TORTS | Health care program theft isn't 'fraud'

An act of "simple theft" by a health care worker may not be prosecuted as health care "fraud," the 3d U.S. Circuit Court of Appeals has ruled. The ruling overturned the conviction of a woman accused of stealing more than $240,000 from the cash payments made by patients of a Pittsburgh methadone clinic.

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An act of “simple theft” by a health care worker may not be prosecuted as health care “fraud,” the 3d U.S. Circuit Court of Appeals has ruled. The ruling overturned the conviction of a woman accused of stealing more than $240,000 from the cash payments made by patients of a Pittsburgh methadone clinic. U.S. v. Jones, No. 05-4898. The three-judge panel concluded that prosecutors had failed to establish an essential element in their case against Aimee Jones because they had never proved that there was “any type of misrepresentation by Jones in connection with the delivery of, or payment for, health care benefits, items, or services.” Writing for the court, visiting Judge Jane A. Restani of the U.S. Court of International Trade said that when Congress passed the health care fraud statute, 18 U.S.C. 1347(2), it also passed a statute governing theft from health care programs, 18 U.S.C. 669. “Given that Congress passed an accompanying statute that explicitly covers theft, it cannot be the case that Congress intended Section 1347 to be interpreted so broadly as to convert an instance of simple theft into health care fraud merely because the theft was perpetrated by an employee of a health care benefit program,” Restani wrote. “Were we to read Section 1347 so broadly as to cover simple theft by an employee, Section 669 itself would be rendered insignificant, if not wholly superfluous,” Restani wrote. Aimee Jones worked as a front-counter clerk at Progressive Medical Specialists Inc., a methadone clinic where clients generally paid cash. Prosecutors said that in March 2004, the clinic discovered significant discrepancies between its records of cash intake and its bank deposits. An investigation revealed that between August 2001 and August 2004, Jones had deposited more than $144,000 in cash into her and her husband’s bank account despite the fact that the couple’s joint gross income from 2001 to 2003 was less than $40,000 each year. Jones was indicted on one count of health care fraud under Section 1347(2) and convicted by a Pennsylvania federal jury. She was sentenced to two years in prison and ordered to pay more than $240,000 in restitution. Jones appealed, arguing that the government had not established the elements of health care fraud in violation of Section 1347(2) because the purported theft was not committed in connection with the delivery or payment of health care benefits, and because Progressive was not a health care benefit provider. The 3d Circuit reversed, holding that the evidence had failed to prove fraud because the government had never showed that Jones “used false or fraudulent pretenses, representations, or promises to obtain money or property . . . in connection with the delivery of, or payment for, health care benefits, items, or services.” As a matter of basic statutory construction, Restani found that the “simple theft” Jones had allegedly committed should not have been prosecuted under the fraud statute since it was covered by Section 669. Courts, Restani said, “construe statutory language to avoid interpretations that would render any phrase superfluous.” In criminal cases, Restani said, the “rule of lenity” requires courts to give precedence to the terms of the more specific statute whenever a general statute and a specific statute address the same concern. “Here, Section 669 is the more specific statute, as it directly addresses theft from a health care benefit program while Section 1347 addresses fraud in connection with the delivery of, or payment for, health care benefits, items, or services. Section 1347 is simply not the proper statute under which Jones should have been charged,” Restani wrote.

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