Fifth Circuit: “Everybody Knew” Evidence Insufficient For Willfulness

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A recent Fifth Circuit decision, United States v. Nora,1 reversed a clerical employee’s convictions for conspiring to commit health care fraud, conspiring to pay or receive illegal health care kickbacks, and aiding and abetting health care fraud because there was no evidence that the employee knew that his conduct was unlawful. The Court’s decision sets a high bar for willful conduct that could potentially apply beyond the Medicare fraud context to other white-collar crimes and securities violations.

The Fraudulent Scheme

Appellant Jonathon Nora was the office manager at Abide Home Health Care Services, Inc., a home health care agency. Nora’s job responsibilities involved coordinating new patient intake — collecting insurance information, assigning a nurse to evaluate the patient’s eligibility for care, assigning a nurse to conduct home health care visits, and entering the data generated during these processes. Abide and its employees were charged with Medicare fraud, and a jury convicted Nora of conspiracy to commit health care fraud, conspiracy to pay or receive illegal health care kickbacks, and aiding and abetting health care fraud. Because Nora assigned prospective patients to doctors who approved medically unnecessary treatment plans, the government alleged that Nora was complicit in Medicare fraud. The government also pointed to Nora’s awareness of Abide’s practice of “ghosting” a patient and later recertifying that patient for care to avoid raising suspicions surrounding patients lingering in Abide’s system for years. Nora’s conviction for conspiracy to pay or receive illegal health care kickbacks was based on the fact that he processed kickback payments, maintained a log of referrals, and sometimes delivered kickback payments. As for Nora’s conviction for aiding and abetting health care fraud, the facts indicated that a group home called Nora to refer a patient that was ineligible for home health care and that Nora sent a nurse to assess the patient, referred the patient to Abide’s doctors, and processed the referral payment.

The Fifth Circuit’s Holding

Nora appealed his convictions to the Fifth Circuit, arguing that they were not supported by the evidence. The Fifth Circuit agreed and reversed Nora’s convictions for conspiracy and aiding and abetting. The Fifth Circuit held that there was insufficient evidence to conclude that Nora acted willfully, as required under both the health care fraud statute, 18 U.S.C. § 1347(a)(1), and the anti‑kickback statute, 42 U.S.C. § 1320a-7b(b)(2).

The Fifth Circuit emphasized that there was insufficient evidence to prove that Nora understood that Abide’s practices were fraudulent or unlawful. Though the government offered evidence that Nora received compliance and Medicare training, there was no evidence of “what this training entailed or if it discussed health care laws or Medicare regulations[.]”2 Even a form signed by Nora stating that he had been briefed on compliance and that he would report “any fraudulent behavior and/or abuse” as soon as possible was insufficient because it lacked a description of the compliance program.3 Further, evidence that Nora attended staff meetings that discussed changes to Medicare regulations was insufficient. And no other Abide employees testified that Nora understood the “unlawful or fraudulent purpose” behind Abide’s activities.4 Though other employees testified that “[e]veryone in the office” knew about ghosting, it was unclear if everyone knew that the practice was “employed to evade Medicare regulations.”5 Accordingly, the Fifth Circuit reversed Nora’s convictions and vacated his sentence.

Key Takeaways

The Fifth Circuit’s decision emphasizes that mere exposure or blind involvement in unlawful activity and evidence that “everybody knew” of the unlawful activity is not sufficient to constitute willfulness under the health care fraud statute, 18 U.S.C. § 1347(a)(1), or the anti-kickback statute, 42 U.S.C. § 1320a-7b(b)(2). Instead, the government must establish that the defendant knew that the precise conduct constituting fraud was unlawful; merely showing the defendant received general compliance training will not be sufficient.

Moreover, because the Fifth Circuit opined on the definition of willfulness in a criminal statute, Nora’s reasoning could very likely have implications beyond the Medicare fraud context to other areas of the law where willfulness is an element of the crime, including white-collar crimes and securities fraud.6 In this sense, it may reflect a growing trend among circuit courts of raising the bar for prosecutors to show willfulness sufficient for criminal conviction where it is not clear that the conduct in question was intentional. For example, the District of Columbia Circuit’s 2019 decision in Robare Group, Ltd., v. SEC, 922 F.3d 468, 480 (D.C. Cir. 2019) held that negligent conduct cannot constitute willfulness under the Investment Advisers Act of 1940. At the very least, these decisions should be something practitioners consider when analyzing criminal issues regarding willful conduct.

1 No. 18-31078, 2021 WL 716628 (5th Cir. Feb. 24, 2021).

2 Id. at *6.

3 Id.

4 Id. at *7.

5 Id.

6 See id. at *5.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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