United States v. Beth Palin

874 F.3d 418
CourtCourt of Appeals for the Fourth Circuit
DecidedOctober 30, 2017
Docket16-4522, 16-4540
StatusPublished
Cited by20 cases

This text of 874 F.3d 418 (United States v. Beth Palin) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Beth Palin, 874 F.3d 418 (4th Cir. 2017).

Opinion

Affirmed by published opinion. Judge Motz wrote the opinion, in which Judge Duncan and Judge Wynn joined.

DIANA GRIBBON MOTZ, Circuit Judge:

After a bench trial, the district court found Beth Palin and Joseph Webb (wife and husband) guilty of health care fraud and conspiracy to engage in health care fraud, in violation of 18 U.S.C. §§ 1347 and 1349. Palin and Webb appeal, principally contending the district court failed to apply the correct standard of materiality and failed to find their misrepresentations were material. For the reasons that follow, we affirm.

I.

During a two-week trial, the district court considered numerous documents and the testimony of more than twenty witnesses.- We briefly summarize that evidence.

Palin owned Mountain’Empire Medical Care (“MEMC”), an addiction medicine clinic, and Bristol Laboratories (“the Lab”), which processed urine drug tests ordered by MEMC doctors, among others. Webb assisted Palin in the operation of both facilities.

The Lab performed two types of urine tests: the basic, inexpensive “quick-cup” test and a more sophisticated, more expensive “analyzer” test. Although referring doctors ordered their patients to undergo drug tests, the doctors did not specify the type of test. Palin and Webb made that decision, instituting procedures in which insured patients were treated differently than uninsured patients. In general, uninsured patients paid cash and received one test each week—the “quick-cup” test. Insured patients received both the “quick-cup” and the more expensive “analyzer” test. The Lab billed insurers (which included Medicare and private insurance companies) for the sophisticated test.

In a detailed written opinion, the district court found Palin and Webb “knowingly and willfully executed a scheme to defraud health care benefit programs” in violation of §§ 1347 and 1349. The court found that performing additional, weekly, expensive tests for insured patients was not medically necessary; that insurers have rules prohibiting providers from submitting claims for unnecessary tests; and that Palin and Webb knew the additional tests were unnecessary but hid that fact when billing the insurers. The court, however, did not expressly mention materiality.

Palin and Webb then moved for judgments of acquittal or, in the alternative, for a new trial, relying in part on Universal Health Services, Inc. v. United States ex rel Escobar, - U.S. -, 136 S.Ct. 1989, 195 L.Ed.2d 348 (2016), which issued after the district court had found them guilty. They contended that Universal Health changed the materiality standard applicable to health care fraud under § 1347 and, under the new standard, their asserted misrepresentations were not material.

The district court issued a careful opinion and order denying the motions. In that opinion and order, the court acknowledged that its opinion finding Palin and Webb guilty did not discuss materiality as an element of health care fraud. But the court explained that the misrepresentations at issue in this case were material, even assuming the standard outlined in Universal Health applied.

This appeal followed.

II.

A.

On appeal, the Government agrees with the defendants that materiality constitutes an element of health care fraud and conspiracy to commit health care fraud. That concession is well-advised. Section 1347 provides that it is a crime to “knowingly and willfully execute[ ] ... a scheme or artifice ... to defraud any health care benefit program” or obtain money or property from a health care benefit program “by means of false or fraudulent pretenses, representations, or promises.” This language mirrors that in the longstanding federal mail fraud (18 U.S.C. § 1341), wire fraud (§ 1343), and bank fraud (§ 1344) statutes, which similarly prohibit any “scheme or artifice to defraud” or obtaining money or property “by means of false or fraudulent pretenses, representations, or promises.” In Neder v. United States, 527 U.S. 1, 21-25, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999), the Supreme Court held that the mail, wire, and bank fraud statutes incorporated the common-law definition of “fraud,” which requires “a misrepresentation or concealment of material fact,” meaning materiality is an implicit element of those statutes. Although Neder did not examine § 1347, the same analysis applies and compels the same result—materiality constitutes an element of health care fraud. See United States v. Perry, 757 F.3d 166, 175-76 (4th Cir. 2014).

■ Because materiality constitutes an element of'their offenses, we must éxamine whether, as Palin and Webb contend, the district court erred by not expressly ruling on materiality when finding them guilty. The extent to which the court considered materiality at that stage is unclear. On one hand, as the court acknowledged in denying the post-trial motions, it “did not include any reference to a materiality element” in its opinion finding Palin and Webb guilty. On the other, the court never stated in that opinion that it had concluded materiality was not an element of health care fraud. Moreover, its findings suggest that it viewed the misrepresentations at issue here—that the sophisticated tests were medically necessary—as material to the decision by insurers to pay for claims submitted by the Lab. For example, the district court found that Palin and Webb performed medically unnecessary tests, hid this fact from insurers, and sought payment for those tests from insurers when applicable rules prohibited the submission of claims for medically unnecessary tests.

Assuming the district court did err in failing to consider materiality ex-' pressly when assessing guilt,- harmless error review applies. See Neder, 527 U.S. at 15, 119 S.Ct. 1827 (a court reviews an omission of an element of an offense for harmless error). An error is harmless only if the reviewing court concludes beyond a reasonable doubt that the verdict would, have been the same absent the error. See id. at 19, 119 S.Ct. 1827. In.the context of a bench trial, that inquiry turns on whether “it is clear- that a rational fact finder would have found [the defendant] guilty absent the error.” See United States v. Poole, 640 F.3d 114, 120 (4th Cir. 2011). Moreover, in determining if an error is harmless, a reviewing court may consider the entire record, including the trial court’s discussion of its error during post-trial proceedings. See id.

Even if the district court failed to consider materiality when finding Palin and Webb guilty, the error was harmless. The record contains no evidence “that could rationally lead to a contrary finding with respect 'to that omitted' element.” See United States v. Brown, 202 F.3d 691, 700-01 (4th Cir.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

United States v. Steven Fulton
Fourth Circuit, 2025
United States v. James Smith
Fourth Circuit, 2022
United States v. James Johnson
Fourth Circuit, 2022
United States v. Hassan Ali
991 F.3d 561 (Fourth Circuit, 2021)
United States v. Bijan Rafiekian
991 F.3d 529 (Fourth Circuit, 2021)
United States v. Rebecca Moriello
980 F.3d 924 (Fourth Circuit, 2020)
United States v. Terry Millender
970 F.3d 523 (Fourth Circuit, 2020)
United States v. Salomon E. Melgen
967 F.3d 1250 (Eleventh Circuit, 2020)
LONGO v. WHEELING HOSPITAL, INC.
N.D. West Virginia, 2019
United States v. Daley
378 F. Supp. 3d 539 (W.D. Virginia, 2019)
United States v. Verdon Taylor
Fourth Circuit, 2019
United States v. Josepha Kasai
Fourth Circuit, 2018
United States v. Robin Peavler
900 F.3d 743 (Sixth Circuit, 2018)
United States v. Oaks
302 F. Supp. 3d 716 (D. Maryland, 2018)
United States v. Barry Terry
Fourth Circuit, 2018
United States v. Mohsin Raza
876 F.3d 604 (Fourth Circuit, 2017)

Cite This Page — Counsel Stack

Bluebook (online)
874 F.3d 418, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-beth-palin-ca4-2017.