On May 10, 2017 Attorney General Jeff Sessions issued a memorandum to all federal prosecutors setting out the new administration’s policy on charging and sentencing. The directive may result in more frequent use of mandatory minimums and longer sentences for offenders.
Under the new policy, federal prosecutors are directed to charge and pursue the “most serious” and readily provable offense, defined as “those that carry the most substantial guidelines sentence, including mandatory minimum sentences.” The memorandum recognizes that there may be some limited circumstance in which prosecutors find that strict application of the charging policy is not warranted. In remarks to New York City law enforcement on Friday, May 12, the Attorney General noted that his policy gives prosecutors discretion to avoid sentences that would result in an injustice. Assistant United States Attorneys must, however, obtain approval to charge less than the most serious offense.
The policy represents a stark reversal of the charging guidelines crafted by the Obama administration, which directed prosecutors not to charge defendants with crimes that carried mandatory minimum sentences under Title 21 based on drug type and quantity where the defendant met certain criteria, including that the defendant’s conduct did not involve violence, trafficking to minors, or serious injury or death. The reversal of the former administration’s charging guidelines affects prosecutors’ ability to consider the individualized circumstances and characteristics of defendants implicated in drug offenses at the charging stage.
The new memorandum addresses sentencing policy as well. It requires prosecutors to disclose to the sentencing court all facts that impact the sentencing guidelines or mandatory minimum sentences and to seek a reasonable sentence under the § 3553 factors in all cases. According to the policy, sentences imposed within the guideline range will be considered appropriate in most cases. Read More
On May 10, 2017 Attorney General Jeff Sessions issued a memorandum to all federal prosecutors setting out the new administration’s policy on charging and sentencing. The directive may result in more frequent use of mandatory minimums and longer sentences for offenders.
Under the new policy, federal prosecutors are directed to charge and pursue the “most serious” and readily provable offense, defined as “those that carry the most substantial guidelines sentence, including mandatory minimum sentences.” The memorandum recognizes that there may be some limited circumstance in which prosecutors find that strict application of the charging policy is not warranted. In remarks to New York City law enforcement on Friday, May 12, the Attorney General noted that his policy gives prosecutors discretion to avoid sentences that would result in an injustice. Assistant United States Attorneys must, however, obtain approval to charge less than the most serious offense.
The policy represents a stark reversal of the charging guidelines crafted by the Obama administration, which directed prosecutors not to charge defendants with crimes that carried mandatory minimum sentences under Title 21 based on drug type and quantity where the defendant met certain criteria, including that the defendant’s conduct did not involve violence, trafficking to minors, or serious injury or death. The reversal of the former administration’s charging guidelines affects prosecutors’ ability to consider the individualized circumstances and characteristics of defendants implicated in drug offenses at the charging stage.
The new memorandum addresses sentencing policy as well. It requires prosecutors to disclose to the sentencing court all facts that impact the sentencing guidelines or mandatory minimum sentences and to seek a reasonable sentence under the § 3553 factors in all cases. According to the policy, sentences imposed within the guideline range will be considered appropriate in most cases. Read More
A recent case in the District of New Jersey, United States v. Alesia Watson, No. 17-05537 (D.N.J.), illustrates the government’s continued efforts against white collar crime. The executive director of the Ocean City, New Jersey Housing Authority (the “OCHA”) pleaded guilty to embezzling federal funds received from the U.S. Department of Housing and Urban Development (“HUD”) and administrated by the OCHA. According to court documents, the executive director used two credit cards to purchase sixty-nine Master Card gift cards during the period of December 2013 through March 2015. The executive director used the gift cards either for personal expenses not associated with the OCHA, or provided the gift cards to family members and friends. The executive director then used federal funds received from HUD and administrated by the OCHA to pay the credit card bills associated with the purchased gift cards. The government estimates the loss was somewhere between $6,500.00 and $15,000.00.
The embezzlement charge carries a maximum sentence of one year in prison and $100,000.00 fine or twice the gain/ loss amount from the offense. Sentencing is set for August 15, 2017. Read More
Marc Stephen Raspanti and Pamela Coyle Brecht will speak at the “Current Trends in False Claims Act/Qui Tam Whistleblower Litigation,” CLE presented by the SC Bar CLE Division, SC Federal Bar Association Qui Tam Section, and the Charleston School of Law. Marc will discuss, “Ten Practice Tips for Relators- Doing Your Best to File a Winning Qui Tam Case,” and Pam will present on, “Medicare Part C and Part D FCA Cases: The Next Frontier.” They both will participate on a panel discussion regarding “FCA/Qui Tam Suits: Plaintiff’s Perspective.” Read More
On April 7, 2017, the Commonwealth Court of Pennsylvania issued its opinion in Chestnut Hill College v. Pennsylvania Human Rel. Commn., 844 C.D. 2016, — A –, 2017 WL 1289250, (Pa. Commw. Apr. 7, 2017), holding, in a case of first impression, that a Catholic college’s decision to expel a student could be challenged under the Pennsylvania Human Relations Act (“PHRA”).
During administrative proceedings before the Pennsylvania Human Relations Commission (“PHRC”), Chestnut Hill College (“the college”) claimed that the PHRC lacked jurisdiction over the matter because, the college asserted, it was not a “public accommodation” under the PHRA and, moreover, that any exercise of jurisdiction would violate the college’s First Amendment rights. The PHRC rejected those arguments and the appeal followed.
The Commonwealth Court affirmed. The Court noted that the scope of “public accommodations” under the PHRA is broad. Accordingly, “[p]rovided the College accepts . . . the patronage of the general public, and is not in its nature distinctly private, it constitutes a public accommodation as defined by the Act.” The Court rejected the college’s position that it was “distinctively private” given its religious affiliation. The Court noted that unlike a parochial school, which is heavily focused on indoctrinating students in the relevant religious faith, religious colleges remain largely secular in their educational functions. The Court also rejected the college’s position that the First Amendment precluded jurisdiction. While the Court recognized that, under the First Amendment, “generally courts must defer to church hierarchy in the resolution of any ecclesiastical matter,” the Court concluded that the expulsion decision could be reviewed under “neutral principles of law” and thus the judiciary would not be tasked with delving into religious doctrine.
Chestnut Hill broadens the scope of the PHRA and PHRC. Prior to Chestnut Hill, many religious colleges and universities could rely on established precedent holding that parochial grade schools are not “public accommodations” to argue that their institutions are outside the scope of the PHRA and PHRC. Read More
To attract high caliber employees, employers sometimes commit to employment for a fixed period through an employment contract. Not surprisingly, those employees with the leverage to command an employment contract typically represent a serious competitive threat once they leave the company. Given that dynamic, most employment contracts include restrictive covenants, such as non-solicit or non-compete agreements. The recent case of Metalico Pittsburgh Inc. v. Douglas Newman, et al., __ A.3d __ (2017), 2017 WL 1398882 (Pa. Super. Ct., April 19, 2017) dealt with the question of what happens to the restrictive covenants in an employment contract when an employee converts to at-will status.
In Metalico, an employer entered into three-year contracts with two high-level executives. After the three-year period ended, Metalico continued to employ the executives as at-will employees, with some corresponding changes to the conditions of their employment. After working at-will for a year, the two executives departed to a competitor and solicited Metalico’s customers to move their business from Metalico to their new employer. They also solicited Metalico employees to resign and join the new employer. In response, Metalico sought a preliminary injunction to enforce the restrictive covenants.
The executives argued that they were no longer bound to the restrictive covenants because the three-year term of their employment contracts had expired. The trial court agreed and ruled that the restrictive covenants did not carry forward because the transition from a term employee to an at-will employee constituted the commencement of a new instance of employment. The Pennsylvania Superior Court, however, rejected that rationale citing the following provision of the employment contracts:
If the Executive’s employment hereunder expires or is terminated, this Agreement will continue in full force and effect as is necessary or appropriate to enforce the covenants and agreements of the Executive in [§] 8[, which contains the restrictive covenants]. Read More
The Mandatory Victims Restitution Act, 18 U.S.C. § 3663(a), requires courts to impose restitution as part of the sentence for defendants convicted of certain crimes. But sometimes at sentencing, the amount of restitution to be imposed is not yet known. In such instances, the court may enter a judgment that sets aspects of the punishment, like a term of imprisonment or probation, while deferring the amount of restitution, which is ordered later via an amended judgment.
In Manrique v. United States, the U.S. Supreme Court was presented with the following question: When a defendant appeals from an initial judgment that does not set a restitution amount, is he entitled to appeal the subsequently entered restitution award? By a 6-2 majority (Justice Gorsuch took no part in the decision), the Court held that a defendant endeavoring to appeal a restitution order in a deferred restitution case must file a notice of appeal from that order, i.e., the amended judgment. By failing to file a notice of appeal from the amended judgment, Manrique, who had noticed appeal of the sentence of imprisonment imposed in the initial judgment, forfeited his right to challenge the restitution amount imposed in his case.
Per the Court, under both Federal Rule of Appellate Procedure 3(a)(1) and 18 U.S.C. § 3742(a), which governs criminal appeals, a defendant is required to file a notice of appeal after the district court has decided the issue he wishes to appeal. It thus rejected Manrique’s arguments that (1) there is only one “judgment,” as that term is used in the Federal Rules of Appeals, in a deferred restitution case, and (2) a notice of appeal filed after the initial judgment springs forward to appeal the amended judgment.
In dissent, Justice Ginsburg, whose opinion Justice Sotamoyor joined, expressed concern that the district court had not fulfilled its obligation to notify Manrique of his right to appeal. Read More
In 2015 and 2016, the Securities and Exchange Commission and the Department of Justice racked-up record recoveries under the FCPA in both civil and criminal fines. It was the largest amount collected in history. The SEC and the Department of Justice seemed to forge a well-oiled machine when it came to investigating and prosecuting myriad FCPA violations. Indeed, in 2016 corporate defendants paid a combined $2.48 BILLION to resolve FCPA cases. As a result of all the regulatory activity coming out of Washington, D.C., the compliance industry beefed up at every level its FCPA compliance efforts. The question that looms is: How will FCPA matters fare under Attorney General Jeff Sessions and SEC Chair Jay Clayton?
There has never been an executive branch that could boast more per capita net worth or experience in the global marketplace among its members than the one currently assembled. President Trump and many of his cabinet members have business interests in China, Japan, Russia, Malaysia, India, Korea, and elsewhere that are yet to be completely understood. The full extent of this involvement will perhaps never be known due to the positions that have been taken with regard to disclosures. The question becomes whether FCPA prosecutions will wane. And, if they do, will that dropping number become rather apparent, rather quickly, based on the amount of activity that has occurred in the preceding years under the Obama administration? The SEC whistleblower program, which is still currently intact, drives tremendous amounts of tips and cases into the mix. According to public statements, the SEC received over 4,200 tips in fiscal year 2016 alone. This has clearly changed the prosecutorial landscape.
In a panel appearance in New York City on April 19, 2017 entitled “Annual SEC/DOJ Enforcement 2017 Update,” the public gained insight into the government’s own thoughts on this issue. Read More
Speculation is rampant concerning if and how the priorities of the U.S. Department of Justice will change under Attorney General Sessions. Looking at it from a different perspective, it is likely that certain priorities of the Obama administration will remain. Below I highlight a few recent cases involving healthcare prosecutions – an area that is likely to remain active over the next four years.
The investigation of these matters undoubtedly took place prior to the current administration. Nevertheless, the significant dollars spent on healthcare by private insurers and the federal government alike will require the DOJ to be focused on allegations of healthcare fraud in the future. A link to the DOJ press release follows each bullet.
On March 6, the operator of a Los Angeles rehabilitative clinic was sentenced to 63 months imprisonment for a $3.4 million Medicare fraud scheme. The defendant, Simon Hong, pled guilty based on the allegation that he billed for occupational therapy services that were not medically necessary and not provided. Instead, patients received acupuncture and massage therapy, which were not properly reimbursable by Medicare. At Hong’s direction, co-conspiring therapists inappropriately billed the “treatment” as legitimate occupational therapy. LINK
In early-March, a federal jury convicted Rex Duruji for his role in a healthcare fraud and conspiracy totaling $1.3 million. During the four-day trial in Houston, Texas, the government presented evidence that Mr. Duruji posed as a physician to induce Medicare beneficiaries to sign up for home-health services that were not provided. There was also evidence admitted at trial that Medicare beneficiaries were paid kickbacks for those claims. LINK
On March 1, two Florida residents pled guilty for their role in a $20 million healthcare fraud conspiracy that paid for referrals for patients to home-health care. Mildrey Gonzalez and Milka Alfaro, co-owners and operators of seven health agencies in the Miami area, were alleged to have paid bribes and kickbacks to physicians and other health professionals for prescriptions for home-health services and for referral of Medicare patients to their home-health agencies. Read More
As we head into the second quarter of an already turbulent 2017, it is worth reflecting on the truly extraordinary events of 2016. Of course, there was the hotly-contested, historic election in November, which may usher in sweeping changes to our nation’s healthcare system. Although the potential impact of these future changes remains to be seen, one thing is clear: 2016 was an extraordinary year for all those who work in healthcare compliance. In particular, 2016 was a truly historic year for the federal False Claims Act (FCA), and one that should be carefully reviewed by the entire healthcare compliance community.
2016: The FCA’s “Pearl” Anniversary
This year the FCA celebrated a historic mile-stone, marking the passage of 30 years since the qui tam whistleblower provisions were added by Congress in 1986. During that time, the FCA has become widely-recognized as the government’s most potent weapon to combat fraud, waste, and abuse involving taxpayer funds. Since 1986, the government has recovered more than $48 billion in FCA cases, $31 billion of which came from healthcare-related cases.1 Of the Morse$31 billion in healthcare recoveries, $25 billion came from cases filed by whistleblowers, and whistleblowers received more than $3.6 billion in awards for reporting the fraud. Since 1986, there have been more than 6,100 whistleblower cases related to healthcare filed under the FCA.
Senator Charles Grassley (R-IA), one of the principle architects of the 1986 FCA amendments, recognized the 30-year milestone by commenting that: “Thirty years’ worth of recoveries shows that we did the right thing. The False Claims Act is, hands down, the most effective tool the government has to fight fraud against the taxpayers.”2 Senator Grassley’s staunch sup-port of the FCA is important to note, as he was just re-elected to his seventh term, and he serves as the Chairman of the Senate Judiciary Committee. Read More
