Justia White Collar Crime Opinion Summaries

Dubin was convicted of healthcare fraud, 18 U.S.C. 1347 after he overbilled Medicaid for psychological testing performed by his company. The prosecution argued that, in defrauding Medicaid, he also committed “[a]ggravated identity theft” under section 1028A(a)(1), which applies when a defendant, “during and in relation to any [predicate offense, such as healthcare fraud], knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person.” Dubin’s fraudulent Medicaid billing included the patient’s Medicaid reimbursement number. The Fifth Circuit affirmed Dubin’s aggravated identity theft conviction.The Supreme Court vacated. Under section 1028A(a)(1), a defendant “uses” another person’s means of identification “in relation to” a predicate offense when the use is at the crux of what makes the conduct criminal. Under the government’s view, section 1028A(a)(1) would apply automatically any time a name or other means of identification happens to be part of the payment or billing used in the commission of a long list of predicate offenses. The Court concluded that the use of a means of identification must entail using a means of identification specifically in a fraudulent or deceitful manner, not as a mere ancillary feature of a payment or billing method. The inclusion of “aggravated” in 1028A’s title suggests that Congress contemplated a particularly serious form of identity theft, not ordinary overbilling offenses. View "Dubin v. United States" on Justia Law

This case arose out of a qui tam action against Prime Healthcare Services—Encino Hospital, LLC (Encino Hospital) and others to impose civil penalties for violation of the Insurance Fraud Prevention Act (IFPA), Insurance Code section 1871 et seq. The State of California and relator (Plaintiffs) appealed from a judgment entered after a bench trial in which the court found insufficient evidence to support their allegations that Defendants engaged in insurance fraud by billing insurers for services performed in a detox center for which they had no appropriate license, and by employing a referral agency to steer patients to the center.   The Second Appellate District affirmed the judgment. The court explained that, CDI alleged that Encino Hospital misrepresented to insurers that it was properly licensed to provide detox services when it was not. The trial court found no evidence suggesting that Defendants presented a false claim to any insurer. The court agreed, reasoning that no authority of which it is aware or to which it has been directed obligates Encino Hospital to hold any license other than its license as a general acute care hospital. Because Encino Hospital needed no separate license or approval, and no evidence showed it concealed any provider, the CDI’s cause of action for false claims failed for lack of a predicate. View "State of Cal. v. Encino Hospital Medical Center" on Justia Law

The First Circuit affirmed Defendant's sentence of twenty-four months' imprisonment imposed in connection with his plea of guilty to health care fraud, holding that the sentence was neither procedurally nor substantively unreasonable.Defendant pleaded guilty to health care fraud for his multiyear scheme to defraud MaineCare, a state-run program that administers Medicaid benefits in the state of Maine and reimburses Maine health care providers for MaineCare services. After a hearing, the court varied downward and imposed a sentence of twenty-four months' imprisonment. The First Circuit affirmed Defendant's sentence, holding (1) the district court did not err in its loss calculations or in imposing a four-level leader/organizer enhancement; and (2) Defendant's downward variant sentence satisfied the substantive reasonableness standard. View "United States v. Ahmed" on Justia Law

Defendants 1 and 2 are siblings and were indicted on substantive counts of health care fraud, conspiracy to commit health care fraud, money laundering, and conspiracy to commit money laundering related to their activities running a "pill mill." The District Court precluded evidence that Defendant 1 provided good care to his patients. The court also precluded evidence proffered by Defendant 2 (the younger sibling) that it is part of the Nigerian culture to defer to older siblings' decisions. Following their convictions, Defendant's challenged the court's evidentiary rulings as well as the sufficiency of the evidence.The Eleventh Circuit affirmed Defendants' convictions, rejecting all claims of error. The court also determined that the evidence was sufficient to support their convictions. View "USA v. Patrick Emeka Ifediba, et al" on Justia Law

Plaintiff alleged that Defendants Kinetic Concepts, Inc., and its indirect subsidiary KCI USA, Inc. (collectively, “KCI”) submitted claims to Medicare in which KCI falsely certified compliance with certain criteria governing Medicare payment for the use of KCI’s medical device for treating wounds. The district court granted summary judgment to KCI, concluding that Plaintiff failed to establish a genuine issue of material fact as to the False Claims Act elements of materiality and scienter.   The Ninth Circuit reversed the district court’s summary judgment. The court agreed that compliance with the specific criterion that there be no stalled cycle would not be material if, upon case-specific review, the Government routinely paid stalled-cycle claims. In other words, if stalled-cycle claims were consistently paid when subject to case-specific scrutiny, then a false statement that avoided that scrutiny and instead resulted in automatic payment would not be material to the payment decision. The court concluded, however, that the record did not show this to be the case. The court considered administrative rulings concerning claims that were initially denied, post-payment and pre-payment audits of particular claims, and a 2007 report by the Office of Inspector General of the U.S. Department of Health and Human Services. The court concluded that none of these forms of evidence supported the district court’s summary judgment ruling.   The court held that the district court further erred in ruling that there was insufficient evidence that KCI acted with the requisite scienter and that the remainder of the district court’s reasoning concerning scienter rested on a clear failure to view the evidence in the light most favorable to Plaintiff. View "STEVEN HARTPENCE V. KINETIC CONCEPTS, INC." on Justia Law

Defendant owned and operated a healthcare clinic. Along with another provider, Defendant engaged in a scheme to fraudulently bill Medicare for home health services that were not properly authorized, not medically necessary, and, in some cases, not provided. Insiders testified to Defendant's role in the conspiracy, indicating she knew the home healthcare agencies were paying marketers to recruit patients. Defendant also told an undercover FBI agent she could show him how to make money by recruiting patients. Defendant was convicted and sentenced to 300 months in federal prison.Defendant appealed, challenging the sufficiency of the evidence against her. However, the Fifth Circuit affirmed her conviction, finding that a rational jury could have concluded that Defendant knew about and willfully joined the conspiracy. Additionally, the court rejected Defendant's challenges to her sentence, finding that the district court did not commit a procedural error and that her sentence was not substantively unreasonable. View "USA v. Rodriguez" on Justia Law

Two medical doctors, licensed to prescribe controlled substances, were convicted for violating 21 U.S.C. 841, which makes it a crime, “[e]xcept as authorized[,] . . . for any person knowingly or intentionally . . . to manufacture, distribute, or dispense . . . a controlled substance.” Registered doctors may dispense controlled substances via prescription only if the prescription is “issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.” 21 CFR 1306.04(a).The Supreme Court vacated their convictions. Section 841’s “knowingly or intentionally” mental state applies to the statute’s “except as authorized” clause. Once a defendant meets the burden of producing evidence that his conduct was “authorized,” the government must prove beyond a reasonable doubt that the defendant knowingly or intentionally acted in an unauthorized manner. Section 885 does not provide a basis for inferring that Congress intended to do away with, or weaken ordinary and longstanding scienter requirements but supports applying normal scienter principles to the “except as authorized” clause. The Court of Appeals in both cases evaluated the jury instructions relating to "mens rea" under an incorrect understanding of section 841’s scienter requirements. View "Ruan v. United States" on Justia Law

Defendant and several others were indicted on various healthcare fraud offenses stemming from a scheme in which Defendant and others would pay TRICARE beneficiaries to order certain creams and vitamins. At a jury trial, Defendant was convicted of one count of conspiracy to commit health care fraud, one count of receiving an illegal kickback payment, and six counts of making illegal kickback payments. The District Court sentenced Defendant to 240 months imprisonment.On appeal, Defendant challenged, among other things, the sufficiency of the evidence pertaining to his convictions for paying illegal kickbacks. The Fifth Circuit agreed with Defendant's reasoning that he did not "induce" TRICARE beneficiaries to order the substances by paying them because the substances were for their own use. Thus, the court reversed Defendant's convictions for paying illegal kickback payments. The court affirmed Defendant's other convictions and remanded for resentencing. View "USA v. Cooper" on Justia Law

Tinimbang invested $811,400, founding Donnarich Home Health in 2005 with his then-wife Josephine and their children. In 2006-2007, the others forced him out of management; Tinimbang maintained his equity position. Josephine and their son, Richard, later incorporated two healthcare businesses: Josdan and Patient Home; some of the funding came from Donnarich’s assets. Tinimbang later asserted that he was not compensated for those asset transfers or for his removal as Donnarich’s president.Josephine and others were charged with conspiracy to commit healthcare fraud (18 U.S.C. 1349) and conspiracy to launder the proceeds of healthcare fraud and unlawful payments for patient referrals (18 U.S.C. 1956(h)) by using Donnarich and Josdan to fraudulently bill Medicare and creating shell companies to deposit checks. The government sought the forfeiture of assets involved in or traceable to the conspiracies. Josephine fled. Guerrero, an employee, pled guilty and agreed to forfeit assets. The district court entered a preliminary order of forfeiture.Tinimbang asserted a claim to the assets by instituting ancillary proceedings, citing his investment in Donnarich, his removal without compensation, and the allegedly improper transfers from Donnarich to Josdan and Patient. Tinimbang did not provide any financial tracing. The government “reviewed the movement of funds” and did not trace any of Tinimbang’s investment to the forfeiture assets. The Seventh Circuit affirmed summary judgment in favor of the government. Tinimbang had not carried his burden to show a vested or superior interest in the forfeited assets at the time of the criminal acts. View "United States v. Tinimbang" on Justia Law

Jennings, who was not a medical professional, ran Results Weight Loss Clinic in Lombard, Illinois. Jennings paid Mikaitis, who was working full‐time for a hospital in Lockport, Illinois cash to secure a Drug Enforcement Agency registration number for the clinic and to review patient charts. Over the next two years, Jennings ordered over 530,000 diet pills (controlled substances) for over $84,000 using Mikaitis’s credit card and DEA number. Mikaitis appeared at Results weekly to get $1,750 cash and review four to eight charts. Results also gave drugs—in person and by mail— to many patients whose charts he never reviewed. A nurse practitioner who worked at the clinic later testified she noticed almost immediately that Jennings was unlawfully distributing drugs. Jennings paid Mikaitis about $98,000 cash, in addition to reimbursement for drug costs.Mikaitis was tried on 17 counts. He denied knowing about illegal activity. The district judge issued a deliberate avoidance (ostrich) instruction. Convicted, Mikaitis was sentenced to 30 months. The Seventh Circuit affirmed. Ample evidence demonstrated that Mikaitis subjectively believed that there was a high probability he was participating in criminal activity and that he took specific, deliberate actions to avoid learning that fact. Mikaitis was a medical professional with corresponding duties. The jury was free to conclude the red flags were obvious to him. View "United States v. Mikaitis" on Justia Law