Clay: Affirming health care fraud convictions

In U.S. v. Clay, No. 14-12373 (Aug. 11, 2016), in a 124-page opinion, the Court affirmed convictions of defendants convicted, after a three-month trial, of filing false Medicaid expense reports. After a length recitation of the facts, the Court rejected challenges to the sufficiency of the evidence. The Court found “abundant” evidence of false expenses, noting that the firm’s own forensic accountant testified that reported expense amounts were false. The Court found that Florida’s “80/20” law, and implementing contracts, mandated that 80% of the premium paid to a health plan must be expended for health care services, and could not count as administrative expenses or overhead. The defendants submitted false reports to avoid these mandated requirements, and knew their reports were false. The Court also affirmed the convictions for making false statements to federal agents. The Court also rejected a challenge to jury instructions. The defendants argued that the jury instruction regarding their “deliberate indifference to the truth” lowered the standard to recklessness, instead of an intent to defraud. The Court found that the instruction linked “deliberate indifference” to “intent to defraud.” Further, the trial proceeded under a theory of actual knowledge rather than deliberate indifference. The Court also rejected the defendants’ challenge to the district court’s ruling that their compensation could be admitted in evidence. The Court noted that the district court instructed the jury that the defendants’ wealth had nothing to do with their guilty, but was admitted only to show their “financial motive” to commit the charged frauds. The Court also rejected a challenge to the admissibility of a restated financial statement, generated while the company was under investigation.