United States v. Cooper

• Decision Date: 22 June 2022
• Docket Number: 20-10821
• Citation: 38 F.4th 428
• Parties: UNITED STATES of America, Plaintiff—Appellee, v. John Paul COOPER, Defendant—Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

38 F.4th 428

UNITED STATES of America, Plaintiff—Appellee,

v.John Paul COOPER, Defendant—Appellant.

No. 20-10821

United States Court of Appeals, Fifth Circuit.

FILED June 22, 2022

Stephen S. Gilstrap, Leigha Amy Simonton, Assistant U.S. Attorney, U.S. Attorney's Office, Northern District of Texas, Dallas, TX, for Plaintiff-Appellee.

Robert Clary, Attorney, Murphy, TX, for Defendant-Appellant.

Before Dennis, Elrod, and Duncan, Circuit Judges.

Jennifer Walker Elrod, Circuit Judge:

This case arises out of a health care fraud prosecution. John Paul Cooper and others purportedly schemed to defraud TRICARE, a federal health care program, out of millions of dollars. The jury reached a partial verdict as to Cooper and convicted him of one count of conspiracy to commit health care fraud, one count of receiving an illegal kickback payment, and six counts of making illegal kickback payments. The district court sentenced Cooper to a total of 240 months' imprisonment. Cooper now appeals those convictions on various grounds. Because there was insufficient evidence to support his convictions for paying illegal kickbacks, we REVERSE in part and REMAND for resentencing. We AFFIRM Cooper's convictions for conspiracy to commit health care fraud and receiving an illegal kickback payment.

I.

John Paul Cooper and Richard Cesario co-owned a marketing company called CMGRX. Through the company, the pair schemed to defraud TRICARE, a federal health care program. The scheme was organized as follows: CMGRX hired recruiters who contacted TRICARE beneficiaries and induced them to sign up for creams and vitamins—experimental compounded drugs—to treat scars and pain, claiming that the beneficiaries would be participating in a study of these substances. The recruiters promised the beneficiaries $250 per prescription. Once beneficiaries signed up, CMGRX would send pre-filled prescription forms to various doctors for signing and would pay the doctors for each prescription signed. CMGRX would then send the signed prescriptions to various pharmacies.

Upon receiving the prescriptions, the pharmacies would fill them, bill TRICARE, and send a portion of the proceeds they received from TRICARE back to CMGRX. Once beneficiaries received the compounded creams or vitamins and sent a completed questionnaire about the product to CMGRX, CMGRX would send the questionnaire to a nonprofit charity created by Cooper and Cesario. The charity would then pay the participants the promised $250, using money supplied by CMGRX.

In other words, CMGRX paid TRICARE beneficiaries to order certain substances. CMGRX paid doctors to prescribe the substances to the beneficiaries. TRICARE paid the pharmacies that provided the substances, and the pharmacies paid a portion of those funds to CMGRX. So, everyone involved in the scheme received money, except for TRICARE, who paid. And Cooper was intimately involved throughout the entire scheme. Among other things, Cooper: (1) helped recruit doctors, employees, and pharmacies; (2) negotiated the amount of funds pharmacies would kick back to CMGRX; (3) calculated the amount CMGRX would pay beneficiaries and doctors; (4) helped fund the nonprofit entity and control who it paid; (5) oversaw prescription formulas to help maximize CMGRX revenue; and (6) shared in CMGRX profits.

By May of 2015, TRICARE stopped reimbursing the pharmacies for filling the compounded drug prescriptions because it was losing too much money. CMGRX stopped operating and all money was taken out of the company. Early the next year Cooper and Cesario were arrested. A grand jury indicted Cooper, Cesario, and several others in a 40-count indictment. Cooper was charged on several of the counts: Count 1 for conspiring to commit health care fraud; Counts 16, 18–20, and 22–23 for receiving illegal kickbacks; and Counts 27–30 and 35–40 for paying illegal kickbacks. Most of the co-defendants pleaded guilty, but Cooper went to trial.

The jury reached a partial verdict as to Cooper. It convicted him on Count 1 for conspiring to commit health care fraud, Count 18 for receiving illegal kickbacks from a pharmacy called Dandy Drug, and Counts 35–40 for paying illegal kickbacks to TRICARE beneficiaries. The district court sentenced Cooper to a total of 240 months' imprisonment. Cooper appealed to this court, raising various challenges to his convictions based on statutory construction, sufficiency of the evidence, statements the district court made to the jury, and constitutional considerations.

II.

Cooper challenges his convictions under Counts 35–40 for paying illegal kickbacks to TRICARE beneficiaries. He argues that even if he could be tried under Counts 35–40, his convictions for those counts are not supported by sufficient evidence. We review de novo a defendant's properly preserved sufficiency-of-the-evidence challenge. United States v. Daniels , 930 F.3d 393, 402 (5th Cir. 2019). "The sufficiency challenge requires determining what conduct constitutes an offense," which is a statutory interpretation question we also review de novo. United States v. Williams , 602 F.3d 313, 315 (5th Cir. 2010). "In reviewing sufficiency of the evidence we view the evidence and all inferences to be drawn from it in the light most favorable to the verdict to determine if a rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Delgado , 401 F.3d 290, 296 (5th Cir. 2005) (quoting United States v. Posada–Rios , 158 F.3d 832, 855 (5th Cir. 1998) ).

Cooper claims that the government failed to meet its burden in showing that he paid TRICARE beneficiaries to induce them to "refer" individuals to doctors and pharmacies for products to be paid by TRICARE. Essentially, Cooper's view is that the evidence was insufficient to convict him of paying to induce "refer[rals]" under 42 U.S.C. § 1320a-7b(b)(2)(A) —the statutory provision on which the district court instructed the jury. The government counters that the payments Cooper made to TRICARE beneficiaries were to induce them to refer themselves to doctors and pharmacies, so the referral element of the provision is satisfied. We agree with Cooper.

Section 1320a-7b(b)(2)(A) designates as a felony when anyone "knowingly and willfully offers or pays any remuneration ... to any person to induce such person ... to refer an individual to a person" for the acquisition of an item paid for by a federal health care program. 42 U.S.C. § 1320a-7b(b)(2)(A) (emphasis added). The jury instructions given by the district court for Counts 35–40 mirrored this provision. The parties also agree that the language in the jury charge controls. In its brief, the government asserted that "the relevant sufficiency question is whether the jury's verdict—based on the court's instructions —is supported" (emphasis added), and Cooper readily agreed with that approach in his reply brief.

While the statute does not define the word "refer," "[w]hen interpreting statutes, ‘[w]ords are to be understood in their everyday meanings—unless the context indicates that they bear a technical sense.’ "

Thomas v. Dep't of Educ. (In re Thomas) , 931 F.3d 449, 454 (5th Cir. 2019) (quoting Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 69 (2012)). Given the medical context of the applicable anti-kickback provisions, the word "refer" should be given a technical meaning. See United States v. Patel , 778 F.3d 607, 613 (7th Cir. 2015) (discussing different meanings of the word "referral" and applying "[t]h[e] more expansive definition of ‘referral,’ [which] is frequently used in the medical context"). This broad definition of refer "includes not only a doctor's recommendation of a provider, but also a doctor's authorization of care by a particular provider." Id. at 612. As the Seventh Circuit has explained, the referrer typically serves a gatekeeping role, facilitating or approving a "patient's choice of provider." Stop Ill. Health Care Fraud, LLC v. Sayeed , 957 F.3d 743, 749 (7th Cir. 2020).

The question here is whether the statute's use of the term "refer," when given its technical meaning, covers what Cooper paid the TRICARE beneficiaries to do—obtain a product for their own use. We hold that it does not.

Start with the text. The plain text of the statute specifies that when a person pays "any person to induce such person " to "refer an individual to a person" to, say, order a prescription from that person, he commits a felony. 42 U.S.C. § 1320a-7b(b)(2)(A) (emphases added). That crowded sentence can be broken down like this: when A pays B to induce B to refer C to order a prescription from D, A commits a felony. The government, by contrast, says that B and C can be the same, such that A commits a felony when he pays B to induce B to self-refer B to order a prescription from D. That reading makes little sense on its own; without any legislative instructions to the contrary, the straightforward takeaway is that the "person" being paid and the "individual" whom the paid person refers are different people. We have said as much previously when we held that § 1320a-7b(b)(2)(A) "criminalizes the payment of any funds or benefits designed to encourage an individual to refer another party to a Medicare provider for services to be paid for by the Medicare program." United States v. Miles , 360 F.3d 472, 479 (5th Cir. 2004) (emphasis added); see also United States v. Ricard , 922 F.3d 639, 647 (5th Cir. 2019) ; United States v. Martinez , 921 F.3d 452, 466–67 (5th Cir. 2019). Thus, our decisions provide a straightforward and consistent explanation of this provision as applying to instances in which the defendant pays someone to induce that person to refer someone else to a health care good or service.

That is not to say that what Cooper did was not a felony, it just was not this felony. The very next subsection criminalizes inducing someone to "purchase" or "order" a substance "for which payment may be made in whole or in...