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The People v. Rita Guiamelon

April 24, 2012


(Los Angeles County Super. Ct. No. BA361105) APPEAL from a judgment of the Superior Court of Los Angeles County, Brad M. Fox, Judge. Affirmed.

The opinion of the court was delivered by: Epstein, P. J.


Dr. Rita Guiamelon, a physician, challenges her conviction under Business and Professions Code section 650 (section 650) for paying illegal fees to persons who referred patients qualified for federal and state programs to her practice. She contends this statute is preempted by the federal Medicaid anti-kickback statute (42 U.S.C. § 1320a-7b(b)) under the doctrines of implied conflict and obstacle preemption. Her conflict preemption argument is that the federal anti-kickback statute requires a higher scienter than does section 650, making compliance with both federal and state law impossible. Guiamelon's obstacle preemption argument is that as applied to her, section 650 is an obstacle to the Congressional objective of providing health care services to the underserved. We conclude that conflict preemption is not applicable because the federal anti-kickback statute supplements rather than supplants the remedy under section 650. Obstacle preemption is not established because the purpose of section 650 is consistent with the purpose underlying the federal anti-kickback statute.

Alternatively, Guiamelon argues section 650 is unconstitutionally vague and that it improperly infringes on the marketing of physician's services to the uninsured. She also claims that in light of expressed legislative intent to extend healthcare services to the uninsured, we should interpret section 650 as not applying in the particular circumstances of this case. Finally, Guiamelon raises a First Amendment challenge.

We decline to construe section 650 to add a scienter requirement not included in the statute as enacted. Section 650 is not unconstitutionally vague and we find no other basis to exempt Guiamelon from prosecution under its terms. We reject her First Amendment challenge, finding that section 650 does not regulate activity protected by the First Amendment.


The facts in this case are straightforward although the underlying statutory scheme is not. Guiamelon began her practice in the Philippines. She moved to the United States in 1985 and was licensed as a physician here in 2003, with a specialty in pediatrics. She opened a solo practice and became a provider for various federal and state health programs for the poor, which we describe below. She treated primarily low-income Spanish-speaking patients. Guiamelon unsuccessfully tried to increase her client base through various marketing measures, including distribution of fliers, billboards, and participation in health fairs. She was approached by marketers who claimed they could bring her patients. Guiamelon subsequently engaged marketers to bring patients to her, by either driving them to her office, or directing them there. Between 2007 and 2009, she saw 25 to 30 patients a day, one-third of them brought to her by these marketers.

Guiamelon used personal checks to pay the marketers $20 for each referred patient who was qualified to enroll, and who did enroll, in a federal or state health care program. She documented the payments and issued Internal Revenue Form 1099 to the marketers, and reported these payments on her state and federal tax returns as business expenses. Guiamelon did not know what "capping" meant, and did not consider her payments to the marketers to be kickbacks, rebates, or commissions.

Carmen Casmiro Porras testified that she was paid by Guiamelon to bring young people and children to Guiamelon's office for services from 2007 to 2009. She said twelve other marketers also were working for Guiamelon. Porras handed out cards offering free medical services and transportation to a health care provider, with Guiamelon's contact information on them. Porras brought five to six patients to Guiamelon's clinic every day it was open. She would give Guiamelon a list of the patients she brought into the practice. Guiamelon would count the patients, and every 15 to 20 days personally gave Porras a check as payment for each qualified patient. People's exhibit 6 was identified by Porras as lists of patients she had procured for Guiamelon in order to receive payment. The entries indicate the program for which the patient applied.*fn1 Porras was paid $20 per patient for each patient who enrolled in the CHDHP and Family PACT.*fn2 Guiamelon provided Porras with IRS forms to report the payments.

Guiamelon came to the attention of the California Department of Justice, Bureau of Medi-Cal Fraud, in the course of its investigation of a dentist who used Porras's services. Special Agent Rochelle Plue followed Porras's vehicle to Guiamelon's office. A subsequent surveillance of Guiamelon's office revealed that it was very busy, and that many cars, including a vehicle driven by Porras, dropped off individuals in the parking lot and left. A search warrant was executed at Guiamelon's office. Records were found documenting payments of about $20 per patient to various marketers for the period from 2007 through April 2010. Guiamelon told Special Agent Craig Black that she employed four or five marketers who were paid $20 for each patient determined to be eligible for enrollment in federal and state health care programs. At trial, she testified that the applications she signed to become a provider under Medi-Cal, CHDP, and Family PACT contained her declaration that she would abide by all the rules and regulations of each program.

An amended complaint charged Guiamelon (and three co-defendants) with grand theft (count I, Pen. Code, § 487), presenting false Medi-Cal claims (count II, Welf. & Inst. Code, § 14107, subd. (b)(1)), receiving unlawful Medi-Cal remuneration (count III, Welf. & Inst. Code, § 14107.2, subd. (b)), and with offering rebates for patient referrals (count IV, Bus. & Prof. Code, § 650, subd. (a)). The trial court dismissed counts I and II on Guiamelon's motion (Pen. Code, § 995). The jury convicted Guiamelon on count IV and acquitted her on count III. After denying Guiamelon's motion for new trial, the trial court suspended imposition of sentence and placed her on a three-year formal probation. This is a timely appeal from the judgment of conviction.



Our analysis begins with a summary of pertinent aspects of the complex federal and state statutory scheme arising from the Social Security Act. That statutory scheme provides the framework for this case. It is a system described as "'among the most intricate ever drafted by Congress'" and so "'Byzantine'" in its construction as to be "'"almost unintelligible to the uninitiated."'" (Olszewski v. Scripps Health (2003) 30 Cal.4th 798, 810 (Olszewski), quoting Schweiker v. Gray Panthers (1981) 453 U.S. 34, 43.)

A. Medicaid

"In 1965, Congress established Medicaid by enacting title XIX of the Social Security Act (42 U.S.C. §§ 1396-1396v; see Schweiker v. Gray Panthers, [supra,] 453 U.S. [at p.] 36 (Schweiker)). 'The Medicaid program . . . is a cooperative endeavor in which the Federal Government provides financial assistance to participating States to aid them in furnishing health care to needy persons. Under this system of "cooperative federalism," [citation] if a State agrees to establish a Medicaid plan . . . the Federal Government agrees to pay a specified percentage of "the total amount expended . . . as medical assistance under the State plan. . . ."' (Harris v. McRae [(1980)] 448 U.S. [297,] 308.) Participation is voluntary, but 'once a State elects to participate, it must comply with the requirements of Title XIX.' (Id. at p. 301.)" (Olszewski, supra, 30 Cal.4th at p. 809.) "'Congress intended that states be allowed flexibility in developing procedures for administering their statutory obligations under the Medicaid statute and their state plans.' [Citation.]" (Id. at p. 810.)

Carol Lambert, a nurse consultant with the California Department of Health Care Services in the Division of Audits and Investigations and an expert witness for the prosecution, testified that prior to 2009, Medicaid and Medi-Cal shared equally in the cost of reimbursing a provider for services.*fn3

B. Medi-Cal

California's program under Medicaid is Medi-Cal. "Welfare and Institutions Code section 14000 declares that '[t]he purpose [of the Medi-Cal program] is to afford health care and related remedial or preventive services to recipients of public assistance and to medically indigent aged and other persons . . .'; thus, the program's primary objective is to alleviate the hardship and suffering incurred by those who cannot afford needed medical care by enabling them to obtain such medical treatment." (Committee To Defend Reproductive Rights v. Myers (1981) 29 Cal.3d 252, 271-272.)

According to Lambert, Medi-Cal is "both a state and federally funded program for low income individuals who either do not have insurance or have no access to health services through any other insurer." It is administered by the Department of Health Care Services. She explained that the "Medi-Cal program makes services possible to eligible beneficiaries or recipients through enrolled providers and there is a formalized process through which a physician . . . would apply to the Department of Health Care Services principally through the provider enrollment division."

C. Child Health and Disability Prevention Program

Guiamelon was an approved provider for the Child Health and Disability Prevention Program (CHDP). (Health & Saf. Code, § 120425, et seq.) In creating this program in 1995, the Legislature declared that "a community-based program of early identification and referral for treatment of potential handicapping conditions will be effective in reducing the incidence of the conditions and will benefit the health and welfare of the citizens of this state. [¶] It is the intention of the Legislature in enacting this article and Section 120475 to establish child health and disability prevention programs, that shall be financed and have standards established at the state level and that shall be operated at the local level, for the purpose of providing early and periodic assessments of the health status of children." (Health & Saf. Code, § 124025.) The Legislature further declared its intent that these programs make maximum use of existing health care resources so that the health screening programs are fully integrated with existing health services. (Ibid.) It was intended that "outreach programs be developed to stimulate the use of preventative health services . . . ." (Ibid.)

Lambert testified that CHDP "is directly related to the Medi-Cal program." She explained: "Many of the eligible beneficiaries, eligible patients for Child Health and Disability Prevention Services are Medi-Cal beneficiaries." CHDP is also administered by the Department of Health Care Services. A beneficiary may become enrolled in CHDP by going to a physician who is an approved Medi-Cal provider and "declar[ing] to the provider that they are California residents, that the children in the family are under the age of 19, and that their family income is at a certain level that is at or below 200 percent of the federal poverty line."

The first page of the CHDP application form describes the evolving focus of the program: "When the CHDP program was implemented in 1973, its primary purpose was to implement Federal Medicaid Early and Periodic Screening mandates in California. Over the years, the program has expanded to assure that all low-income children and youth in California have access to preventive health care services. The program has been financed by State funds . . . to provide non-Medi-Cal eligible children and youth younger than 19 years of age with the same services as available to Medi-Cal recipients younger than 21 years of age. [¶] . . . Effective July 2003 the CHDP program is a 'Gateway'[*fn4 ] maximizing the enrollment of uninsured children and youth in Medi-Cal or Healthy Families[*fn5 ]. Many of the children and youth served otherwise would not have been eligible for, or enrolled in, other health care." Lambert testified that Gateway is to provide services to the child while he or she is applying for Medi-Cal.

D. Family Planning Access Care and Treatment (Family PACT)

Guiamelon also was an approved provider of services under the Family PACT program. This program was established "to provide comprehensive clinical family planning services to any person who has a family income at or below 200 percent of the federal poverty level . . . and who is eligible to receive these services pursuant to the waiver identified in [Welf. & Inst. Code, § 14132, subd. (aa)](2)." (Welf. & Inst. Code, § 14132, subd. (aa).) Lambert explained that the only way a provider can become a Family PACT provider is to first be enrolled in the Medi-Cal program. "A beneficiary or recipient could enroll in the Family PACT program simply by presenting him or herself to an FPACT provider and filling out a paper form that identifies their residence and . . . their level of family income." The provider then issues a Health Access Program Card.

To participate in Medi-Cal, Family PACT, and CHDP a provider, such as Guiamelon, must agree to comply with all applicable rules and regulations. Lambert referred to paragraph 19 of People's Exhibit 3, a blank Medi-Cal provider agreement, which states: "Provider agrees that it shall not offer, give, furnish, or deliver any rebate, refund, commission preference, patronage dividend, discount, or any other gratuitous consideration, in connection with the rendering of health care services to any Medi-Cal beneficiary. . . . Provider further agrees that it will not take any other action or receive any other benefit prohibited by state or federal law." This form is given to all enrolled providers, who must keep a copy for future reference. ...

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