U.S. v. Starks

• Decision Date: 09 October 1998
• Docket Number: No. 96-3117,96-3117
• Citation: 157 F.3d 833
• Parties: 12 Fla. L. Weekly Fed. C 146 UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Angela F. STARKS, Defendant-Appellant, Andrew R. Siegel, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 833

157 F.3d 833

12 Fla. L. Weekly Fed. C 146

UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Angela F. STARKS, Defendant-Appellant Andrew R. Siegel, Defendant-Appellant, Cross-Appellee.

No. 96-3117.

United States Court of Appeals Eleventh Circuit.

Oct. 9, 1998.

Miriam L. Sumpter, Tampa, FL, for Defendant-Appellant.

Arnold D. Levine, Levine, Hirsch, Segall & Northcutt, P.A., Tampa, FL, for Siegel.

Charles R. Wilson, U.S. Atty., Tamra Phipps, Terry A. Zitek and Susan H. Rothstein, Asst. U.S. Attys., Tampa, FL, Susan Humes Raab, Asst. U.S. Atty., Jacksonville, FL, for Plaintiff-Appellee, Cross-Appellant.

Appeals from the United States District Court for the Middle District of Florida.

Before ANDERSON and BIRCH, Circuit Judges, and PAINE ^*, Senior District Judge.

BIRCH, Circuit Judge:

Defendants Angela Starks and Andrew Siegel seek to overturn their convictions under the anti-kickback provision of the Social Security Act, 42 U.S.C. § 1320a-7b ("the Anti-Kickback statute"). Specifically, Starks and Siegel argue that the district court erred by refusing to instruct the jury concerning the relevant mens rea. In addition, Starks and Siegel contend that the Anti-Kickback statute is unconstitutionally vague. While denying the defendants' allegations of error, the government cross-appeals Siegel's sentence on the grounds that the district court should not have reduced his offense level for acceptance of responsibility, and that the district court should have applied the guideline for bribery of a public official rather than the guideline for fraud and deceit. We AFFIRM IN PART, REVERSE IN PART, and REMAND.

BACKGROUND ¹

In 1992, Andrew Siegel was both the president and the sole shareholder of Future Steps, Inc., a corporation that developed and operated treatment programs for drug addiction. On April 22, 1992, Future Steps contracted with Florida CHS, Inc. to run a chemical dependency unit for pregnant women at Florida CHS's Metropolitan General Hospital ("the Hospital"). In return, Florida CHS promised to pay Future Steps a share of the Hospital's profits from the program. As a Medicaid provider, the Hospital performed medical services for indigent and disabled persons and received payment for these activities through Consultec, the fiscal intermediary for the Florida Medicaid program. Before executing the Future Steps-Florida CHS contract, Siegel initialed each page of the agreement, which included a provision explicitly forbidding Future Steps from making any payment for patient referrals in violation of the Anti-Kickback statute.

At the time Siegel signed this contract, Angela Starks and Barbara Henry had just become community health aides in the employ of the State of Florida Department of Health and Rehabilitative Services ("HRS"). ² Although Starks and Henry were employees of HRS, they actually worked in a federally-funded research project in Tampa, Florida known as "Project Support." As part of their duties, Starks and Henry advised pregnant women about possible treatment for drug abuse. Upon beginning their work at HRS, Starks and Henry learned from their supervisor both that they could not accept any outside employment that might pose a conflict of interest with their work at HRS and that they were obligated to report any outside employment to HRS.

During the spring of 1992, Future Steps had difficulty attracting patients. One of Future Steps's salaried "liaison workers," Robin Doud-Lacher, however, identified Project Support as a potential source of referrals because of its relationship with high-risk pregnant women. When Doud-Lacher's initial efforts to establish a referral relationship between Future Steps and Project Support failed, Siegel suggested to Doud-Lacher that she spend more time at Project Support, give diapers to Project Support, take Project Support workers to lunch, and otherwise build a relationship with Project Support's employees.

During one of her subsequent visits to Project Support, Doud-Lacher learned from Starks and Henry that cuts in federal spending threatened to reduce their work hours. When Starks and Henry asked if Doud-Loucher knew of other available work, she promised to inquire for them about opportunities at Future Steps.

After discussing Starks and Henry's interest with her immediate supervisor, Doud-Lacher spoke directly with Siegel about hiring the two women. Despite Starks and Henry's extant employment with HRS, Siegel told Doud-Loucher that he would pay Starks and Henry $250 for each patient they referred: $125 when a referred woman began inpatient drug treatment with Future Steps and $125 after each such woman had stayed in Future Steps's program for two weeks. ³ After accepting Siegel's terms, Starks and Henry did not report their referral arrangement to anyone at Project Support or HRS.

At the outset of their work for Future Steps, Starks and Henry received checks written on Future Steps's account and signed by Siegel. Before issuing these checks, Siegel verified that the referred patients had actually entered the Future Steps program; he did not, though, verify that the referrals were legal. Although the checks Siegel signed were coded variously as payments for aftercare, counseling, and marketing expenses, Siegel was actually only paying Starks and Henry for their referrals. In fact, Siegel did not at any time pay Starks and Henry for any of their time, effort, or business expenses, or for any covered Medicare service.

When Doud-Lacher left Future Steps, Siegel had Michael Ix, another liaison worker, assume responsibility for the Starks and Henry referral arrangement. Generally, either Starks or Henry would call Ix and ask him to pick up a referral directly from the Project Support clinic. When Ix arrived at Future Steps with the referred patient, Siegel would give Ix a check for Starks and Henry. Later, after Henry told Ix that she did not want anyone at Project Support to see her receiving checks from Future Steps, Ix agreed to deliver the checks to Starks and Henry either in the Project Support parking lot or at a restaurant. Between June 1992 and January 1993, Future Steps wrote checks payable to Starks totaling $2750 and to Henry totaling $1975.

At the end of 1992, Future Steps began paying Starks and Henry in cash. To make these payments, Ix would withdraw cash from his personal bank account and meet Starks and Henry either at a restaurant or at a twelve-step program; Siegel and Future Steps would then reimburse Ix. On one occasion, Siegel accomplished this reimbursement by meeting Ix in a restaurant restroom and giving him $600. In total, Ix paid Starks and Henry approximately $1000 to $1200 in cash.

Beyond the impropriety of Starks and Henry's acceptance of referral payments from Siegel, the referral arrangement directly affected Starks and Henry's counseling of the pregnant women who relied on them and Project Support for help. At trial, several of Future Steps's clients testified that Starks and Henry threatened that HRS would take away their babies if they did not receive treatment for their drug addictions; in some instances, Starks and Henry threatened women with the loss of their babies if they did not go specifically to Future Steps. According to these women's testimony, Starks and Henry informed them only about Future Steps's program (eschewing discussion of alternative treatments), and most waited with Starks and Henry at the Project Support clinic until someone from Future Steps arrived to take them to the Hospital. Starks and Henry's physician supervisor also testified that she told the two HRS employees to be more evenhanded in their advice to Project Support's patients, after the number of women going to Future Steps from Project Support increased substantially.

In total, Starks and Henry referred eighteen women from Project Support to Future Steps. From these referrals, the Hospital received $323,023.04 in Medicaid payments.

On July 29, 1994, a federal grand jury indicted Siegel, Starks, Henry, and Doud-Lacher on five counts related to the referrals. Count One charged all four defendants with conspiring against the United States, in violation of 18 U.S.C. § 371, by offering to pay remuneration for referral of Medicare patients, in violation of 42 U.S.C. § 1320a-7b(b)(2)(A), and by soliciting and receiving such referral payments, in violation of 42 U.S.C. § 1320a-7b(b)(1)(A). Counts Two and Three charged Siegel and Doud-Loucher with paying remuneration to Starks and Henry to induce referrals of Medicaid patients, in violation of 42 U.S.C. § 1320a-7b(b)(2)(A). Finally, Count Four charged Starks and Count Five charged Henry with soliciting and receiving referral payments, in violation of 42 U.S.C. § 1320a-7b(b)(1)(A).

On February 22, 1996, the jury returned guilty verdicts as to all of the defendants on all five counts. Thereafter, the district court sentenced Siegel to serve three concurrent terms of twenty-four months of imprisonment and five years supervised release. In choosing this sentence, the district court reduced Siegel's offense level under U.S.S.G. § 3E1.1 for acceptance of responsibility and applied the guideline for fraud, U.S.S.G. § 2F1.1. The district court sentenced Starks to two concurrent terms of thirty months of home detention.

DISCUSSION

On appeal, defendants Starks and Siegel renew two contentions from their trial. First, they claim that the district court committed reversible error when it refused to instruct the jury that, because of the Anti-Kickback statute's mens rea requirement, Starks and Siegel had to have known that their referral arrangement violated the Anti-Kickback statute in order to be convicted. Second, Starks and Siegel argue that the Social Security Act's prohibition on paid referrals, when considered together with the Act's safe harbor provision, 42 U.S.C. § 1320a-7b(b)(3) ("the Safe Harbor provision"), is unconstitutionally vague. We address each of...