No. 96-1167

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1996

SWARAN KUMAR JAIN,  PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES  OF APPEALS
FOR THE  EIGHTH CIRCUIT

BRIEF FOR THE  UNITED STATES IN OPPOSITION

WALTER DELLINGER
Acting Solicitor General

JOHN C. KEENEY
Acting Assistant Attorney
General

VICKI S. MARANI
Attorney

Department of Justice 
Washington, D.C. 20530-0001
(202) 514-2217

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No. 96-1167

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1996

SWARAN KUMAR JAIN,  PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES  OF APPEALS
FOR THE  EIGHTH CIRCUIT

BRIEF FOR THE  UNITED STATES IN OPPOSITION

WALTER DELLINGER
Acting Solicitor General

JOHN C. KEENEY
Acting Assistant Attorney
General

VICKI S. MARANI
Attorney

Department of Justice 
Washington, D.C. 20530-0001
(202) 514-2217

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      QUESTION PRESENTED

    Whether a conviction for "knowingly and willfully
solicit[ing] or receiv[ing]" payments from Medicare
providers exchange for patient referrals, in viola-
tion of the Medicare anti-kickback statute, 42 U.S.C.
1320a-7b(b)(1)(A), requires proof that the defendant
knew that his conduct was unlawful.

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     TABLE OF CONTENTS

                    Page

Opinions below   . . . .  1
Jurisdiction   . . . .  1
Statement   . . . .  1
Argument   . . . .  5
Conclusion   . . . .  10

     TABLE OF AUTHORITIES

Cases:

Carella  v. California, 491 U.S.263 (1989)   . . . .  9
Cheek v. United States, 498 U. S. 192 (1991)   . . . .  5, 6, 7
Hanlester Network v. Shalala, 51 F.3d 1390 (9th
Cir. 1995)   . . . .  7
National Organization for Women, Inc. v. Scheidler,
510 U.S. 249 (1994)   . . . .  9 
Ratzlaf v. United States, 51 U.S. 135 (1994)   . . . .  5, 6 
Spies v. United States, 317 U.S. 492 (1943)   . . . .  6 
United States v. Bay State Ambulance & Hosp.
Rental  Serv., Inc., 874 F.2d 20 (1st Cir. 1989)  . . . .  8 
United States v. Piervinanzi, 23 F.3d 670 (2d Cir.),
cert. denied, 513 U.S. 900,904(1994)  . . . .  9 

Statutes:

Medicare and Medicaid Amendments of 1980, Pub. L.
No. 96-499, Tit. IX, 917,94 Stat. 2625  . . . .  6 
18 U.S.C. 371  . . . .  2 
18 U.S.C. 666  . . . .  2 
18 U. S. C. 1341  . . . .  2 
42 U.S.C. 1320a-7b(b)(l)  . . . .  7 
42 U.S.C. 1320a-7b(b)(1)(A) . . . .  2, 4, 5 
42 U.S.C. 1320a-7b(b)(2) . . . .  7

Miscellaneous:

H.R. Rep. No. 1167,96th Cong., 2d Sess. (1980) . . . .  6
Health Care Financing Admin., Medicare and
Medicaid (CCH) (1993) . . . .  9

(III)

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In the Supreme Court of the United States

      OCTOBER TERM, 1996

   No. 96-1167

SWARAN KUMAR JAIN, PETITIONER

    v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
   FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

       OPINIONS BELOW

    The opinion of the court of appeals (Pet. App. 1-15)
is reported at 93 F.3d 436.  The opinion of the district
court (Pet. App. 16-26) is unreported.

        JURISDICTION

    The judgment of the court of appeals was entered on
August 8, 1996.  Cross-petitions for rehearing were
denied on October 22, 1996.  Pet. App. 27.  The petition
for a writ of certiorari was filed on January 17, 1997.
The jurisdiction of this Court is invoked under 28
U.S.C. 1254(1).

        STATEMENT

Following a jury trial in the United States Dis-
trict Court for the Western District of Missouri,

(1)

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 2

petitioner was convicted on one count of conspir-
acy to defraud the United States, in violation of 18
U.S.C. 371; one count of soliciting and receiving re-
muneration for referring Medicare patients to a hos-
pital, in violation of 42 U.S.C. 1320a-7b(b)(1)(A) (the
Medicare anti-kickback statute); one count of  bribery
in connection with patient referrals to a hospital that
received benefits in excess of $10,000 under a federal
program, in violation of 18 U.S.C. 666; and 16 counts
of mail fraud, in violation of 18 U.S.C. 1341.  The
district court vacated the conspiracy and bribery con-
victions on petitioner's post-trial motion.  The court
sentenced petitioner to concurrent terms of five
years' probation, including six months of home de-
tention, and ordered him to pay a fine of $10,000.  The
court of appeals affirmed the conviction under the
anti-kickback statute but reversed the mail fraud
convictions and remanded for resentencing, the court
also affirmed sentencing determinations challenged
by the government on cross-appeal.  Pet. App. 1-15.
    1. Petitioner, a psychologist in private practice,
operated the Center for Mental Health Services, Inc.,
an outpatient therapy clinic in Leavenworth, Kansas.
North Hills Hospital, an acute-care psychiatric hospi-
tal in Kansas City, Missouri, paid petitioner for pa-
tient referrals.  Between July 1989 and October 1990,
North Hills made 19 payments totaling $40,500 to
petitioner, with the payments increasing in amount
and frequency during 1990.  Petitioner referred 49
patients to North Hills in 1989 and 1990.  One was a
Medicare beneficiary;  30 were insured by the Civilian
Health and Medical Program of the Uniformed Ser-
vices (CHAMPUS), a Defense Department program;
and the rest were privately insured.  Pet. App. 2-4;
Gov't C.A. Br. 2, 10.

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3

    At petitioner's trial, a North Hills administrator
testified that his September 1989 letter to petitioner
promising to pay him $1,000 per month for "market-
ing" was in fact an agreement to pay him for patient
referrals.  According to the administrator, petitioner
provided no documentation of any subsequent market-
ing services.  Instead, their conversations repeatedly
linked the payments to petitioner's substantial vol-
ume of patient referrals.  The administrator testified
that it was "very unusual for a professional person to
make it so clear that they are willing to exchange
patients for money," and to discuss the subject "in
such an open manner."  Pet. App. 2; Gov't C.A. Br. 4-5.
    Another North Hills administrator testified that
petitioner provided little if any tangible marketing
support, demanded higher payments, threatened to
refer his patients elsewhere if the payments were not
increased, and once showed him a letter from a com-
peting hospital offering to pay $2,500 for each refer-
ral.  North Hills ceased making payments to peti-
tioner in October 1990, when a new administrator re-
fused to continue the practice.  Pet. App. 3; Gov't C.A.
Br. 7-8.
    2.  Petitioner testified in his own defense.  He de-
nied ever requesting money for patient referrals
and stated on direct examination that such conduct
would be "stupid," "illegal," "unethical," and "wrong."
Pet. App. 3, 9.  He also denied receiving a letter from
one of North Hills's competitors offering to pay him
$2,500 per referral. Id. at 3. Petitioner testified that
he was supposed to receive $100 an hour for conduct-
ing mental health workshops and other promotional
activities in the community.  Ibid.  He also claimed
that North Hills had underpaid him for the time he

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spent on those marketing activities, and that as a
result  he had terminated the fee arrangement.  Ibid.
    Petitioner was convicted on, inter alia, one count
of violating 42 U.S.C. 1320a-7b(b)(1)(A).  That provi-
sion establishes criminal penalties for any person
who "knowingly and willfully solicits or receives any
remuneration  * * *  in return for referring an
individual to" a provider of services paid for by
Medicare.  See Pet. App. 6 n.1.  In explaining the
elements of the offense, the district court instructed
the jury that "the word 'willfully'  means unjustifiably
and wrongfully, known to be such by [petitioner]."
Id. at 7.  The court "also instructed that `good
faith' was a defense to this charge, explaining that
[petitioner] acted in good faith if he believed he was
being paid for promoting North Hills, not for refer-
ring patients."  Ibid.  The court declined, however, to
instruct the jury that petitioner could be convicted
only if he was found to have "intentionally violated a
known legal duty."  Ibid.
    3.  The court of appeals affirmed petitioner's con-
viction under Section 1320a-7b(b)(1)(A).  Pet. App. 5-9.
The court rejected petitioner's contention that
knowledge of illegality is required to establish the
mens rea element of that offense.  The court explained
that "[b]oth the plain language of th[e] statute, and
respect for the traditional principle that ignorance
of the law is no defense, suggest that a heightened
mens rea standard should only require proof that
[petitioner] knew that his conduct was wrongful,
rather than proof that he knew it violated `a known
legal duty.'"  Id. at 9.

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5

The court of appeals concluded, in the alternative,
that any error in the district court's instruction was
harmless.  The court explained:

    [Petitioner's] defense was that he did not take
money from North Hills for referring patients.
On direct examination, he testified that payments
for patient referrals are not only "unethical" and
"wrong," they are "illegal."  That testimony effec-
tively took mens rea out of the case, for [peti-
tioner] acknowledged that, if the jury disbelieved
his denials, he would be guilty under his own re-
quested instruction as well as the instruction
given by the district court.

Pet. App. 9.

        ARGUMENT

    1.  Petitioner renews his contention that, in or-
der to have acted "willfully" under 42 U.S.C. 1320a-
7b(b)(l)(A), he had to have known that accepting kick-
backs for patient referrals was illegal.  Pet. 7-24.
That claim is incorrect.  "The general rule that igno-
rance of the law or a mistake of law is no defense to a
criminal prosecution is deeply rooted in the American
legal system."  Cheek v. United States, 498 U.S. 192,
199 (1991).  In arguing that the statute in this case is
an exception to that rule, petitioner principally relies
(see Pet. 11) on the holding in Ratzlaf v. United
States, 510 U.S. 135, 137 (1994), that the "willfully
violating" requirement of the currency structuring
prohibition demands proof that the defendant "acted
with knowledge that his conduct was unlawful."  The
Court in Ratzlaf,  however, did not establish a per se
rule that a conviction for "willful" acts requires proof
that the defendant understood the illegality of his

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6

conduct.  To the contrary, the Court recognized that
the term "willfull"  "is a 'word of many meanings,'  and
`its construction [is] often . . . influenced by its
context."  Id. at 141 (quoting Spies v. United States,
317 U.S. 492, 497 (1943)).  Indeed, the Ratzlaf Court
explicitly reaffirmed the "venerable principle" that
ignorance of the law is not a defense.  Id. at 149.  See
also Cheek, 498 U.S. at 209 (Scalia, J., concurring in
the judgment) (noting that, "in many contexts, [the
word] `willfully' refers to consciousness of the act but
not to consciousness that the act is unlawful").
    As the court of appeals pointed out, "[t]he statute at
issue in Ratzlaf made criminal a willful violation of
another anti-structuring statute."  Pet. App. 8; see
Ratzlaf, 510 U.S. at 146-147. "[I]n the Medicare anti-
kickback statute," by contrast, "the word `willfully'
modifies a series of prohibited acts."  Pet. App. 9.
This case is governed by the general rule that igno-
rance of the law is no defense, rather than by the
exception recognized in Ratzlaf.  1.
    There is no merit to petitioner's contention that
the anti-kickback statute is part of such a complex
regulatory scheme that a knowledge-of-illegality re-

___________________(footnotes)
                                        
    1.  Petitioner's reliance (see Pet. 20-21) on legislative history
is misplaced.  Congress added the elements "knowingly and
willfully" to the Medicare anti-kickback statute in 1980 (see
Medicare and Medicaid Amendments of 1980, Pub. L. No. 96-
499, Tit. IX,  917, 94 Stat. 2625) to avoid the imposition of
criminal penalties on an individual "whose conduct, while im-
proper, was inadvertent."  H.R. Rep. No. 1167, 96th Cong., 2d
Sess. 59 (1980).  The statute need not be construed to require
knowledge of illegality, however, in order to avoid the imposi-
tion of criminal sanctions on persons whose conduct is "inadver-
tent."  Rather, it is sufficient to require proof that the defen-
dant acted voluntarily and intentionally.

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7

quirement is necessary to avoid ''ensnaring uninten-
tional violators."  Pet. 18.  In Cheek, this Court noted
that, "largely due to the complexity of the tax laws,"
it had long "interpreted the statutory term `willfully'
as used in [those laws] as carving out an exception to
the traditional rule" that ignorance of the law or a
mistake of law is no defense to criminal prosecution.
498 U.S. at 200.  Petitioner cannot establish, however,
that the provision under which he was convicted
is so complex that Cheek's knowledge-of-illegality
standard was needed to prevent him from being pe-
nalized for "frank difference of opinion or innocent
errors made despite the exercise of reasonable care."
Id. at 205 (citations omitted).  Petitioner's own trial
testimony-in which he admitted knowing that ac-
ceptance of money for patient referrals is not only
"unethical" and "wrong," but "illegal," Pet, App. 3,
9-belies his attempt to portray himself as "[u]nsure
of which financial relationships are permitted [under
the anti-kickback statute] and which are not," Pet. 23.
    2.  As petitioner notes (Pet. 10-14), the Ninth Cir-
cuit has held that liability under the Medicare anti-
kickback statute requires proof that the defendant
"engage[d] in prohibited conduct with the specific
intent to disobey the law."  Hanlester Network v.
Shalala, 51 F.3d 1390, 1400 (1995).  The Hanlester
court's discussion of the anti-kickback statute's
scienter requirement focused on 42 U.S.C. 1320a-
7b(b)(2), which applies to persons who" "knowingly and
willfully offer[] or pay[]" kickbacks, rather than (as
here) Section 1320a-7b(b)(l), which applies to persons
who "knowingly and willfully solicit[] or receive[]"
kickbacks.  See 51 F.3d at 1400.  Hanlester also differs
from the instant case in that it arose in the context of

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8

an administrative debarment proceeding rather than
a criminal prosecution.  Those distinctions do not ap-
pear to have influenced the Ninth Circuit's determi-
nation that the term "willfully" should be construed
to require knowledge of illegality.  2.
    Nevertheless, further review is not warranted
here.  Because only two courts of appeals have spoken
to the issue of whether the Medicare anti-kickback
statute requires proof of knowledge of illegality, the
issue in this case would benefit from further con-
sideration in the lower courts before this Court inter-
venes.  3.  The present ease, moreover, would be an

___________________(footnotes)

    2.  Contrary to petitioner's claim (Pet. 13-14), however, the
First Circuit did not adopt a knowledge-of-illegality require-
ment in United States v. Bay State Ambulance & Hospital
Rental Service, Inc., 874 F.2d 20 (1989).  The district court in
Bay State had instructed the jury that "[w]illfully means to do
something purposely, with the intent to violate the law, to do
something purposely that law forbids."  Id. at 33.  The defen-
dants appealed, arguing that the district court had erred in
failing to give an additional instruction.  Ibid.  Reviewing for
plain error, the First Circuit characterized the instruction
given by the district court as "appropriate."  Ibid.  Read in
context, that statement meant only that the instruction given
did not prejudice the defendants-i.e., that the failure to give
the additional instruction was not reversible error.  The Bay
State court did not address the question whether a defendant
could be convicted under the anti-kickback statute without a
finding  that he knew  his conduct to be illegal.
    3.  Petitioner also notes (see Pet. 16-17) that a manual issued
in 1981 by the Health Care Financing Administration (HCFA),
an agency  within the Department of Health and Human Ser-
vices (HHS), defined the term "willfully" as follows:
    The term "willfully" means voluntarily, purposefully, de-
liberately, and intentionally as opposed to accidentally, in-
advertently, or carelessly.  It  involves actual  knowledge of

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9

inappropriate vehicle for resolving the issue.  As the
court of appeals explained, during his testimony peti-
tioner denied that he referred patients for money and
admitted that he knew such conduct to be illegal.
"That testimony effectively took mens rea out of the
case," because "if the jury disbelieved [petitioner's]
denials, he would be guilty under his own requested
instruction."  Pet. App. 9.  Because the court of
appeals correctly found that any instructional error
in this case was harmless, Carella v. California,
491 U.S. 263, 270-271 (1989) (Scalia, J., concurring in
the judgment), petitioner would not benefit even if
his contention on the meaning of the statute were
accepted.

___________________(footnotes)

    the existence of a legal obligation and the intent to evade
that obligation.

Medicare and Medicaid (CCH) "par" 13,915.17 (1993).  The court of
appeals' ruling in this case is inconsistent with the second
sentence of that definition.  The quoted portion of the manual
does not refer specifically to the anti-kickback statute, how-
ever, but is intended as a generic definition of the term
"willfully."  And the brief for the Secretary of HHS filed in
Hanslester makes clear that the agency does not currently
construe the anti-kickback statute to require knowledge of
illegality.  Gov't C.A. Br. at 38-43, No. 93-55351 (9th Cir.); cf.
National Organization for Women, Inc. v. Scheidler, 510 U.S.
249, 261 (1994) (internal Department of Justice guidelines
issued in 1981 were owed no deference when they had been
amended in relevant respects in 1984).  In any event, an
internal agency manual does not govern the construction of the
statute.  See United States v. Piervinanzi, 23 F.3d 670, 682-683
(2d Cir.), cert. denied, 513 U.S. 900, 904 (1994).

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CONCLUSION

    The petition for a writ of certiorari should be 
denied.

Respectfully submitted.

WALTER DELLINGER
Acting Solicitor General

JOHN C. KEENEY
Acting Assistant Attorney
General

VICKI S. MARANI
Attorney

MAY 1997