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Health Care Fraud
wrongfully referred to her in exchange for ing ALi, model penal Code §2.02(2)(c) not convict mahmud based on a finding of

kickbacks, this conduct did not constitute (1985), and a negligent defendant is one negligence as establishing that any error the
fraud because there was “no evidence of a who should have known of a similar risk trial court committed was harmless.25
« Continued from page S3
knowing, false representation,” i.e., the ser- but, in fact, did not. (citing §2.02(2)(d)).20
Although some courts have cautioned that
fraud statute is impermissibly vague, pre- vices were accurately described in the medi- in theory, the giving of such a charge a “conscious avoidance,” “willful blindness”
cisely because it criminalizes noncompliance care claims forms, the services were actually should be rare. Because the showing the or “deliberate ignorance” charge is rarely
with the amorphous and unfathomable medi- provided, and the services were medically government must make to be entitled to it appropriate,26 in health care fraud cases
care and medicaid regulations. But courts necessary. The court rejected this argument, is substantial, and because knowledge and such a charge is becoming the rule and not
have repeatedly assured providers that the pointing out that the defendant “acknowl- intent are so frequently the only disputed the exception.27
health care fraud statute does not criminalize edged that she signed medicare enrollment issues in health care fraud cases, courts ought So now health care providers face a double

every regulatory violation. it only criminalizes applications in 2003, 2004, and 2005 and, by not to risk that a provider will spend time in edged sword when they assert that they were
conduct engaged in with a knowing intent to doing so, certified that she would abide by federal prison because he or she received unaware of any medicare fraud in their prac-
defraud. The complexity of the medicare and medicare law.” According to the court, “by the medicare money so he “should have been tice, or that a failure to follow medicare regula-
medicaid regulatory scheme does not render allegedly submitting noncompliant claims to more careful” or that he was negligent and tions was not a knowing effort to defraud the
the health care fraud statute vague, the courts medicare after signing the applications, the “should have known” what was going on.21 (As government. The prosecutor may respond
say, because the statute “requires a specific knowledge requirement of” the health care a side note, health care providers ought to that the provider “should have known,” i.e.,
intent to defraud or misrepresent. The con- fraud statute “is satisfied.” other courts have be entitled to a charge to the jury that there “consciously avoided learning” of the fraud, or
stitutionality of an arguably vague statutory reached similar conclusions.16
are alternative regulatory and civil remedies that the provider is guilty because she broke
standard is closely related to whether that available to the government, which include her promise in the medicare application not to
This theory of criminal liability—that once
standard incorporates a mens rea require- you sign the medicare application you commit restitution, interest and penalties, and that disobey any of the thousands upon thousands
ment. The presence of a scienter inquiry can health care fraud if you ever violate a medi- a criminal conviction is not a prerequisite to of medicare regulations that apply to her.
save an otherwise vague statute.”14
care regulation—is stunning in its breadth. if pursuit of these avenues against providers).
No one disputes that health care fraud and
The problem with this supposed saving widely accepted, it has the potential to sub- in United States v. Mahmud,22 a medicare misconduct is a serious problem, or that, in
grace is that prosecutors appear to have ject nearly every medicare provider to at least strike force case, the defendant mahmud was some circumstances, criminal prosecution is
found ways around it. Specifically, the gov- the threat of criminal prosecution for minor an accountant who owned Comprehensive an appropriate response. But criminalizing
ernment has argued, and some courts have regulatory violations. As medicare reimburse- health Care, a service that subcontracted unintentional conduct, even if that conduct
agreed, that because medicare providers ment rates continue to drop, and fewer and with physical therapy clinics. The clinics costs the government money, is not the

sign an enrollment agreement in which they fewer providers are willing to participate in provided the therapy services to patients answer, for several reasons. first, and most
promise to abide by all of the medicare stat- a program that pays less than private insur- and Comprehensive/mahmud billed medicare fundamentally, it is not fair to the targets of
utes, rules and regulations, and not to submit ance and requires hours more bureaucratic for the services, and turned the proceeds health care fraud prosecutions to destroy
any claims that violate those regulations, any headaches to get claims paid,17 an expansion over to the clinics, keeping a percentage as careers and lives without solid proof of evil
future noncompliance is fraud. Last year, in of criminal liability for medicare noncompli- payment for Comprehensive’s services. The intent. Second, it risks providing a major
United States v. Luis,15 the defendant con- ance may be the tipping point at which the evidence that mahmud was actually aware disincentive for providers to participate
tended that when she submitted claims to already existing shortage of medicare doctors of the fraud that was undeniably occurring in government health care programs, and
medicare that related to patients who were
becomes an actual crisis.18
at one particular clinic was extremely slim. voluntary physician participation in these
mahmud, the government was forced to con- programs is essential for their continued

Conscious Avoidance
cede, did not provide therapy services or viability. finally, it is not the most effective
participate directly in any of the fraudulent use of resources to fight fraud. Criminal trials
As explained above, the supposed protec- conduct at the clinic, which consisted of eat up resources on both sides that would oth- Promote Your
tion health care providers have from being creating fake patient files to make it appear erwise be available for recovering health care
convicted of serious fraud offenses for what that medicare billable services had been monies. prosecutors and agents can spend NEW YORK
are really regulatory violations, or violations provided when they had not. predictably, months on a single trial, and, even if victori-
of nonfraud statutes, is the requirement that the government resorted, at least in part, to ous, recoup a tiny fraction of the dollars at
the government prove that the defendant the strategy described above—they argued issue. Defendants and their employers utilize
that mahmud was guilty of health care fraud extraordinary resources to avoid conviction, STATE BAR
acted with a guilty mind: knowingly and with
fraudulent intent. in addition to blunting that because he violated the terms of his medicare and those that are convicted will never work
bulwark by arguing that signing a medicare agreement and medicare regulations. “The in the profession again and will never repay
application means future regulatory violations government [also] explained that mahmud the government more than pennies on the TUTORIAL
are fraud, the protection has been further had to certify that he agreed to abide by all of dollar. The fact that criminal prosecutions
eroded by the government’s increasingly medicare’s rules and regulations in order to are not the most cost effective way to fight
successful requests that courts give what is receive a billing number.”23 more specifically, health care fraud can be seen in the way
alternatively called a “conscious avoidance,” the government contended that mahmud was recoveries are reported. The strike force,
“willful blindness” or “deliberate ignorance” criminally liable because even though he was which specializes in the “indictment and long PROGRAM

charge in health care fraud cases.
not a medical professional, the medicare rules jail sentence” strategy, rarely if ever reports
The U.S. Supreme Court, in Global-Tech by which he agreed to abide required him actual dollars recovered. They report massive
Appliances v. SEB S.A.,19 has made it clear to supervise the services performed by the forfeiture judgments, but conveniently omit
that, where the government seeks a jury medical professionals at the clinics.24 it was the fact that there is almost never any money COURSES &
instruction that the defendant may be guilty undisputed that mahmud had not done so.
left to pay those judgments. The health Care
if he “consciously avoided” learning a crucial Nevertheless, the government used anoth- fraud and Abuse Control program, on the
incriminating fact, there must be evidence er “aggressive” strategy to obtain mahmud’s other hand, which includes civil actions and SERVICES
that the defendant was actually aware of a conviction. They requested a willful blind- settlements, recently reported that it recovers
high probability of that fact, and “the defen- ness charge. of course, they lacked proof that $8 for every dollar it spends and recovered
IN
dant must take deliberate actions to avoid mahmud was “actually aware” of a high prob- over $4 billion last year.
learning of that fact.” As the court elaborated:
ability that the therapy visits he billed had Aggressive investigation of overbilling,
A willfully blind defendant is one who not taken place. Nor was there evidence that and pursuit of reimbursement, restitution
takes deliberate actions to avoid confirm- mahmud took “deliberate actions” to avoid and monetary sanctions, with criminal pros-
ing a high probability of wrongdoing and confirming this fact. making things worse, ecution reserved for the clear cut cases of
who can almost be said to have actually the trial court mangled the instruction, first actual knowing fraud, has and will yield better
known the critical facts. (citing g. wil- telling the jury that if the defendant “ignored results, and not just financially. The fervor Indera Singh
liams, Criminal Law §57, p. 159 (2d ed. a high probability” that the services were not with which the medicare strike force periodi-
cally perp walks 50 or 100 doctors, nurses and 212-457-9471
1961) (“A court can properly find willful provided they could find knowledge, and then
blindness only where it can almost be omitted the requirement that the defendant health care professionals before the cameras,
said that the defendant actually knew”). “take deliberate actions” to avoid learning while announcing grossly inflated allegations [email protected]
By contrast, a reckless defendant is one of the fact. The Sixth Circuit had no problem of fraud, and repeatedly bragging about their
who merely knows of a substantial and affirming the conviction, relying on the fact body count and long jail terms, would be
unjustified risk of such wrongdoing, (cit-
that the court did instruct the jury they could
troubling in any criminal arena. when some