Eleventh Circuit Has Opportunity in “U.S. v. Clay” to Reshape Prosecutors’ & Courts’ Approach on Criminal Intent

11th CircuitOn Friday, October 2, the U.S. Court of Appeals for the Eleventh Circuit will hear oral arguments in a closely followed criminal health-care fraud case, U.S. v. Clay. Earlier this year, Washington Legal Foundation published a Legal Backgrounder on the case and its broader ramifications, Clay v. United States: When Executives Receive Jail Time for Ordinary Business Decisions.

In Clay, federal prosecutors converted a contract dispute between a medical services provider, WellCare Health Plans, and the State of Florida Agency for Healthcare Administration (AHCA) into a criminal action. The company had interpreted a complex state law regarding the repayment of Medicaid premiums to the state in a manner that was contrary to AHCA’s interpretation. AHCA’s interpretation was not memorialized in a state regulation or guidance document. Despite this lack of guidance, federal prosecutors indicted WellCare and its executives for health care fraud. The company entered into a deferred-prosecution agreement, leaving the executives to fend for themselves.

The key issue at trial was whether the WellCare executives’ interpretation of Florida law was reasonable. This question goes to the existence of an actus reus—i.e., were the executives’ actions unlawful? In a criminal trial, this issue should be addressed by the presiding judge, not the jury. The judge in Clay, however, instructed the jury to decide whether the defendants’ interpretation was reasonable. He also failed to follow an Eleventh Circuit precedent, U.S. v. Whiteside, which dictates the government must prove beyond a reasonable doubt that a defendant’s statement or submission “is not true under a reasonable interpretation of the law.”

Rules requiring the judge, not the jury, to determine legal questions, and precedents such as Whiteside, are critical in today’s regulatory environment. As attorney Matthew G. Kaiser wrote in the WLF Legal Backgrounder on U.S. v. Clay:

Businesses must regularly interpret complex laws and regulations impacting their communications with federal and state governments. Tax forms, license applications, claims for payment from the government, and a myriad of other forms demand answers to questions that have more than one reasonable answer. Without the protection of judicial precedents like Whiteside, interacting with the federal government becomes a high-stakes game of “Gotcha!”

Those protections are especially important for executives who, under a September 9, 2015 “Principles of Federal Prosecution” memo from Deputy Attorney General Sally Quillian Yates, will increasingly be subject to criminal investigation and prosecution in addition to, or apart from, their companies.

All who share WLF’s concerns with overcriminalization and the federal erosion of business civil liberties should keep a close eye on what the Eleventh Circuit does in Clay.

2 thoughts on “Eleventh Circuit Has Opportunity in “U.S. v. Clay” to Reshape Prosecutors’ & Courts’ Approach on Criminal Intent

  1. Pingback: WellCare Legal Case — United States v. Clay — Court May Reshape Approach on Criminal Intent

  2. Pingback: Supreme Court Cert Grant in “Farha v. US” Can Clarify Level of Criminal Intent Needed to Prove “Knowledge” – The WLF Legal Pulse

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