U.S. v. LaHue

• Decision Date: 23 March 1999
• Docket Number: No. 98-3146,98-3146
• Citation: 170 F.3d 1026
• Parties: 1999 CJ C.A.R. 3302 UNITED STATES of America, Plaintiff-Appellant, v. Robert C. LaHUE, doing business as Robert C. LaHue, D.O., Chartered, doing business as Blue Valley Medical Group; Ronald H. LaHue, Defendants-Appellees,
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1026

170 F.3d 1026

1999 CJ C.A.R. 3302

UNITED STATES of America, Plaintiff-Appellant, v. Robert C. LaHUE, doing business as Robert C. LaHue, D.O Chartered, doing business as Blue Valley Medical Group; Ronald H. LaHue, Defendants-Appellees,

No. 98-3146.

United States Court of Appeals Tenth Circuit.

March 23, 1999.

Sean Connelly, Attorney, Department of Justice, Denver, Colorado (Jackie N. Williams, United States Attorney, and Tanya J. Treadway, Asst. United States Attorney, District of Kansas, and William H. Bowne, Department of Justice, Washington, D.C., with him on the briefs), for Plaintiff-Appellant.

Jeffrey D. Morris, of Bryan Cave LLP, Overland Park, Kansas (James L. Eisenbrandt, of Bryan Cave LLP, Overland Park, Kansas, Nilesh S. Patel, Kansas City, Missouri, and Bruce Houdek, Kansas City, Missouri, with him on the briefs), for Defendants-Appellees.

Before SEYMOUR, Chief Judge, EBEL and KELLY, Circuit Judges.

SEYMOUR, Chief Judge.

Defendants Dr. Ronald LaHue and Dr. Robert LaHue, agents of Blue Valley Medical Group (BVMG), were indicted on one count of conspiracy under 18 U.S.C. § 371 (count 1), seven counts of Medicare fraud under the Anti-Bribery Act, 18 U.S.C. § 666(b) (counts 2 through 8), one count of conspiracy under 18 U.S.C. § 286 (count 9), and one count of witness tampering under 18 U.S.C. § 1512 (count 10). The district court granted defendants' motion to dismiss counts 2 through 8 on the theory that BVMG did not receive federal benefits as required by section 666(b) and therefore was not within the ambit of the statute. ¹ United States v. LaHue 998 F.Supp. 1182, 1184 (D.Kan.1998). The government appeals, arguing that the alleged fraud falls within section 666(b) because BVMG was a recipient of Medicare reimbursements assigned to it by its patients. We affirm the district court.

I

From 1985 to 1995, BVMG provided services in Kansas and Missouri as one of the largest geriatric care practices in the United States. Dr. Robert LaHue was president of BVMG and his brother, Dr. Ronald LaHue, was vice-president. The LaHues and other BVMG physicians provided medical services to nursing home residents and also referred patients to various hospitals for inpatient and outpatient care.

The indictment alleged that the LaHues engaged in a criminal scheme to receive bribes from various hospitals in return for referring Medicare patients to the hospitals. It asserted that the LaHues proposed and entered into a number of sham consulting agreements where BVMG received annual consulting "fees" from each hospital in amounts ranging from $50,000 to $150,000 in return for referring patients to the paying hospital. The government charged that the scheme constituted federal government program fraud in violation of section 666, which applies to an organization that receives "benefits" under a federal program.

The LaHues moved to dismiss the charges of program fraud, asserting that Medicare reimbursements to doctors are not benefits within the meaning of section 666(b). The district court agreed. The court determined that Medicare payments are extended by Congress to the patient, who is both the intended recipient of the funds and the intended beneficiary of Medicare. The patient is permitted voluntarily to direct the funds to the medical provider through assignment. Under this pattern of disbursement, the district court held that reimbursements to BVMG physicians can not be characterized as section 666 benefits from a federal program because those benefits were disbursed to the patient before dissemination to BVMG. Accordingly, the district court dismissed the claims against BVMG under section 666. ²

II

In reviewing the district court's determination, we must decide whether providers of medical services to Medicare Part B patients fall within the statutory jurisdiction of 18 U.S.C. § 666(b). In other words, are the LaHues agents of an organization, BVMG, that "receive[d] benefits in excess of $10,000 under a Federal Program." Id. (emphasis added) In making this determination, we look first at the nature of the Medicare program, and then assess section 666 in light of that program.

A. Medicare Part B

Many BVMG patients were eligible for Medicare reimbursements under 42 U.S.C. §§ 1395j-1395k and used the reimbursements to pay for BVMG services under Medicare Act Part B. The Medicare Act consists of two parts: Part A, Hospital Insurance Benefits for the Aged and Disabled, 42 U.S.C. §§ 1395c-1395i; ³ and Part B, Supplementary Medical Insurance Benefits for the Aged and Disabled, 42 U.S.C. §§ 1395j-1395w. Our case exclusively addresses Medicare Part B payments. Part B of the Medicare system was established to provide "benefits" to the individual beneficiary for use in paying the costs of certain medical services, including physicians' services. Part B is a voluntary program where beneficiaries pay monthly premiums that, along with federal government contributions, are remitted to the Federal Supplementary Medical Insurance Trust Fund. See id. § 1395t. The Department of Health and Human Services has responsibility for administering the program and contracts with private insurance carriers who evaluate and pay Part B claims out of the Trust Fund. See id. § 1395u.

Under Part B, a physician may either request direct payment by patients on the basis of an itemized bill or accept assignment agreements. Under an assignment agreement, the beneficiaries execute formal assignments of their individual benefits to the physicians to compensate the physicians for health care services. See id. § 1395u(h). A physician who does not accept assignment can charge her patient in excess of the Medicare allowed expense, a practice called "balance billing." Medicare pays eighty percent of reasonable reimbursable claims while the beneficiary is responsible for the remaining twenty percent and any "balance billing." See 42 U.S.C. § 1395l. The dismissed charges at issue here all involved patient assignments directing that their Medicare reimbursements be sent to the BVMG physicians to pay for medical services rendered. A BVMG physician who accepted assignment agreed to accept a specified amount as full payment for each service. This assignment scheme implies that the intended beneficiary of Medicare Part B is the patient. The Medicare statute reinforces this interpretation. It provides in relevant part:

Scope of benefits; definitions

(a) The benefits provided to an individual by the insurance program [Medicare] established by this part shall consist of--

(1) entitlement to have payment made to him or on his behalf (subject to the provisions of this part) for medical and other health services....

42 U.S.C. § 1395k. As the statute reads, "benefits" are "provided to an individual," who has the authority to direct whether they are to be paid "to him or on his behalf." Id. With this in mind, we turn to an analysis of section 666.

B. 18 U.S.C. § 666

We review legal issues of statutory construction de novo. United States v. Oberle, 136 F.3d 1414, 1423 (10th Cir.1998). In interpreting section 666, we recognize that the Supreme Court directs us to use restraint in interpreting federal criminal statutes. Dowling v. United States, 473 U.S. 207, 214, 105 S.Ct. 3127, 87 L.Ed.2d 152 (1985). "Courts in applying criminal laws generally must follow the plain and unambiguous meaning of the statutory language." Salinas v. United States, 522 U.S. 52, ----, 118 S.Ct. 469, 474, 139 L.Ed.2d 352 (1997) (quoting United States v. Albertini, 472 U.S. 675, 680, 105 S.Ct. 2897, 86 L.Ed.2d 536 (1985)). Where the statute is ambiguous, we look to the legislative history and the underlying public policy of the statute. See United States v. Simmonds, 111 F.3d 737, 742 (10th Cir.1997).

The Anti-Bribery Act, 18 U.S.C. § 666, prohibits the unlawful acceptance of anything of value of $5,000 or more if the person taking the bribe is an agent of an organization subject to the statute. Whether an organization falls within the scope of the statute is determined pursuant to the limits of section 666(b), which reads:

The circumstances referred to in subsection (a) of this section is that the organization, government, or agency receives, in any one year period, benefits in excess of $10,000 under a Federal program involving a grant, contract, subsidy, loan, guarantee, insurance, or other form of Federal assistance.

18 U.S.C. § 666(b). The district court acknowledged the superficial appeal of the government's contention that the plain language of section 666(b) includes the patient assignments to BVMG. See LaHue, 998 F.Supp. at 1187. The scope of section 666(b) jurisdiction reaches any organization that "receives ... benefits" from a federal program in an amount over $10,000. 18 U.S.C. § 666(b). Medicare is indisputably a federal program and BVMG did receive reimbursements in any one year in excess of $10,000 for its physicians' services to Medicare recipients.

In support of this argument, the government offers an analogy to anti-discrimination statutes, contending that "section 666 'expressly equates "benefits" with "Federal assistance." ' " Br. of Aplt. at 15 (quoting United States v. Rooney, 986 F.2d 31, 34 (2d Cir.1993)). The government then directs us to cases holding that providers who accept Medicare funds receive "federal assistance" under an anti-discrimination statute. Id. at 16 (citing United States v. Baylor Univ. Med. Ctr., 736 F.2d 1039, 1042-48 (5th Cir.1984)). The government concludes by analogy that a health care provider who accepts Medicare funds thereby receives federal benefits and accordingly falls within the scope of section 666.

We are not persuaded by the analogy to anti-discrimination statutes, which are civil rather than criminal. We must exercise particular restraint in interpreting federal criminal statutes. Dowling, 473 U.S. at 214, 105 S.Ct. 3127. Moreover, there are inherent policy differences between these criminal and civil...