Willfulness: Often-Overlooked in Healthcare Fraud and Kickback Cases
Regarding healthcare fraud and kickback cases, I believe many attorneys – both prosecutors and defense attorneys – overlook one crucial element – “willfulness.”
Four main federal criminal statutes cover healthcare fraud (18 U.S.C. 1347, the Anti-Kickback Statute, false statements, and obstruction). All of them require t e government to prove beyond a reasonable doubt that the defendant acted “willfully.”
Understanding 'Willfulness' in Healthcare Fraud
Willfulness is the critical element that distinguishes a criminal case from a case that should be handled civilly or administratively. Prosecutors and law- forcement agents often take this element for granted, but attorneys and practitioners should examine this element more closely.
Willfulness: The Defining Criterion
So what does it mean to act “willfully”?
Five circuits define “willfully” in their pattern jury instructions in the same way that the government has to prove beyond a reasonable doubt that the defendant knew what he or she was doing was illegal.
1st Circuit: “An act or failure to act is ‘willful’ if done voluntarily and intentionally, and with the specific intent to do something the law forbids, or with the specific intent to fail to do something the law requires to be done; that is to say, with bad purpose either to disobey or to disregard the law.” Instruction 4.18.1347 (healthcare fraud).
3rd Circuit: “That [defendant] knew [his/her] conduct was unlawful and intended to do something that the law forbids. That is, to find that [defendant] acted willfully, you must find that the evidence proved beyond a reasonable doubt that [defendant] acted with a purpose to disobey or disregard the law.” Instruction 5.05 (note that the 3rd Circuit does not explicitly include “willfully” in its healthcare fraud instruction – make sure to ask for this to be included!).
5th Circuit: “[T]he act was committed voluntarily and purposefully, with the specific intent to do something that the law forbids; that is, to say, with bad purpose either to disobey or disregard the law.” Instruction 2.59 (healthcare fraud).
8th Circuit: “A defendant acts willfully if he knew his conduct was wrongful or unlawful.” Instruction 6.42.1320 (note that this definition is included in the instruction for Anti-Kickback Statute violations but not in the definition for healthcare fraud cases – make sure to ask for this definition to be included in all types of HCF cases!).
11th Circuit: “The act was committed voluntarily and purposely, with the intent to do something the law forbids; that is, with the bad purpose of disobeying or disregarding the law.” Instruction B9.1A (note that the 11th Circuit did not specifically include “willfully in its healthcare fraud instruction – make sure to ask for this to be included!).
The Legal Interpretation of 'Willfully'
Two other circuits have language in their pattern jury instructions suggesting similar instructions:
The Seventh Circuit’s pattern jury instructions for healthcare fraud do not define “willfully” but notes that one 2008 case suggests that “willfully” requires proof that a defendant knows that his or her conduct was “in some way unlawful.” In the cases I handled as a prosecutor in Chicago, we included a version of that definition.
The Ninth Circuit’s jury instructions for healthcare fraud and the Anti-Kickback Statute refer to willfulness, and the notes for Instruction 5.5 state that willfulness in healthcare fraud cases generally requires knowledge that a defendant’s conduct was unlawful.
Following these circuits, willfulness means more than unethical, immoral, or sketchy. While the government does not have to prove that an individual knows the particular statutes that he or she violated, the government has to prove that the individual knew that their conduct violated some law.
Please note that the Sixth Circuit does NOT define willfully the same way as other circuits. In its healthcare fraud instruction (10.05), the Sixth Circuit defines “knowingly and willfully” as follows: “An act is done ‘knowingly and willfully’ if it is done voluntarily and intentionally, and not because of mistake or some other innocent reason.”
The Sixth Circuit’s instruction is, I believe, incorrect as it treats “willfully” as synonymous with “knowingly.” It also appears to not take into account an important case on this topic – United States v. Ajoku (08-1094 in the Central District of California, 11-50230 in the Ninth Circuit, and 13-7264 before the Supreme Court).
In 2011, Kelechi Ajoku, a licensed vocational nurse, was convicted by a jury of making false statements in a healthcare matter under 18 U.S.C. 1035. Defense counsel had asked that willfulness be defined as requiring proof that the defendant “acted with knowledge that his conduct was unlawful.” The district court rejected this request and gave instructions that treated “willfully” as synonymous with “knowingly.”
In 2013, the Ninth Circuit affirmed that instruction. The Ninth Circuit wrote, “[i]n the context of false statement cases … willfulness simply means ‘deliberately and with knowledge,’ and does not require knowledge of unlawfulness.”
The case was appealed to the Supreme Court. 2014, the Solicitor General confessed to the error, and the Supreme Court vacated the judgment.
In 2015, Ajoku was re-tried.
This time, the district court separated “knowingly” and “willfully” in the instructions.
This time, the district court told jurors that the government had to prove that Ajoku had acted “willfully “ with a bad purpose. In other words, the defendant committed the act voluntarily and purposefully, and with knowledge that his conduct was unlawful.”
This time, Ajoku was found not guilty.
Unfortunately, the Sixth Circuit’s jury instruction on healthcare fraud has not been updated in light of the Ajoku case. Some people may have been convicted under this definition and should not have been convicted.
If you’re in the Sixth Circuit, ask for a “willful” definition that fits with other circuits.
Strategic Implications for Legal Practitioners
Regarding evidence, attorneys should look carefully at the facts to determine whether the government can prove willfulness in particular cases. Here are some questions to consider:
Did a defendant sign a Medicare provider enrollment form? If he or she did, the government would use that form as evidence of willfulness because signing that form (1) establishes knowledge of the healthcare fraud statute and the Anti-Kickback Statute and (2) contains the statement: “I will not knowingly present or cause to be presented a false or fraudulent claim for payment by MedicareHowever, But if a defendant did not sign a form, the government may have difficulty proving that he or she acted willfully, particularly when it comes to kickback cases or defendants who are not medical professionals.
What kind of contact did a defendant have with the government before being prosecuted? If a defendant was notified that they were an outlier, that might show willfulness. However, if a defendant was audited and told their claims were acceptable, that might undercut the government’s proof of willfulness.
Does the government’s case relate to something many people get wrong? If so, that could show mistakes and undercut willfulness. For example, office visits and other evaluation and management (E&M) services have a high error rate. In 2010, the government estimated that 55 percent of claims for E&M services were improperly coded and lacked documentation, resulting in $6.7 billion in improper Medicare payments. If so many doctors are making mistakes here, specific evidence in a criminal case should show that it was not just another mistake. Similarly, while cash in unmarked envelopes is an illegal kickback, the further a case gets from that scenario, the harder it will be for the government to show willfulness in a kickback case.
Were there safe harbors that might undercut willfulness even if not technically applicable? There are lots of safe harbors to the Anti-Kickback Statute. If a defendant believed in good faith that he or she fell within a safe harbor, that defendant did not act “willfully” even if he or she was wrong.
What did a particular defendant know or not know? If a defendant was kept in the dark about his or her role, or was misled by his or her employer, or was simply naïve or gullible, that would undercut willfulness. This is especially important in home-health, DME and other “doctor-enabled” fraud cases where doctors often do not understand how the overall fraud is working and may not even understand that they are part of a fraud.
If a defendant talked to the government, did they admit knowing that their conduct was illegal, or did they just acknowledge that there were some erroneous or mistaken claims? The distinction is essential. Admitting in hindsight that a claim was improper is NOT the same as knowing at the time that one’s conduct was illegal.
Prosecutors should scrutinize their cases carefully for evidence of willfulness. If they do not have such evidence, they should consider referring the case for civil or administrative resolution, or they should just decline the case entirely.
Defense attorneys should also scrutinize their call for evidence of willfulness. And if the case has to go to trial, consider focusing the defense on willfulness. Doing so turns the case around by concentrating on a person’s state of mind, an area that the government might have taken for granted and can do little to build up once a case goes over. Focusing a jury’s attention specifically on willfulness might be more effective than trying to defend the legitimacy of particular claims or trying to say that everything had been done perfectly.
The Stephen Lee Law legal blog covers various topics, including healthcare fraud defense, investigations, data analytics, and the federal anti-kickback statute.
For further insights into willfulness or legal guidance with healthcare fraud defense, please contact Stephen Lee Law.
