Petition — HARVEY GOLDEN v. UNITED STATES (Nos. 80-632, 80-558, 161)

Supreme Court brief1980

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YONK, JR., CLERK |

In the Supreme Court of the Anited States

OCTOBER TERM, 1980

HARVEY GOLDEN, PETITIONER,

VS.

UNITED STATES OF AMERICA, RESPONDENT.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Counsel for Petitioners:

Warren J. Pertove of the Rosert S. Harrison of the

Michigan Bar Michigan Bar

18860 West Ten Mile Road 18860 West Ten Mile Road

Suite 200 Suite 200

Southfield, Michigan 48075 Southfield, Michigan 48075

Telephone: (313) 424-8000 Telephone: (313) 424-8000

RENAISSANCE PRINTING COMPANY, 76 W. ADAMS, KALES BUILDING,

DETROIT, MICHIGAN 43226 — PHONE 964-3185

II.

QUESTIONS PRESENTED FOR REVIEW

WHETHER, DURING THE PERIOD MAY 27, 1974,

THROUGH JANUARY 9, 1975, APPLICATION OF

42 USC § 1396h(b)(1) WAS LIMITED TO ONE WHO

BOTH (1) FURNISHED ITEMS OR SERVICES TO

AN INDIVIDUAL WHICH WERE COMPENSABLE

UNDER 42 USC § 1396 et seq., AND (2) SOLICITED,

OFFERED, OR RECEIVED ANY KICKBACK IN

CONNECTION WITH HIS OR HER FURNISHING

OF SUCH SERVICES TO SUCH INDIVIDUAL?

WHETHER COUNTS 11 THROUGH 15 OF THE

AMENDED FOLLOW UP INFORMATION FAIL

TO ALLEGE THAT PETITIONER FURNISHED

ITEMS OR SERVICES TO ANY INDIVIDUAL

WHICH WERE COMPENSABLE UNDER 42 USC §

1396 et seg. INCONNECTION WITH WHICH HE

ALLEGEDLY RECEIVED THE PAYMENTS SET

FORTH IN SAID COUNTS, AND THUS FAIL TO

CHARGE AN ESSENTIAL ELEMENT OF A VIO-

LATION OF 42 USC § 1396h(b)(1)?

A. WHETHER THE AMENDED FOLLOW UP IN-

FORMATION ALLEGED AND DEFENDANT'S

PLEA OF GUILTY ESTABLISHED THAT

PETITIONER FURNISHED LABORATORY

TESTING SERVICES TO ANY INDIVIDUAL

WHICH WERE COMPENSABLE UNDER 42

USC § 1396 et seq.

B. WHETHER THE AMENDED FOLLOW UP IN-

FORMATION ALLEGED AND DEFENDANT'S

PLEA OF GUILTY ESTABLISHED THAT

PETITIONER FURNISHED TO ANY IN-

DIVIDUAL PHYSICIAN’S SERVICES AS

Iil.

DEFINED BY 42 USC § 1396(d)(5) AND 42 USC §

1395(x)(r)1) WHICH WERE COMPENSABLE

UNDER 42 USC § 1396 et seq.

WHETHER THE AMENDED FOLLOW UP IN-

. FORMATION ALLEGED AND DEFENDANT'S

PLEA OF GUILTY ESTABLISHED THAT

PETITIONER FURNISHED TO ANY IN-

DIVIDUAL ANY SERVICES WHICH WERE

COMPENSABLE UNDER 42 USC § 1396 et seq.

WHETHER THE ALLEGED PAYMENTS TO PETI-

TIONER AS SET FORTH IN COUNTS 11

THROUGH 15 OF THE AMENDED FOLLOW UP

INFORMATION WERE KICKBACKS AS THAT

TERM IS USED IN 42 USC § 1396(h)(b)(1) OR

REBATES AS THAT TERM IS USED IN 42 USC §

1396(h)(b)(2)?

DID THE COURT OF APPEALS COMMIT ER-

ROR IN REFUSING TO GRANT A REHEAR-

ING FOR THE PURPOSES OF DETERMINING

WHETHER:

1. CONGRESS INTENDED TO DIFFEREN-

TIATE BETWEEN KICKBACKS AND

REBATES IN ENACTING 42 USC §§

1396(h)(b\(1) and 1896(h)(b)(2)?

2. THE PAYMENTS ALLEGEDLY RECEIVED

BY PETITIONER WERE KICKBACKS AS

THAT TERM IS USED IN 42 USC §

1396(h)(b)(1) OR REBATES AS THAT

TERM IS USED IN 42 USC § 1396(h)(b)2)?

3. ANY PAYMENTS ALLEGEDLY RECEIVED

BY PETITIONER WERE PERCENTAGE

PAYMENTS AND, THUS, KICKBACKS

WITHIN THE DEFINITION SET FORTH

iii

IN U.S. v HANCOCK, 604 F.2d 999 (7th Cir.

1978)?

IV. WHETHER DURING THE PERIOD MAY 27, 1974,

THROUGH JANUARY 9, 1975, 42 USC § 1396(h)(b)

(1) WAS APPLICABLE TO ONE WHO REFERRED

LABORATORY BUSINESS TO A MEDICAL

TESTING LABORATORY, BUT WHERE THE

PARTY REFERRING SUCH BUSINESS DID NOT

PERFORM THE LABORATORY TESTS AND

WHERE THE REFERRING OF SUCH BUS!NESS

WAS NOT A SERVICE WHICH WAS COMPEN-

SABLE UNDER 42 USC § 1396 et seq.

WHETHER APPLICATION OF THE PROVISION

OF 42 USC § 1396(h\bX1) AS IT WAS FRAMED

DURING THE PERIOD MAY 27, 1974, THROUGH

JANUARY 9, 1975, WOULD RESULT IN A DENIAL

Cr DUE PROCESS TO APPELLANT FOR THE

REASON THAT SUCH STATUTE WAS VAGUE

AND INDEFINITE AND DID NOT GIVE FAIR

WARNING THAT IT WAS APPLICABLE TO THE

RECEIPT OF PAYMENTS BY A DOCTOR IN

RETURN FOR REFERRING LABORATORY

BUSINESS TO A MEDICAL TESTING LABORA-

TORY WHERE THE MEDICAL TESTING SERV-

ICES WITH REGARD TO SUCH REFERRED

BUSINESS WERE ALL PERFORMED BY THE

MEDICAL TESTING LABORATORY AND NOT

BY THE REFERRING DOCTOR?

TABLE OF CONTENTS

PAGE

QUESTIONS PRESENTED ...............-00.

TABLEOF AUTHORITIES.....<..........-... ’

JURISDICTION ...... Aigo sis Slanpee oie 1

STAUMMINEE oo ces 5

REASONS FOR GRANTING THE WRIT ........ 7

Sec OES GRRE eae en eae 30

perenieks 6 = ooo et la

EERO AAT LEME Ib

RMI ror rc ee aed lc

Pe SANA Gey MeO a COM hs ES ld

RUN er as ie le

INDEX OF AUTHORITIES

UNITED STATES SUPREME COURT

CASES

Atlantic Cleaners & Dryers v United States, 286

GRP OR ENO <cicaid'c bk Gis Sead Gado pes oaks

El Dorado Oil Works, et al v United States, et al,

SS Bee i ic oe eS es wes

Jordan v DeGeorge, 341 US 223 ..............

Russell v United States, 369 US 749 (1962)......

Toussie v United States, 397 US 112(1970) .....

United States v Boston and Mazne Railroad, 380

Ri MER RODD «ow che kclc bite ee ORE EN « oc

UNITED STATES COURT OF APPEALS

CASES

CIR v Ridgeway’s Estate, 291 F2d 257 (3d Cir.

WEE Wisin Sisliced cue a Oe © » come hemes Ais

Continental Illinois National Bank & Trust Com-

pany of Chicago v United States, 403 F2d 721

SIGN BORD: 4-0 cus wtnle eth ake eGule Biicecee.

FTC v Manager, Retail Credit Co, Miami Ranch

Office, 515 F2d 988 (D.C. Cir. 1975) ........

General Motors Acceptance Corp. v Whisnant,

387 F2d 744 (5th Gir. 1968) ...............

Hotel Equities Corp. v CIR, 546 F2d 725 (7th

PL Aa. 3k 3,00 Cnc eee bern s ecaaes

Jackson v Kelly, 557 F2d 735 (10th Cir. 1977) ...

United States v Blasius, 397 F2d 203 (2nd Cir.

_. Regs pe tree sore t

United States v Bush, 522 F2d 641 (7th Cir. 1975)

PAGE

24, 25

18, 19, 22

12, 13

23, 24

EEE

United States v George, 477 F2d 508 (7th Cir.

oe CERRO RON, paneer RR Me Ry

MON es oe aie i ace ney y a4

United States v Monasterski, 567 F2d 677 (6th

CC MF A oh) Ca biraciecs op CRAM b PRIA vie cS

United States v Porter, 591 F2d 1048 (5th Cir.

SON ab sralereil S ois's REO REE CREE was

Te he Caer tee rT Os

United States of America For the Use & Benefit of

Floating Floors, Inc., v Federal Insurance

Company, 381 F2d 361 (9th Cir. 1967) ......

Uptagrafft v United States, 315 F2d 200 (4th Cir.

RRER 8) Gait CRS ah cae vengeheten és ah oes

UNITED STATES DISTRICT COURT

CASES

United States v Chappell, 292 F Supp 494 (D.C.

ak WOU Ne ke

United States v Eastern Airlines, Inc., 192 F Supp

ROT as FRC BURT os Veta eeenies cies

United States v Elliott, 266 F Supp 1038 (D.C.

NN A So ea

United States v Mondal, 298 F Supp 1038 (D.C.

Pe RED ao 05 6 boned atid ye TAR g was

United States v Naughten, 195 F Supp 157 (D.C.

Cal. TOR nts sb eet EROSs eas a phseo

PAGE

iii, 7, 23,

25, 26

6, 7, 26

vii

UNITED STATES CONSTITUTIONAL

PROVISIONS PAGE

Fifth Amendment to the Constitution ......... 10, 13,

21, 26

Sixth Amendment to the Constitution ......... 13, 18, 21

FEDERAL STATUTES

SE COs i68 0c kOe yOi ed banat ie a 5

NIE UID oo 6h nfo dopa alan Os (Aap Cae 5

SE SOR Gis 5 4 iba. cake ape swoon s bills 5

AGN 0s foe e svar Ook te RE nie 5

RIS SSRN 5 etnies vt tied Se aaeread are e's 0 « l

Gs ERRNO 8 ed ih es eke Re 9

MATE SUMMED 6.05 coe cual Hews Oes Ko 12, 13, 14

SEU OAL ts ciiaacivlecens ee pean 12, 13, 14

Pe Se he oy ANN ag Bee anes eer a 2, 9, 10,

12, 13, 14

ee PGs LOMO) soso. ov eewinlned pany sks 12, 13, 14

RPI a EE URMEN Eg 5.5.5 p vicina ken dbp pe 6 c'a' pie Ace ii, 20

GR AEs ROM OOIM OLD bic pie hS oo dism cade 13

oe en) ae Nee ae i, ii, iii, 6,

7, 8, 9, 14, 15, 16, 17, 19, 20

MET TEE) Sis hdc is Cea e retest 2,9

Ce Se Pa oe a iret 2-3, 9

SPARE MOOD co iiaive sc curaereaheribas ii, 3,9

MEER 616215 60's 06d ning ona A 8 MES 26

MISCO) 23... 6. 28

viii

PAGE

42 USC § 1SSGIE MT) foo is ie eee i, ii, iii,

1-2, 5, 6, 7, 8, 10, 12, 13, 14,

17, 20, 22, 23, 26, 28, 29, 30

SB USCS ISUSRID RS) oi cn Raw. ii, 6, 8

23, 29

GPU GE 8A Oo vie gent hans ecaokaeeke ees 24

MICHIGAN STATUES

ROE OE. COCR ND adil es pocorn eaten shes Cai 3

MCL § 325.82(2)(a) ....... Bi ow Wik 's aisha. waders 3-4

FEDERAL RULES PAGE

Wed, Te Fas ooo ok ceca gee uw eee 18, 21

Pad. RC. GG is i oh eii ees i Waig Seed 64 7

CONGRESSIONAL RECORDS

AND RECORDS

House Report 95-393, 1977, U.S. Code Cong. &

Admin. News, 3039, 3055-3056, p.23....... 26

FEDERAL REGULATIONS

CFR Title 20, Chapter III, Part405........... 4-5

MICHIGAN ADMINISTRATIVE CODE

SBS -SOSSEE), CID ss: vse hin Baw edn aks Bing 5

ae pees ee rad * Lx Wel nee ee a eS ae Re a ne a Ces ee ee ee ey ge eee ee Wy ty kel i 4

OPINIONS BELOW

The decision of the Court of Appeals, Nos. 79-5222-24,

79-5269-70, June 16, 1980, not yet reported, appears in the

Appendix hereto. On August 19, 1980, the Court of Appeals

entered its Order denying Petitioner Golden’s Motion for Re-

hearing. A copy of that Order appears in the Appendix here-

to. The District Court issued an Opinion and Order denying

Defendant Golden’s Motion to Dismiss Indictment and Mo-

tion to Dismiss Information on March 16, 1979. Counsel does

not know if such Opinion and Order was published and a

copy thereof appears in the Appendix hereto. The District

Court also issued an Opinion and Order denying Defendant's

Mottur for Rehearing which is reported at 468 F. Supp. 410

(E.D. Mich. 1979).'

JURISDICTION

The judgment of the Court of Appeals for the Sixth Circuit

was entered on June 16, 1980. A timely petition for rehearing

was denied on August 19, 1980, and this Petition for Cer-

tiorari was filed within sixty (60) days of that date pursuant to

Rules 20.1 and 20.4. This Court’s jurisdiction is invoked un-

der Title 28, United States Code, § 1254(1).

STATUTES AND REGULATIONS INVOLVED

42 USC § 1396h(b)(1) provides in pertinent part:

(b) Whoever furnishes items or services to an individual

for which payment is or may be made in whole or in

' Defendants-Appellants below were Richard Tapert, Harvey Golden,

Gerald Weingarden, Donald Freedlander, and Robert Gash.

part out of Federal funds under a State plan ap-

proved under this subchapter and who solicits, offers

or receives any

(1) kickback or bribe in connection with the fur-

nishing of such items or services or the making or re-

ceipt of such payment, or

(2) rebate of any fee or charge for referring any

such individual for the furnishing of such items or

services.

42 USC § 1395x(b)(3) provides:

(b) The term ‘inpatient hospital services’ means the

following items and services furnished to an inpa- 5

tient of a hospital and (except as provided in para-

graph (3)) by the hospital— ...

(3) such other diagnostic or therapeutic items or

services, furnished by the hospital or by others

under arrangements with them made by the hospi-

tal, as are ordinarily furnished to inpatients either

by such hospital or by others under such arrange-

ments;

42 USC § 1396d(a)(1) provides in pertinent part:

For purposes of this subchapter —

(a) The term ‘medical assistance’ means

* * * *

(1) inpatient hospital services (other than services

in an institution for tuberculosis or mental

diseases);

42 USC § 1396d(a)(3) provides in pertinent part:

For purposes of this subchapter —

(a) The term ‘medical assistance’ means

* * * *

(3) other laboratory and X-ray services;

42 USC § 1396d(a)(5) provides in pertinent part:

For purposes of this subchapter —

(a) The term ‘medical assistance’ means

* * * *

(5) physicians’ services furnished by a physician (as

defined in section 1395x(r)(1) of this title), whether

furnished in the office, the patient’s home, a hospi-

tal, or a skilled nursing facility, or elsewhere;

MCL § 325.81(1)(b) provides in pertinent part:

Sec. 1. As used in this act:

* * * *

(b) ‘Clinical Laboratory’ means a facility which

may be patronized by any physician, health officer

or other person authorized by law for the purpose of

obtaining information for the diagnosis, prevention

or treatment of disease or the assessment of medical

condition by the microbiological, serological, histo-

logical, hemotological, immunohematological,

biophysical, cytological, pathological or biochem-

ical examination of materials derived from the

human body, except as provided in section 2.

MCL § 325.82(2)(a) provides in pertinent part:

Sec. 2. (1) This act does not apply to:

(a) A laboratory operated by a person licensed or

registered to practice medicine, osteopathy, dentis-

try or podiatry who performs laboratory tests or

procedures, personally or through his employees,

solely as an adjunct to the treatment of his own pa-

tients.

CFR Title 20, Chapter III, Part 405, Sub-part M,

§ 1316(g)(4) states:

(g) Standard; laboratory report and record. The

laboratory report is sent promptly to the licensed

physician or other authorized person who requested

the test and a suitable record of each test result is

preserved by the laboratory for a period of at least 2

years after the date of submittal of the report or for

a period of time required by State law for such rec-

ords, whichever is longer. The factors explaining

the standard are as follows:

(4) The results of laboratory tests or procedures or

transcripts thereof are not sent to the patient con-

cerned except with the written consent of the physi-

cian or other authorized person who requested the

test.

Regulations 405.1310 of Sub-part or Part 405 of Chapter

III of Title 20 of the Code of Federal Regulations as published

on September 19, 1974, provides in pertinent part:

... Services furnished by out-of-hospital lalorato-

ries under the direction of a physician, such as a

pathologist, are considered to be subject to the con-

ditions where the physician holds himself and the

facilities of his office out to other physicians as being

available for the performance of diagnostic tests. A

laboratory maintained by a physician for perform-

ing diagnostic tests for his own patients is exempt

from the conditions unless such laboratory accepts

at least 100 specimens in any category during any

calendar year wiagnostic tests on referral from other

_ physicians. ...

Michigan Administrative Code R325.2353(1) and (2) pro-

vides:

Rule 53. (1) The original or duplicate report shall

be preserved for at least 1 year and shall be acces-

sible to the authorized individual ns sommes de the

laboratory.

(2) The results of laboratory tests or procedures or

copies thereof shall not be given or sent to the pa-

tient concerned except with the written consent of

the physicin or other authorized person who re-

quested the test.

STATEMENT

On or about September 21, 1978, Harvey O. Golden, De-

fendant-Petitioner (hereinafter referred to as Petitioner) was

named as a Defendant in Counts 1 through 25 of a 37 Count

indictment handed down by a United States Grand Jury.

Count I of the indictment alleged a conspiracy in violation of

18 USC § 1962(d), Counts 2 and 3 of the indictment alleged

substantive violations of the provisions of 18 USC §1962(b)

and § 1962(c) and Counts 4 through 24 of the indictment each

alleged individual mail fraud offenses in violation of 19 USC

§ 1341. All of the charges in the indictment related to pay-

ments allegedly received by Petitioner in return for referring

Medicare and Medicaid laboratory business to Titan

Laboratory. On or about February 2, 1979, the Unite States

Attorney filed a Follow-Up Information additionally charg-

ing Petitioner in Counts 11 through 16 with six violations of

the provisions of 42 USC § 1396h(b)(1) as such statute was in

effect during the period May 27, 1974, through January 9,

ie |

1975. On March 9, 1979, oral argument was had before the

District Court upon Defendant Golden's Motion to Dismiss

the Indictment and Information. During oral argument on

March 9, 1979, counsel for the government admitted that the

language of the Information referred to services performed by

the laboratory. App. p. 3a. Government counsel also stated

that the Information only covered § 1396h(b)(1) and not

§ 1396h(b)(2). App. p. 4a. On March 16, 1979, the District

Court entered its Opinion and Order denying said Motion.

On March 21, 1979, the United States Court of Appeals for

the Fifth Circuit issued its decision in United States v Porter,

591 F2d 1048 (5th Cir. 1979). Relying on this case, counsel for

Defendant orally moved for a rehearing of the Motion to Dis-

miss. On March 29, 1979, the District Court permitted argu-

ment upon such Motion for Rehearing in view of Porter,

supra. Or. April 5, 1979, the District Court entered its Opin-

ion and Order denying Defendant's Motion for Rehearing.

On April 10, 1979, Defendant-Petitioner Harvey O. Golden

entered a plea of guilty to Counts 11 through 15 of the Follow-

Up Information as amended. Count 16 of the Information

and all of the Counts of the indictment against Petitioner

were dismissed upon Motion of the government at the time

that Petitioner entered his guilty plea. Prior to the entry of Pe-

titioner’s guilty plea it had been orally stipulated between

counsel for Petitioner and Assistant United States Attorney,

Peter Rosen, that the Follow-Up Information would be

amended by the government. An Order granting the govern-

ment’s Motion to Amend Follow-Up Information was filed

with the Court by the government on August 9, 1979. Peti-

tioner was aware of, and had stipulated to, the amendatory

language added to the Information at the time that he pled

guilty. The Amended Follow-Up Information did not state

that Petitioner performed or furnished any services compen-

sable under 42 USC § 1396 et seq. to any individual. Rather,

it charged that Petitioner obtained services. At Petitioner's

plea hearing, the Court advised him that the government

would have to prove that he obtained services from Titan La-

boratories which were compensable under Title 19 (42 USC §

1396 et seq.). App. p. 3b. The Court did not adutse Petitioner

that the Government would have to prove that he furnished

any services.

Prior to pleading guilty Petitioner had advised Assistant

United States Attorney, Peter Rosen, “hat he intended to

appeal his guilty plea. Petitioner Golden’s desire to appeal

was communicated to the District Court as early as the date

upon which Petitioner entered his plea of guilty and was

acknowledged by the Court at the sentencing on June 7, 1979.

Petitioner was released on personal bond pending appeal. On

April 26, 1979, Petitioner Golden filed a Motion for Arrest of

Judgment pursuan: to Rule 34 of the Federal Rules of

Criminal Procedure in order that he might be able to appeal

jurisdictional defects following hiz plea of guilty. Petitioner's

Motion for Arrest of Judgment was denied by the District

Court on May 1, 1979. On June 16, 1980, the United States

Court of Appeals for the Sixth Circuit affirmed the decisions

of the District Court, relying upon United States v Hancock,

604 F. 2d 699 (7th Circuit 1978) and refusing to follow United

States v Porter, 591 F. 2d 1048 (5th Cir. 1979). On August 18,

1980, the Court of Appeals denied Petitioner’s Motion for En

Banc Rehearing.

REASONS RELIED ON FOR

ALLOWANCE OF THE % 21T

QUESTION I & IV

Petitioner has argued below that the criminal conduct pro-

hibited by 42 USC § 1396(h)(b)(1) consists of the following

elements:

1. Defendant must be someone who has furnished

items or services to an individual.

2. The items or services furnished by Defendant

must have been compensable under 42 USC §

1396, et seq.

3. Defendant must have solicited, offered, or

received a “kickback” in connection with his or

her furnishing of such services.

The statute is not, on its face, applicable to one who has not

furnished services or items compensable under § 1396, et seq.

It is additionally clear from the face of the statute that the

“kickbacks” received must be in connection with compensable

services furnished by the kickback recipient and not in con-

nection with compensable services or items furnished by

another party. This follows from the fact that the phrase

“with the furnishing of such items or services” as used in sub-

paragraph (1) refers back to the same items or services men-

tioned in paragraph (b) which must have been furnished by

the Defendant. The focus of criminal charges brought under

the statute must, thus, be upon relevant items or services fur-

nished by the Defendant. If the payments alleged to be

kickbacks were not solicited, offered, or received in connec-

tion with compensable items or services furnished by Defen-

dant, then the statute is not applicable. Nor, is the statute ap-

plicable if the alleged payments were not “kickbacks,” but,

rather, “rebates,” as that term is used in § 1396(h)(b)(2). Peti-

tioner has argued below, and urges upon this Court, that the

relevant services in the instant case were the laboratory testing

services performed by Titan Laboratories, and that such ser-

vices were not “furnished” by Petitioner. Petitioner has also

argued below that the referring of laboratory business by Peti-

tioner to Titan Laboratories was not a service compensable

under § 1396, et seq., and, thus, was not a service contem-

plated under § 1396(h)(b)(1).

When one examines the internal structure of the Medicare

and Medicaid statutes, 42 USC § 1395, et seq. and § 1396, et

seq., it is discovered that the statute itself seems to equate the

“furnishing” of laboratory services with the performance of

such services. Laboratory services are specifically distin-

guished from physician’s services under the Medicaid statutes

relevant to the instant cause. Compare 42 USC § 1396(d)(a)

(3) and (5). Inpatient hospital services are also covered under

42 USC § 1396(d)(a)(1). The definition of inpatient hospital

services is set fort’. in 42 USC § 1395(x)(b)(3). That section

provides as follows:

The term ‘inpatient hospital services’ means the

following items and services furnished to an inpa-

tient of a hospital and (except as provided in

paragraph (3)) by the hospital —

3. Such other diagnostic of therapeutic

items or services, furnished by the

hospital or by others under arrange-

ments with them made by the hospital,

as are ordinarily furnished to inpa-

tients either by such hospital or by

others under such arrangements;

Laboratory testing services are diagnostic in nature. Thus, it

can be seen that the very structure of the Medicare and

Medicaid Acts definitionally equates the “furnishing” of

laboratory services with the performing of such services. Inpa-

tient hospital services under § 1395(x)(b)(3) include those

generally “furnished”:

1. To inpatients;

2. Of a hospital;

3. By a hospital.

Except, however, they also include those “furnished”:

1. To inpatients;

2. Of a hospital;

3. By others under arrangements with the hospital.

It is thus clear that the word furnished in the context of inpa-

tient hospital services is used by the statute in a manner which

clearly demonstrates that the term furnished is synonymous

with the term performed. When the hospital performs the

tests it “furnishes” them to the inpatients. When an outside

lab performs the tests they are statutorily defined as having

been “furnished” by the laboratory. Petitioner submits that

neither the internal construction of the Medicare or Medicaid

statutes or the legislative history contains any suggestion that

the term furnished is to have any different meaning when

used in conjunction with laboratory services performed by an

independent testing laboratory upon referral by or arrange-

ment with a physician than it is to have when used in conjunc-

tion with the same type of services performed by an indepen-

dent laboratory under an arrangement with a hospital. The

term “furnished” is used nc differently in 42 USC §

1396(h)(b)(1) than it is in 42 USC § 1395(x)(b)(3). If the

opposite were true and in the absence of a differing statutory

definition under § 1396(h)(b)(1), § 1396(h)(b)(1) would

offend the doctrine of lenity and be vague and confusing and

in violation of the Fifth Amendment right to due process. In

short, if laboratory testing business is referred to an indepen-

dent laboratory by a physician and the independent labora-

tory performs the analysis, then such analysis service is

furnished by the laboratory and not by the physician. Such

interpretation is internally consistent with other sections of

the Act and is mandated if the statute is to be held constitu-

tional.

It must be noted that the majority opinion of the Court of

Appeals disposed of Issues I and IV as set forth in this Petition

for Writ of Certiorari summarily. The Court stated:

Appellants contend that they did not ‘furnish’ the

services in connection with which they received

payments ... These and all other contentions made

by Appellants have been considered and found to

be without merit. App. p. 20c.

Circuit Judge Jones, concurring, however, did deal with the

question of whether the laboratory services were “furnished”

by Appellant and held as follows:

It is fair to say that physicians in Michigan in

1976-1977 furnished the laboratory services to their

patients. The physicians took the specimens and

sent them to a laboratory. App. p. 22c.

Judge Jones then held that the statute is satisfied if there is a

logical relationship between the alleged kickbacks and the

services for which Federal funds were paid. It appears that

Judge Jones’ conclusion is based upon his premise that:

... physicians in Michigan in 1976-1977 furnished

the laboratory services to their patients. The physi-

cians took the specimens and sent them to a

laboratory. A laboratory could act only on orders

from the physicians. Mich. Comp. Laws Ann. §§

325.81(b), 325.89(b), repealed by Mich. Comp.

Laws. Ann. § 333.20501 et seg. (1978); cf. 42

C.F.R. § 405.1316(e) (Medicare Regulations). The

laboratory could report the test results only to the

physicians, unless they instructed otherwise. Mich.

Adm. Code R. 325.2353(2) (Rule 53); cf. 42 C.F.R.

§ 405.1216(g) (Medicare Regulations). The physi-

cians bore the responsibility of interpreting the test

data. In short, the physicians did everything but

actually perform the clinical tests. Under these cir-

cumstances by interpreting the word ‘furnish’

according to its common usage to mean ‘supply or

provide,’ I would hold that the physicians did ‘fur-

nish’ the laboratory services. App. p. 22c.

In so holding Judge Jones either ignored or did not under-

stand the use of the term “furnished” in 42 USC §

1395(x)(b)(3), where such term is clearly employed as a

synonym for performed. See e.g. 42 USC §§ 1395k(a)(b),

1395n(b)(1), and 1395x(h)(3). Significantly the same con-

siderations cited by Judge Jones in support of his conclusion

that the Appellant “furnished” the laboratory service in the

instant case apply equally to laboratory tests “furnished .. .

by others under arrangements with them made by the

hospital . . .” as enunciated in § 1395x(b)(3). In the hospital

situation hospital staff members take the specimens and send

them to the laboratory. Results are likewise reportable to the

hospital or a doctor and must be interpreted by a doctor.

Nevertheless, even in such context the statute refers to the

diagnostic testing services as having been “furnished” by such

other i.e. the outside laboratory. C.f. United States of

America For the Use and Benefit of Floating Floors, Inc. v

Federal Insurance Company, 381 F. 2d 361 (9th Cir. 1967) in

which the Ninth Circuit held that the placing of an order for

goods did not constitute the “furnishing” of those goods for

the purpose of The Miller Act.

Under Judge Jones’ construction the term “furnishes”

would have a broader meaning under § 1396(h)(b)(1) than it

would under other sections of the act. Such constitutional in-

consistency is contrary to the notion that criminal statutes are

to be strictly construed in favor of the accused. U.S. v Boston

& Maine Railroad, 380 US 157 (1965); Tousste v U.S., 397 US

112 (1970); U.S. v Monasterski, 567 F. 2d 677 (6th Cir. 1977).

Judge Jones’ comments indicate, moreover, that he was talk-

ing about physicians generally and not about the facts of this

specific case as disclosed by the record.

While Judge Jones seems to have erroneously accepted the

concept that the relevant compensable services furnished in

the instant case by Petitioner were the laboratory services, the

majority did not address itself to the statutory construction

issue. Thus, we do not know what compensable services the

majority concluded were furnished by Petitioner. This silence

exacerbates the failure of the Amended Follow-Up Informa-

tion to specify which services were furnished by Petitioner.

This Court can only speculate as to whether the majority

accepted Judge Jones’ rationale or, on the other hand, prem-

ised its decision on the “informal amendment” argument

advanced by the government and which was roundly chas-

tised by Judge Jones at Fn. 1. If the former, then the entire

panel has construed the term “furnishes” in § 1396h(b)(1) ina

manner which is inconsistent with and broader than the use of

the same term in §§ 1395x(b)(3), 1395k(a)(b), 1395n(b)(1),

and 1395x(h)(3). Such inconsistent and broader construction

offends the doctrine of lenity. U.S. v Boston & Maine

Railroad, supra. It does violence to the presumption that

where the same word is used in different parts of the same act

it is intended to have the same meaning, wherever used in

such act. C.J.R. v Ridgeway’s Estate, 291 F 2d 257 (3d Cir.

1961), Hotel Equities Corp. v C.I.R., 546 F 2d 725 (7th Cir.

1976), Atlantic Cleaners and Dryers, Inc. v U.S., 286 U.S.

427 (1932). If, on the other hand, the majority opinion

reflects acceptance of the government's “informal amend-

ment” argument then, as discussed below, serious Fifth and

Sixth Amendment problems are present in this case.

No question exists in this case as to who performed the

laboratory testing services. Certiorari should be granted in

this case for the purpose of determining whether the term

“furnishes” as used in 42 USC §§ 1395nn(b)(1) and

1396h(b)(1) is to be interpreted narrowly as used in e.g. §§

1395x(b)(3), 1395k(a\(b), 1395n(b)(1), and 1395x(h)(3) to

refer only to the party actually performing such services.

Moreover, the failure of the majority, below, to rule upon

such issues results in a serious issue as to what service the

majority found was, in fact, furnished by Petitioner. The only

way that these questions can be answered is for this Court to

issue the Writ of Certiorari prayed for by Petitioner.

QUESTION II

Regardless of whether this Court accepts Petitioner's con-

tention that the laboratory services performed by Titan

Laboratories were the relevant services contemplated by 42

USC § 1396(h)(b)(1) and that Petitioner did not furnish such

services, nevertheless, it cannot be doubted that § 1396(h)(b)

(1) is only applicable to someone who does furnish to another

individual some type of services which are compensable under

§ 1396, et seq. That being the case, it is axiomatic that

charges brought under § 1396(h)(b)(1) must specifically

allege that a Defendant furnished to an individual services

which were compensable under § 1396, et seq. Any failure to

so allege constitutes the omission of an element of the crime

charged. Petitioner submits that Counts 11 through 16 of the

Amended Follow-Up Information in this cause failed to

allege:

1. That Petitioner furnished any laboratory testing

services to any individual which were compen-

sable under 42 USC § 1396, et seq.;

2. That Petitioner furnished any physicians’ serv-

ices to any individual which were compensable

under 42 USC § 1396, et seq.; and,

3. That Petitioner furnished any services of any

nature to any individual that were compensable

under 42 USC § 1396, et seq.

Rather than focusing upon any services furnished by Peti-

tioner to any individual, the Amended Follow-Up Informa-

tion focused upon the laboratory services performed by Titan

Laboratories and obtained by Petitioner from Titan, The

Information does not charge that Petitioner “furnished” such

services to anyone only that he obtained them, While the

Information does speak in terms of Petitioner having received

monetary payments from Titan Laboratories “in exchange

for referring his laboratory work to Titan Laboratories, Inc.,”

nevertheless, the referral of laboratory business was not a serv-

ice which was compensable under 42 USC § 1396, et seq.

Significantly, the Assistant United States Attorney at-

tempted to argue before the Court of Appeals that the govern-

ment had informally amended the Amended Follow-Up In-

formation by virtue of certain comments he made at the

District Court level during oral argument upon Petitioner's

Motion to Dismiss. Spectfically, the Assistant United States

Attorney had argued that while the language of the Informa-

tion referred to services performed by the laboratory, never-

theless, it was the government's position that a doctor,

himself, furnishes services to an individual whenever he treats

that individual and whenever he sends that indtvidual’s blood

or other specimens for testing. App. p. 3a. No language in the

Amended Follow-Up Information, however, referred to treat-

ment of individuals by Petitioner. The following interchange

took place between the District Court Judge and the Assistant

United States Attorney upon argument of Petitioner's Motion

to Dismiss.

THE COURT: And do I understand then that the

government's position is that the services, I am trying to

understand, the services rendered by the doctor are the

taking of the blood, for example.

MR. PARKER: The taking of what?

THE COURT: The taking of the blood.

MR. PARKER: Of the treating of the patient, one,

and also the sending of the blood to the laboratory, both

of those, I think, constitutes services to an individual.

Perhaps, sending the blood is part of the component part

of the total treatment of the individual, but I think that a

doctor's examination of the patient constitutes services

under the misdemeanor statute. App. p. 4a.

Judge Jones in Fn. 1 of his concurring Opinion chastised the

government for its zealous advancement of the theory that the

Amended Follow-Up Information had been informally

amended by virtue of such oral argument. The government

moved before the Court of Appeals to strike such comments

by Judge Jones, App. p. 1d, but such Motion was denied.

App. p. le.

The crucial point is that the government's own argument

regarding the nature of the services “furnished” to individuals

by Petitioner is at odds with the government's own admission

that the services focused upon by the Amended Follow-Up In-

formation are the laboratory services. If the government

meant to charge that the services furnished by Petitioner were

those of treating the patient and sending blood and specimens

to the laboratory, then it is apparent that the Information is

fatally defective in that regard, since it does not even refer to

such services and since the referral of specimens is not a serv-

ice compensable under § 1396 et seq. Quite simply put, the

Information failed to advise Petitioner of the nature of the

services that he was charged with furnishing to individuals.

Inseparable from the question of whether the Amended

Follow-Up Information charged Petitioner with furnishing

any services as required by § 1396(h)(b)(1), is the question of

whether Petitioner actually pled guilty to that critical ele-

ment. At the time of Petitioner's plea, the District Court

Judge did not inquire of Petitioner whether he treated any pa-

tients, drew any specimen samples, or furnished any other

item of service compensable under 42 USC § 1396, et seq. to

any individual. Nor, did Petitioner at his plea hearing state or

indicate that he did furnish any such services. Petitioner was

not advised by the Court that the government would have to

prove that he did furnish any such services. Indeed, the

District Court, buttressing Petitioner's argument that the

Amended Follow-Up Information did not charge that he fur-

nished any services compensable under § 1396 et seq. advised

Petitioner as follows:

THE COURT: Now, do you understand that in

order to prove you guilty of those counts, the government

would have to prove beyond a reasonable doubt that on |

or about the dates listed below that you obtained services

from Titan Laboratories for which payment was to be

made in part out of Federal funds under a State plan ap-

proved under the Social Security Act, Title 19, do you

understand that?

DEFENDANT GOLDEN: Yes.

THE COURT: _Inthat you solicited and/or received

payments from Titan Laboratories, Inc., and Media

Technology is detailed in the specific counts, some from

Titan and some from Media?

DEFENDANT GOLDEN: Yes, your Honor.

THE COURT: I guess one is from Media and the

balance from Titan. And, zt would have to prove that

you recetved these payments knowingly and willfully. Do

you understand that?

DEFENDANT GOLDEN: Yes.

THE COURT: And that you received them because

you had — in order to prove you guilty that you received

them because you had in fact referred this business to

Titan Laborator‘es, do you understand?

DEFENDANT GOLDEN: Yes, your Honor. App.

p. 3b.

The Court simply never asked Petitioner whether he had fur-

nished any services to any patients, nor did it advise him that

to prove him guilty as charged in the Information, the

government would have to prove beyond a reasonable doubt

that he did furnish services to an individual. The Court

simply advised Petitioner that in order to find him guilty the

government would have to prove that he had knowingly

received payments for referring laboratory business to

Titan. Such advice by the Court was consistent with the

language of the Amended Follow-Up Information to the

effect that Petitioner obtained services from Titan and

received payment for referring business to Titan, but fails to

focus upon or advise Petitioner that the government would

have to prove that he furnished laboratory or any other com-

pensable scrvices to any other individual.

That an indictment or Information must allege every ele-

ment of a crime sought to be charged is axiomatic. Russell v

United States, 369 US 749 (1962). The failure of an indict-

ment or Information to allege all of the elements of the crime

charged is violative of Rule 7(c) of the Federal Rules of

Criminal Procedure and the basic Sixth Amendment require-

ment that an accused must be apprised of the nature of the

accusation against him. He must be sufficiently apprised of

the charges which he must meet and the indictment or Infor-

mation must be sufficiently specific to enable him to plead

double jeopardy in case any other proceedings are subse-

quently commenced against him based upon the same facts.

Russell v United States, supra.

An important corollary purpose to be served by the require-

ment that an indictment or Information set out each and

every element of the crime charged is to inform the Court of

the facts alleged so that it may decide whether they are suffi-

cient in law to support a conviction if one should be had.

Russell vy United States, supra. As noted by the Court in

Russell:

A cryptic form of indictment in cases of this kind

requires the Defendant to go to trial with a chief

issue undefined. It enables his conviction to rest on

one point and the averments of the conviction to

rest on another. It gives the prosecution free hand

on appeal to fill in the gaps of proof by surmise or

conjecture. The Court has had occasion before now

to condemn just such a practice in a quite different

factual setting. Cole v Arkansas, 333 US 196, 201,

202, 92 L Ed 644, 647, 648, 68 S Ct 514. Russell v

United States, supra, at 766.

Petitioner submits that the holding and rationale of the

United States Supreme Court in Russell is applicable to the

instant cause. The Amended Follow-Up Information did not

charge, generally, that Petitioner furnished any services to

any individual which were compensable under 42 USC §

1396, et seq: Nor, did it charge that he furnished any specific

services to any individual which were compensable under §

1396, et seq. The only services spoken of by the Information

are those performed by the laboratory and obtained by Peti-

tioner. The District Court's advice to Petitioner at his plea

hearing was worded in the form of an Information which was

insufficient to support a conviction.

Nevertheless, the government has, through its “Informa-

tional Amendment” argument shifted its theories at various

stages of this proceeding as regards the services furnished by

Petitioner. The government did not argue or state at Pett-

tioner’s plea hearing the relevant services “furnished” by him

were “physician's services” as defined by 42 USC § 1395x(r).

Nor did the Information charge that he “furnished”

laboratory testing services as found by Judge Jones below. Nor

did the Court so advise Petitioner.

The failure of the Trial Court to question Petitioner as to

the nature of the services furnished by him, or to advise him

that the government had the burden of proving beyond a

reasonable doubt that he furnished laboratory or physician’s

services which were compensable under 42 USC § 1396, et

seq., when combined with the Court's positive assertion that

the government would have to prove beyond a reasonble

doubt that he obtained services, well illustrates the confusion

generated by the deficiencies of the Amended Follow-Up In-

formation. The majority opinion of the Court of Appeals

treats Petitioner's challenge to the sufficiency of the indict-

ment in a summary manner. The Court stated:

Appellants contend that they did not ‘furnish’ the

services in connection with which they received

payments, and that the Information does not

charge an offense. These and all other contentions

made by Appellants have been considered and

found to be without merit. United States v Tappert,

et al, App. p. 20c.

From that statement by the Court of Appeals it is impossible

to determine whether the majority adopted the United States

Attorney’s argument as chastised by Judge Jones, that he had

informally amended the Information to charge that the serv-

ices furnished by Petitioner, within the meaning of § 1396h

(b)(1), were those of treating his patients and sending

specimens to the laboratory, or, on the other hand, whether it

adopted Judge Jones’ concurring rationale to the effect that

the Information charged that Petitioner “furnished” to his

patients the laboratory services which the Amended Follow-

Up Information charges that he “obtained” from Titan

Laboratories. The crucial fact is that the Information itself

does not charge that Petitioner furnished any corapensable

services to anyone nor did the District Court’s comments to

Petitioner, based as they were upon the language of the

Amended Follow-Up Information, so advise Petitioner. The

District Court’s comments to Petitioner upon his plea were

thus based strictly upon the language of the Amended Follow-

Up Information and did not reach the critical element of

what services were charged as having been furnished by Peti-

tioner. The critical relationship between sufficiency of

charges and plea acceptance is thus exposed. Petitioner was

advised by the District Court of what was charged. That

charge did not include the critical element of specifically what

compensable Medicaid services were furnished by Petitioner.

Petitioner, thus, upon the basis of the District Court’s

explanation of the nature of the crime charged, pled guilty to

that which was specifically set forth in the Amended Follow-

Up Information, as it was explained to him by the Court.

Neither the Amended Follow-Up Information nor the Court's

comments based thereon advised Petitioner of the services he

was accused of “furnishing”. Accordingly, Petitioner has not

been advised of the nature of his alleged offense. The failure

to so advise is in violation of Rule 7(c) of the Federal Rules of

Criminal Procedure and of Petitioner’s Fifth and Sixth

Amendment rights to due process and notice of the charges

against him.

The above defects were ignored, without meaningful com-

ment by the majority of the Court of Appeals. Judge Jones

concurring, while chastising the government for its “fast and

loose” play “with the established rules of criminal procedure

and principles of due process”, as regards its argument that it

informally amended the Information to charge that the rele-

vant services furnished by Petitioner were treatment and

referral services, nevertheless, overlooked the fact that the

Amended Follow-Up Information did not charge that Peti-

tioner “furnished” laboratory services. It only charged that he

“obtained” such services, and that is all Petitioner was advised

by the District Court that the government would have to prove

when he entered his plea. The Information to which Peti-

tioner pled guilty was, thus, insufficient to advise the District

Court of the essential elements of the crime charged against

which the District Court could guage the sufficiency of Peti-

tioner’s plea. Judge Jones assumed, that the Amended Follow-

Up Information advised Petitioner that he was accused of fur-

nishing the laboratory testing services, but did not rationally

discuss the question of whether the language of that docu-

ment so advised Petitioner.

Petitioner submits that he has never been sufficiently

advised or notified of the services which he is accused of hav-

ing furnished within the meaning of 42 USC § 1396h(b)(1). As

a result his plea of guilty is not sufficient to sustain conviction

under § 1396h(b)(1). This Court should grant Certiorari in

this cause in order to determine whether Petitioner has been

sufficiently advised of the charges against him as required by

Russell v U.S., supra.

QUESTION III

On or about September 29, 1980, a Petition For Writ of

Certiorari was filed with this Court by Gerald Weingarden,

D.O. Dr. Weingarden was charged with and pled guilty to

five counts of violating 42 USC § 1396h(b)(1). Those charges

were contained in the same Amended Follow-Up Information

as the charges against Petitioner Golden. Petitioner Golden

does hereby adopt and incorporate by reference herein those

reasons for granting Certiorari advanced by Petitioner

Weingarden in his Petition sor Writ of Certiorari.

As previously noted, Petitioner Golden’s Motion For En

Banc Rehearing was denied by the Court of Appeals by Order

dated August 19, 1980. In that Motion for Rehearing Peti-

tioner Golden raised issues relating to the term “rebate” as

used in § 1396h(b)(1) and the phrase “percentage payments”

as that phrase is used in US v Hancock, 604 F 2d 999 (7th Cir.

1978). Petitioner submits that the failure of the Court of

Appeals to grant rehearing for the purpose of resolving the

aforesaid issues is reason for this Court to grant Certiorari in

this cause.

It must be noted that 42 USC § 1396h(b)(2), unlike §

1396h(b)(1), speaks in terms of rebates of fees or charges for

the referral of Medicaid business. The record in this cause

makes it clear that Petitioner was prosecuted as a result of

conduct alleged to consist of the referral of Medicaid business

to a testing laboratory in return for certain payments made to

him.

If Congress intended the term “kickback” as used in 42 USC

§ 1396h(b)(1) to have the same meaning as the term rebate as

used in § 1396h(b)(2), then Petitioner submits that the pro-

hibition of § 1396h(b)(2) would be completely encompassed

within the terms of § 1396h(b)(1). As such, § 1396h(b)(2)

would be superfluous and unnecessary. There is a presump-

tion, however, against interpreting a statute in a way which

would render portions of the statute ineffective, unnecessary,

or meaningless and Courts should not support that Congress

intended to enact unnecessary statutes or attribute futile acts

to Congress. FTC v Manager, Retail Credit Co., Miami

Branch Office, 515 F 2d 988 (D.C. Cir. 1975); Jackson v

Kelly, 557 F 2d 735 (10th Cir. 1977); General Motors Accep-

tance Corp. v Whisnant, 387 F 2d 744 (5th Cir. 1968); US v

Blastus, 397 F 2d 203 (2d Cir. 1968); Uptagrafft v US, 315 F

2d 200 (4th Cir. 1963); Continental Illinots National Bank &

Trust Co. of Chicago v US, 403 F 2d 721 (Ct. Cl. 1968). Every

‘y

part of a statute must be viewed in connection with the whole

so as to harmonize all parts, if practicable, and give sensible

and intelligent effect to each. General Motors Acceptance

Corp. v Whisnant, supra. The use of surplussage is not ordi-

narily to be attributed to Congress. US v Naughten, 195 F

Supp 157 (D.C. Cal. 1961).

At the time that 42 USC § 1396 was enacted, the term

“rebate” was well known to American jurisprudence. In El

Dorado Oil Works, et al v US, et al, 328 US 12 (1946), the

Court dealt with the question of rebates prohibited by the

Elkins Act, 49 USC § 41. In El Dorado, the Appellant, El

Dorado Oil Works, processed, sold, and shipped coconut oil

in interstate commerce. For such purpose it leased special

tank cars from General American Tank Car Corporation.

The rental agreement provided for a specific monthly

amount to be paid by El Dorado to lessor as rent for each car.

When the railroad utilized such cars the railroad paid a cer-

tain tariff for the use of such cars to lessor. Under the agree-

ment between lessor and lessee, lessor, in turn, was to pay over

to lessee the mileage tariffs paid by the railroad. The

Interstate Commerce Commission had found that El Dorado

was entitled to receive a just and reasonable allowance out of

the mileage tariffs for the cost incurred by it in furnishing the

cars, namely an amount equal to the monthly car rental that

El Dorado was required to pay to lessor. The Court further

held, however, that El Dorado could not receive any portion

of the mileage tariffs received by lessor from the railroad

which was in excess of the monthly rental paid by the lessee to

lessor since the receipt by El] Dorado of any such excess would

be the receipt of a prohibited rebate under Elkins Act.

El Dorado had argued that receipt by it from lessor of the

mileage tariffs in excess of the monthly rental amount was not

a rebate since the freight on the goods transported was not

paid by it, but was always paid by the consignees at the

regular published freight rate. The Court rejected this argu-

ment. El Dorado, supra, at 22.

The consignees in El Dorado stand in the same position as

the State of Michigan and the Federal Government in the in-

stant case as the parties paying for the services. The railroad

was the party providing the services and stands in the same

position as the laboratory in this case. El] Dorado occupied the

position of Petitioner Golden in this case. Payment for services

rendered was lawfully received by the railroad in El Dorado

and was lawfully received by the laboratory in the instant

case. In both cases payment was for services actually and

legitimately rendered. The indirect payments by the railroad

to El Dorado and the payments by the laboratory to Petitioner

in this case were not violative or in breach of any fiduciary

duty of the recipient. It is this aspect of breach of fiduciary

duty, be it of a public official to his constituency or of an

employee to his employer, which characterizes a kickback.

See generally US v Bush, 522 F 2d 641 (7th Cir. 1975) and US

v George, 477 F 2d 508 (7th Cir. 1973). A rebate, however,

can consist of any discount, concession, reduction of price, or

payment by a supplier of goods or services to a purchaser of

goods or services. Such practices are not common-law crimes,

nor are they malim in se. They are only prohibited where

specific statutes so provide.

Both the majority of the Court of Appeals and Judge Jones,

concurring, based their decision in this cause on US v Han-

cock, 604 F 2d 999 (7th Cir. 1978). In Hancock, the 7th Cir-

cuit did not deal with the question of whether the payments

there received by Defendants were kickbacks or rebates as

discussed above. Rather, the Seventh Circuit simply defined

kickbacks as “percentage payments.” Without a determina-

tion of whether Petitioner received “percentage payments,” it

is impossible to determine whether Hancock is applicable to

the instant cause. The Court below refused to consider such

issue by denying Petitioner’s Motion. While Petitioner urges

this Court to resolve the conflict in the Circuits between US v

Porter, 591 F 2d 1048 (5th Cir. 1979), and Hancock, and to

properly differentiate between rebates and kickbacks, as well

as to determine whether the Court below properly interpreted

the term “furnishes” as used in § 1396h, nevertheless, it is sub-

mitted that the record in this cause does not even support a

conviction under the “percentage payment” rationale of

Hancock.

QUESTION V

Petitioner Golden alleges that the application to him of 42

USC § 1396h(b)(1) as it was framed during the period in ques-

tion would result in a denial of due process for the reason that

such statute did not give fair warning that it was applicable to

the receipt of payments by doctor in return for referring

laboratory business to a medical testing laboratory where the

laboratory testing services were all performed by the medical

testing laboratory and not by the referring doctor. The statute

does not advise that it is the referring doctor who is deemed to

furnish the laboratory services. Other sections of the statute

indicate that it is the laboratory which furnishes such services.

Criminal statutes which fail to give due notice that an act has

been made criminal before it is done are unconstitutional

deprivations of due process of law. Jordan v DeGeorge, 341

US 223. Congress, in amending § 1396h in 1977, acknowl-

edged the unclarity of the statute here asserted against Peti-

tioner. House Report 95-393, 1977 US Code Cong. and

Admin. News, 3039, at 3055-3056. It is axiomatic that a

statute which forbids the doing of an act in terms so vague

that men of common intelligence must necessarily guess at its

meaning and differ as to its application, violates the due proc-

ess clause of the Fifth Amendment to the United States Con-

stitution. United States v Tandaric, 152 F 2d 3 (C.C.A. Ind.

1945). While a criminal statute does not have to meet impossi-

ble standards of specificity in order to avoid being unconstitu-

tionally vague, United States v Elliot, 266 F Supp 318 (D.C.

N.Y. 1967), nevertheless it must define a crime in such a way

that a man of common intelligence can understand the type

of activity which is proscribed by the statute and can, thus,

conduct himself within the confines of the law. United States v

Mandal, 298 F Supp 1038 (D.C. N.Y. 1967). If the acts pro-

scribed are so couched that men of common intelligence must

guess at the meaning or differ as to the applicability of the

statute then the statute denies due process. United States v

Eastern Airlines, Inc., 192 F Supp 187 (D.C. Fla. 1961).

Indeed, the due process clause requires that criminal statutes

be strictly construed against the prosecution and in favor of

the defendant. United States v Chappell, 292 F Supp 494

(D.C. Cal. 1968).

The District Court in the instant case in denying

Petitioner's Motion To Discuss the Information stated as

follows:

Defendant argued orally, however, that the person

who furnishes the services must be the same person

who received the kickback therefor, and that defen-

dant Golden did not furnish the services connected

with the alleged kickbacks. The government

responded both orally and in its reply brief that a

doctor furnishes services under the statute when he

examines the patient and sends the test materials to

the laboratory. It is clear that since federal funds

would be paid out both to the treating physician

and to the laboratory, the treating physician does

fall under the statute, since the physician both

renders services to the patient and (allegedly)

received kickbacks from the laboratory. Given this

‘%

understanding and the legislative history, it cannot

be said that § 1396h is impermissively vague. See

Opinion and Order Denying Defendant Golden's

Motion To Dismiss Indictment and Motion To

Dismiss Information.

This statement by the District Court graphically discloses the

statute’s lack of clarity. The Amended Follow Up Information

focused upon the fact that Petitioner obtained labortory serv-

ices. The government then argued and the District Court

seems to have agreed that the relevant services “furnished” by

Petitioner were those of treating his patients (although the

Amended Follow-Up Information did not so allege). The

majority of the Court of Appeals did not address the question

of which services were furnished by Petitioner and Judge

Jones, concurring, concluded that Petitioner “furnished” the

laboratory services which were performed by another. To

make matters worse, the District Court, in accepting Peti-

tioner’s plea did not advise him which service he was accused

of furnishing, but, conversely, advised him that the govern-

ment would have to prove beyond a reasonable doubt that he

obtatned services. Such advice was not even consistant with

the District Court’s own comments as set forth above.

It is thus apparant that at various times the Assistant

United States Attorney, the District Court and the Court of

Appeals have adopted different interpretations of the word

“furnishes,” as used in § 1396h(b)(1). These different inter-

pretations involve a critical element of the crime sought to be

charged. Such confusion was exactly the type of thing that

Congress referred to in the Committee report accompanying

the 1977 Amendment to § 1396h(b).

Petitioner can only wonder how he is supposed to have been

able to ascertain that he would be guilty of a violation of §

1396h(b)(1) as a result of receiving payments from a clinical

testing laboratory in return for referring work to such

laboratory when the United States Congress, as set forth in the

House Report previously cited, and United States Attorneys

across the nation have acknowledged that the language of the

statute was unclear and in need of amendment in order to

clarify the financial arrangements to be deemed criminal. If a

statute’s lack of clarity is conceded by United States Attorneys

and members of Congress (many of whom are attorneys) then

it cannot be said that it is sufficiently clear to non-attorneys

and men of common intelligence such as Petitioner. It is not

clear that § 1396h(b)(1) advises that it applies to laboratory

testing services “furnished by others” under arrangements

made by doctors. Internal statutory language refers to the

party who performs such services as the furnisher thereof.

Thus, § 1396h(b)(1) cannot be constitutionally applied to

Petitioner.

Nor does § 1396h(b)(1) clearly advise Petitioner that by vir-

tue of treating Medicaid patients, he would “furnish services”

within the contemplation of the section. (Note, moreover,

that the Amended Follow-Up Information did not so charge;

the District Court did not so advise upon Petitioner's plea, nor

the Court of Appeals so hold).

The Court below did not interpret or apply § 1396h(b)(2).

Nevertheless, Petitioner must concede that such subsection is

more closely applicable to the facts of this case than §

1396h(b)(1). Petitioner moved before the Court of Appeals

for a rehearing upon the questions of whether the payments

allegedly received by Petitioner were rebates or kickbacks and

whether Congress intended to differentiate between kickbacks

and rebates. Petitioner submits that such differentiation was

specifically intended by Congress and that the kickback por-

tion of the statute is not constitutionally applicable to this

cause.

Rebates are payments by a supplier of service to one who

orders the service, but do not involve breach of, or in-

terference with, a fiduciary relationship. Kickbacks involve

such breach or interference. The instant case does not involve

any such breach or interference. § 1396h(b)(1) does not advise

that it is applicable to a payment arrangement which does not

involve any such breach or interference. While a rebate may,

in certain economic circumstances, be prohibited, it is not

necessarily the legal equivalent of a kickback. § 1396h(b)(1)

does not advise that payments for referral of business which

do not breach or interfere with a fiduciary relationship are

illegal. The section under which Petitioner is charged does,

thus, fail to advise that the conduct alleged in this cause is

prohibited.

CONCLUSION

Petitioner Golden submits that substantial reasons exist for

granting the Writ of Certiorari prayed for in this Petition. A

split in ‘e Circuits as evidenced by the decisions of the Fifth

Circuit and the Seventh Circuit must be resolved. The term

“furnishes” as used in the statute can only be definitively inter-

preted by this Court. A determination must be made as to

whether the conduct of Petitioner as charged in this case, con-

stitutes the receipt of a rebate as opposed to a kickback and

whether the amounts allegedly received by Petitioner were

percentage payments as that phrase has been used by the

Seventh Circuit. Finally, this Court must determine whether

the statute as applied to the facts of the instant cause, is suffi-

ciently clear to put men of average intelligence on notice that

it would be applicable.

Respectfully submitted,

LIPPITT, HARRISON, PERLOVE,

FRIEDMAN & ZACK

By: (s) Warren J. Perlove (P18798)

Attorney for Petitioner

18860 West Ten Mile Road

Suite 200

Southfield, Michigan 48075

(313) 424-8000

And: (s) Robert S. Harrison

Attorney for Petitioner

18860 West Ten Mile Road

Suite 200

Southfield, Michigan 48075

(313) 424-8000

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the

foregoing Petition For Writ of Certiorari was mailed to the of-

fice of FRANCIS L. ZEBOT, U.S. Attorney's Office, 839

Federal Building, Detroit, Michigan 48226, and WADE H.

McCREE, JR., Solicitor General of the United States,

Washington, D.C. 20530, this 17th day of October, 1980.

(s) Warren J. Perlove, Esq.

(s) Robert S. Harrison, Esq.

APPENDIX A

UNITED STATES OF AMERICA

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF AMERICA,

GERALD WEINGARDEN, D.O., DON-

ALD FREEDLANDER, D.O., ROBERT Criminal

GASH, D.O., HARVEY GOLDEN, D.O., Action

RICHARD TAPERT, D.O., HENRY No. 8-80689

ELLIS, SANFORD HOSKOW, CHARLES

SHERMETARO, MAUREEN HOSKOW, Harvey

a/k/a MAUREEN A. DELANEY, J.K.F., Golden, D.O.

INC., M.A. DELANEY, INC., a Michigan

corporation, MEDIA TECHNOLOGY,

INC., a Michigan corporation, and BER-

NARD LAMPEAR,

Defendants

Proceedings had in the above-entitled matter before

HONORABLE CORNELIA G. KENNEDY, Chief Judge,

United States District Court, at Detroit, Michigan, on Friday,

March 9, 1979.

APPEARANCES:

PETER ROSEN and ROSS PARKER, Esq.

Assistant United States Attorney

817 Federal Building

Detroit, Michigan 48226

Appearing on behalf of United States of America

LIPPITT, HARRISON, PERLOVE, FRIEDMAN &

ZACK

18860 West Ten Mile Road

Southfield Michigan 48075

(By Warren J. Perlove, Esq.)

Appearing on behalf of Defendant Harvey Golden

GILLIS, NELSON, LOUISELL & BERG

Suite 1670, Renaissance Center

Detroit, Michigan 48243

(By Philip A. Gillis, Esq.)

Appearing on behalf of Defendant Charles

Shermetaro

BARRIS, GOLOB & PRITCHARD, P.C.

1930 Buhl Building

Detroit, Michigan 48226

(By Michael H. Golob, Esq.)

Appearing on behalf of Defendants Richard

Tapert and Gerald Weingarden

NEIL FINK

1500 Buhl Building

Detroit, Michigan 48226

(By Cynthia R. Goldfarb, Esq.)

Appearing on behalf of Defendant Donald

Freedlander

THE COURT: I don’t think that is quite his argument.

He would concede that the statute could cover doctors if the

service was rendered by the doctor. In other words, let’s just

take an example, if a doctor examined a patient and paid a

kickback to, say, another doctor for referring the patient, I

think he would — I won’t make him do this — but I think he

would concede that that would come under (b).

MR. PERLOVE: I would absolutely concede that, Your

Honor.

THE COURT: What I think he is arguing is that a per-

son who furnishes the services must be the same person who

solicits, offers, or receives the kickback, and that the doctor

here did not — the doctors, they all join in — did not furnish

the services relating to the kickbacks, at least I think that’s

what he is saying.

MR. PERLOVE: That’s absolutely correct, Judge.

MR. PARKER: I realize that the language of the infor-

mation refers to services performed by the laboratory and

perhaps that’s the root of the confusion, if any.

THE COURT: No, I don’t think he is confused about

that. He is just claiming that the doctors did not furnish any

service. He is talking about the statute. He says the doctor did

not furnish any service for which any kickback was paid, that

the only person that furnished any services for which any

kickbacks were paid was the laboratory, at least that’s their

argument.

MR.'PARKER: _I guess our position would be that a doc-

tor furnishes services to an individual whenever he treats that

individual and whenever he sends that individual’s blood or

whatever for testing, and so comes right under the plain

language of the statute. The statute says whoever provides ser-

vices to an individual. The doctors are charged with pro-

viding services to a patient and then sending, as part of those

services, blood to a laboratory which is to be analyzed and

which laboratory then pays a kickback to the doctor.

THE COURT: Is the Government’s proof going to show

that the payments for Medicaid and Medicare are made

directly to the laboratory or are they made to the doctor?

MR. PARKER: They are made to both. When a doctor

provides services to a patient, he then bills for his services to

the Department of Social Services for Medicaid, for example.

THE COURT: Right.

MR. PARKER: And the laboratory to whom is sent

specimens by the doctor, then bills for whatever work it per-

forms.

THE COURT: It bills Medicaid directly for the work it

performs?

MR. PARKER: It bills the Department of Social Serv-

ices, yes.

THE COURT: And do I understand then that the

Government's position is that the services, I am trying to

understand, the services rendered by the doctor are the taking

of the blood, for example.

MR. PARKER: The taking of what?

THE COURT: The taking of the b ood.

MR. PARKER: Of the treating of the patient, one, and

also of the sending of the blood to the laboratory, both of

those, I think, constitute services to an individual. Perhaps

sending the blood is part of the component part of the total

treatment of the individual, but I think that a doctor’s ex-

amination of a patient constitutes services under the misde-

meanor statute.

THE COURT: Does the information cover 2(d), I mean

(b)2 or (b)1 or both.

MR. PARKER: It’s just (b)1. I think that’s the only one

that is charged.

MR. PERLOVE: That is correct.

Would the Court like this back?

APPENDIX B

UNITED STATES OF AMERICA

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF AMERICA,

GERALD WEINGARDEN, D.O., DON-

ALD FREEDLANDER, D.O., ROBERT Criminal

GASH, D.O., HARVEY GOLDEN, RICH- Action

ARD TAPERT, D.O., HENRY ELLIS, No. 8-80689

SANFORD HOSKOW, CHARLES SHER-

METARO, MAUREEN HOSKOW, a/k/a Plea

MAUREEN A. DELANEY, J.K.F., INC., Harvey

M.A. DELANEY, INC., a Michigan Cor- Golden, D.O.

poration, MEDIA TECHNOLOGY, INC.,

a Michigan corporation, and BERNARD

LAMPEAR,

Defendants

Proceedings had in the above-entitled matter before the

HONORABLE CORNELIA G. KENNEDY, Chief Judge,

United States District Court, at Detroit, Michigan, on Tues-

day, April 10, 1979.

APPEARANCES:

PETER ROSEN and ROSS PARKER, Esq.

Assistant United States Attorn~ys

817 Federal Building

Detroit, Michigan 48226

Appearing on behalf of United States of America

ALBERT KRIEGER

1428 Brickell Avenue

Miami, Florida 33131

Appearing on behalf of Defendant Gerald Wein-

garden, D.O.

LIPPITT, HARRISON, PERLOVE, FRIEDMAN &

ZACK

Suite 200, 18860 West Ten Mile Road

Southfield Michigan 48075

(By Warren J. Perlove and Robert S. Harrison, Esq.)

Appearing on behalf of Defendant Harvey

Golden, D.O.

NEIL H. FINK, Esq.

1500 Buhl Building

Detroit, Michigan 48226

Appearing on behalf of Defendant Donald

Freedlander, D.O.

BARRIS, GOLOB & PRITCHARD, P.C.

1930 Buhl Building

Detroit, Michigan 48226

(By Michael H. Golob, Esq.)

Appearing on behalf of Defendant Richard

Tapert D.O.

. is that correct, Mr. Rosen?

MR. ROSEN: I think that is a factually accurate state-

ment, your Honor.

THE COURT: It is accurate that you would make that

statement?

MR. ROSEN: _I would make that representation, yes.

MR. HARRISON: Your Honor, I should have said

Medicaid or Medicare, rather than just limiting it to

Medicaid.

THE COURT: That does not change Mr. Rosen’s posi-

tion.

MR. ROSEN: No, it does not.

THE COURT: Now, do you understand that in order to

prove you guilty of those counts the Government would have

to prove beyond a reasonable doubt that on or about the dates

listed below that you obtained services from Titan Labora-

tories for which payment was to be made in part out of federal

funds under a state plan approved under the Social Security

Act, Title 19, do you understand that?

DEFENDANT GOLDEN: Yes.

THE COURT: And that you solicited and/or received

payments from Titan Laboratories, Inc., and Media

Technology as detailed in the specific counts, some from

Titan and some from Media?

DEFENDANT GOLDEN: Yes, your Honor.

THECOURT: I guess one is from Media and the balance

from Titan.

And it would have to prove that you received these

payments knowingly and wilfully. Do you understand that?

DEFENDANT GOLDEN: Yes.

THE COURT: And that you received them because you

had — in order to prove you guilty that you received them

because you had in fact referred this business to Titan

Laboratories, do you understand that?

DEFENDANT GOLDEN: Yes, your Honor.

In addition to that I was also promised directorship of the

laboratory which I was given.

THE COURT: Which you were or you were not given?

DEFENDANT GOLDEN: I was given.

THE COURT: You were a director then of Titan

Laboratories at one time?

DEFENDANT GOLDEN: Yes. ;

MR. PERLOVE: Your Honor, this is not a directorship

in the sense of a member of the board of directors.

MR. HARRISON: He was a laboratory director.

THE COURT: I appreciate the clarification.

MR. PERLOVE: I think it’s a significant point.

THE COURT: But you never actually became a director

in the sense of going there and directing their activities?

DEFENDANT GOLDEN: I performed various tasks for

the laboratory, I set up their complete profiles, among other

things, and I did a great deal of research as well as consulting

with them.

THE COURT: Well, let me ask you, was one of the

reasons, you have indicated now an additional reason for

these payments in addition to referral of the business, were

both of these reasons co-equal?

DEFENDANT GOLDEN: _I would say so, yes.

THECOURT: The referral of business and the work that

you did were co-equal reasons for the payment?

DEFENDANT GOLDEN: Yes.

THECOURT: Dol understand that you do wish to plead

guilty to Counts 11 through 15?

DEFENDANT GOLDEN: Yes, your Honor.

THECOURT: You understand you have a constitutional

right under the Federal Constitution to a jury trial, or if you

and the Government both agree, you have a right to a trial by

the Judge, and by pleading guilty you give up your constitu-

tional right to a jury trial, indeed, your right to a trial at all,

do you understand that?

DEFENDANT GOLDEN: Yes, your Honor.

THE COURT: Do you understand that at a trial you are

presumed to be innocent, and that the Government would

have to prove your guilt beyond a reasonable doubt before

either the Judge or the jury could find you guilty, do you

understand that?

DEFENDANT GOLDEN: I understand that, your

Honor.

THE COURT: Do you understand that at a trial you

could testify in your own behalf, if you chose to do so, but you

have a right under the Constitution to remain silent, and if

you chose to remain silent the jury would be instructed, and

the Court would apply the same rule of law, that no finding or

inference of guilt could be held against you?

DEFENDANT GOLDEN: I understand.

THE COURT: Do you understand that at a trial you are

entitled to be represented by counsel, to be confronted in

open court by the witnesses against you, to have your attorney

cross-examine those witnesses and have the power of the

court’s subpoena to secure witnesses on your own behalf, and

by pleading guilty you give up all those rights?

DEFENDANT GOLDEN: I understand that, your

Honor.

THECOURT: Knowing those things, how do you wish to

plead at this time to Counts 11, 12, 13, 14, 15?

DEFENDANT GOLDEN: Guilty, your Honor.

THE COURT: Will you tell me in your own words what

it is that you did do that causes you to plead guilty?

DEFENDANT GOLDEN: Part of my motives I stated,

perhaps an equal amount of my motives were for the indice-

ment of monetary gain.

THE COURT: In other words, to receive payment from

Titan for sending work to Titan?

DEFENDANT GOLDEN: Yes.

THE COURT: And some of that work at least was

Medicare and Medicaid work?

DEFENDANT GOLDEN: Yes, your Honor.

THE COURT: Would that be true for all of the periods

involved here, May 27, 1974, through December 6, 1974?

DEFENDANT GOLDEN: Yes, your Honor.

THE COURT: Are there any other questions the Gov-

ernment would like me to ask?

MR. ROSEN: I can’t think of any, your Honor.

THE COURT: And you have had plenty of time to

discuss this matter with your attorney?

DEFENDANT GOLDEN: Yes, your Honor.

THE COURT: And, counsel, you have also explained to

him his constitutional rights in this matter?

MR. HARRISON: Yes, we have, your Honor.

THE COURT: Once again let me explain to you, Dr.

Golden, that if an appeal on the legal issues that your counsel

intends to raise is unsuccessful, at least I presume he does, you

understand that this is a final plea of guilty here, that there

will not be a chance at that time to ask that it be set aside or do

something of that nature, do you understand this is a final

plea of guilty?

DEFENDANT GOLDEN: That has been explained to

me.

MR. HARRISON: Your Honor, we do intend to appeal

with regard to our legal disagreement .. .

APPENDIX C

Nos. 79-5222-24, 79-5269-70

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

APPEAL from

v the United States

District Court for

RICHARD TAPERT, HARVEY GOLD- the Eastern Dis-

GOLDEN, GERALD WEINGARDEN, _ trict of Michigan.

DONALD FREEDLANDER and RO-

BERT GASH,

Dfendants- Appellants.

Decided and Filed June 16, 1980.

Before: WEICK and JONES, Circuit Judges, and

PHILLIPS, Senior Circuit Judge.

PHILLIPS, Senior Circuit Judge, delivered the opinion of

the Court, in which WEICK, Circuit Judge, joined. JONES,

(pp. 18-20) filed a separate concurring opinion.

PHILLIPS, Senior Circuit Judge. These are consolidated

appeals by five Detroit osteopathic physicians who were con-

victed of receiving kickbacks for sending urine and blood

samples of their patients to Titan Laboratories (Titan) for

analysis. All five of the physicians were enrolled in the

Medicare and Medicaid programs and the charges for the

laboratory analysis were paid to Titan out of Medicare and

Medicaid funds. The district court held that the payments

violated the original version of 42 U.S.C. § 1936h(b),' which

was in effect during the years involved in this case. In 1977

Congress amended the statute so as to remove any possible

doubt that conduct such as that involved in the present case

violates the Act.”

The principal issues on this appeal are whether the infor-

mation under which appellants were convicted charges a

violation of the pre-1977 version of 42 U.S.C. § 1396h(b)(1)

(note one), and whether the statute is unconstitutional for

vagueness. Then Chief District Judge Cornelia Kennedy, now

a judge of this court, ruled that the payments to the doctors

were kickbacks, that the information charges a violation of

the statute and that the statute is not invalid for vagueness.

We affirm.

' (b) Whoever furnishes items or services to an individual for which

payment is or may be made in whole or in part out of Federal funds

under a State plan approved under this title [42 USCS §§ 1396-1396d,

1396f-1396i] and who solicits, offers, or receives any —

(1) kickback or bribe in connection with the furnishing of such

items or services or the making or receipt of such payment, or

(2) rebate of any fee or charge for referring any such individual to

another person for the furnishing of such items or services

shall be guilty of a misdemeanor and upon conviction thereof shall be

fined not more than $10,000 or imprisoned for not more than one year,

or both.

* The amended § 1396h(b) (1) is as follows:

(b) (1) Whoever solicits or receives any remuneration (including any

kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in

cash or in kind —

(A) in return for referring an individual to a person for the fur-

nishing or arranging for the furnishing of any item or service for

Apparently Titan initiated the arrangement for the

kickbacks, by having its representative contact one of the

which payment may be made in whole or in part under this sub-

chapter, or

(B) in return for purchasing, leasing, ordering, or arranging for

or recommending purchasing, leasing, or ordering any good, facil-

ity, service, or item for which payment may be made in whole or in

part under this subchapter,

shall be guiltyof a felony and upon conviction thereof, shall be fined not

more than $25,000 or imprisoned for not more than five years, or both.

(2) Whoever offers or pays any remuneration (including any kick-

back, bribe, or rebate) directly or indirectly, overtly or covertly, in cash

or in kind to any person to induce such person —

(A) to refer an individual to a person for the furnishing or ar-

ranging for the furnishing of any item or service for which payment

may be made in whole or in part under this subchapter, or

(B) to purchase, lease, order, or arrange for or recommend pur-

chasing, leasing, or ordering any good, facility, service, or item for

which payment may be made in whole or in part under this sub-

chapter,

shall be guilty of a felony and upon conviction thereof, shall be fined not

more than $25,000 or imprisoned for not more than five years, or both.

(3) Paragraphs (1) and (2) shall not apply to —

(A) a discount or other reduction in price obtained by a provider

of services or other entity under this subchapter if the reduction in

price is properly disclosed and appropriately reflected in the costs

claimed or charges made by the provider or entity under this sub-

chapter; and

(B) any amount paid by an employer to an employee (who has a

bona fide employment relationship with such employer) for

employment in the provision of covered items or services.

physicians.’ In return for payments from Titan or one of its

affiliates, the physician agreed to send his patients’ specimens

to Titan and to encourage his colleagues to do the same.

Other physicians entered into similar agreements, which

Titan described as “consulting” arrangements. This pattern

of activity began in April 1974 and continued until January

1978.

Beginning in 1976, the physicians began depositing their

Titan checks in an escrow fund for the purpose of acquiring

an interest in Titan. The fund was administered by J.K.F.

Inc., a corporation set up by the physicians to hold the Titan

stock they proposed to buy. When the escrow fund reached

$60,000, the physicians contributed an additional $15,000

and J.K.F. Inc. acquired a 40 per cent interest in Titan.

On September 21, 1978, a federal grand jury returned a 37

count indictment against appellants, five other individuals

and three Michigan corporations. On February 2, 1979, the

Government filed a 42 count follow-up information charging

appellants with soliciting and receiving Medicare and

Medicaid kickbacks from Titan and associated entities. The

information thereafter was amended. The version under

which appellants were convicted is referred to in the record as

the Amended Follow-Up Information.

Judge Kennedy denied the motions of appellants to dismiss

the indictments. Thereafter, in a published opinion, she

denied their motions for a rehearing. United States v. Wetn-

garden, 468 F.Supp. 410 (E.D. Mich. 1979). In this opinion

Judge Kennedy held that the pre-1977 version 42 U.S.C. §

3 See United States v. Shermetaro, F.2d (No. 79-5148, 6th

Cir. 1980), in which this court affirmed the conviction of one of the par-

ties to this scheme under 18 U.S.C. § 371 for conspiracy to defraud the

United States by obstructing the collection of income taxes from Titan

Laboratories.

1396h(b)(1) prohibited the conduct charged in the informa-

tion, and that the challenged statute was sufficiently clear to

given to appellants adequate notice that their alleged conduct

was illegal.

Thereafier, under a plea bargaining agreement, each of

the appellants entered a plea of guilty to certain counts of the

informaticn applicable to him. The Government approved

dismissal of the indictment.

Prior to their guilty pleas, the appellants gave notice that

they intended to appeal the ruling of the district court on the

applicability of § 1396h(b)(1). To preserve the issue for ap-

peal, they moved for arrest of judgment under Fed. R. Crim.

P. 34 on the ground that the statute did not apply to their con-

duct and the district court, therefore, had no jurisdiction to

accept their guilty pleas. This is the procedure approved by

this court in United States v. Heller, 579 F.2d 990, 992-93,

and n. 1 (6th Cir. 1978). See also North Carolina v. Alford,

400 U.S. 25, 37-38 (1970); United States v. Cox, 464 F.2d

927, 941 (6th Cir. 1972). The Government concedes that the

alleged defects raised by appellants are jurisdictional and not

waived by their guilty pleas. Consequently the legal issue is

properly before this court.

III

Dr. Gerald Weingarden entered a plea of guilty to Counts

three through seven of the amended follow-up information,

which are as follows:

On or about the dates listed below, in the Eastern

District of Michigan, Gerald Weingarden, D.O., having

obtained services from Titan Laboratories, Inc., for

which payment was to be made in part out of federal

funds under a state plan approved under Title XIX of

the Social Security Act, did knowingly and wilfully solicit

and receive kickback payments from Titan Labora-

tories, Inc., Spartan Laboratories, Inc., and M. A.

Delaney, Inc., as detailed below in connection with the

furnishing of the aforesaid services, each payment being

a separate count of this indictment.

To wit, the Government contends Gerald Weingar-

den, received monetary payments labelled “consulting

fees” fzom an entity related to Titan Laboratories, Inc.,

namely Spartan Laboratories, Inc., principally to in-

duce the defendant to send his laboratory work to Titan.

In addition, it was agreed that the defendant would per-

form the following services: (1) to forrn and assist in the

formation of J.K.F., Inc., as described in indictment

Number 78-80689, and (2) to encourage other doctors to

send their laboratory work to Titan, as described in In-

dictment Number 78-80689.

Gerald Weingarden visited Titan Laboratories, Inc.,

from time to time, in connection with the performance

of the above-described services.

The claims filed by Titan Laboratories, Inc., were in

accordance with the Medicaid statutes and regulations,

and the monies received by Titan Laboratories, Inc.,

were those to which Titan Laboratories, Inc., was en-

titled. That is, when Titan Laboratories, Inc., was ask-

ing for payment for specific blood work, that blood work

had been done, and that the billing for that blood work

was in accordance with medicaid statutes and regula-

tions.

Approximate

Date Amount Source of

Count of Payment of Money Payment

3 October 27, 1976 $1,000 Spartan Laboratories, Inc.

4 November 22, 1976 $1,000 Spartan Laboratories, Inc.

5 December 28, 1976 $1,000 Spartan Laboratories, Inc.

6 March 1, 1977 $1,000 Spartan Laboratories, Inc.

7 March 1, 1977 $1,000 Spartan Laboratories, Inc.

All in violation of Title 42, U.S.C., Section 1396h(b)(1).

At his Rule 11 sentencing hearing, Dr. Weingarden admit-

ted that he had committed the acts charged in the informa-

tion.

Dr. Harvey Golden entered a plea of guilty to counts 11

through 15 of the Information, which charged as follows:

On or about the dates listed below, in the Eastern

District of Michigan, Harvey Golden, D.O., having ob-

tained services from Titan Laboratories, Inc., for which

payment was to be made in part out of federal funds

under a state plan approved under Title XIX of the

Social Security Act, did knowingly and wilfully solicit

and receive kickback payments from Titan Labora-

tories, Inc., and Media Technology, Inc., as detailed

below in connection with the furnishing of the aforesaid

services, each payment being a separate count of this in-

dictment.

To wit, Harvey O. Golden D.O., received monetary

payments from Titan Laboratories, Inc., in exchange

for referring his laboratory work to Titan Laboratories,

Inc. The claims filed by Titan Laboratories, Inc., were

in accordance with the Medicaid statutes and regula-

tions, and the monies received by Titan Laboratories,

Inc., were those to which Titan Laboratories, Inc., were

entitled. That is, when Titan Laboratories, Inc., was

asking for payment for specific blood work, that blood

Cal

work had been done, and that the billing for blood work

was in accordance with Medicaid statutes and regula-

tions.

Approximate

Date Amount Source of

Count of Payment of Money Payment

11 May 27, 1974 $ 850 Titan Laboratories, Inc.

12 August 8, 1974 $ 900 Media Technology, Inc.

13 September 3, 1974 $1,500 Titan Laboratories, Inc.

14 October 24, 1974 $1,000 Titan Laboratories, Inc.

15 December 6, 1974 $1,500 Titan Laboratories, Inc.

All in violation of Title 42, U.S.C., Section 1396h(b)(1).

At his Rule 11 sentencing hearing, Dr. Golden testified as

follows:

THE COURT: Knowing those things, how do you

wish to plead at this time to Counts 11, 12, 13, 14, 15?

DEFENDANT GOLDEN: Guilty, your Honor.

THE COURT: Will you tell me in your own words

what it is that you did do that causes you to plead guilty?

DEFENDANT GOLDEN: Part of my motives I

stated, perhaps an equal amount of my motives were for

the inducement of monetary gain.

THE COURT: In other words, to receive payment

from Titan for sending work to Titan?

DEFENDANT GOLDEN: Yes.

THE COURT: And some of that work at least was

Medicare and Medicaid work?

DEFENDANT GOLDEN: Yes, your Honor.

THE COURT: Would that be true for all of the

periods involved here, May 27, 1974, through December

6, 1974?

DEFENDANT GOLDEN: Yes, your Honor.

Dr. Donald Freedlander entered a plea of guilty to counts

17 through 21 of the Information, which charged as follows:

On or about the dates listed below, in the Eastern

District of Michigan, Donald Freedlander, D.O., having

obtained services from Titan Laboratories, Inc., for

which payment was to be made in part out of federal

funds under a state plan approved under Title XIX of

the Social Security Act, did knowingly and wilfully solicit

and receive kickback payments from Titan Labora-

tories, Inc., and M. A. Delaney, Inc., as detailed below

in connection with the furnishing of the aforesaid serv-

ices, each payment being a separate count of this indict-

ment.

To wit, the Government contends Donald Freed-

lander, D.O., received monetary payments from an enti-

ty related to Titan Laboratories, Inc., namely M. A.

Delaney, Inc., principally to induce Donald Freed-

lander, D.O., to send his laboratory work to Titan

‘Laboratories, Inc. In addition, it was agreed that

Donald Freedlander would perform the following serv-

ices:

(1) to form and assist in the formation of J.K.F., Inc., as

described in Indictment Number 78-80689, and (2) to

encourage other doctors to send their laboratory work to

Titan Laboratories, Inc., as described in Indictment

Number 78-80689.

The claims filed by Titan Laboratories, Inc., were in ac-

cordance with the Medicaid statutes and regulations,

and the monies received by Titan Laboratories, Inc.,

were those to which Titan Laboratories, Inc., were en-

titled.

That is, when Titan Laboratories, Inc., was asking for

payment for specific blood work, that blood work had

been done, and that the billing for that blood work was

in accordance with Medicaid statues and regulations.

10c

Approximate

Date Amount Source of

Count of Payment of Money Payment

17. August 23, 1976 $200 M.A. Delaney, Inc.

18 August 23, 1976 $200 M.A. Delaney, Inc.

19 September 7, 1976 $200 M.A. Delaney, Inc.

20 September 10,1976 $200 M.A. Delaney, Inc.

21 September 15,1976 $200 M.A. Delaney, Inc.

All in violation of Title 42, U.S.C., Section 1396h(b)(1)._ -

At his Rule 11 sentencing hearing, Dr. Freedlander testi-

fied as follows:

THECOURT: Will you tell me what it was that you

did on or about the dates mentioned that causes you to

plead guilty? What did you do on or about August 23rd,

1976, with regard to these checks apparently from M. A.

Delaney, Inc.?

DEFENDANT FREEDLANDER: These checks

were received by me, yes, your Honor, they were received

by me.

THECOURT: You received the checks described in

Counts 17, 18, 19, 20, 21?

DEFENDANT FREEDLANDER: Yes, I did, your

Honor.

THE COURT: From M. A. Delaney?

DEFENDANT FREEDLANDER: Yes, I did.

THE COURT: And did you have some relationship

at least with Titan Laboratories as stated in the informa-

tion?

DEFENDANT FREEDLANDER: Yes, I did, your

Honor.

THE COURT, And did that include some kind of

business involving Medicare and Medicaid?

DEFENDANT FREEDLANDER: Right.

THE COURT: In other words, this was business

lle

with Titan Laboratories that included some business

relating to Medicare and Medicaid samples?

DEFENDANT FREEDLANDER: Yes, your Honor.

THE COURT: Did you receive these payments for

sending work to Titan Laboratories?

DEFENDANT FREEDLANDER: Yes, I did, your

Honor.

THE COURT: Did you perform any services for

these companies, M. A. Delaney and Titan Lab?

DEFENDANT FREEDLANDER: Yes, I did, your

Honor, I helped with the formation and was of assistance

to the J.K.F. Corporation.

* * *

THE COURT: You have said something about,

among other things, and that was kind of confusing to

me, except for setting up J.K.F. Corporation, did you

provide any other services to Titan Laboratories?

DEFENDANT FREEDLANDER: Yes, among

other things, I encouraged other physicians to send their

work to the laboratory.

THE COURT: In other words, there may not be a

factual basis for this plea other than the statement that

you in fact performed services besides sending business to

Titan Lab? mn

MR. FINK: I think under the general intent statute,

I don’t think there has to be a dominant purpose, your

Honor. He has indicated that that was one of the things

he received consideration for.

THECOURT: As long as it is clear, and I am not so

sure it is clear from the statement, was one of the reasons

that you received these payments from Titan Lab, or

from M. A. Delaney, Inc., because you were sending

your lab business to Titan Laboratories, was that one of

the reasons?

a |

12c

DEFENDANT FREEDLANDER: In the total, yes,

it was. It was part of it. It was one of the reasons.

* * *

THE COURT: In view of the fact it uses the word

wilfully and that there were other considerations, I think

we should at least really know what he does wish to plead

guilty. I have a little problem with the factual basis

under his statement. Maybe I can ask him this question.

Was the referral of business to Titan Laboratories a

substantial or significant reason?

DR. FREEDLANDER: They were among the rea-

sons, you know, a combination as to the rest of it, why, I

received the compensation, yes, your Honor.

THE COURT: I am still trying to find out if it was

significant at all or was it just minor?

DEFENDANT FREEDLANDER: Well, when I say

significant, your Honor, there are several components

involved. Is this more strongly than this one or that one,

as the case may be, as I say, I did give my blood work to

the laboratory, I did help assist them, I did help in get-

ting other doctors referred to them, and with the com-

bination of everything I don’t know where to put the

weight on each one as to compensation, but all were

done by me, that is true, and I did receive the compensa-

tion,

MR. FINK: Your Honor, the 1952 cases that you are

familiar with, the Interstate travel in aid of racketeering

cases, which are specific intent crimes, which I don’t

think this is, do not require the dominant purpose to be

the travel, it can be a co-equal purpose.

THE COURT: Is he going to say it was co-equal

with the other things?

13c

DEFENDANT FREEDLANDER: With the other

things, yes.

THECOURT: As long as we get something that was

co-equal with other services of recruiting doctors and

helping to form this other corporation, the three oe them

would be co-equal?

DEFENDANT FREEDLANDER: Yes, your Honor.

THECOURT: I think that that is sufficient for that.

THE COURT: I think I should ascertain that.

Did you, in fact, submit blood samples to Titan

Laboratories?

DEFENDANT FREEDLANDER: That I did, your

Honor.

THE COURT: And they were from Medicare and

Medicaid patients?

DEFENDANT FREEDLANDER: Yes, they were.

MR. ROSEN: That's sufficient.

THECOURT: I think I asked that but maybe not so

directly.

MR. ROSEN: I have nothing further.

THECOURT: And that was during the time period

of these checks that were received from M. A. Delaney?

DEFENDANT FREEDLANDER: Yes, they were,

your Honor.

THE COURT: And the payments from M. A.

Delaney were for the three purposes: One because you

sent your lab work to Titan; two, because they indicated

tests; and, three, you were supplying other doctors to

send their work to J.K.F. and/or others?

DEFENDANT FREEDLANDER: Yes, your Honor.

14c

THE COURT: And you did what you did knowing-

ly?

DEFENDANT FREEDLANDER: Yes, I did, your

Honor.

THE COURT: Having discussed these matters this

afternoon, do you still wish to plead guilty to Counts 17,

18, 19, 20 and 21?

DEFENDANT FREEDLANDER: Yes, I do.

Dr. Richard Tapert entered a plea of guilty to counts 27

through 31 of the Information, which charged as follows:

On or about the dates listed below, in the Eastern

District of Michigan, Richard Tapert, D.O., having ob-

tained services from Titan Laboratories, Inc., for which

payment was to be made in part out of federal funds

under a state plan approved under Title XIX of the

Social Security Act, did knowingly and wilfully solicit

and receive kickback payments from Titan Labora-

tories, Inc., and Associated Physicians Services Co., as

detailed below in connection with the furnishing of the

aforesaid services, each payment being a separate count

of this indictment.

To wit, Richard Tapert, D.O., received monetary

payments from an entity related to Titan Laboratories,

Inc., namely Associated Physicians Services Company,

in exchange for referring his laboratory work to Titan

Laboratories, Inc. The claims filed by Titan Labora-

tories, Inc., were in accordance with the Medicaid

statutes and regulations and the monies received by

Titan Laboratories, Inc., were those to which Titan

Laboratories, Inc., was entitled. That is, when Titan

Laboratories, was asking for payment for specific blood

work was in accordance with Medicaid statutes and

regulations.

15c

Approximate

Date Amount Source of

Count of Payment of Money Payment

27 June 24, 1975 $200 Associated Physicians

Services, Co.

28 August 12, 1975 $200 Associated Physicians

Services, Co.

29 September 9, 1975 $500 Associated Physicians

Services, Co.

$0 October 17, 1975 $200 Associated Physicians

Services, Co.

31 December 10,1975 $200 Associated Physicians

Services, Co.

All in violation of Title 42, U.S.C., Section 1396h(b)(1).

At his Rule 11 sentencing hearing, Dr. Tapert testified as

follows:

THE COURT: How do you plead to counts 27

through 31?

THE DEFENDANT: I plead guilty.

THECOURT: Will you tell me what it was that you

did do that causes you to plead guilty to those counts?

THE DEFENDANT: I accepted monetary pay-

ments from Associated Physicians Service Company in

exchange for referring my laboratory work to Titan

Laboratory.

THE COURT: And did you do that knowingly?

THE DEFENDANT: Yes, I did.

THE COURT: Are there any other questions the

Government would like me to ask?

MR. ROSEN: Maybe your Honor could inquire as

to the taking of blood samples from Medicare-Medicaid

patients.

THE COURT: Yes, during this period of time that

these payments were made, was some of the work that

you were referring to Titan Laboratory or Associated

Physicians Medicare and Medicaid work?

l6c

THE DEFENDANT: Yes.

THE COURT: For Medicare and Medicaid pa-

tients?

THE DEFENDANT: That is correct.

THE COURT: And would that be true during the

period of each of these payments?

THE DEFENDANT: Yes.

THE COURT: Any other questions, Mr. Rosen.

MR. ROSEN: No, your Honor.

THE COURT:Have you had plenty of time to discuss

this matter with your attorney?

THE DEFENDANT: Yes, I have.

THE COURT: And he has explained to you what it

is the Government has to prove to prove you guilty?

THE DEFENDANT: Yes.

THE COURT: And you understand also that this is

a final disposition insofar as this Court is concerned, that

this plea of guilty, if the Court accepts it, it will not set

aside the plea of guilty should an appeal be unsuccessful

on the legal issues, do you understand?

THE DEFENDANT: I understand.

THE COURT: Having discussed these matters this

afternoon, do you still wish to plead guilty to these

counts?

THE DEFENDANT: Yes, I do.

Dr. Robert Gash entered a plea of guilty to county 36 of the

Information, which charged as follows:

On or about the dates listed below, in the Eastern

District of Michigan, Robert Gash, D.O., having obtain-

ed services from Titan Laboratories, Inc., for which pay-

ment was to be made in part out of federal funds under a

state plan approved under Title XIX of the Social

Security Act, did knowingly and wilfully solicit and

17c

receive kickback payments from Titan Laboratories,

Inc., and Associated Physicians Services, Co., as detailed

below in connection with the furnishing of the aforesaid

services, each payment being a separate count of this in-

dictment.

To wit, Robert Gash, D.O., received monetary

payments from an entity related to Titan Laboratories,

Inc., namely Associated Physicians Services Company,

in exchange for referring his laboratory work to Titan

Laboratories, Inc. The claims filed by Titan were in ac-

cordance with the Medicaid statutes and regulations and

the monies received by Titan Laboratories, Inc., was en-

titled. That is, when Titan Laboratories, Inc., was ask-

ing for payment for specific blood work was in accord-

ance with Medicaid statutes and regulations.

Approximate

Date Amount Source of

Count of Payment « of Money Payment

36 August 11, 1975 $200 Associated Physicians

Services, Co.

All in violation of Title 42, U.S.C., Section 1396h(b)(1).

In his Rule 11 sentencing hearing, Dr. Gash testified as

follows:

THE COURT: Will you tell me what you did on or

about August 11, 1975 that causes you to plead guilty?

DEFENDANT GASH: On or about August 11,

1975, I received a check for $200.00 from Associated

Physicians Services, Inc., for submission of lab work to

Titan Laboratories.

THE COURT: To Titan Laboratories?

DEFENDANT GASH: Yes.

THE COURT: And was some of that lab work at

least lab work under both Medicare and Medicaid?

18c

DEFENDANT GASH: _I would have to assume so. I

really don’t know that, your Honor.

THE COURT: But ordinarily there would be some

within the work that you would submit within a month?

DEFENDANT GASH: _I would say so, yes.

THE COURT: Does the Government have some

evidence that some of this was?

MR. ROSEN: Yes, it does, your Honor.

THE COURT: Are there any other a you

would like to ask?

MR. ROSEN: No, your Honor.

THE COURT: Having discussed this matter this

afternoon, do you still wish to plead guilty to Count 36?

DEFENDANT GASH: Yes, your Honor.

In asserting that the statute was not sufficiently broad prior

to the 1977 amendment to make their activities a criminal of-

fense, and that the statute under which they were convicted is

invalid for vagueness, appellants rely strongly upon the fact

that Congress found it necessary to enact the 1977 amend-

ment.

An amendment to an existing statute is not an acknowledg-

ment by Congress that the original statute is invalid. It is a

common and customary legislative procedure to enact

amendments strengthening and clarifying existing laws.

The report of the House Committee on Ways and Means

contains the following statement on the purpose of the 1977

amendment:

Your committee bill would modify the penalty provi-

sions in existing law which relate to those persons pro-

viding services under medicare and medicaid.

19c

Existing law provides specific penalties under the

medicare and medicaid programs for certain practices

that long have been regarded by professional organiza-

tions as unethical, which are unlawful in some jurisdic-

tions, and which contribute significantly to cost of the

programs. Such practices as the submission of false

claims, or the soliciting, offering, or acceptance of

kickbacks or bribes, including rebates or [sic] a portion

of fees or charges for patient referrals, are misdemeanors

under present law ...

Recent hearing and reports, however, indicate that

such penalties have not proved adequate deterrents

against illegal practices by some individuals who provide

services under medicare and medicaid. In addition,

these misdemeanor penalties appear inconsistent with

existing Federal criminal code sanctions which make

similar actions punishable as felonies. Also, it has been

brought to the attention of the committee by the U.S.

Attorney's offices which have utilized these Social Secur-

ity Act sanctions in the prosecution of medicare and

medicaid fraud cases that the existing language of these

penalty statutes is unclear and needs clarification.

Your committee's bill would strengthen the penalty

provisions in existing law which relate to persons pro-

viding services under medicare and medicaid .. .

In addition, the bill would clarify and restructure

those provisions in existing law which define the types of

financial arrangements and conduct to be classified as il-

legal under medicare and medicaid. (Emphasis added.)

H.R. Rep. No. 95-393 (II), 95th Cong., Ist Sess.

reprinted in (1977) U.S. Code Cong. & Ad. News 3039,

3055.

20c

We agree with the definition of “kickbacks” adopted and

applied by the Seventh Circuit in United States v. Hancock,

604 F.2d 699 (7th Cir. 1978). We follow that decision in

affirr ng the decision of the district court that appellants

have entered pleas of guilty under an Information charging

them with violations of a valid statute which made their con-

duct a criminal offense. The record demonstrates to our

satisfaction that the payments which the appellants admitted

receiving were “kickbacks” within the meaning of the statute.

We choose to follow the Seventh Circuit in Hancock, rather

than United States v. Porter, 591 F.2d 1048 (5th Cir. 1979).

The reasons for this conclusion are stated well by Judge Ken-

nedy in her published opinion. 468 F.Supp. at 412-15.

Appellants contend that they did not “furnish” the services

in connection with which they received payments, and that

the Information does not charge an offense. These and all

other contentions made by appellants have been considered

and found to be without merit.

The convictions are affirmed.

JONES, Circuit Judge, concurring. I agree that the term

“kickback” should be defined to include “a percentage pay-

ment for granting assistance by one in a position to open up or

control a source of income.” United States v. Hancock, 604

F.2d 999, 1002 (7th Cir. 1978). The United States has an im-

portant interest in securing the honest administration of

federally funded programs. United States v. Thompson, 366

F.2d 167 (6th Cir.), cert. dented, 385 U.S. 973 (1966). I write

separately to discuss a substantial issue of first impression con-

cerning the construction of 42 U.S.C. § 1396h (b) (1) (1972):

Is a physician, who provides services to medicaid patients and

who receives illegal kickbacks from laboratories for the refer-

ral of those patients, for which referrals federal funds do not

reimburse the doctor or the laboratory, a person who “fur-

2lc

nishes items or services to an individual for which payment is

or may be made in whole or part out of Federal funds . . . and

who ... receives any (1) kickback .. . in connection with the

furnishing of such items or services ...?” I concur with the

majority's affirmative answer.

The language of the amended informtions and the guilty

pleas, as thoroughly reported in the majority opinion, define

the facts of the case.' The defendants were charged with and

pleaded guilty to receiving payments in various forms from a

laboratory for patient referrals. The informations allege that

the defendants “obtained services” from a laboratory, for

which services medicaid would pay in part, and that the

defendants received kickbacks in connection with these serv-

ices. Consequently, the relevant services for which federal

funds were paid are the tests performed by the laboratory.

The record also establishes that the defendants were reim-

bursed by medicaid for their treatment of the same patients

referred to the laboratories.

The facts raise two questions of statutory interpretation: 1)

did the physicians “furnish” the laboratory services; and 2)

were the kickbacks paid “in connection with” the laboratory

services rather than just the patient referrals? Defendants

' According to my construction of § 1396h (b) (1), the amended infor-

mations do state an offense. In his zeal to uphold the guilty pleas, the

Assistant United States Attorney argued seriously that this Court should

consider the amended informations to have been informally amended by

oral argument and by his response to the defendants’ motion to dismiss

the informations. Further, he contended that the district court had im-

plicitly granted leave for this informal second amendment. The Govern-

ment’s position is not supported in the record and is an attempt to play

“fast and loose” with the established rules of criminal procedure and

principles of due process. Such overly zealous advocacy should be tem-

pered. In other respects, the Assistant United States Attorney prepared a

fine brief.

22c

argue that they did not “furnish” the laboratory services, since

the laboratory actually performed the tests. They point out

that their services were reimbursed separately from the labor-

atory tests. Second, they argue that the kickbacks were paid

“in connection with” the patient referrals rather than any

service for which medicaid funds were paid. They declare

that the kickbacks did not affect their treatment of patients or

the laboratory's performance of tests.

It is fair to say that physicians in Michigan in 1976-1977

furnished the laboratory services to their patients. The physi-

cians took the specimens and sent them to a laboratory. A

laboratory could act only on orders from the physicians.

Mich. Comp. Laws Ann. §§ 325.81(b), 325.89(b), repealed

by Mich. Comp. Laws Ann. § 333.20501 et seq. (1978); cf. 42

C.F.R. § 405.1316(e) (Medicare regulations). The laboratory

could report the test results only to the physicians, unless they

instructed otherwise. Mich. Adm. Code R. 325.2353(2) (Rule

53); cf. 42 C.F.R. § 405.1316(g) (Medicare regulations). The

physicians bore the responsibility of interpreting the test data.

In short, the physicians did everything but actually perform

the clinical tests. Under these circumstances, by interpreting

the word “furnish” according to its common usage to mean

“supply or provide”, I would hold that the physicians did “‘fur-

nish” the laboratory services.

The physicians received the kickbacks “in connection with”

the laboratory services. The statute is satisfied if there is a

logical relationship between the kickbacks and the services for

which federal funds were paid. In our case, the kickbacks

were an agreed part of the performance of the laboratory

services. The relationship between the physicians and the

laboratory was formed around the payment of the kickbacks.

The physicians chose to refer patients to a specific laboratory

because of the negotiated kickback payments. The phrase “in

23c

connection with” has a sufficiently broad meaning in com-

mon parlance to conclude that the kickbacks were received

“in connection with” the laboratory services.

The legislative history bolsters my interpretation of § 1396h

(b) (1) as enacted in 1972. Congress intended to prohibit in

the administration of the Medicaid program any practices

which were unethical or were proscribed by state law. H. R.

Rep. No. 92-231, 92d Cong., 2d Sess., reprinted in [1972]

U.S. Code Cong. & Ad. News 4989, 5007, 5093, 5308. The

physicians’ receipt of kickbacks for patient referrals to the

laboratory is forbidden by both Section 21 of the Code of

Ethics of the Michigan Association of Osteopathic Physicians

and Surgeons and by state statute, Mich. Comp. Laws Ann

§ 445.162. Similarly, a laboratory is prohibited from

soliciting business by paying kickbacks. Mich. Comp. Laws

permits, § 1396h (b) (1) should be interpreted to effectuate

congressional intent. Barrett v. United States, 423 U.S. 212

(1976); United States v. Tarter, 522 F.2d 520 (6th Cir. 1975).

The ordinary meaning of the statutory language and the 1972

legislative history compel the conclusion that the physicians’

receipt of kickbacks under the circumstances in this case is a

violation of § 1396h (b) (1).

Finally, because the ordinary meaning of the plain

language of § 1396h (b) (1) would have notified the defen-

dants that their conduct was unlawful, the statute is not un-

constitutionally vague. United States v. Hancock, 604 F.2d at

1002.

Accordingly, I concur with the opinion and judgment of

the majority.

APPENDIX D

IN THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee

v Nos.

79-5222-24

RICHARD TAPERT, HARVEY GOL- 79-5269-70

DEN, GERALD WEINGARDEN, DON-

ALD FREEDLANDER, AND ROBER'1I

GAST,

Defendant-Appellants.

MOTION TO STRIKE OR AMEND FOOTNOTE

ONE IN CONCURRING OPINION

NOW COMES the United States of America, by and

through its attorney, James K. Robinson, United States Attor-

ney, Eastern District of Michigan, and respectfully requests

that footnote one of the concurring opinion in this case be

striken or amended for the following reasons:

1. The defendants in this case, under terms of a plea

bargain, pled guilty to various counts of receiving Medicaid

kickbacks from Titan Laboratories for referral of blood work.

In addition to making arguments on the meaning of “kick-

backs” and on other matters of statutory interpretation, the

defendants also contended on appeal that even if the Govern-

ment'’s statutory interpretation was accepted, the information

still failed to state an offense.

The Government responded on this last argument with two

alternative arguments: 1) that the information implicitly

alleged that the kickbacks were received by the defendants in

connection with their furnishing to their Medicaid patients

blood testing services performed by the lab (Argument IV-A

of Government's Brief); or 2) that the information was infor-

mally amended to embrace a second means of violating the

statute in that the kickbacks were received by the defendants

in connection with their furnishing treatment services to

Medicaid patients separate from but related to the blood

testing services performed by the lab (Argument IV-B of

Government's Brief).

The Court's opinion affirming the convictions stated simply

that the defense contention that the information did not

charge an offense was “considered and found to be without

merit.” Slip op. at 17. Thus it is not clear whether the major-

ity accepted Argument IV-A, Argument IV-B or both.

The text and footnote one of the concurring opinion make

it apparent, however, that the concurring opinion accepted

Government's Argument IV-A and rejected Government's

Argument IV-B.

This motion addresses itself solely to the manner in which

the concurring opinion rejected Government's Argument

IV-B.

2. Footnote one of the concurring opinion states:

1. According to my construction of § 1396h(b)(1),

the amended informations do state an offense, In

his zeal to uphold the guilty pleas, the Assistant

United States Attorney argued seriously that this

Court should consider the amended informations to

have been informally amended by oral argument

and by his responre to the defendants’ motion to

dismiss the informations. Further, he contended

that the district court had implicitly granted leave

for this informal second amendment. The Govern-

ment’s position is not supported in the record and is

an attempt to play “fast and loose’ with the

established rules of criminal procedure and prin-

ciples of due process. Such overly zealous advocacy

should be tempered. In other respects, the Assistant

United States Attorney prepared a fine brief.

3. The Government respectfully suggests that the

characterization of the Government's argument as “not sup-

ported in the record” and as “an attempt to play ‘fast and

loose’ with the established rules of criminal procedure and

principles of due process” as well as constituting “overly

zealous advocacy” is an unfair criticism of the Government's

argument and that publication of this criticism in the perma-

nent reports of the Sixth Circuit would do an injustice to the

office of the United States Attorney for the Eastern District of

Michigan and to the Assistant United States Attorney who

handled the appeal in this case.

4. Assistant United States Attorney Francis Zebot, appel-

late counsel for the Government in this case, presented Argu-

ment IV-B in good faith. Even in the wake of the criticism in

footnote one of the concurring opinion, he believes that the

argument was appropriate and that advancing it was consis-

tent with his obligation under Canon 7 of the Code of Profes-

sional Responsibility: “A Lawyer Should Represent a Client

Zealously Within the Bounds of the Law.” (See Zebot Affi-

davit, attached hereto.)

5. In Argument IV-B, Mr. Zebot quoted precise lan-

guage in the Government's response to defendant Golden's

motion to dismiss and precise language in oral argument on

that motion upon which he was relying to argue for informal

amendment of the information. See Government's Brief, pp.

67-69. He likewise quoted precise language from Judge Ken-

nedy’s Opinion and Order denying defendant Golden’s mo-

tion to dismiss upon which he relied. See Government’s Brief,

pp. 70-71. The relied-upon language of Government trial

counsel and Judge Kennedy does indeed refer to doctors’

treatment services to Medicaid patients separate from blood

testing services. Yet footnote one asserts that appellate gov-

ernment counsel's position is “not supported by the record.”

6. Not only did Mr. Zebot set out clearly the language

upon which he relied for informal amendment and informal

leave to amend, but stressed certain factors which might lead

the court to be receptive to such informal amendment in the

circumstances of this case (7.e., the virtual assurance of some

reimbursable Medicaid treatment service by the defendants

on a patient related to the blood work whenever there is a

reimbursable Medicaid blood testing service by the lab;

failure of the defense to object to the information on this

specific ground before pleading guilty when the Government

and court treated the information 2 if it embraced treatment

services to patients; harmless error because of actual notice;

the context of a bargained guilty plea (this factor was added

at oral argument)).

7. Mr. Justice Sutherland In Berger v. United States, 295

U.S. 88 (1935) said:

The United States Attorney is a representative not

of an ordinary party to a controversy, but of a

sovereignty whose obligation to govern impartially

is as compelling as its obligation to govern at all;

and whose interest, therefore, in a criminal pro-

secution is not that it shall win a case, but that

justice shall be done. As such, he is in a peculiar and

very definite sense the servant of the law, the

twofold aim of which is that guilt shall not escape or

innocence suffer. He may prosecute with earnest-

ness and vigor — indeed, he should do so. But,

while he may strike hard blows, he is not at liberty to

strike foul ones. It is as much his duty to refrain

from improper methods calculated to produce a

wrongful conviction as it is to use every legitimate

means to bring about a just one.”

8. Representing the government with “earnestness and

vigor” certainly includes making good faith appellate argu-

ments in an effort to sustain a criminal conviction. Ethical

Consideration 7-4 regarding Canon 7 of the Code of Profes-

sional Responsibility states:

The advocate may urge any permissible construc-

tion of the law favorable to his client, without

regard to his professional opinion as to the likeli-

hood that the construction will ultimately prevail.

His conduct is within the bounds of the law, and

therefore permissible, if the position taken is sup-

ported by the law or is supportable by a good faith

argument for an extension, modification, or rever-

sal of the law. However, a lawyer is not justified in

asserting a position in litigation that is frivolous.

9. Appellate courts are, of course, free to reject appellate

arguments of counsel, as the concurring opinion does with

respect to Argument IV-B. We disagree, however, that it was

improper even to advance the argument and we believe that

the position asserted was not “frivolous.” Surely the appellate

adversary system is better served by a climate which en-

courages counsel to make all good faith arguments in support

of his or her client's cause.

10. Mr. Zebot has the reputation both in this office and the

local legal community as a competent and cautious attorney

who attempts to seek justice within proper bounds. Prior to

joining our office, Mr. Zebot served for several years with the

office of the Michigan State Appellate Defender where he

represented many indigent defendants in criminal appeals.

11. Mr. Zebot labored painstakingly to produce the brief

in this case. To charge that he has made an argument not sup-

ported by the record and to accuse him of playing “fast and

loose” with the law in the permanent published reports of the

Sixth Circuit would unjustly blemish an otherwise excellent

record.

12. The concurring opinion’s rejection of Argument IV-B

certainly can be accomplished without calling Mr. Zebot’s in-

tegrity into question.

WHEREFORE, for all the foregoing reasons, the Govern-

meni respectfully requests that footnote one of the concurring

opinion be struck or amended.

Respectfully submitted,

JAMES K. ROBINSON

United States Attorney

Dated: July 10, 1980.

APPENDIX E

Nos. 79-5222, 79-5228,

79-5224, 79-5269

and 79-5270

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

(Filed July 29, 1980)

UNITED STATES OF AMERICA,

Plaintiff- Appellee,

ORDER

RICHARD E. TAPERT, D.O., HAR-

VEY GOLDEN, D.O., GERALD WEIN-

GARDEN, DONALD FREEDLANDER

and ROBERT GASH,

Defendants-Appellants.

Upon consideration of the motion of appellee to strike or

amend footnote one in the concurring opinion in the above-

styled cases,

It is ORDERED that the motion be and it hereby is denied.

ENTERED BY ORDER OF THE COURT.

(s) JOHN P. HEHMAN, Clerk

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.