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Weapons in DOJ's Arsenal: Prosecutions Under the Travel Act and Other Fraud Statutes

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Weapons in DOJ's Arsenal: Prosecutions Under the Travel Act and Other Fraud Statutes Weapons in DOJ's Arsenal: Prosecutions under the Travel Act and Other Fraud Statutes Brian D. Bewley, Polsinelli PC Jacob T. Elberg, United States Attorney’s Office, District of N.J Carolyn McNiven, Greenberg Traurig, LLP Agenda I. Overview of the Travel Act A. Statutory Enactment B. Elements of Offense C. State Law Predicates II. Enforcement of Travel Act in Health Care A. Overview of Recent Cases B. New Jersey Cases C. California Cases D. Forest Park Medical III. Discussion and Questions Overview of Travel Act •“Interstate and foreign travel or transportation in of racketeering enterprises.” •Proposed and enacted in 1961 by A.G. Robert F. Kennedy •Intent was to address organized crime: gambling, liquor, prostitution, narcotics, and using illegal bribes to corrupt politicians •Activities that crossed state lines a central nexus Travel Act Offense The Travel Act Provides that: Whoever travels in interstate or foreign commerce or uses the mail or any facility in interstate or foreign commerce, with intent to— (1) distribute the proceeds of any unlawful activity; or (2) commit any crime of violence to further any unlawful activity; or (3) otherwise promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on, of any unlawful activity, and thereafter performs or attempts to perform . an act [as further described] . shall be imprisoned . • “unlawful activity” includes extortion and bribery, as defined by state law. Elements Of Travel Act Offense 1. Interstate Element • Mailings • Wirings/Use of Wires • Travel • Note: disagreement as to how integral needs to be • Courts are in agreement defendant need not have known about interstate element 2. Intent Element 3. Performance Element (Subsequent Overt Act in Furtherance) Key Aspects of Travel Act • Penalties • 5 year max for non-violent offenses • Fine = maximum of either $250,000 or twice gross gain/loss • Different than healthcare fraud/kickback offenses • No requirement of “fraud” – no need to prove material false statement • No federal health care benefit program involvement • Predicate for 18 USC 371 Conspiracy (Conspiracy to Violate the Travel Act) • Based on violation of State Law But No double jeopardy in case of separate state prosecution • Elements of Predicate State Offenses Vary Widely Expansion to Cover Commercial Bribery • At time AG Robert Kennedy proposed TA, perception that bribery of public officials such as judges and police was part and parcel of organized criminal activity that hampered local law enforcement • “Bribery” in TA not limited to bribery of government officials or official corruption • United States v. Perrin, 444 U.S. 37 (1979) • Interpreted “bribery” in Travel Act to include acts of Commercial Bribery • Until recently Travel Act was used sparingly to prosecute commercial bribery State Predicates • Very state specific and elements vary • Not Every State Has a Commercial Bribery Statute • Georgia, Idaho, Indiana, Maryland, Montana, New Mexico, Oregon, Tennessee, West Virginia, and Wyoming • Several state statutes may apply INCLUDING THOSE THAT CONFLICT • State penalty/category irrelevant • State enforcement of state statute irrelevant Texas Commercial Bribery Statute • (a) For purposes of this section: (1) “Beneficiary” means a person for whom a fiduciary is acting. (2) “Fiduciary” means: • (A) an agent or employee; • (B) a trustee, guardian, custodian, administrator, executor, conservator, receiver, or similar fiduciary; • (C) a lawyer, physician, accountant, appraiser, or other professional advisor; or • (D) an officer, director, partner, manager, or other participant in the direction of the affairs of a corporation or association. • (b) A person who is a fiduciary commits an offense if, without the consent of his beneficiary, he intentionally or knowingly solicits, accepts, or agrees to accept any benefit from another person on agreement or understanding that the benefit will influence the conduct of the fiduciary in relation to the affairs of his beneficiary. Summary: State criminal laws as Predicates to Travel Act Violations • In health care context, government uses various state criminal laws as predicates to Travel Act violations. • In a nutshell (based on recent government enforcement) if: • State law prohibits certain conduct; and • Involves interstate commerce (use of U.S. Postal System). THEN Potential Violation of the Travel Act Noteworthy Issues/Questions: 1. Unlike the Anti-Kickback Statute, the Travel Act was not promulgated to address financial arrangements in the health care industry; • Query: What role would AKS safe harbor play in TA prosecution? 2. Many state “predicate” laws have either never been enforced, or rarely are enforced; 3. Conversion of state law violation to violation of federal law increases penalties significantly; 4. What is a physician’s duty of fidelity? 5. Does there have to be patient harm to prosecute under the Travel Act? RECENT PROSECUTIONS NAYAK (Illinois) • Underlying Facts • The Charges • The Plea • Conclusions BLS (New Jersey) • Overview of Prosecutions • Over 50 Separate Indictments • Use of Travel Act • Challenges to Use of Travel Act by Two Defendants (Ostrager & Greenspan) • Status of Investigation California Cases • Operation Spinal Cap • Overview • Charges • Outcome/Status • Workers’ Compensation Kickback Cases • Overview • Charges • Outcome/Status Forest Park Medical Center • Background Facts • Charges • Motion to Dismiss • Ruling on Motion to Dismiss Questions? THANK YOU!.
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