Reversal of Healthcare Fraud Conviction Due to Insufficiency of the Evidence—Government Has to Prove that Defendant Knew his Conduct was Illegal. United States v. Nora, 2021 WL 716628 (5th Cir., filed 2/24/21).

This is an excellent opinion from a widely regarded as conservative court of appeals.  Good.  Now maybe the government will back off on its relentless quest to turn every physician or physician-adjacent employee into a criminal. 

Nora was a lower level, but salaried, employee at Abide Home Health Care Services, Inc., a healthcare facility that billed Medicare for services in connection with patients needing home health care.  This opinion provides the complex details of how the business was structured, but the basics are this—These doctors were billing patients’ insurance companies for activities and tests conducted by the business which the government alleged were medically unnecessary.  Doctors who were referring cases to the business would receive referral fees, also known as “illegal kickbacks” (because that’s what they are).  Abide was also engaged in an activity called “ghosting” where, in order to comply with Medicare regulations that mandated home healthcare approvals only last for 60-day periods, Abide would officially “discharge” patients from the program, but still continue to make home visits. Abide would not bill Medicare for these visits.  Later, the patient would be re-enrolled and the billing would continue.  This was done to prevent any “red flags” from appearing to Medicare from too many 60-day approvals. Pro tip:  Whenever you’re doing things out of the ordinary in order to avoid raising “red flags,” you’re engaging in activity that definitely should raise red flags. 

So, Nora was aware of, and participated in some of these activities.  He knew, for example that some patients were being discharged but were still receiving services.  Nora would also facilitate payment of some the “referral fees.”  The government tried to prove that Nora knew these actions were illegal because he received “training on compliance, Medicare, and home health,” which supposedly should have alerted him to the illegal quality of these actions.  He also completed a 4-hour nursing certification.  There were a couple of other compliance related meetings he attended which the government argued gave him notice that this conduct was illegal.

The Fifth Circuit disagreed.  These crimes required that the government prove that a defendant “knowingly and willfully” engaged in the illegal conduct.  As the opinion notes, “in order to establish a ‘willful’ violation of a statute, the Government must prove that the defendant acted with knowledge that his conduct was unlawful.” *5 (quoting Bryan v. United States, 524 U.S. 184, 191-92 (1998)).  The Court found the government failed to offer any evidence to prove Nora possessed this state of mind with regard to any of these illegal acts.  The Court noted:  Nora’s “proximity” to Abide’s fraudulent practices does not supply sufficient evidence to convict him. *9.  The Court reversed all three of Nora’s convictions—conspiracy to commit healthcare fraud, conspiracy to pay or receive kickbacks, and aiding and abetting liability. 

This is an important case because it should serve to remind the government that not everyone who is proximate to illegal conduct is a criminal.  Here the government imputed a high level of sophistication to a young man who was simply doing his job as directed by others more experienced in healthcare law.  Instead of focusing on those who clearly knew better, they indicted this guy whose life surely was turned upside down by his indictment, conviction, and then appeal.  Anyway, it’s really, really hard to win an appeal on sufficiency of the evidence, but this case shows just how sloppy and improper the government’s prosecution was in the first place.