In United States v. Merino, No. 19-50291, 2021 WL 754589 (9th Cir. Feb. 26, 2021), the court of appeals reversed the conviction of Marina Merino of conspiracy to commit healthcare fraud in violation of 18 U.S.C. § 1349 and eight counts of healthcare fraud in violation of 18 U.S.C. § 1347. Merino was convicted after a trial in the Central District of California. At trial, the government presented evidence that Merino was employed as a patient recruiter and marketer at a medical clinic. The government alleged that she worked with others fraudulently to bill Medicare for unnecessary services. The government sponsored a cooperating witness at trial, Zoila O'Brien, who, like Merino, was a patient recruiter for a leader of the alleged conspiracy, Robert Glazer.
O'Brien testified that Merino was accepting kickbacks for her recruiting efforts. Notably, O'Brien did not testify that Marino had any knowledge that Glazer was billing Medicare fraudulently, nor did any other witness. There was also evidence that Merino lied to a federal agent, Agent Li, by minimizing her role as Glazer's employee. The government's Medicare witness, Investigator Person (actual name), spent some time testifying about how detailed and complex the law and regulations are that determine whether a service is "medically necessary." Investigator Person went further, testifying that even Medicare providers "reasonably disagree about what those regulations require." At the time of her trial, Merino was a 62-year-old with no medical training. The jury convicted Merino. She was sentenced on those convictions to 21 months in prison and three years of supervised release.
In this appeal, Merino argued that there was insufficient evidence to prove that she knew about the fraudulent billing scheme that was organized by two of her alleged codefendants. The Ninth Circuit reviewed the sufficiency of the trial evidence de novo, viewing all evidence in the light most favorable to the prosecution, as is the law. Referring to the evidence as "sparse," the court determined that no rational juror could have concluded that Merino committed conspiracy to commit healthcare fraud beyond a reasonable doubt. The court began its analysis with Salinas v. United States, 522 U.S. 52, 63 (1997), and stated that the prosecution must have proved that Merino intended to pursue the same criminal objective as her conspirators. The court went on to contrast two legal rules of conspiracy law: that it is proper for the jury to draw inferences from conduct, such as coordinated action to accomplish an unlawful purpose, but that mere association with others guilty of a crime cannot, standing alone, prove guilt. In sum, the court reaffirmed that guilt by association is insufficient.
In applying this law to the Merino facts, the court started its legal analysis with the government's theory that Merino intentionally joined a scheme fraudulently to bill Medicare for services not rendered, or services that were not medically necessary. The court began with the assumption that the evidence was sufficient to convict Merino of a violation of the Anti-Kickback Statute (AKS). Notably, Marino stood trial uncharged with any anti-kickback violation. The testimony of the cooperator witness, O'Brien, alone could bear the weight of an AKS violation in all likelihood. Nevertheless, neither O'Brien, nor any other evidence, proved that Merino knew that Glazer's clinic was billing Medicare for patient services that were not legitimate. The government's appellate lawyers argued that Merino's lie to Agent Li about the extent of her employment with Glazer's clinic was evidence of a cover-up scheme and thus, proved guilt. The court dispatched with that argument, acknowledging that, yes, those lies may well have evidenced a guilty heart, but it was guilty of another crime, a kickback violation, or likely many such violations. This crime was uncharged in Marino's indictment. Last, the court dismissed the government's argument that Merino must have known that Glazer's Medicare billed services were unnecessary because of her role at the clinic — the guilt by association argument. Referring to Investigator Person's testimony about complex Medicare regulations, the court noted Merino's lack of sophistication in the complex healthcare space. The court concluded by holding that the government presented insufficient evidence that Merino agreed to peruse the specific objective of the charged conspiracy, and thus, the conspiracy conviction must fall.
Moving to the eight substantive counts of healthcare fraud under § 1347(a), the court reversed those convictions as well. Citing that statute, the court stated that the government must prove beyond a reasonable doubt that Merino knowingly and willfully executed, or attempted to execute, a scheme to defraud Medicare. Because Marino was not a healthcare provider, she could be guilty of these substantive charges if she either was a conspirator with others who committed the crimes, or an aider and abettor. The court concluded that under either theory, on the evidence admitted at trial, no rational jury could convict Marino of joining the "object of the conspiracy for which she was chargedor that she had the specific intent to facilitate fraudulent billing, rather than a 'different or lesser offense.'" It is hard to criticize the grand jury investigation in this matter because evidence often becomes more clear and focused as a case like this gets closer to trial. That said, if the grand jury had returned an anti-kickback count against Merino, it is clear that the court would have affirmed that charge based on the evidence admitted during trial.
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