People v. Motor City Hosp. and Surgical Supply, Inc.

• Decision Date: 23 December 1997
• Docket Number: 196345,Docket Nos. 195746
• Citation: 227 Mich.App. 209,575 N.W.2d 95
• Parties: PEOPLE of the State of Michigan, Plaintiff-Appellant, v. MOTOR CITY HOSPITAL AND SURGICAL SUPPLY, INC., Defendant-Appellee. PEOPLE of the State of Michigan, Plaintiff-Appellant, v. Kevin E. DRUZINSKI, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 95

575 N.W.2d 95

227 Mich.App. 209

PEOPLE of the State of Michigan, Plaintiff-Appellant, v. MOTOR CITY HOSPITAL AND SURGICAL SUPPLY, INC., Defendant-Appellee.

PEOPLE of the State of Michigan, Plaintiff-Appellant, v. Kevin E. DRUZINSKI, Defendant-Appellee.

Docket Nos. 195746, 196345.

Court of Appeals of Michigan.

Submitted June 4, 1997, at Lansing.

Decided Dec. 23, 1997, at 9:05 a.m.

Released for Publication March 10, 1998.

Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and Richard L. Koenigsknecht, Assistant Attorney General, for People.

Martin L. Reisig, Birmingham, and James C. Steffl, Farmington Hills, for defendant-appellee on appeal.

Before CORRIGAN, C.J., and KELLY and HOEKSTRA, JJ.

CORRIGAN, Chief Judge.

The prosecution appeals by right the circuit court's order quashing the information charging defendants with violating § 4 of the Medicaid False Claims Act (MFCA), M.C.L. § 400.604; M.S.A. § 16.614(4), and § 4 of the Health Care False Claims Act (HCFCA), M.C.L. § 752.1004; M.S.A. § 28.547(104), by aiding and abetting the receipt of a rebate or referral fee. This case presents an issue of first impression whether the portions of MFCA § 4 and HCFCA § 4 criminalizing the receipt of a referral fee include a "corrupt intent" element. We hold that they do not, and we reverse the decision of the circuit court and reinstate the charges.

Defendants, a provider of durable medical equipment and its owner/manager, allegedly paid $790 to another provider, Certified Air Respiratory Equipment, Inc. (CARE), for CARE's act of referring customers to defendant provider. The district court bound defendants over on three counts of aiding and abetting CARE in violation of M.C.L. § 400.604; M.S.A. § 16.614(4), and three counts of aiding and abetting CARE in violation of M.C.L. § 752.1004; M.S.A. § 28.547(104). The statutes provide:

A person who solicits, offers, or receives a kickback or bribe in connection with the furnishing of goods or services for which payment is or may be made in whole or in part pursuant to a program established under [the Social Welfare Act], who makes or receives the payment, or who receives a rebate of a fee or charge for referring an individual to another person for the furnishing of goods and services is guilty of a felony, punishable by imprisonment for not more than 4 years, or by a fine of not more than $30,000.00, or both. [M.C.L. § 400.604; M.S.A. § 16.614(4) (emphasis added).]

A person who solicits, offers, pays or receives a kickback or bribe in connection with the furnishing of goods or services for which payment is or may be made in whole or in part by a health care corporation or health care insurer, or who receives a rebate of a fee or charge for referring an individual to another person for the furnishing of health care benefits is guilty of a felony, punishable by imprisonment for not more than 4 years, or by a fine of not more than $50,000.00, or both. [M.C.L. § 752.1004; M.S.A. § 28.547(104) (emphasis added).]

The circuit court quashed the information. It reasoned that the statutes are unconstitutional without a knowledge or "corrupt intent" element because the offenses could otherwise encompass innocent behavior. The court concluded that the statutes should apply only to those who knowingly engage in wrongful acts. The court then held that the district court erred in binding over defendants for trial because the prosecutor presented no evidence to establish that defendants intended to help CARE violate the statutes.

The prosecution argues that the circuit court erred in quashing the information because the offenses do not contain a knowledge or corrupt intent element. This Court reviews de novo the circuit court's decision to quash the information on legal grounds. People v. Thomas, 438 Mich. 448, 452, 475 N.W.2d 288 (1991). Moreover, the question whether the instant offenses include an intent element is one of statutory construction, which this Court likewise reviews de novo. People v. Quinn, 440 Mich. 178, 185, 487 N.W.2d 194 (1992); People v. Sheets, 223 Mich.App. 651, 655, 567 N.W.2d 478 (1997). The plain language of the instant statutory offenses does not include a knowledge or corrupt intent element. Consequently, this Court must determine whether the Legislature actually intended to require an element of fault even though it did not expressly so state. Quinn, supra at 185, 487 N.W.2d 194. Where, such as with these offenses, the offense in question does not codify a common-law crime, this Court must ascertain whether the Legislature intended scienter as an element of the offense, or whether it intended to hold the offender liable regardless of what he knew or did not know. ¹ Id. at 186, 487 N.W.2d 194. We conclude that the Legislature did not intend that the instant offenses include a corrupt intent element.

The available legislative history reveals that the Legislature did not intend to include a specific intent element in the offenses. The prohibition of rebates and referral charges first appeared in the original version of the MFCA that was introduced as Senate Bill 18 on January 24, 1977. 1977 Journal of the Senate 40. The Legislature enacted the MFCA, 1977 P.A. 72, to fill a void in the law concerning fraudulent activity in connection with Medicaid. House Legislative Analysis, SB 18, June 27, 1977. The House Legislative Analysis observed that prosecutors had difficulty in obtaining convictions under then existing law because there were "few statutes which relate[d] to the specific criminal actions involved and few statutes applying penalties for such actions." Id. at 1. In 1982, the Legislature amended the MFCA to grant the Attorney General additional investigative powers. 1982 P.A. 518. Two years later, the Legislature again amended the MFCA and also enacted the HCFCA because the MFCA had not served its purpose. House Legislative Analysis, HB 5102 & 5103, December 19, 1984, p. 1. The Legislature enacted the HCFCA to extend to private insurers and health care corporations the same protections against fraud that it afforded the Department of Social Services ² in the MFCA. Id. at 2. The Legislature never sought to amend M.C.L. § 400.604; M.S.A. § 16.614(4) to include a corrupt intent element.

The Legislature's inclusion of a knowledge element in other sections of the MFCA and HCFCA further evinces its intent that the instant offenses not include a corrupt intent element. When construing a statute, this Court may not "assume that the Legislature inadvertently omitted from one statute the language that it placed in another statute, and then on the basis of that assumption, apply what is not there." Farrington v. Total Petroleum, Inc., 442 Mich. 201, 210, 501 N.W.2d 76 (1993). Here, the Legislature included a knowledge element in the MFCA and HCFCA provisions pertaining to the filing of false claims. M.C.L. § 400.607; M.S.A. § 16.614(7), M.C.L. § 752.1003; M.S.A. § 28.547(103). Moreover, the Legislature specifically included a "corrupt" intent element in other statutes involving bribery and kickbacks. M.C.L. § 750.117; M.S.A. § 28.312 (public officers), M.C.L. § 750.118; M.S.A. § 28.313 (public officers), M.C.L. § 750.120; M.S.A. § 28.315 (jurors), M.C.L. § 750.121; M.S.A. § 28.316 (public institution).

The absence of a corrupt intent element in the instant offenses also furthers the underlying purposes of the MFCA and HCFCA by criminalizing conduct that fosters false claims. By their plain terms, M.C.L. § 400.604; M.S.A. § 16.614(4) and M.C.L. § 752.1004; M.S.A. § 28.547(104) criminalize the receipt of referral fees. The blanket prohibitions make those who engage in the business of providing goods and services responsible for ensuring that no referral fees are paid because they are in the best position to do so. Accordingly, the Legislature did not intend a corrupt intent element in these offenses.

In this case, the prosecution charged defendants under an aiding and abetting theory of culpability. Long ago, the Legislature abolished the distinction between principals and accessories. The pertinent statute provides:

Every person concerned in the commission of an offense whether he directly commits the act constituting the offense or procures, counsels, aids, or abets in its commission may hereafter be prosecuted, indicted, tried and on conviction shall be punished as if he had directly committed such offense. [M.C.L. § 767.39; M.S.A. § 28.979.]

"The requisite intent is that necessary to be convicted of the crime as a principal." People v. Kelly, 423 Mich. 261, 278, 378 N.W.2d 365 (1985). The instant offense is a general intent, not a specific intent, crime. The requisite intent is the intent to do the prohibited physical act, i.e. to receive a referral fee. See People v. Langworthy, 416 Mich. 630, 639, 331 N.W.2d 171 (1982); People v. Maleski, 220 Mich.App. 518, 523, 560 N.W.2d 71 (1996). Therefore, to convict defendants as aiders and abettors, the prosecutor must prove that defendants intended that CARE receive a referral fee.

The circuit court erroneously determined that the statutes would be unconstitutional unless they contained a "knowledge" or "corrupt intent" element. A statute enjoys a presumption of constitutionality. People v. Hubbard (After Remand), 217 Mich.App. 459, 483, 552 N.W.2d 493 (1996). This Court must construe a statute as constitutional unless its unconstitutionality is clearly apparent. Id. at 483-484, 552 N.W.2d 493. This Court has held that "knowledge" is an element of many offenses in order to prevent innocent acts from constituting crimes. See People v. Watts, 133 Mich.App. 80, 83, 348 N.W.2d 39 (1984). The Legislature's intent, however, generally controls regarding this issue. See Quinn, supra at 185, 487 N.W.2d 194. As previously discussed, the Legislature intended that the instant offenses contain a general intent, not a corrupt intent, element. Moreover, the circuit court's reasoning...