United States v. Alap Shah

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 19-12319
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D.C. Docket No. 1:18-cr-20526-UU-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
ALAP SHAH,
Defendant-Appellant.
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Appeal from the United States District Court
for the Southern District of Florida
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(November 24, 2020)
Before WILLIAM PRYOR, Chief Judge, HULL and MARCUS, Circuit Judges.
WILLIAM PRYOR, Chief Judge:
This appeal of convictions for receiving healthcare kickback payments, 42
U.S.C. § 1320a-7b(b), requires us to decide whether an error in a jury instruction
was harmless. At the request of the government, the district court instructed the
jury that Dr. Alap Shah violated the statute prohibiting kickbacks if one reason he
accepted the payment was because it was in return for writing prescriptions. In his
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written briefs on appeal, Shah argued that the district court erred and should have
instructed the jury that the government was required to prove that his main or only
reason for accepting the payment was because it was made in return for writing
prescriptions. The government defended the jury instruction as a correct statement
of the law. We instructed the parties to be prepared to address at oral argument
whether the text of the statute makes clear that Shah’s motivation for accepting
kickbacks was irrelevant. Both parties then agreed at oral argument that the jury
instruction was erroneous and that the statute requires no proof of the defendant’s
motivation for accepting the illegal payment, so long as he accepts the kickback
knowingly and willfully. But the parties disagreed about whether the error harmed
Shah. We conclude beyond a reasonable doubt that the error caused Shah no harm
because it required the government to prove even more than the statute required.
We affirm.
I. BACKGROUND
Dr. Alap Shah was a podiatrist in Columbus, Georgia. He sometimes
prescribed compounded medicines to his patients. Compounded medicines are
custom-formulated drugs that can vary from off-the-shelf drugs in strength,
delivery method, or combinations. For example, a compounded medicine might be
a cream that combines three pain-reducing drugs ordinarily produced in pill form
at a lower strength than available off the shelf. Specialized pharmacies produce
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compounded medicines, which are much more expensive than off-the-shelf
prescription medications. A single tube of a compounded cream can cost $15,000
or more.
Shah and about 20 others participated in a kickback conspiracy that involved
writing prescriptions for compounded drugs. Each of them faxed prescriptions for
compounded drugs to a company called PGRx Group, which in turn directed a
compounding pharmacy to fill the prescriptions. The pharmacy paid PGRx Group
a kickback, usually around 50 percent of its profits, for each prescription PGRx
Group referred to it. PGRx Group passed part of that kickback on to the
prescribing doctor.
Shah received his share of the profits as a flat monthly payment of $5,000,
and some other doctors received a percent commission from the prescriptions they
wrote. PGRx Group disguised the nature of the payments by hiring the doctors to
be “medical directors,” by calling the payments speaker fees for promoting PGRx
Group and compounded drugs at professional events, and by routing payments to
the prescribing doctors’ family members or employees.
Shah joined the conspiracy in May 2014 after being recruited by its
masterminds, Paul Meek and Gary Small. Meek and Small invited Shah to be a
medical director for PGRx Group. They offered him $5,000 each month for his
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participation, and they sent him a contract that explained his duties as a medical
director.
Shah corrected a typo in the contract before signing it. The contract provided
Shah’s duties as a medical director included performing on-site supervision and
training, management, and administrative responsibilities. And the contract
required PGRx Group to provide Shah with office space in its facility.
Shah performed none of his duties under the contract. Far from providing
on-site supervision and training, he did not even know where PGRx Group was
located. And PGRx Group never provided him with office space. But even so,
PGRx Group always paid Shah $5,000 a month.
After seven months, PGRx Group told Shah he would receive the same
payments under a new contract. The new contract required Shah to promote PGRx
Group as a speaker. Shah promoted PGRx Group no more than a handful of times,
but he continued receiving his payments of $5,000 each month.
Shah prescribed compounded medications far more often after he signed the
contracts with PGRx Group than before he signed the contract. For example, in a
six-month period before the conspiracy began—from August 2013 to February
2014—Shah wrote 26 prescriptions for compounded medications. But in a six-
month period during the conspiracy—from August 2014 to February 2015—he
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wrote 209 prescriptions for compounded medications. At trial, Shah nevertheless
insisted that he never wrote a prescription that a patient did not need.
Frequent text messages and emails between Shah and his cohorts, Meek and
Small, showed that the medical director and speaker contracts were a sham. At one
point, Meek wrote to Shah, “If we can get five to ten scripts a day from you, I
believe then we will be good to go.” Shah answered, “I will do what I can.”
Another time, Shah warned Small, “I will be on vacation this week, so you may
see a drop off in numbers. FYI: Will pick up starting week 4/6 again.” Meek and
Small both asked Shah about a dropoff in prescriptions during July 2014. Small
wrote, “Our records indicat[e] only three scripts sent for the month of July. If this
sounds incorrect on your side, please resend if you have time.” Shah responded, “I
will look into it[.]” And Meek wrote: “I’m checking in as I have not seen any
scripts for the month of July. Am I looking at the wrong line?” Shah responded, “I
was out of town until 7/7 but wrote all last week and this. Are you sure?”
They also corresponded about insurance coverage and reimbursement rates
for different drugs. Tricare, a federal program for members of the military and their
families, paid for many of the prescriptions Shah wrote. It reimbursed at a higher
rate than other insurance companies. Shah texted Small at one point to say that he
“got two TRICAREs” that he “want[ed] to give” Meek and Small. Another time,
Shah wrote, “Need script for wellness vitamins. Don’t have. Heard TRICARE pays
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well.” Near the end of the conspiracy, when Tricare stopped reimbursing as
generously for compounded medications, Shah texted Small to ask why he wasn’t
being paid. Small responded in detail: “We are getting a few hundred dollars per
script on the PPO and Medicare. The TRICARE is being tested now possibly over
$10,000 a script and we will know soon.” Shah also offered to change his
prescription practices. He wrote to Small, “I can push cream instead. Thought
patches might be good pay.” Small replied, “Patches pay a little bit less than the
creams.”
Shah continued in this role until around May 2015, when Tricare made the
conspiracy less profitable by instituting a prior-authorization requirement for
compounded drugs. All told, he received checks from PGRx Group totaling
$55,350.43. The prescriptions he wrote during the conspiracy cost Tricare more
than a million dollars.
A grand jury charged Shah with one count of conspiring to receive
kickbacks for writing prescriptions or to defraud the government and three counts
of receiving kickbacks for writing prescriptions—one count each for kickbacks in
July, August, and September 2014. 18 U.S.C. § 371; 42 U.S.C.
§ 1320a­7b(b)(1)(B). Shah pleaded not guilty, and the case went to trial.
Over Shah’s objection, the government asked the judge to instruct the jury
that “the government must only prove that inducing the [writing of prescriptions]
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was one of the Defendant’s purposes in soliciting or receiving the remuneration or
kickback.” The district court decided to give an instruction similar to the one
requested: Shah was guilty if “obtaining payment in return for [writing
prescriptions] was one of [his] purposes in soliciting or receiving the remuneration
or kickback.” That instruction read as follows:
To satisfy the second element of this offense, the Government does not
have to prove that the defendant’s sole purpose in soliciting or receiving
the remuneration or kickback was to obtain payment in return for the
purchasing, leasing, ordering and arranging for, and recommending
purchasing, leasing and ordering. Rather, the Government must only
prove that obtaining payment in return for the purchasing, ordering or
leasing was one of the defendant’s purposes in soliciting or receiving
the remuneration or kickback.
The district court also instructed the jury that the government must prove that Shah
accepted the payments knowingly and willfully and that he committed no crime if
he accepted the payments in good faith.
Shah’s closing argument focused on mens rea and the good-faith defense.
He began by telling the jury that “[t]he case is about whether Dr. Shah acted
willfully.” “That’s the key,” he reiterated. He summarized evidence showing that
Shah thought the scheme was legal. And he concluded the argument by reminding
the jury that it was obligated to acquit Shah “if he thought [the scheme] was legal.”
“That’s the promise of America,” he told them. “That’s the promise that you made
when you were sworn in as a juror.”
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The jury convicted Shah of count one, conspiring to receive health care
kickbacks or defraud the United States, and counts three and four, receiving
kickbacks in August and September. It acquitted him on count two, receiving a
kickback in July. The district court sentenced him to 36 months of incarceration on
each count, to run concurrently, and ordered him to pay $55,340 in restitution.
II. STANDARD OF REVIEW
“We review de novo the legal correctness of a jury instruction . . . .” United
States v. Melgen, 967 F.3d 1250, 1259 (11th Cir. 2020). “[A]n improper instruction
on an element of the offense violates the Sixth Amendment’s jury trial guarantee.”
Neder v. United States, 527 U.S. 1, 12 (1999). But a constitutional error is
harmless if “it appears ‘beyond a reasonable doubt that the error complained of did
not contribute to the verdict obtained.’” Id. at 15 (quoting Chapman v. California,
386 U.S. 18, 24 (1967)); see also Hedgpeth v. Pulido, 555 U.S. 57, 60–61 (2008).
III. DISCUSSION
After we posed written questions to them, both parties conceded at oral
argument that the jury instruction was erroneous because the statute does not
require proof of the defendant’s motivation for accepting the payment. Because
Shah, the government, and the American Medical Association as amicus curiae
argued in their briefs that the statute requires proof of either partial or primary
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motive, we first explain why the parties’ later concession was correct. We then
address whether the error was harmless.
The statute of conviction says nothing about the defendant’s motivation for
accepting the payment. The statute instead reads as follows:
(b) Illegal remunerations
(1) Whoever knowingly and willfully solicits or receives any
remuneration (including any kickback, bribe, or rebate) directly
or indirectly, overtly or covertly, in cash or in kind—
...
(B) in return for purchasing, leasing, ordering, or
arranging for or recommending purchasing, leasing, or
ordering any good, facility, service, or item for which
payment may be made in whole or in part under a Federal
health care program,
shall be guilty of a felony and upon conviction thereof, shall be fined
not more than $100,000 or imprisoned for not more than 10 years, or
both.
42 U.S.C. § 1320a-7b(b). The next subsection uses nearly parallel terms to prohibit
the other side of the coin: No one may “knowingly and willfully offer[] or pay[]
any remuneration . . . to any person to induce such person” to cause the purchase of
something paid by a federal healthcare program. Id. § 1320a-7b(b)(2).
The text does not require proof of a defendant’s “purposes in soliciting or
receiving” a payment. The statute’s key phrase—“remuneration . . . in return for
[writing Tricare prescriptions]”—says nothing about the reasons the defendant
accepted the payment. Instead, the words “in return for” are an adjectival
prepositional phrase describing the payment. See Chicago Manual of Style § 5.176
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(2017). And there is no reason to stretch that phrase into a description of the
defendant’s mental state.
We sometimes “read a state-of-mind component into an offense” when the
statute lacks an express mens rea requirement. United States v. U.S. Gypsum Co.,
438 U.S. 422, 437 (1978). But we need not do so here because Congress specified
the necessary mental state a few words earlier: The defendant must accept the
payment “knowingly and willfully.” 42 U.S.C. § 1320a­7b(b)(1). So the parties are
correct to concede that the crime requires no proof of the defendant’s motivation
for accepting the payment.
A similar statute that uses the phrase “in return for” supports this reading. A
federal bribery statute contains the following prohibition:
[No] public official, . . . directly or indirectly, [shall] corruptly
demand[], seek[], receive[], accept[], or agree[] to receive or accept
anything of value personally or for any other person or entity, in return
for . . . being influenced in the performance of any official act . . . .
18 U.S.C. § 201(b)(2) (emphasis added). Some public officials prosecuted under
this statute argued that they were not guilty because they received payments in
exchange for a promise to perform an official action, but they did not actually
intend to perform that action. But the courts faced with those arguments decided
that the statute extended to their false promises because “[t]he phrase ‘in return for’
brings into play the purpose of the bribe,” not the defendant’s motivation for
accepting it. United States v. Myers, 692 F.2d 823, 840–42 (2d Cir. 1982)
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(alteration adopted); accord United States v. Peleti, 576 F.3d 377, 382–83 (7th Cir.
2009). Our pattern jury instruction for receipt of a bribe by a public official adopts
this view that the recipient of the payment need not intend to perform his end of
the bargain. Eleventh Circuit Pattern Jury Instructions (Criminal Cases) Offense
Instruction 5.2 (2020) (“It is not necessary that the public official actually make a
decision or take an action . . . . Nor must the public official in fact intend to
perform the official act . . . .”). And it explains the necessary mental state without
looking to the defendant’s motivation for accepting the bribe. Id. (“To act
‘corruptly’ means to act knowingly and dishonestly for a wrongful purpose.”). In
the same way, the phrase “in return for” in section 1320a­7b(b) speaks to the
nature of the payment, not Shah’s reasons for accepting it.
Our decision creates no tension with other circuits’ precedents interpreting
the statute. None of our sister circuits’ opinions addressing the payee crime
decided the question raised by the parties’ briefs. See United States v. Borrasi, 639
F.3d 774, 776 (7th Cir. 2011); United States v. Bay State Ambulance & Hosp.
Rental Serv., Inc., 874 F.2d 20, 29–30 (1st Cir. 1989); United States v. Kats, 871
F.2d 105, 106, 108 (9th Cir. 1989); United States v. Porter, 591 F.2d 1048, 1050,
1054 (5th Cir. 1979). And we agree with our sister circuits that the payor crime,
which prohibits “knowingly and willfully offer[ing] or pay[ing] any remuneration
. . . to induce” the same set of enumerated activities, prohibits payments that are
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meant by the payor to induce one of the enumerated actions. 42 U.S.C.
§ 1320a­7b(b)(2); see United States v. McClatchey, 217 F.3d 823, 828, 834–35
(10th Cir. 2000); United States v. Davis, 132 F.3d 1092, 1094 (5th Cir. 1998);
United States v. Greber, 760 F.2d 68, 69–70 (3d Cir. 1985). So motive matters for
the payor crime even though it does not for the payee crime.
The district court erred by instructing the jury that the government had to
prove Shah accepted the payments at least in part because they were made in return
for the prescriptions he wrote. No such proof was required. But the government has
met its burden of proving beyond a reasonable doubt that the error did not harm
Shah. The erroneous instruction required the government to prove more than the
statute required, so if anything, the error worked to Shah’s advantage.
Shah argues that the error harmed him because it relaxed the government’s
burden to prove willfulness; instead of proving that he accepted the payments
willfully, he says, the government could argue that Shah broke the law if only one
of his reasons for accepting the payment was that it was made in return for the
prescriptions he wrote. And he says the government took advantage of this
possibility when it repeatedly focused on the “one purpose” instruction in its
opening statement and closing argument.
We disagree. The district court correctly instructed the jury about the burden
the government bore in proving willfulness. And it correctly instructed the jury that
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Shah committed no crime if he accepted the payments in good faith. And Shah’s
own closing argument focused on the mens rea requirements and the good-faith
instruction. We see no reason why adding an unnecessary “one purpose”
instruction could have prejudiced Shah by detracting from the otherwise correct
willfulness and good-faith instructions. In the absence of any prejudice to Shah, we
affirm. See, e.g., United States v. House, 684 F.3d 1173, 1206 (11th Cir. 2012).
IV. CONCLUSION
We AFFIRM Shah’s conviction.
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