Fraud or just a wee mistake?

After a steady stream of disappointing decisions, you wouldn't have to be a whiz to guess that the number one case in today's opinions would come out poorly for the defendants, who all ended up in hot water. Okay, okay, enough puns. Today's published opinion in United States v. Bertram et al. is about, well, urine. Urine and health care fraud.

The five defendants in this case started a company that provided urinalysis testing services for drug treatment clinics. At some point, the company's equipment broke down, resulting in a testing backlog --- a problem for a company offering their physician customers quick results to determine whether patients were abusing drugs. The company held those samples on ice, sometimes for months. When they managed to clear the backlog, they tested the now-months-old samples and billed for them. The government accused the defendants of billing for services that they knew to be medically unnecessary. The government (never opposed to gilding the lily) brought an indictment containing over 100 counts against the defendants. The jury ultimately acquitted them of more than eighty counts, but convicted of seventeen counts. 

In challenging the sufficiency of the evidence, the defendants argued that they had provided the services they billed for, they never made any material misrepresentations, and they did not omit any information that the doctors requested. Indeed, the doctors never required that the tests be performed in a specific amount of time. These might seem to be necessary facts in a fraud case, which requires proof of "any false statements or assertions that concern a material aspect of the matter in question, that were either known to be untrue when made or made with reckless indifference to the truth." It does not appear that there were any such misrepresentations here. The court disagreed, holding that when they submitted bills for services rendered many months after they were requested, the defendants knew that the tests were no longer necessary and failed to inform the doctors of this fact. This omission was itself fraudulent, and the court affirmed the convictions.

One of the defendants successfully appealed his sentence, however, arguing that the court erred in imposing a manager enhancement because there was no evidence that he exerted control over any other criminal participant. The appeals court agreed, noting that the district court's conclusion that "everybody's making decisions in this case" did not suffice to justify the enhancement. Once again, the Sixth Circuit requires express findings on the record that a defendant exerted control over another criminal participant.

It's an overall disappointing decision, but if you're looking for a helpful sentencing argument then urine luck.