United States District Court, W.D. Virginia, Abingdon Division
M. Myatt, Special Assistant United States Attorney, and
Zachary T. Lee, Assistant United States Attorney, Abingdon,
Virginia, for United States;
Michael J. Khouri, Khouri Law Firm, Irvine, California, for
Defendant Beth Palin;
C. Dickenson, Assistant Federal Public Defender, Abingdon,
Virginia, for Defendant Joseph D. Webb.
OPINION AND ORDER
P. Jones United States District Judge
remaining defendants in this criminal case, Beth Palin and
Joseph D. Webb, have separately filed motions for judgment of
acquittal, or for a new trial in the alternative, challenging
their convictions of healthcare fraud and conspiracy to
commit healthcare fraud. For the following reasons, I will
deny the motions.
facts of this case are set forth in detail in my earlier
opinion stating my findings following a bench trial (Op.,
Apr. 7, 2016, ECF No. 297) and I will not repeat them here.
Palin owned both Mtn. Empire Medical Care LLC
(“MEMC”), an addiction medicine clinic, and
Bristol Laboratories, LLC (“Bristol Labs”), the
lab that processed the urine drug screens ordered for
patients of MEMC and patients of a deceased coconspirator,
Charles K. Wagner, M.D. Webb, Palin’s husband, was not
an owner of the clinic but held himself out as one and was
heavily involved in the operation of both MEMC and Bristol
Labs. The government alleged and proved, in a nonjury trial,
that Palin and Webb devised a scheme to defraud Medicare, two
state Medicaid programs, and various private insurers by
conducting and billing for urine drug screens that they knew
were not medically necessary.
seeks acquittal or a new trial on two grounds: (1) that the
Supreme Court’s recent decision in Universal Health
Services, Inc. v. United States, 136 S.Ct. 1989 (2016),
altered the applicable law, and (2) that there was
insufficient evidence to support her conviction. Webb’s
post-trial motion asserts that the evidence was insufficient
to support his conviction. The motions have been fully
briefed and are ripe for decision. I will dispense with oral
argument because the facts and legal contentions are
adequately presented in the materials before the court and
argument would not significantly aide the decisional process.
is only one ground for a motion for judgment of acquittal.
This is that the evidence is insufficient to sustain a
conviction of one or more of the offenses charged in the
indictment or information.” United States v.
Hoover-Hankerson, 406 F.Supp.2d 76, 81-82 (D.D.C. 2005)
(citation omitted), aff’d, 511 F.3d 164 (D.C.
Cir. 2007). “A defendant challenging the sufficiency of
the evidence faces ‘a heavy burden.’”
United States v. Thorne, 614 F. App’x 646, 647
(4th Cir. 2015) (unpublished) (quoting United States v.
McLean, 715 F.3d 129, 137 (4th Cir. 2013)).
review of a motion for acquittal under Rule 29, the court
“must sustain the verdict if there is substantial
evidence” to uphold the verdict. Burks v. United
States, 437 U.S. 1, 17 (1978). In the context of a
criminal conviction, the Fourth Circuit has defined
substantial evidence as “that evidence which ‘a
reasonable finder of fact could accept as adequate and
sufficient to support a conclusion of a defendant’s
guilt beyond a reasonable doubt.’” United
States v. Newsome, 322 F.3d 328, 333 (4th Cir. 2003)
(quoting United States v. Burgos, 94 F.3d 849,
862-63 (4th Cir. 1996) (en banc)). The court must consider
“circumstantial as well as direct evidence.”
United States v. Tresvant, 677 F.2d 1018, 1021 (4th
Rule of Criminal Procedure 33(a) provides, “Upon the
defendant's motion, the court may vacate any judgment and
grant a new trial if the interest of justice so requires. If
the case was tried without a jury, the court may take
additional testimony and enter a new judgment.”
“The issue of whether to grant a new trial is firmly
committed to the discretion of the trial court.”
United States v. Head, Nos. 94-5858, 94-5859,
94-5906, 94-5907, 1996 WL 60445, at *2 (4th Cir. Feb. 12,
this case was decided by the court after a bench trial, I
have already thoroughly reviewed the evidence and concluded
that it was sufficient to convict the defendants. Palin
argues that there was insufficient evidence of fraud because
“the Government failed to provide evidence to the trier
of fact of any material lie, misrepresentation, or misleading
act or omission.” (Def. Beth Palin’s Mot. for J.
of Acquittal or, In the Alternative, New Trial 15, ECF No.
338.) I disagree with this assessment of the evidence. Palin
committed fraud when she developed a scheme by which her
subordinates and agents, who were not medical professionals,
would order and bill for medically unnecessary urine drug
screens that were not used in patient treatment. By
submitting claims for payment, Palin misrepresented that the
tests had been ordered for individual patients by physicians
based on medical necessity, as the insurers required, when in
fact the orders were usually completed by non-physician staff
members automatically, at Palin’s direction, without
any individually determined medical need for the tests. The
various healthcare benefit programs prohibited Bristol Labs
from submitting claims for medically unnecessary services and
would not have paid for the urine drug screens had they known
the tests were medically unnecessary. That is sufficient
evidence to support a conviction of health care fraud. The
evidence further showed that Palin entered into an agreement
with Webb and Wagner and took acts in furtherance of that
agreement, supporting her conviction of conspiracy to commit
health care fraud.
contends that he is entitled to judgment of acquittal because
“the government did not prove that Medicare was a
health care benefit program affecting commerce as defined in
the statute because there was not adequate testimony about
commerce.” (Renewed Mot. for J. of Acquittal or In the
Alternative Mot. for New Trial 1-2, ECF No. 339.) For
purposes of the health care fraud statute, a “health
care benefit program” is “any public or private
plan or contract, affecting commerce, under which any medical
benefit, item, or service is provided to any individual, and
includes any individual or entity who is providing a medical
benefit, item, or service for which payment may be made under
the plan or contract.” 18 U.S.C. § 24(b).
“Courts have interpreted ‘affecting
commerce’ to mean affecting interstate commerce.”
United States v. Natale, 719 F.3d 719, 732 n.5 (7th
Cir. 2013). Courts of appeal that have considered challenges
like Webb’s have found sufficient evidence of
interstate commerce where the record showed that: (1)
defrauded insurance companies were based out of state and did
business throughout the United States, United States v.
Gelin, 712 F.3d 612, 620 (1st Cir. 2013); (2) the
federal government funded 60% of a defrauded state Medicaid
program, United States v. Kpohanu, 377 F.
App’x 519, 523 (6th Cir. 2010) (unpublished); and (3)
“the fraud was to Medicaid, a federally funded program
that affects commerce, ” United States v.
Girod, 646 F.3d 304, 316 (5th Cir. 2011). Indeed, the
Fifth Circuit has stated,
[I]t cannot seriously be contended that Medicare and Medicaid
do not affect commerce. The provision of medical services
affects interstate commerce because both physicians and
hospitals serve nonresident patients and receive
reimbursement through Medicare payments, and the regulated
activity in this case substantially affects commerce and is
linked to interstate commerce.
United States v. Ogba, 526 F.3d 214, 238 (5th Cir.
2008) (internal quotation marks, footnotes, and ...