the business records exception to computer-generated evidence, a critical issue with the rise of digital record-keeping. The decision establishes the important principle that the timing and purpose of the data entry, not the data retrieval, determines admissibility under Rule 803(6). This allows parties to present data compiled over many years for regular business purposes in a readable format for trial without it being disqualified as 'prepared for litigation.' The ruling also affirms that the use of an authorized third-party agent in the data processing chain does not break the continuity required for a business record.
