United States District Court, N.D. California
ORDER RE MOTION TO DISMISS INDICTMENT
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE.
criminal action for conspiracy to pay and receive healthcare
kickbacks, defendants move to dismiss the indictment. For the
following reasons, the motion is Denied.
California Medical Assistance Program is a program that
provides below-cost healthcare to certain individuals. The
Medi-Cal program includes a program known as Family PACT that
provides funding for a limited suite of family
planning-related services such as contraceptive methods and
treatment of certain sexually transmitted diseases.
November 2018, an indictment charged defendants Shapour
Motamedi, Shayan Motamedi, and Heriberto Moises Lopez with
violating 18 U.S.C. § 371 which states, “[i]f two
or more persons conspire either to commit any offense against
the United States, or to defraud the United States, or any
agency thereof in any manner or for any purpose, and one or
more of such persons do any act to effect the object of the
conspiracy, each shall be fined under this title or
imprisoned not more than five years, or both. If, however,
the offense, the commission of which is the object of the
conspiracy, is a misdemeanor only, the punishment for such
conspiracy shall not exceed the maximum punishment provided
for such misdemeanor.” The indictment specifically
charges defendants with a conspiracy to pay and receive
health care kickbacks in violation of the following
anti-kickback statutes: 42 U.S.C. § 1320a-7b(b)(1)(B)
and § 1320a-7b(b)(2)(B).
indictment alleges that around at least October 2015 to
October 2018, defendants Shapour and Shayan operated a
company called MegaMed Clinical Laboratories. Defendant Lopez
acted as an intermediary between doctors and clinics and
MegaMed. As part of the conspiracy, defendants paid kickbacks
to representatives of medical clinics in exchange for clinics
sending specimens to MegaMed for payment. Defendants offered
representatives either a percentage of Medi-Cal's
reimbursement for tests or a fixed fee per specimen. The
indictment alleges multiple specific instances in which
Shapour or Shayan paid or corresponded with individuals in
furtherance of the kickback conspiracy.
August 2019, defendants filed a motion to dismiss the
indictment pursuant to Federal Rules of Criminal Procedure
12(b)(1) on the grounds that the anti-kickback statutes the
indictment is based on are unconstitutionally vague and
violate the non-delegation doctrine, and accordingly, because
a conspiracy crime requires an agreement to violate the law,
the charges cannot stand. The government opposes.
determining whether a law is unconstitutionally vague, courts
will look to whether the law: “(1) involved only
economic regulation, (2) contained only civil, not criminal
penalties, (3) contained a scienter requirement, which might
mitigate any vagueness, and (4) threatened any
constitutionally protected rights statute must give a person
of ordinary intelligence adequate notice of the conduct it
proscribes.” Village of Hoffman Estates v. The
Flipside, 455 U.S. 489, 498 (1982). A statute must give
a person of ordinary intelligence adequate notice of the
conduct it proscribes. Cal. Pac. Bank v. Fed. Deposit
Ins. Corp., 885 F.3d 560, 571 (9th Cir. 2018)
support their argument that the anti-kickback statutes are
unconstitutionally vague without any citations to the
statutory language, but rather with a conclusory statement
that a reading of the safe harbor statute as well as the
opinions and special fraud alerts issued by the Office of the
Inspector General “does not give an ordinary person
fair warning about what the law demands” and that
Congress “shirked its responsibility to clearly write
what conduct is proscribed in regards to the anti-kickback
statutes.” Contrary to this assertion, the
anti-kickback statutes are not vague under Davis or
Hanlester. The anti-kickback statutes regulate only
economic conduct and do not chill any constitutional rights.
Although they allow for criminal penalties, they also require
“knowing and willful” conduct, a requirement
which mitigates any vagueness in the statutes. Hanlester
Network v. Shalala, 51 F.3d 1390, 1397-98 (9th Cir.
1995). Furthermore, unlike United States v. Davis
where it was unclear whether Congress intended for the
statute to impose additional punishment under the residual
clause, Congress's intent under the anti-kickback
statutes is clear, and amendments regarding the manner of
implementation and promulgation of safe-harbor regulations
have added even further clarity. 139 S.Ct. 2319 (2019);
see e.g. 42 U.S.C. § 1320a-7c.
defendants' other argument is that Congress has
unconstitutionally delegated the power to define a crime in
the anti-kickback statutes to the Office of the Inspector
General and Attorney General. Congress may delegate its
legislative power to an agency as long as it provides an
intelligible principle to which the person or the body
authorized is directed to conform. Mistretta v. United
States, 488 U.S. 361, 372 (1989) (quoting J.W.
Hampton, Jr. & Co. v. United States, 27624 U.S. 394,
409 (1928). The “delegation is permissible if Congress
has made clear to the delegee ‘the general policy'
he must pursue and the ‘boundaries of [his]
authority.'” These standards are not demanding.
Gundy v. United States, 139 S.Ct. 2116, 2129 (2019).
1977, Congress enacted the Medicare-Medicaid Anti-fraud and
Abuse Amendments which prohibited (1) the solicitation or
receipt of any remuneration (including any kickback, bribe,
or rebate) directly or indirectly, overtly or covertly, in
cash or in kind, in return for referrals, and (2) the offer
or payment of such remuneration to induce referrals. Pub. L.
95-142 § 1877(b)(1). Subsequently in 1987, Congress
enacted the Medicare and Medicaid Patient and Program
Protection Act which consolidated the anti-kickback laws and
importantly required the Secretary of the Department of
Health and Human Services in consultation with the Office of
the Inspector General to issue safe harbor regulations
specifying payment practices that are not subject to criminal
prosecution under the anti-kickback statutes. 42 U.S.C.
§ 1320a-7(b)(7). In 1996, as part of the Health
Insurance Portability and Accountability Act (HIPPA), the
Secretary was directed to, among other things, conduct
investigations, audits, evaluations, and inspections relating
to the delivery of and payment for health care in the United
States with the OIG and the Secretary General. Id.
at § 1320a-7c(a)(1). Section 205 of the same act also
provides numerous criteria for the Secretary to consider in
establishing safe harbor laws. Id. at §
supporting their argument, defendants cite again to
Davis, which applies a vagueness analysis on the
residual clause definition of a violent felony and is not
relevant here. 139 S.Ct. at 2319. They also cite to the
dissent in Gundy for the proposition that vague laws
violate the nondelegation doctrine. 139 S.Ct. at 2134. The
dissent in Gundy is not binding. Defendants argue
that “a reasonable observer would add Justices Alito
and Kavanaugh to constitute a five justice majority.”
This does not change ...