US v. Neufeld

• Decision Date: 27 November 1995
• Docket Number: No. CR-2-94-144 (1).,CR-2-94-144 (1).
• Citation: 908 F. Supp. 491
• Parties: UNITED STATES of America, Plaintiff, v. Elliot NEUFELD, D.O., and Jon Mickle, Defendants.
• Court: U.S. District Court — Southern District of Ohio

908 F. Supp. 491

UNITED STATES of America, Plaintiff, v. Elliot NEUFELD, D.O., and Jon Mickle, Defendants.

No. CR-2-94-144 (1).

United States District Court, S.D. Ohio, Eastern Division.

November 27, 1995.

Roger Philip Sugarman, Robert Carl Schuler, Emens Kegler Brown Hill & Ritter, Columbus, OH, James Streicker, Chicago, IL, for Elliot Neufeld.

David Joseph Bosley, United States Attorney's Office, Columbus, OH, William Bowne, U.S. Department of Justice, Fraud Section, Washington, DC, for the U.S.

OPINION AND ORDER

GEORGE C. SMITH, District Judge.

This matter is before the Court on defendant Neufeld's motion to dismiss the indictment. Since the filing of this motion the government filed an "Amended Superseding Indictment" and a "Second Superseding Indictment." Defendant Jon Mickle has not filed a motion to dismiss the indictment. This ruling addresses defendant Neufeld's motion to dismiss the indictment in light of the Second Superseding Indictment.

I. Background

Defendant Dr. Neufeld is an osteopathic physician who has been licensed to practice medicine in the State of Ohio since 1975. Since the mid-1980s, Dr. Neufeld has focused his practice on treating HIV-positive patients and those afflicted with Acquired Immune Deficiency Syndrome ("AIDS"). Dr. Neufeld provides the primary care for more HIV/AIDS patients than any other physician in the Columbus area and he is a registered provider of Medicare and Medicaid services.

Medicare and Medicaid are medical insurance programs designed to ensure that the elderly, unemployed, self-employed and low-paid workers receive quality health care. Congress established Medicare under Title XVIII of the Social Security Act of 1965, 42 U.S.C. § 1395 et seq. Congress established Medicaid under Title XIX of the Social Security Act of 1965, 42 U.S.C. § 1396 et seq. These programs cover the cost of home health care services and the purchase of durable medical equipment.

In late 1990, Caremark, a home infusion company, expanded its home health care services in the Columbus area to include treatment of AIDS patients. The company requested Dr. Neufeld's services as a consultant to assist in the development of treatment and educational programs for its staff and its patients. Dr. Neufeld was paid for services allegedly performed under these written Consulting Agreements. The payments he received pursuant to these agreements form the basis for the charges in the indictment.

Count one (1) of the indictment charges a conspiracy to violate the anti-kickback provisions of the Medicaid-Medicare Anti-Kickback statute ("Anti-Kickback statute"), 42 U.S.C. §§ 1320a-7b(b). Counts two through twenty-seven of the indictment charge Dr. Neufeld with substantive violations of the Anti-Kickback statute, 42 U.S.C. § 1320a-7b(b). Counts twenty-eight through thirty charge mail fraud in violation of 18 U.S.C. §§ 1341 and 2.

II. DISCUSSION

Dr. Neufeld moves to dismiss the indictment in its entirety or various counts thereof. He makes several arguments in support of his motion. Dr. Neufeld first contends that the indictment must be dismissed because all counts are premised on the Anti-Kickback statute which is unconstitutionally vague on its face and as applied to him. Dr. Neufeld further asserts that even if the Anti-Kickback statute is not vague, due process requires that the government be estopped from prosecuting him because he falls within a safe harbor provision of the Anti-Kickback statute. Finally, Dr. Neufeld contends that counts twenty-eight, twenty-nine and thirty of the Indictment must be dismissed because as mail and wire fraud counts, they fail in three separate respects to allege a violation by Dr. Neufeld.

The Court will first address Dr. Neufeld's vagueness argument.

A. Vagueness of the Anti-Kickback Statute

The Anti-Kickback statute, 42 U.S.C. § 1320a-7b(b), represents a cumulation of several years of Congressional effort to combat fraud and abuse in the Medicare and Medicaid programs. Congress first enacted the Medicare-Medicaid Anti-Kickback laws in 1972. See Social Security Amendments Act, Pub.L. No. 92-603, §§ 242(b) (Medicare) and (c) (Medicaid), 86 Stat. 1419 (1972). This law made it a misdemeanor to solicit, offer, or receive "any kickback or bribe in connection with" furnishing covered services or referring a patient to a provider of those services. Id.

In 1977, Congress expanded upon the 1972 statute. Congress made violations of the statute a felony and additionally proscribed the solicitation or receipt of "any remuneration," including any kickback, bribe, or rebate, in return for referring a patient to a provider of covered services, regardless of whether the prohibited act was done "directly or indirectly," "overtly or covertly," or "in cash or in kind." Medicare-Medicaid Anti-fraud and Abuse Amendments, Pub.L. No. 95-142, 91 Stat. 1179, 1181 (1977).

A certain uneasiness with the application of the Anti-Kickback statute led Congress to revise the statute again in 1980:

Congress was concerned that criminal penalties may be imposed under current law to an individual whose conduct, while improper, was inadvertent. Accordingly, the section clarifies current law to assure that only persons who knowingly and willfully engage in the proscribed conduct could be subject to criminal sanctions.

H.R.Rep. No. 96-1167, at 59, reprinted in 1980 U.S.C.C.A.N. 5526, 5572. The statute's additional scienter requirement specifically required that one "knowingly and willfully" perform a prohibited act to be found guilty of a violation. See Omnibus Reconciliation Act of 1980, Pub.L. No. 96-499, 94 Stat. 2599, 2625 (1980) (codified as amended at 42 U.S.C. § 1395nn(b)(1)).

In 1987, Congress streamlined the Anti-Kickback statute into a single statutory scheme, codified at 42 U.S.C. § 1320a-7b(b). This is the current version of the statute and provides in relevant part:

(1) Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, for cash or in kind —

(A) in return for referring an individual to a person for the furnishing of any item or service for which payment may be made in whole or in part under Medicare or Medicaid or a State health care program, or

(B) in return for purchasing, leasing, ordering or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made under Medicare or Medicaid or a State health care program,

shall be guilty of a felony ...

Id.

Dr. Neufeld contends that the Anti-Kickback statute does not give fair warning of the standards by which his conduct is to be judged. He asserts that the statute is vague on its face as well as applied to his alleged conduct. Although previous versions of the Anti-Kickback statute have been upheld on vagueness challenges in this Circuit, see United States v. Tapert, 625 F.2d 111, 121-22 (6th Cir.), cert. denied, 449 U.S. 1034, 101 S.Ct. 609, 66 L.Ed.2d 496 (1980); United States v. Perlstein, 632 F.2d 661, 662 n. 1 (6th Cir.1980), cert. denied, 449 U.S. 1084, 101 S.Ct. 871, 66 L.Ed.2d 809 (1981), Dr. Neufeld submits that revisions to the statute and recent Supreme Court pronouncements limit the precedential value of these decisions.

The Supreme Court has held that a "criminal statute must be sufficiently definite to give notice of the required conduct to one who would avoid its penalties." Boyce Motor Lines, Inc. v. United States, 342 U.S. 337, 340, 72 S.Ct. 329, 330, 96 L.Ed. 367 (1952); see also Posters `N' Things, Ltd. v. United States, ___ U.S. ___, ___, 114 S.Ct. 1747, 1754, 128 L.Ed.2d 539 (1994); Grayned v. City of Rockford, 408 U.S. 104, 108-09, 92 S.Ct. 2294, 2298-99, 33 L.Ed.2d 222 (1972). A facial vagueness challenge which does not implicate constitutionally protected conduct, however, will only lie if the statute "is impermissibly vague in all of its applications." Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 495, 102 S.Ct. 1186, 1191, 71 L.Ed.2d 362 (1982); see also United States v. Mazurie, 419 U.S. 544, 550, 95 S.Ct. 710, 714, 42 L.Ed.2d 706 (1975) ("Vagueness challenges to statutes which do not involve First Amendment freedoms must be examined in the light of facts of the case at hand."). In light of Hoffman Estates and Mazurie, the Court observes that a facial vagueness analysis is not necessarily warranted given that Dr. Neufeld does not contend that the Anti-Kickback statute infringes upon his constitutional liberties. The Court, nonetheless, will proceed in an analysis of the Anti-Kickback statute for facial vagueness. See, e.g., Hanlester Network v. Shalala, 51 F.3d 1390, 1399-1400 (9th Cir.1995); Tapert, 625 F.2d at 121-22 (addressing an earlier version of the statute).

The Supreme Court has enumerated four factors that must be considered in conducting a vagueness inquiry: (1) does the statute regulate economic activity; (2) does it contemplate civil or criminal penalties; (3) does it contain a scienter requirement; and (4) does it threaten any constitutionally protected rights? Posters `N' Things, ___ U.S. at ___, 114 S.Ct. at 1754; Hoffman Estates, 455 U.S. at 498-99, 102 S.Ct. at 1193-94.

After careful consideration of the four factors, the Court does not find 42 U.S.C. § 1320a-7b(b) to be unconstitutionally vague on its face. While the statute does provide for criminal penalties, all other factors mitigate against a facial vagueness challenge. First of all, the statute regulates economic activity which is "subject to a less strict vagueness test." Hoffman Estates, 455 U.S. at 498, 102 S.Ct. at 1193. Moreover, the statute does not implicate constitutionally protected rights and contains a heightened scienter requirement.

The heightened scienter standard of the Anti-Kickback statute requires that the government prove that the defendant "knowingly and willfully" accept renumeration "in return for" ...