Federal court confirms broad reading of “willfully” in health care false statements cases: Ignorance of the law is no defense

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In Brief

  • The First Circuit recently confirmed that in prosecutions for false statements in health care matters, a defendant does not have to know that making the statement is illegal to be found to have acted “willfully” under the statute.
  • This ruling is consistent with other courts’ recent broad interpretations of “willfully” under the statute.

The Court of Appeals for the First Circuit has joined in an emerging trend of federal courts broadly interpreting what constitutes willful conduct in health care matters with its decision in United States v. Russell.

In upholding the conviction of a laid-off stockbroker who had failed to report his income from working under the table in an application for government-subsidized health care, the First Circuit made clear that ignorance of the law was no excuse. After submitting renewal forms for three years to continue his coverage, the stockbroker, Rodney Russell, was charged and convicted under 18 U.S.C. 1035, “Making False Statements in Relation to Health Care Matters.”

On appeal, Russell relied on the theory that the prosecution did not prove his knowledge of the illegality of his actions (i.e., that lying on the application for health care coverage would run afoul of the law). Russell challenged the trial court’s jury instructions, claiming that in order to show that he acted “willfully” under the statue, the prosecution would have to “not only prove that Russell’s statements were false and that he knew they were false, but that he also knew that making those false statements was illegal.” In making this argument, Russell relied on the Supreme Court’s ruling in Bryan v. United States, which defined “willful” in a different criminal context as “acting with a bad purpose.”

The First Circuit rejected this argument in its August decision, ruling that the same Supreme Court opinion noted that the term “willfully” is “a word with many meanings.” As such, the only “willful” act that Russell had to commit for conviction under §1035 was making a false statement while knowing it was false.

In the context of false statements in relation to health care matters, this broad definition of “willful” is consistent with other recent appellate decisions in federal courts. In June, the Ninth Circuit held in United States v. Ajoku that the “willfulness” requirement of §1035 simply means “deliberately and with knowledge; proving the defendant knew making the false statement was illegal is not required.”

Similarly, in July, the White Collar Watch reported on the Seventh Circuit decision in United States v. Natale, in which the court upheld another conviction under §1035. The defendant had argued on appeal that the term “willful” should equate to “specific intent” – in other words, that the defendant had the specific intent to deceive a health care benefit program. The Seventh Circuit rejected this argument, noting that it had “refused to find an ‘intent to deceive’ requirement in ‘willfulness’ language from other, similarly worded statutes.”

Rodney Russell was sentenced to five months in prison and three years of supervised release. Although the Russell defendant was a consumer of health care, not a provider, three takeaways are clear from his conviction. First, accurate reporting is crucial when participating in health care benefit programs. Second, providers should pay attention to the continuing trend of federal prosecutions for making false statements in relation to health care matters. Third, Courts of Appeals are narrowing the scope of potential defenses to a charge under §1035. Saul Ewing’s White Collar practice will continue to monitor this area closely and will provide updates.