Healthcare Fraud – If a defendant is charged under 42 U.S.C. § 1320(a)-7b(b) in conjunction with an 18 U.S.C. § 371 conspiracy to receive illegal kickbacks, the government must prove that federal funds passed through the conspiracy.
Xiulu Ruan and John Couch were charged with operating a “pill mill” and were convicted on various counts of racketeering, distributing controlled substance, and receiving kickbacks in relation to a federal healthcare program under 18 U.S.C. § 371 and 42 U.S.C. § 1320a-7b(b). Ruan was also convicted of various counts of money laundering. Ruan was sentenced to 252 months’ imprisonment and over $15 million in restitution. Couch was sentenced to 240 months’ imprisonment and over $16 million in restitution.
Ruan and Couch appealed, challenging their convictions, various evidentiary rulings at trial, and the district court’s jury instructions. Ruan also challenged his sentence and restitution order.
On appeal, the Court held that there was insufficient evidence to support “one of the illegal kickback conspiracy convictions.” The Court held that, “[b]ecause the 42 U.S.C. § 1320(a)-7b(b) offense was alleged as an 18 U.S.C. § 371 conspiracy, federal jurisdiction was premised on the existence of a ‘Federal health care program.’” Therefore, “the government had to show that federal funds passed through” Ruan’s and Couch’s operation, which involved a worker’s compensation dispensary. The Court noted that the evidence the government introduced, Department of Labor payments for physician services and emails that some patients had federal insurance, did not show federally-paid-for prescriptions or any other “indication that federal monies actually passed through the dispensary.”
The Court affirmed Ruan’s and Couch’s other convictions because the totality of the evidence was sufficient for a jury to reasonably conclude their guilt.
The Court also affirmed the district court’s evidentiary rulings, the propriety of the district court’s jury instructions, and Ruan’s sentence and restitution.
Appeal from the Southern District of Alabama
Opinion by Coogler (by designation from N.D. Ala.), joined by Wilson and Newsom
Click here to read the opinion.