United States v. Shah, No. 19-12319

• Decision Date: 24 November 2020
• Docket Number: No. 19-12319
• Citation: 981 F.3d 920
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Alap SHAH, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

981 F.3d 920

UNITED STATES of America, Plaintiff-Appellee,

v.Alap SHAH, Defendant-Appellant.

No. 19-12319

United States Court of Appeals, Eleventh Circuit.

November 24, 2020

Randall Dana Katz, U.S. Attorney's Office, FORT LAUDERDALE, FL, Daniel Matzkin, Lisa Tobin Rubio, Emily M. Smachetti, U.S. Attorney Service - SFL, MIAMI, FL, Scott Dion, U.S. Attorney's Office, MIAMI, FL, for Plaintiff - Appellee.

Paul Stephen Kish, Kish Law, LLC, ATLANTA, GA, Larry Donald Murrell, Jr., Law Office of L.D. Murrell, PA, WEST PALM BEACH, FL, for Defendant - Appellant.

Amy Levin Weil, The Weil Firm, ATLANTA, GA, for Amicus Curiae AMERICAN MEDICAL ASSOCIATION.

Before WILLIAM PRYOR, Chief Judge, HULL and MARCUS, Circuit Judges.

WILLIAM PRYOR, Chief Judge:

This appeal of convictions for receiving healthcare kickback payments, 42 U.S.C. § 1320a-7b(b), requires us to decide whether an error in a jury instruction was harmless. At the request of the government, the district court instructed the jury that Dr. Alap Shah violated the statute prohibiting kickbacks if one reason he accepted the payment was because it was in return for writing prescriptions. In his written briefs on appeal, Shah argued that the district court erred and should have instructed the jury that the government was required to prove that his main or only reason for accepting the payment was because it was made in return for writing prescriptions. The government defended the jury instruction as a correct statement of the law. We instructed the parties to be prepared to address at oral argument whether the text of the statute makes clear that Shah's motivation for accepting kickbacks was irrelevant. Both parties then agreed at oral argument that the jury instruction was erroneous and that the statute requires no proof of the defendant's motivation for accepting the illegal payment, so long as he accepts the kickback knowingly and willfully. But the parties disagreed about whether the error harmed Shah. We conclude beyond a reasonable doubt that the error caused Shah no harm because it required the government to prove even more than the statute required. We affirm.

I. BACKGROUND

Dr. Alap Shah was a podiatrist in Columbus, Georgia. He sometimes prescribed compounded medicines to his patients. Compounded medicines are custom-formulated drugs that can vary from off-the-shelf drugs in strength, delivery method, or combinations. For example, a compounded medicine might be a cream that combines three pain-reducing drugs ordinarily produced in pill form at a lower strength than available off the shelf. Specialized pharmacies produce compounded medicines, which are much more expensive than off-the-shelf prescription medications. A single tube of a compounded cream can cost $15,000 or more.

Shah and about 20 others participated in a kickback conspiracy that involved writing prescriptions for compounded drugs. Each of them faxed prescriptions for compounded drugs to a company called PGRx Group, which in turn directed a compounding pharmacy to fill the prescriptions. The pharmacy paid PGRx Group a kickback, usually around 50 percent of its profits, for each prescription PGRx Group referred to it. PGRx Group passed part of that kickback on to the prescribing doctor.

Shah received his share of the profits as a flat monthly payment of $5,000, and some other doctors received a percent commission from the prescriptions they wrote. PGRx Group disguised the nature of the payments by hiring the doctors to be "medical directors," by calling the payments speaker fees for promoting PGRx Group and compounded drugs at professional events, and by routing payments to the prescribing doctors’ family members or employees.

Shah joined the conspiracy in May 2014 after being recruited by its masterminds, Paul Meek and Gary Small. Meek and Small invited Shah to be a medical director for PGRx Group. They offered him $5,000 each month for his participation, and they sent him a contract that explained his duties as a medical director.

Shah corrected a typo in the contract before signing it. The contract provided Shah's duties as a medical director included performing on-site supervision and training, management, and administrative responsibilities. And the contract required PGRx Group to provide Shah with office space in its facility.

Shah performed none of his duties under the contract. Far from providing on-site supervision and training, he did not even know where PGRx Group was located. And PGRx Group never provided him with office space. But even so, PGRx Group always paid Shah $5,000 a month.

After seven months, PGRx Group told Shah he would receive the same payments under a new contract. The new contract required Shah to promote PGRx Group as a speaker. Shah promoted PGRx Group no more than a handful of times, but he continued receiving his payments of $5,000 each month.

Shah prescribed compounded medications far more often after he signed the contracts with PGRx Group than before he signed the contract. For example, in a six-month period before the conspiracy began—from August 2013 to February 2014—Shah wrote 26 prescriptions for compounded medications. But in a six-month period during the conspiracy—from August 2014 to February 2015—he wrote 209 prescriptions for compounded medications. At trial, Shah nevertheless insisted that he never wrote a prescription that a patient did not need.

Frequent text messages and emails between Shah and his cohorts, Meek and Small, showed that the medical director and speaker contracts were a sham. At one point, Meek wrote to Shah, "If we can get five to ten scripts a day from you, I believe then we will be good to go." Shah answered, "I will do what I can." Another time, Shah warned Small, "I will be on vacation this week, so you may see a drop off in numbers. FYI: Will pick up starting week 4/6 again." Meek and Small both asked Shah about a dropoff in prescriptions during July 2014. Small wrote, "Our records indicat[e] only three scripts sent for the month of July. If this sounds incorrect on your side, please resend if you have time." Shah responded, "I will look into it[.]" And Meek wrote: "I'm checking in as I have not seen any scripts for the month of July. Am I looking at the wrong line?" Shah responded, "I was out of town until 7/7 but wrote all last week and this. Are you sure?"

They also corresponded about insurance coverage and reimbursement rates for different drugs. Tricare, a federal program for members of the military and their families, paid for many of the prescriptions Shah wrote. It reimbursed at a higher rate than other insurance companies. Shah texted Small at one point to say that he "got two TRICAREs" that he "want[ed] to give" Meek and Small. Another time, Shah wrote, "Need script for wellness vitamins. Don't have. Heard TRICARE pays well." Near the end of the conspiracy, when Tricare stopped reimbursing as generously for compounded medications, Shah texted Small to ask why he wasn't being paid. Small responded in detail: "We are getting a few hundred dollars per script on the PPO and Medicare. The TRICARE is being tested now possibly over $10,000 a script and we will know soon." Shah also offered to change his prescription practices. He wrote to Small, "I can push cream instead. Thought patches might be good pay." Small replied, "Patches pay a little bit less than the creams."

Shah continued in this role until around May 2015, when Tricare made the conspiracy less profitable by instituting a prior-authorization requirement for compounded drugs. All told, he received checks from PGRx Group totaling $55,350.43. The prescriptions he wrote during the conspiracy cost Tricare more than a million dollars.

A grand jury charged Shah with one count of conspiring to receive kickbacks for writing prescriptions or to defraud the government and three counts of receiving kickbacks for writing prescriptions—one count each for kickbacks in July, August, and September 2014. 18 U.S.C. § 371 ; 42 U.S.C. § 1320a-7b(b)(1)(B). Shah pleaded not guilty, and the case went to trial.

Over Shah's objection, the government asked the judge to instruct the jury that "the government must only prove that inducing the [writing of prescriptions] was one of the Defendant's purposes in soliciting or receiving the remuneration or kickback." The district court decided to give an instruction similar to the one requested: Shah was guilty if "obtaining payment in return for [writing prescriptions] was one of [his] purposes in soliciting or receiving the remuneration or kickback." That instruction read as follows:

To satisfy the second element of this offense, the Government does not have to prove that the defendant's sole purpose in soliciting or receiving the remuneration or kickback was to obtain payment in return for the purchasing, leasing, ordering and arranging for, and recommending purchasing, leasing and ordering. Rather, the Government must only prove that obtaining payment in return for the purchasing, ordering or leasing was one of the defendant's purposes in soliciting or receiving the remuneration or kickback.

The district court also instructed the jury that the government must prove that Shah accepted the payments knowingly and willfully and that he committed no crime if he accepted the payments in good faith.

Shah's closing argument focused on mens rea and the good-faith defense. He began by telling the jury that "[t]he case is about whether Dr. Shah acted willfully." "That's the key," he reiterated. He summarized evidence showing that Shah thought the scheme was legal. And he concluded the argument by reminding the jury that it was obligated to acquit Shah "if he thought [the scheme] was legal." "That's the promise of America," he told them. "That's the promise that you made when you were sworn in as a juror."

The jury convicted Shah of count one, conspiring to receive health care kickbacks or defraud the United States, and counts three and four, receiving kickbacks in August and...