U.S. v. Bobo, No. 02-11011.

• Decision Date: 26 August 2003
• Docket Number: No. 02-11011.
• Parties: UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Philip K. Bobo, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

344 F.3d 1076

UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Philip K. Bobo, Defendant-Appellant, Cross-Appellee.

No. 02-11011.

United States Court of Appeals, Eleventh Circuit.

DECIDED August 26, 2003.

L. Drew Redden, William N. Clark, Keith Edward Brashier, Redden, Mills & Clark, Birmingham, AL, for Bobo.

Julia J. Weller, Stephen P. Feaga, John Gibbs, Montgomery, AL, Alice H. Martin, Birmingham, AL, for U.S.

Appeals from the United States District Court for the Northern District of Alabama.

Before DUBINA and FAY, Circuit Judges, and DOWD^*, District Judge.

DUBINA, Circuit Judge:

Appellant Dr. Philip Bobo appeals his convictions for conspiracy to defraud the United States and any health care benefit program, in violation of 18 U.S.C. §§ 371, 1347(1), and attempt to defraud any health care benefit program, in violation of 18 U.S.C. § 1347(1). On appeal, Dr. Bobo asserts numerous grounds of error, but we find one issue dispositive: whether the district court erred by denying Dr. Bobo's motion to dismiss the indictment because the conduct alleged in the indictment was legally insufficient to support Dr. Bobo's conviction for health care fraud. Because we conclude that the district court erred in failing to dismiss the indictment, we decline to address the other issues raised on appeal.¹ For the reasons that follow, we reverse the district court's order denying Dr. Bobo's motion to dismiss the indictment and vacate Dr. Bobo's convictions.

I. BACKGROUND

A. Procedural History

A federal grand jury indicted Dr. Bobo for conspiracy to defraud the United States and a health care benefit program, in violation of 18 U.S.C. §§ 371, 1347(1) (Count I); attempt to defraud a health care benefit program, in violation of 18 U.S.C. § 1347(1) (Count II); and wire fraud, in violation of 18 U.S.C. § 1343 (Count III). Dr. Bobo pled not guilty and moved to dismiss the indictment. The district court denied Dr. Bobo's motion to dismiss Counts I and II, but granted the motion as to Count III.² The case proceeded to trial, and a jury found Dr. Bobo guilty of conspiracy to defraud a health care benefit program and attempt to defraud a health care benefit program. Following a sentencing hearing, the district court sentenced Dr. Bobo to 27 months imprisonment on the two counts, to be served concurrently, followed by three years supervised release, and imposed a $60,000 fine.

B. Facts

Dr. Bobo and Neighborhood Health Services

Dr. Bobo has been a board-certified emergency room/trauma physician since 1973, working primarily at Druid City Hospital in Tuscaloosa, Alabama. He also served as medical director of the Alabama Fire College, where he trained firemen and paramedics in emergency medical services. Governor Don Siegelman appointed Dr. Bobo State Emergency Medical Director, and Dr. Bobo served on Governor Siegelman's transition team from November 1998 to January 1999. Dr. Bobo also held other medical-related positions, including physician for the University of Alabama football team, and plant physician at Uniroyal Goodrich. In addition, Dr. Bobo founded Emergicare, a seven-day clinic where patients do not need appointments in order to see a doctor.

In the 1980's, Dr. Bobo and three other doctors, pediatrician Dr. Phil Phillips, general surgeon Dr. Charles Rose, and obstetrician and gynecologist Dr. Karl Harbin created Neighborhood Health Services ("NHS"), a limited liability corporation. The doctors formed NHS to provide primary medical care to patients who would otherwise be forced to use the emergency room. Dr. Bobo and attorney Boolis Boohaker are the administrators of NHS. Dr. Bobo serves as managing partner and owns 51 percent of NHS. Mary Jo Looser, former administrator of the maternity waiver program for the health department in a five county area, serves as executive program director of NHS. NHS has two other employees, Charlotte Jamison, care coordinator director, and Dr. Pat Lagrone, director of quality assurance.

The Medicaid Maternity Waiver Program

Ms. Gwendolyn Williams, Commissioner of the Alabama Medicaid Agency from 1995-1999, testified at Dr. Bobo's trial that Congress created the Maternity Care Program ("MCP") in 1997 to address Alabama's high infant mortality rate and low level rate of prenatal care. The MCP's purpose was to ensure comprehensive medical services to pregnant women on medicaid, beginning with prenatal treatment and following mother and child through the postpartum stage.

Ms. Williams worked with federal agencies to construct a special maternity medicaid program, labeled a "waiver program," because it requires the patient to waive mandated medicaid requirements such as "freedom of choice." The program, entitled Maternity Waiver Program ("MWP"), waives certain medicaid requirements in exchange for an established network of services, specific doctors, hospitals, and other medical providers. Under the program, the expectant mother has a case manager who functions as an overseer of the mother's medical treatment. Ms. Williams worked with the Alabama Medicaid Agency to increase reimbursement rates and also worked with the Department of Health and other agencies to establish a solid network of providers. After initial tests in a few counties, the program expanded statewide.

Under the MCP, the Alabama Medicaid Agency divided the state of Alabama into 13 districts. The districts at issue in this case are District 4, which consists of Lamar, Fayette, Pickens, Tuscaloosa, and Bibb counties, and District 7, which consists of Green and Hale counties. Entities within each district wishing to provide MWP services bid competitively to offer a complete package of benefits including prenatal visits, delivery, postpartum medical care, and case management. Ms. Williams testified that approximately 70 percent of the funding for the program comes from the federal government via the United States Department of Health and Human Services, with the remaining 30 percent of funding provided by the State. The initial statewide budget to finance the MWP was $100,000,000.

Ms. Williams' Association with Dr. Bobo

Ms. Williams testified that she first met Dr. Bobo in early 1998, when he expressed an interest in the MWP. After that first meeting, Ms. Williams stated that Dr. Bobo called her almost weekly, offering suggestions about the MWP. Ms. Williams testified that Dr. Bobo's calls became increasingly hostile, so that she ultimately refused to accept his calls. In July 1998, however, Ms. Williams met with Dr. Bobo to discuss whether the MWP would use requests for proposals ("RFP") or invitations to bid ("ITB") to seek potential providers. Dr. Bobo requested that the MWP use the RFPs because then price would not be the sole determining factor that the agency would consider in awarding the contracts. Dr. Bobo also relayed his concerns over the length of the process and the delays in awarding the contracts. Ms. Williams responded that she did not have the authority under state law to use only RFPs.

Consequently, in October 1998, the agency released the ITBs. This program requires the bidders to provide detailed documentation regarding access to care, participating hospitals, average care time devoted to each patient, and other pertinent information. The bidders provided this information via contracts or signed letters of intent. NHS submitted bids for most of the districts.

The Bidding Process

Ms. Vicki Huff, former Alabama Medicaid Agency Director of Medical Services, testified that her office prepared the 1998 ITBs. She stated that the agency received bids with a bid price that represented the service provider's estimated cost per birth. The two original bidders in District 4 were NHS and Alabama Health Network ("AHN"), a coalition composed of Druid City Regional Health Authority, Bibb County Medical Center, Pickens County Medical Center, West Alabama Health Network, and the Capstone Health Services Foundation. AHN is a consortium of hospitals and clinics created specifically to bid on contracts. For District 4, NHS bid $4,260 and AHN bid $3,889 to provide services under the MWP. The bid price represented the cost to deliver one child, including comprehensive prenatal care, education, and postpartum care. After the agency evaluated the ITBs, State Finance Director, Dr. Henry C. Mabry, III, notified NHS that it had received the contract for District 4.

As to District 7, of the three bidders, NHS, AHN, and Tombigbee Health Care Authority, NHS's bid was the highest, totaling $4,516 per delivery compared to AHN's bid of $3,949 per delivery. The State awarded District 7 to AHN.

On March 19, 1999, Dr. Mabry distributed a letter to all the bidders identifying the "preliminary" winning bids. This letter identified NHS as the MWP recipient for Districts 1, 4, and 9.³ On May 13, 1999, Bill Newton, the acting purchasing director for the Alabama Department of Finance, notified NHS and AHN that all bids received for District 4 had been cancelled and District 4 would have to be rebid due to irregularities in the bid process. Newton informed NHS that the agency would ask for rebids at a later date.

On June 4, 1999, AHN filed a lawsuit protesting the rebid. AHN and the State Medicaid Agency and the State Finance Department settled the lawsuit. NHS did not submit a second bid for District 4. The State then awarded District 4 to AHN.

Conduct at Issue

Ms. Pam Parsons, an assistant vice-president for development at the University of Alabama, testified that Dr. Bobo contacted her around May 11, 1999, regarding Capstone Medical Center ("Capstone"), a physician residency program within the University of Alabama's College of Community Health Sciences. Dr. Bobo requested that Ms. Parsons relay information to the University's President, Dr. Andrew Sorenson, and to the associate dean for clinical affairs at the College of Community Health Sciences, Dr. Marc Armstrong. Dr. Bobo requested Ms. Parsons "pass along"...