United States v. Starks

PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_______________ FILED
U.S. COURT OF APPEALS
No. 96-3117 ELEVENTH CIRCUIT
_______________ 10/09/98
THOMAS K. KAHN
D. C. Docket No. 94-156-CR-T-23C CLERK
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
Cross-Appellant,
versus
ANGELA F. STARKS,
Defendant-Appellant,
ANDREW R. SIEGEL,
Defendant-Appellant,
Cross-Appellee.
______________________________
Appeals from the United States District Court
for the Middle District of Florida
______________________________
(October 9, 1998)
Before ANDERSON and BIRCH, Circuit Judges, and PAINE*, Senior
District Judge.
BIRCH, Circuit Judge:
Defendants Angela Starks and Andrew Siegel seek to
overturn their convictions under the anti-kickback provision of the
Social Security Act, 42 U.S.C. § 1320a-7b (“the Anti-Kickback
statute”). Specifically, Starks and Siegel argue that the district
court erred by refusing to instruct the jury concerning the relevant
mens rea. In addition, Starks and Siegel contend that the Anti-
Kickback statute is unconstitutionally vague. While denying the
defendants’ allegations of error, the government cross-appeals
Siegel’s sentence on the grounds that the district court should not
have reduced his offense level for acceptance of responsibility,
and that the district court should have applied the guideline for
*
Honorable James C. Paine, Senior U.S. District Judge for the Southern District of
Florida, sitting by designation.
2
bribery of a public official rather than the guideline for fraud and
deceit. We AFFIRM IN PART, REVERSE IN PART, and
REMAND.
BACKGROUND1
In 1992, Andrew Siegel was both the president and the sole
shareholder of Future Steps, Inc., a corporation that developed
and operated treatment programs for drug addiction. On April 22,
1992, Future Steps contracted with Florida CHS, Inc. to run a
chemical dependency unit for pregnant women at Florida CHS’s
Metropolitan General Hospital (“the Hospital”). In return, Florida
CHS promised to pay Future Steps a share of the Hospital’s
profits from the program. As a Medicaid provider, the Hospital
performed medical services for indigent and disabled persons and
received payment for these activities through Consultec, the fiscal
1
Because this cases arise from a jury verdict against Starks and Siegel, we view the facts
in the light most favorable to the prosecution. See United States v. Sanchez,
722 F.2d 1501, 1505 (11th Cir. 1984).
3
intermediary for the Florida Medicaid program. Before executing
the Future Steps-Florida CHS contract, Siegel initialed each page
of the agreement, which included a provision explicitly forbidding
Future Steps from making any payment for patient referrals in
violation of the Anti-Kickback statute.
At the time Siegel signed this contract, Angela Starks and
Barbara Henry had just become community health aids in the
employ of the State of Florida Department of Health and
Rehabilitative Services (“HRS”).2 Although Starks and Henry
were employees of HRS, they actually worked in a federally-
funded research project in Tampa, Florida known as “Project
Support.” As part of their duties, Starks and Henry advised
pregnant women about possible treatment for drug abuse. Upon
beginning their work at HRS, Starks and Henry learned from their
supervisor both that they could not accept any outside
2
Although Henry was convicted along with Starks and Siegel for violating the Anti-
Kickback statute, she died during the course of this appeal. We have therefore vacated her
sentence and instructed that she be dismissed from the case.
4
employment that might pose a conflict of interest with their work at
HRS and that they were obligated to report any outside
employment to HRS.
During the spring of 1992, Future Steps had difficulty
attracting patients. One of Future Steps’s salaried “liaison
workers,” Robin Doud-Lacher, however, identified Project Support
as a potential source of referrals because of its relationship with
high-risk pregnant women. When Doud-Lacher’s initial efforts to
establish a referral relationship between Future Steps and Project
Support failed, Siegel suggested to Doud-Lacher that she spend
more time at Project Support, give diapers to Project Support,
take Project Support workers to lunch, and otherwise build a
relationship with Project Support’s employees.
During one of her subsequent visits to Project Support,
Doud-Lacher learned from Starks and Henry that cuts in federal
spending threatened to reduce their work hours. When Starks
and Henry asked if Doud-Loucher knew of other available work,
5
she promised to inquire for them about opportunities at Future
Steps.
After discussing Starks and Henry’s interest with her
immediate supervisor, Doud-Lacher spoke directly with Siegel
about hiring the two women. Despite Starks and Henry’s extant
employment with HRS, Siegel told Doud-Loucher that he would
pay Starks and Henry $250 for each patient they referred: $125
when a referred woman began inpatient drug treatment with
Future Steps and $125 after each such woman had stayed in
Future Steps’s program for two weeks.3 After accepting Siegel’s
terms, Starks and Henry did not report their referral arrangement
to anyone at Project Support or HRS.
Although Starks and Henry had suggested
3
limiting their referrals to patients living
outside the area surrounding Project Support
and/or restricting their recruiting for Future
Steps to their non-HRS hours, Siegel imposed no
bounds on the nature of their referral efforts.
6
At the outset of their work for Future Steps, Starks and
Henry received checks written on Future Steps’s account and
signed by Siegel. Before issuing these checks, Siegel verified
that the referred patients had actually entered the Future Steps
program; he did not, though, verify that the referrals were legal.
Although the checks Siegel signed were coded variously as
payments for aftercare, counseling, and marketing expenses,
Siegel was actually only paying Starks and Henry for their
referrals. In fact, Siegel did not at any time pay Starks and Henry
for any of their time, effort, or business expenses, or for any
covered Medicare service.
When Doud-Lacher left Future Steps, Siegel had Michael Ix,
another liaison worker, assume responsibility for the Starks and
Henry referral arrangement. Generally, either Starks or Henry
would call Ix and ask him to pick up a referral directly from the
Project Support clinic. When Ix arrived at Future Steps with the
referred patient, Siegel would give Ix a check for Starks and
7
Henry. Later, after Henry told Ix that she did not want anyone at
Project Support to see her receiving checks from Future Steps, Ix
agreed to deliver the checks to Starks and Henry either in the
Project Support parking lot or at a restaurant. Between June
1992 and January 1993, Future Steps wrote checks payable to
Starks totaling $2750 and to Henry totaling $1975.
At the end of 1992, Future Steps began paying Starks and
Henry in cash. To make these payments, Ix would withdraw cash
from his personal bank account and meet Starks and Henry either
at a restaurant or at a twelve-step program; Siegel and Future
Steps would then reimburse Ix. On one occasion, Siegel
accomplished this reimbursement by meeting Ix in a restaurant
restroom and giving him $600. In total, Ix paid Starks and Henry
approximately $1000 to $1200 in cash.
Beyond the impropriety of Starks and Henry’s acceptance of
referral payments from Siegel, the referral arrangement directly
affected Starks and Henry’s counseling of the pregnant women
8
who relied on them and Project Support for help. At trial, several
of Future Steps’s clients testified that Starks and Henry
threatened that HRS would take away their babies if they did not
receive treatment for their drug addictions; in some instances,
Starks and Henry threatened women with the loss of their babies
if they did not go specifically to Future Steps. According to these
women’s testimony, Starks and Henry informed them only about
Future Steps’s program (eschewing discussion of alternative
treatments), and most waited with Starks and Henry at the Project
Support clinic until someone from Future Steps arrived to take
them to the Hospital. Starks and Henry’s physician supervisor
also testified that she told the two HRS employees to be more
evenhanded in their advice to Project Support’s patients, after the
number of women going to Future Steps from Project Support
increased substantially.
9
In total, Starks and Henry referred eighteen women from
Project Support to Future Steps. From these referrals, the
Hospital received $323,023.04 in Medicaid payments.
On July 29, 1994, a federal grand jury indicted Siegel,
Starks, Henry, and Doud-Lacher on five counts related to the
referrals. Count One charged all four defendants with conspiring
against the United States, in violation of 18 U.S.C. § 371, by
offering to pay remuneration for referral of Medicare patients, in
violation of 42 U.S.C. § 1320a-7b(b)(2)(A), and by soliciting and
receiving such referral payments, in violation of 42 U.S.C. §
1320a-7b(b)(1)(A). Counts Two and Three charged Siegel and
Doud-Loucher with paying remuneration to Starks and Henry to
induce referrals of Medicaid patients, in violation of 42 U.S.C. §
1320a-7b(b)(2)(A). Finally, Count Four charged Starks and Count
Five charged Henry with soliciting and receiving referral
payments, in violation of 42 U.S.C. § 1320a-7b(b)(1)(A).
10
On February 22, 1996, the jury returned guilty verdicts as to
all of the defendants on all five counts. Thereafter, the district
court sentenced Siegel to serve three concurrent terms of twenty-
four months of imprisonment and five years supervised release.
In choosing this sentence, the district court reduced Siegel’s
offense level under U.S.S.G. § 3E1.1 for acceptance of
responsibility and applied the guideline for fraud, U.S.S.G. §
2F1.1. The district court sentenced Starks to two concurrent
terms of thirty months of home detention.
DISCUSSION
On appeal, defendants Starks and Siegel renew two
contentions from their trial. First, they claim that the district court
committed reversible error when it refused to instruct the jury that,
because of the Anti-Kickback statute’s mens rea requirement,
Starks and Siegel had to have known that their referral
arrangement violated the Anti-Kickback statute in order to be
11
convicted. Second, Starks and Siegel argue that the Social
Security Act’s prohibition on paid referrals, when considered
together with the Act’s safe harbor provision, 42 U.S.C. § 1320a-
7b(b)(3) (“the Safe Harbor provision”), is unconstitutionally vague.
We address each of these arguments before turning to the
government’s cross-appeals concerning Siegel’s sentence.
I. STARKS AND SIEGEL’S APPEALS
A. THE “WILLFULLY” INSTRUCTION
Starks and Siegel argue that the district court erred in its
instruction concerning the mens rea required under the Anti-
Kickback statute. According to 42 U.S.C. § 1320a-7b(b), it is
illegal for a person to “knowingly and willfully solicit[] or receive[]
any remuneration” for referrals for services covered by the federal
government. At trial, the district court gave our circuit’s pattern
instruction regarding the term “willfully”:
12
The word willfully, as that term is used from time to time
in these instructions, means the act was committed
voluntarily and purposely, with the specific intent to do
something the law forbids, that is with a bad purpose,
either to disobey or disregard the law.
R26 at 18; see also 11th Cir. Pattern Jury Instr. 9.1. In reviewing
the district court’s charge, we determine whether the court’s
instructions as a whole sufficiently informed the jurors so that they
understood the issues and were not misled. See Hooshmand,
931 F.2d 725, 733 (11th Cir. 1991).4
In support of their claim, Starks and Siegel rely heavily on
United States v. Sanchez-Corcino, 85 F.3d 549 (11th Cir. 1996),
and Ratzlaf v. United States, 510 U.S. 135, 114 S Ct. 655, 126 L.
Ed. 2d 615 (1994). Since we heard oral argument on this case,
however, the Supreme Court has issued an opinion in United
States v. Bryan, No. 96-8422, __ U.S. __, __ S. Ct. __, __ L. Ed.
4
In Hooshmand, we explained further that “[a] trial court’s refusal to give a requested
instruction is reversible error only if (1) the substance of the instruction was not covered in an
instruction given, (2) the requested instruction is a correct statement of the law, (3) the requested
instruction deals with an issue properly before the jury, and (4) the party seeking the requested
instruction suffered prejudicial harm by the court’s refusal. 931 F.2d at 734.
13
2d __, 1998 WL 309067 (June 15, 1998), that clearly refutes
Starks and Siegel’s position.
In Sanchez-Corcino, a panel of this court held that the term
“willfully” in 18 U.S.C. § 922(a)(1)(D) (requiring license for
firearms), meant that the government had to prove that a
defendant “acted with knowledge of the [§ 922(a)(1)(D)] licensing
requirement.” Id. at 553, 554 (“[k]nowledge of the general
illegality of one’s conduct is not the same as knowledge that one
is violating a specific rule”). In Bryan, though, the Supreme Court
explicitly rejected our decision on Sanchez-Corcino. See Bryan,
__ U.S. at __, __ S. Ct. at __, 1998 WL at *4-5. According to the
Bryan Court, a jury may find a defendant guilty of violating a
statute employing the word “willfully” if it believes “that the
defendant acted with an evil-meaning mind, that is to say, that he
acted with knowledge that his conduct was unlawful.” Id. at __, __
S. Ct. __, 1998 WL at *5. Further, the Supreme Court
distinguished tax or financial cases, such as Ratzlaf, that
14
“involved highly technical statutes that presented the danger of
ensnaring individuals engaged in apparently innocent conduct.”
Id.5 Because “the jury found that [the defendant] knew that his
conduct was unlawful,” the Bryan Court wrote, “[t]he danger of
convicting individuals engaged in apparently innocent activity that
motivated our decisions in the tax cases and Ratzlaf is not
present here.” Id. (footnote omitted). Thus, the Court held that
“the willfulness requirement of § 924(a)(1)(D) does not carve out
an exemption to the traditional rule that ignorance of the law is no
excuse; knowledge that conduct is unlawful is all that is required.”
Id.6
5
In Ratzlaf, the Court reviewed a gambler’s conviction for illegally structuring his
banking transactions so as to avoid technical reporting requirements. See 510 U.S. at 137-38,
114 S. Ct. at 657.
6
The Bryan Court thus upheld a jury instruction strikingly similar to the district court’s
“willfully” charge in this case:
A person acts willfully if he acts intentionally and purposely and with the intent to
do something the law forbids, that is, with the bad purpose to disobey or to
disregard the law. Now, the person need not be aware of the specific law or rule
that his conduct may be violating. But he must act with the intent to do
something that the law forbids.
__ U.S. at __, __ S. Ct. at __, 1998 WL at * 3. Compare R26 at 18 and 11th Cir. Pattern Jury
Instr. 9.1.
15
Analogously, the Anti-Kickback statute does not constitute a
special exception. Section 1320a-7b is not a highly technical tax
or financial regulation that poses a danger of ensnaring persons
engaged in apparently innocent conduct. Indeed, the giving or
taking of kickbacks for medical referrals is hardly the sort of
activity a person might expect to be legal; compared to the
licensing provisions that the Bryan Court considered, such
kickbacks are more clearly malum in se, rather than malum
prohibitum. Compare Bryan, __ U.S. at __, __ S. Ct. at __, 1998
WL at *5.7 Thus, we see no error in the district court’s refusal to
give Starks and Siegel’s requested instruction.8 Accord United
7
Regardless of their knowledge of the law, Starks and Siegel should reasonably have
anticipated that their kickback scheme for referrals was “immoral in its nature and injurious in its
consequences,” because of the obvious risk it posed of corrupting Project Support and HRS’s
roles as providers of medical advice to drug addicted pregnant women. Cf. Black’s Law
Dictionary 959 (6th ed. 1990) (defining malum in se).
8
Starks and Siegel also claim that the evidence was not sufficient to prove that they acted
“willfully.” Given that the government only had to show that they knew that they were acting
unlawfully, however, this claim is unpersuasive. The government produced ample evidence,
including the furtive methods by which Siegel remunerated Starks and Henry, from which the
jury could reasonably have inferred that Starks and Siegel knew that they were breaking the
law—even if they may not have known that they were specifically violating the Anti-Kickback
statute.
16
States v. Davis, 132 F.3d 1092, 1094 (5th Cir. 1998); United
States v. Jain, 93 F.3d 436, 440 (8th Cir. 1996), cert. denied, __
U.S. __, 117 S. Ct. 2452, 138 L. Ed. 2d 210 (1997); United States
v. Bay State Ambulance and Hosp. Rental Serv., Inc., 874 F.2d
20, 33 (1st Cir. 1989). But cf. Hanlester Network v. Shalala, 51
F.3d 1390, 1400 (9th Cir. 1995).
B. VAGUENESS
Starks and Siegel also argue that the Anti-Kickback statute is
unconstitutionally vague because people of ordinary intelligence
in either of their positions could not have ascertained from a
reading of its Safe Harbor provision that their conduct was illegal.9
9
Starks and Siegel offer a variety of arguments to the effect that persons working in the
medical field cannot anticipate what is prohibited under the Anti-Kickback statute and what is
protected by that statute’s Safe Harbor provision. They do not, and cannot, challenge, however,
the government’s contention that, since this is not a First Amendment case, we must evaluate
their claim of vagueness only on an as-applied basis. See Maynard . Cartwright, 486 U.S. 356,
361, 108 S. Ct. 1853, 1857-58, 100 L. Ed. 2d 372 (1988). Thus, we consider Starks and Siegel’s
claim in light of the facts of this individual case, looking only to the constitutionality of the Anti-
Kickback statute as the government has applied it to Starks and Siegel. See United States v.
Hofstatter, 8 F.3d 316, 321 (11th Cir. 1993); United States v. Awan, 966 F.2d 1415, 1424 (11th
Cir. 1992).
17
Under the Safe Harbor provision, the Anti-Kickback statute’s
prohibition on referral payments
shall not apply to . . . any amount paid by an employer
to an employee (who has a bona fide employment
relationship with such employer) for employment in the
provision of covered items and services . . . .
42 U.S.C. § 1320a-7b(b)(3); see also 42 C.F.R. § 1001.952.
According to Starks and Siegel, this provision is vague because
ordinary people in their position might reasonably have thought
that Starks and Henry were “bona fide employees” who were
exempt from the Anti-Kickback statute’s prohibition on
remuneration for referrals.
Starks and Siegel are correct that a criminal statute must
define an offense with sufficient clarity to enable ordinary people
to understand what conduct is prohibited. See, e.g., Hofstatter, 8
F.3d at 321. Both the particular facts of this case and the nature
of the Anti-Kickback statute, however, undercut Starks and
Siegel’s vagueness argument. First, even if Starks and Siegel
18
believed that they were bona fide employees, they were not
providing “covered items or services.” As the government has
shown, Starks received payment from Siegel and Future Steps
only for referrals and not for any legitimate service for which the
Hospital received any Medicare reimbursement. At the same
time, persons in either Siegel’s or Starks’s position could hardly
have thought that either Starks or Henry was a bona fide
employee; unlike all of Future Steps’s other workers, Starks and
Henry did not receive regular salary checks at the Hospital.
Instead, they clandestinely received their checks (often bearing
false category codes) or cash in parking lots and other places
outside the Project Support clinic so as to avoiding detection by
other Project Support workers.
Furthermore, beyond these particular facts, we see no
reason to view the Anti-Kickback statute as vague. In Village of
Hoffman Estates v. The Flipside, 455 U.S. 489, 498-499, 102 S.
Ct. 1186, 1193, 71 L. Ed. 2d 362 (1982), the Supreme Court set
19
out several factors for a court to consider in determining whether
a statute is impermissibly vague, including whether the statute (1)
involves only economic regulation, (2) provides only civil, rather
than criminal, penalties, (3) contains a scienter requirement
mitigating vagueness, and (4) threatens any constitutionally
protected rights. As two of our sister circuits have already
concluded, these factors militate against finding the Anti-Kickback
statute unconstitutional. See Hanlester, 51 F.3d at 1398; Bay
State, 874 F.2d at 32-33. Indeed, the statute regulates only
economic conduct,10 and it does not chill any constitutional rights.
Moreover, although the statute does provide for criminal penalties,
it requires “knowing and willful” conduct, a mens rea standard that
mitigates any otherwise inherent vagueness in the Anti-Kickback
statutes’s provisions. Hanlester, 51 F.3d at 1398; Bay State, 874
F.2d at 33. In sum, we agree with the district court that the Anti-
10
In Hoffman Estates, the Court explained that “economic regulation is subject to a less
strict vagueness test because its subject is often more narrow, and because businesses, which
face economic demands to plan behavior carefully, can be expected to consult relevant
legislation in advance of action.” 455 U.S. at 498, 102 S. Ct. at 1193 (footnote omitted).
20
Kickback statute gave Starks and Siegel fair warning that their
conduct was illegal and that the statute therefore is not
unconstitutionally vague.
II. THE GOVERNMENT’S CROSS-APPEAL
In its cross-appeal, the government contends that the district
court incorrectly granted Siegel a U.S.S.G. § 3E1.1 reduction for
acceptance of responsibility. In addition, the government
maintains that the district court erred by sentencing Siegel under
the fraud and deceit guideline, U.S.S.G. § 2F1.1, rather than the
bribery of a public official guideline, U.S.S.G. § 2C1.1.
A. ACCEPTANCE OF RESPONSIBILITY
On appeal, the government argues that Siegel should not
have received a three-level reduction for acceptance of
responsibility because he denied having had any guilty intent. In
response, Siegel contends that he was entitled to the reduction
21
because he admitted all the relevant facts and cooperated with
the government’s investigation, while preserving his legitimate
legal position regarding the applicability of the statute to his
conduct. We review the district court's determination that Siegel
accepted responsibility for clear error. United States v. Anderson,
23 F.3d 368, 369 (11th Cir. 1994) (per curiam).
To receive a reduction under § 3E1.1, a defendant must
prove that he clearly accepted responsibility for his offense. See
id. The reduction does not apply to “a defendant who puts the
government to its burden of proof at trial by denying the essential
factual elements of guilt, is convicted, and only then admits guilt
and expresses remorse.” U.S.S.G. § 3E1.1, comment. (n.2).
Nonetheless, a defendant may, “[i]n rare situations,” be entitled to
this reduction if he goes to trial to assert and preserve issues
unrelated to factual guilt, such as the applicability of a statute to
his conduct. Id. Still, a defendant who contends that he did not
possess fraudulent intent is making a factual, not a legal,
22
challenge to the government’s criminal allegations that precludes
a sentence reduction for acceptance of responsibility. See United
States v. Smith, 127 F.3d 987, 989 (11th Cir. 1997) (en banc)
cert. denied, __ U.S. __, 118 S. Ct. 1202, 140 L. Ed. 2d 330(1998); see also Sanchez-Corcino, 85 F.3d at 555-56.
By its terms, 42 U.S.C. § 1320a-7b(b)(2) makes it illegal for
any person knowingly to offer any payment “to induce” a referral
for services covered by the federal government. Citing this
provision, Siegel argues that by conceding at trial that he made
payments to Starks and Henry, he admitted all the conduct
prohibited by the statute. As the government correctly points out,
however, Siegel has denied having had any intent to induce
referrals, an essential element of the charges on which he was
convicted. Because Siegel put the government to its burden of
proof by contesting his intent to violate 42 U.S.C. § 1320a-7b(b),
Siegel's arguments at trial amounted to a factual denial of guilt
and were therefore inconsistent with acceptance of
23
responsibility.11 Given the factual positions that Siegel has
taken—and continues to take—we conclude that he should not
have been eligible for a reduction for acceptance of responsibility
and that the district court therefore clearly erred in awarding him a
three-level reduction under § 3E1.1.
B. THE FRAUD AND DECEIT GUIDELINE
Additionally, the government argues that the court erred by
sentencing Siegel under the § 2F1.1 “Fraud and Deceit” guideline
rather than the § 2C1.1 “Bribe” of a public official guideline.
Appendix A of the Sentencing Guidelines references three
Moreover, Siegel contested other aspects of
11
the offense, further supporting the government’s
claim that he did not accept responsibility:
that he signed a contract that specifically
forbid him to pay for referrals or to “take any
action in violation of § 1320a-7b”; that he
agreed to the specifics of Starks and Henry's
payment arrangements; that he reimbursed Michael
Ix for cash payments made to Starks and Henry
for referrals; and that he instructed his
secretary to prepare referral checks for Starks
and Henry.
24
guideline sections which are applicable to violations of § 1320a-
7b: U.S.S.G. § 2B1.1 (larceny), U.S.S.G. § 2B4.1 (commercial
bribery), and § 2F1.1 (fraud). U.S.S.G. app. A, at 384. If more
than one guideline section is referenced for the particular statute,
Appendix A instructs the sentencing court to use the guideline
most appropriate for the nature of the conduct charged. See
U.S.S.G. app. A, at 373 (introduction). Further, the Appendix
provides that if, “in an atypical case, the guideline section
indicated for the statute of conviction is inappropriate because of
the particular conduct involved, [courts should] use the guideline
section most applicable to the nature of the offense conduct
charged in the count of which the defendant was convicted.” Id.
We review the district court’s determination of the applicable
guideline de novo. United States v. Acanda, 19 F.3d 616, 618
(11th Cir. 1994).12
At sentencing, the government did not
12
explicitly object to the district court's
application of § 2F1.1 once the court found that
this provision governed Siegel's sentence. The
25
Regarding the three guidelines listed as potentially
applicable in Appendix A, the government and Siegel properly
agree that Siegel should not be sentenced under § 2B1.1 or §
2B4.1. Since § 2B1.1 applies to crimes involving stolen property,
it clearly has no relevance. Moreover, since § 2B4.1 applies only
to “bribery offenses and kickbacks that do not involve officials of
federal, state, or local government,” § 2B4.1 comment. (n.1), this
guideline provision, too, cannot be appropriate for Siegel, who
illegally induced referrals from a state employee working in a
federal Medicare project.13
Siegel, however, asserts that the third listed guideline, §
2F1.1, is relevant and applicable. To support this position, which
government did, however, vigorously contend that
Siegel's conduct constituted bribery. Because
the government objected to this factual
determination, and the decision about which
guideline to apply necessarily followed from the
district court's ruling, the issue has been
preserved for appeal.
13
By contending that § 2B4.1 does not apply because Siegel’s kickback scheme involved
a public official, Siegel appears to concede that we should treat Starks and Henry as government
officials in reviewing his sentence.
26
was also that of the district court, Siegel relies on United States v.
Adam, 70 F.3d 776, 781 (4th Cir. 1995). In that case, the Fourth
Circuit affirmed a district court’s sentence, under § 2F1.1, of a
physician who had violated the Anti-Kickback statute. Although
Adam involved application of § 2F1.1 to the Anti-Kickback statute,
we find the case to be of little help to our consideration of Siegel’s
sentence, because the Adam court addressed only the district
court’s calculation of the government’s “loss,” without discussing
whether § 2F1.1 or some other provision was the most
appropriate guideline. See id. at 781-82.
Further, we see little reason to view § 2F1.1 as any more
applicable to Siegel’s conduct than § 2B1.1 or § 2B4.1. As a
central part of any application of § 2F1.1, a district court must
calculate the “loss” suffered by the defrauded or deceived victim.
See generally § 2F1.1. Yet, in this case Siegel did not steal from
anyone, including the government; Siegel did not file false
Medicare claims but rather engaged in a kickback scheme that
27
corrupted Project Support’s referral process. While a district court
should sentence persons committing Anti-Kickback crimes
involving fraud or false statements under § 2F1.1, this provision is
not appropriate for this case.
In fact, Siegel’s crime presents the “atypical case” in which
the listed guideline for the Anti-Kickback statute is inapposite and
a court should resort to a more applicable section, in this instance
§ 2C1.1. First, we note that the term “induce” in 42 U.S.C. §
1320a-7b(b)(2) can be reasonably understood in this case to
connote bribery. Indeed, the term “induce” is defined as “[t]o bring
on or about, to affect, cause, to influence to an act or course of
conduct . . . ,” Black’s Law Dictionary at 775; in the context of this
case, “induce” and “bribe” are thus virtually synonymous, since
Siegel induced Starks and Henry to refer patients to Future Steps
through illicit payments. Compare id. at 191 (“Any money, . . .
preferment . . . or undertaking to give any [money or preferment] .
. . with a corrupt intent to induce . . . action, vote, or opinion . . . .
28
“) (emphasis added). See also United States v. Kummer, 89 F.3d
1536, 1540 (11th Cir. 1996) (discussing meaning of “bribe”).
Second, the Anti-Kickback statute explicitly refers to “kickbacks,
bribes, and rebates” as prohibited forms of remuneration for
referrals, bringing Siegel’s crime within the purview of the terms of
§ 2C1.1. See 42 U.S.C. § 1320a-7b(b)(2)(A). Thus, the
indictment and jury instructions in this case referred to payment of
“remuneration (including kickbacks, bribes, or rebates).” R1-2 at
3 (indictment); see also R26 at 24 (instruction defining
remuneration). Finally, by paying Starks and Henry for referrals,
Siegel sought to corrupt their execution of their duties as state
employees and workers in a federal program—just the sort of
corrosive activity that the Sentencing Commission designed §
2C1.1 to punish. Cf. § 2C1.1 comment. (background).14
14
At Siegel’s sentencing hearing, the district court refused to sentence him under § 2C1.1
because it “didn’t charge the jury” on bribery of public employees. R29 at 30. The district
court’s reasoning, however, conflated two separate issues: first, whether Siegel was involved in
bribery; and second, if so, whether he had been involved with bribery of a public official. If
Starks and Henry were bribed but were not public officials, then § 2B4.1 (commercial bribery)
would have applied. See Jain, 93 F.3d at 442-43 (affirming application of § 2B4.1 to a physician
who violated § 1320a-7b by paying another, private physician for a referral). Since, as Siegel
29
Therefore, we hold that the district court erred in applying § 2F1.1
rather than § 2C1.1 in sentencing Siegel.
CONCLUSION
In this case, Starks and Siegel ask that we reverse their
convictions for violating and conspiring to violate the Anti-
Kickback statute, while the government requests that we reverse
the district court’s application of two guideline provisions to
Siegel’s sentence. With regard to Starks and Siegel’s appeal, we
hold that the district court did not err when it refused to give their
requested instruction, and that the Anti-Kickback statute is not
unconstitutionally vague as applied to Starks and Siegel.
Therefore, we AFFIRM these parts of the district court’s judgment.
With regard to the government’s cross-appeal, we hold that the
has conceded to this court, Starks and Henry were government officials, then, if Siegel bribed
them, § 2C1.1 (bribery of a public official) should apply. It would be incongruous for this court
to hold that a defendant who paid a private person for an illegal § 1320a-7b referral should be
sentenced for bribery, but that another defendant who participated in the same conduct with a
government official should be sentenced for fraud rather than bribery of a public official.
30
district court clearly erred in granting Siegel a reduction for
acceptance of responsibility, and we conclude that the district
court should have sentenced Siegel under § 2C1.1 rather than §
2F1.1. Therefore, we REVERSE these parts of the district court’s
judgment and REMAND for further proceedings consistent with
this opinion.
AFFIRMED IN PART, REVERSED IN PART, and
REMANDED.
31