cases to be submitted today on oral argument we'll hear the first two and then take a brief recess we're finishing the day's docket and we begin with united states versus carl mr mar please the court as the court no doubt noticed tom a cardinal is a very unlikely criminal defendant is a sixty five year old registered nurse with no juvenile convictions no adult convictions he was happily married is happily married has three grown children and had no financial difficulties at least until the indictment in this case was returned and he was in fact on the verge of retiring and it's hard to imagine a less likely prosecution the u s attorney in the western district indicted only one person and that one person was someone who had no prior involvement with gloria or vandar him and this was someone who had one hundred you doubt in the mind of a reasonable juror and that is the point what is completely missing from this case is any evidence that tom mcardle had the specific intent required to violate the anti kickback statute in fact the evidence at this trial was such that he took every step that he possibly could to comply with the law the anti kickback statute as this court has observed on any number of occasions is a very unusual statute and every one every court that has ever observed this statute knows that it's a very unusual statute in fact the are you saying he didn't know about the anti kickback law are you just saying he didn't know he was violating it he didn't know that he was violating the law and the n t kickback statute starts out with a requirement that any violation of the statute has to be knowing and willful and that imposes the specific requirement under the law under the language of this court for there to be a knowing and willful violation is that you intend to specifically intend to do that which the law for bit in the manual explicitly say you why isn't what we have here with the mother and the son because the the for the under the n t kickback statute to violate the any kickback statute you have to set out to to to basically circumvent it it then create a a series of safe harbors and those safe harbors are are very unusual in american law in that what they do is that they immunize you against prosecution for violating the statute the way it right it reads is that if you comply with these provisions that is not a violation of the law it's not that you even intend to violate the law it's that that pure and simple is not a violation of the law it creates as any number of commentators have recognized complete immunity from prosecution it's not that it's an affirmative defense on the jury was instructed on that the jury was also given the willfulness instruction that said instruction eighteen they had to find that he acted with bad purpose either to disobey or disregard the law so they're instructed on that as a just come down to a factual sufficien factual sufficiency issue and i recognize that the jury instruction issue in this case was not raised in the court below i did not try to case had i you know but that's speculation but the problem is that we have a jury instruction in this case regarding the affirmative defense that does not take into consideration in any way what happens if you attempt to comply with the safe harbor provision of the n t kickback statute and you don't make it in other words there are seven requirements of the jury was told the defendant's actions are exempted from criminal liability and therefore he is not guilty only if the defendant has shown by a preponderance of the evidence that each of the following seven elements are true in other words the defendant has to come forward and prove all seven elements to meet the safe harbor but what happens if you only meet one or two of the requirements can a jury at that point find that that creates a reasonable doubt absolutely but it's never told that it's never told that if you attempt to complete your saying if you only comply with two of the seven aspects of the affirmative defense that you've established to from one of defense you know what i'm suggesting is that that can create a reasonable doubt and the jury has to be instructed that if you attempt to comply with the safe harbor which after all is is not just an affirmative defense it's a complete defense because it provides you with immunity if you attempt to comply with the safe harbor which in turn affirmative defense in a complete defense i mean when i say complete different here they're saying it provides if you prove self defense in a shooting that's a complete defense i guess i don't know her so i don't understand what distinction you're drawing here the distinction i'm trying to draw your honor is that what this statute actually provides is immunity not just an affirmative defense if you comply with all seven requirements of a safe harbor it was congress intent to provide you with immunity from prosecution not to give you a defens trial but to say you can't prosecute this man because he's comply or this woman because they have complied with the same thing i preach but you didn't move for a pretrial dismissal or anything you know you're saying you did shouldn't even gone to trial because of us know what i'm saying is that ultimately his jury should have been instructed that a showing that attempted compliance with a safe harbor in and of itself can create a reasonable doubt and a criminal case what the jury here was prevent presented with is essentially an all or nothing situation and that's what they're told the defendant actions are exempted from criminal liability and therefore he is not guilty only only if he has shown by preponderance of the evidence that each of the following things are true and so what the jury is told is if he doesn't make all seven you've got to find him guilty what case the you have or what precedent that supports your position that if you comply to you when  i do not your honor and that's part of the problem this is an unexplored area of this particular intersection between the government's burden of proof that a criminal trial the safe harbors created by the end to kickback statute under by congress which we were designed because if you ask yourself what is the difference between a community marketer or a community educator who works for the corporation who's out  basically trying to generate referrals to to a business to the hospital and gloria heavens the other ones down to man over but but she's paid a flat fee regardless of the number of not allowed to be paid under the employee manual no if she was under the under under the personal services exemption to the eighty kickback statute and so if it were no education services these other employees are going out in the community saying here's what our hospital does there was none of that with the people that he was paying that led to this prosecution right where they were just sending patients they want going out in the community and educating people about the hospital  on the record we have no idea what they were doing but i'm assuming that because of the contract which said they were doing that was false that they were not fulfilling the terms of the contract what they were doing is sending patients pure and simple but they were doing it on a per patient basis they were they were paid a flat fee regardless of the number of patients that came well but it's a legal even it doesn't be perp a shit as long as the payment is based on an estimate of the number of patients and there was evidence here that they estimated what twelve to fifteen a estimate was that i can send you twelve to fifteen patients a month but the the number actually varied from nine to nineteen over time and it was as few as nine and then it was as many as nineteen and i understand that this issue was not developed in the court below in terms of the the interplay in the intersection between reasonable doubt affirmative defenses and what does the defendant have to do under the any kickback statute but what i'm suggesting is that we have a jury here in a case that was filled with in disha of innocence and yet it receives an instruction that basically said well he didn't prove the affirmative defense find him guilty and that's why i'm suggesting to the court as an explanation as to why the reasonable doubt that permeates this case was not recognized in the court below the district so the jury wasn't instructed only usual  standard for reasonable doubt the jury was instructed on the usual standard for reasonable doubt but then it gets this jury instruction number twenty one which talks about the interplay between reasonable doubt and the affirmative defense and that's when it's told well if he doesn't show all seven elements of the affirmative defense you can find him not guilty and that's that's the constitutional problem underlying this and that's why i'm saying it's better to look at the question of reasonable doubt in this case and whether a to reasonable juror would have had a reasonable doubt as to mr mcardle stuff x and i want what's the actual claim you want us to throw out the verdict based on what happened insufficient evidence that the evidence was such the lack of governance was such regarding mr mcardle is intent that a reasonable juror necessarily would have had to have a doubt that he intended to specifically violate the law when he acted as he did in this case and come back on the jury and firm tell from his actions of juror caylee that but there was nothing to them for the criminals of intent because all of his actions this is a man who discussed his crime with all of this a contract that you didn't describe what was actually happening a contract with the person who wasn't the actual person who was on the other side of the transaction why why isn't that the suggestion of unlawfulness you say  mean unlawful is could be inferred from that but i think it's equally consistent with an innocent motive i think there's an equally innocent explanation in both of those instances let me turn to the sentencing issue in this case and i know judge smith is the author of landers which is the key opinion in this case and what we had here at sentencing is mr mcardle was sentenced to twenty six months imprisonment that was a downward variance from the guidelines in this case forty one to fifteen months those guidelines were based exclusively on the amount of medicare billings in this case and that was over a million dollars and so there was an increase of fourteen levels the question at sentencing was who has the burden of proof with showing what and under application note six to guideline to be two point four it says well what you have to use are the next benefits and as judge smith pointed out in landers what net benefit means is you take the total amount of the contract with the sums paid deduct the cost of goods sold if you cannot reasonably compute the net benefits you use the amount of the bribes paid both from the district judge and i assumed that th the landers put the burden of proof on the defendant to come forward and show that there were costs in other words that there were things that have to be deducted from that benefit and s as i understand  care of that patient and then that benefit would only be a dollars if that's correct your honor and so what we said well both from this million dollar figure you have to deduct the net benefits from that and what the guidelines tell you in the application no tells you is that if there is no reasonable method of calculating the that benefit that you have to use the amount of the bribes and what i said was in this particular case we have showed that there were in fact direct costs associated the owner of p p h mr logan testified that he testified as to all of these direct costs and that what he said was telling he said but we don't keep track of it in that way we don't basically isolate costs on a per patient basis that's not how we keep track of our books and i said to the judge at that point fine we can there was a mistake with the loss calculation what do you do with the fact that the district court it was substantial downward variance and said even if i was wrong about the last calculation this is the sentence i would impose looking at the holistic sentencing factors there are two responses to that your honor of the first is that the judge could not impose this sentence if i'm correct about the guidelines because the the sentencing range is ten to sixteen months and this would be an upward departure and so she would have had to upwardly depart and there's no basis in the record for an up or departure in this case the second thing is this court has said repeatedly that a judge is statement about what he or she would have done and where the guidelines to come out differently is not to be considered in terms of a rebound and i can provide the court with i can't recall the name of those decisions right off the hit but i'll provide the court with those in a supplemental brief that the court is not to consider that type of statement in determining whether it sure is tons of cases where we considered it instead it's armless it has to meet certain clarity but i know there are tons of cases but you said you aren't the trial counsel but then you say you are arguing  facts and circumstances that the court has seen in this matter and this is the court that oversaw the trial that had the case assigned to it the entire time was extremely familiar with the case and after judging all of the facts and circumstances if ill that the twenty six month sentence was appropriate and of course it is a sentence that the court could have imposed even had the guideline range calculated out lower it would not have been a departure it didn't need any special reasons it was a variance and it was what she thought was appropriate after considering a change in this in his in guidelines is responsible for proving that a man and the error if if there was error in this case in the court relied on landers and it was invited by the defense counsel i know he says in his brief that  no we made all these objections we said all these things prior to getting to court but once they got to court and once they were standing at the podium in front of judge foote he said later says the burden is on me and i'm prepared to carry it forward so if in fact the judge was wrong to require them to prove up the amount of the offset then that error was invited by the defendant but was there an objection to the p s r i know you said there was not want to court there was an objection the jury was never told they couldn't consider all of this evidence mr larson continues that this case was quote filled with indicia of innocence close quote what he said just a few minutes ago he must have been reading a different record  his client didn't testify there were no other witnesses who testified as to any innocent reason behind the actions he took instead what the jury heard was that he contracted with a woman in alabama to send two states away to send fifty two up to fifteen patients a month in exchange for twenty five hundred dollars no community education services no pins being put out in doctors offices to remind the doctors a few have a patient who might benefit from the care or hospital offers remember to think of us no people going out and and educating the nursing home staff or the as i said the doctor's office staff or anybody about the services that are provided just straight you send me this money i'm sorry some of these patients and i'll send you this money or those payments reflected in the house and over no evidence of that in the record honor but the payments did go to vander humans and that was at mrs gloria humans request however when after she made that request mr larson told her sorry mr ricardo told her that he needed to have a written contract with vander him and so that the payments going out to him as document in the hospital records would look legit and that was the exact word that mrs humans testif that mr mcardle use if that isn't in dishes that he's trying to hide this and there's fraud and i don't know what is additionally we had as far as his knowledge in the wilfulness of his actions the employee handbook we the directors of social services and nursing became concerned because mrs higgins patients all same or at least a significant number of them seem to them to be faking their symptoms and they were afraid that these patien were falsifying their condition in order to collect on a pay per day hospital policy they went and presented that's mr ricardo they testified they did that multiple times and mr mcardle blew him off he did not care they was always just get her to send us more people the instruction in the affirmative defense isn't accurate though right because that and i think their complaint about it is it says if you can't prove the affirmative defen reasonable doubt and they as i said they want told that they couldn't consider those things in mitigation or to decide that he did not have the requisite intent if they heard any evidence of it that i submit this record there's simply no evidence or little evidence that he was trying to comply with any safe harbor i think the judge was very generous in giving the instruction based on the record  as far as the safe harbor trying to comply with it he wasn't the contract was between the hospital and vander him and spender him and provided no services glory him instead and although the safe harbor provision doesn't explicitly say the contract has to be with the right person it says that the contract has to be in writing between the parties and mr hammond wasn't even a party to the agreement it was with his mother the safe harbor provision also requires that accurately explain the services being provided in this case it didn't there were no community education services provided by either of the him and and it also requires that payment not be based on the volume of referrals and it was so i would also point out the inconsistency of well never mind i'm sorry  that's been on her a long time the twenty five hundred dollars a month for free for that forty forty four thousand or i'm sorry forty thousand forty two five i think maybe a little over a year  h to address something that the government mentioned about why the contract was inventor him and name if the court would refer to the record at page six ninety one gloria him and was the one who requested that it be put in vanderhoof day because she said it would represent a conflict of interest for her since she was employed full time by hollywood pavillion mr mcardle simply accepted that statement and that was precisely what gloria him and vendor him instead done at stonewall we have to remember that what we're talking about probably didn't consume more than ten to fifteen minutes of everybody's time in decided they had one very brief meeting there with the staff do you know gloria emmons yeah i do she used to send us patients over at stonewall is she good yeah well can she can she refer patients well we can hire as a community marketer like we already have two of here only ours are full time employees she'll just be a contract employee but it wasn't one of those let's sit down and figure out how to avoid the anti kickback statute that's not what occurred in this case to respond to your question judge cost of regarding the twenty six month sentence and the judge's statement on this supreme court in molino martinez addressing a decision out of this court said quote when a defendant is sentenced under a in correct guidelines range whether or not the defendant's ultimate sentence falls within the correct range the error itself can and most often will be sufficient to show a reasonable probability of a different outcome absent the error and that court reversed this court's third print the third prong of the old it wasn't a case where the co alternatively said even if i'm wrong about the guidelines of looked at all the factors and this is the reasonable sentence but in this case that would require an upward departure and there's nary and so i think well actually here would have to be a  sentencing issue i didn't invite the error i was simply the court and i read landers precisely the same way if following the law of this court is inviting error then then i don't know what to do what happened and that we thought ok i have the burden of showing that there are direct costs i showed that there were direct costs i then took at the next step and i showed but we can't determine the amount of those direct costs because that's not how p p h kept its books and records and so when you can't determine the amount of the direct costs landers tells us and application notes six tells us then you use the amount of the brides that alternative prong exists in application notes six for a reason it exist for precisely situations like this a defendant and sentencing doesn't have has but one right you can issue subpoenas to have people come in i didn't have unfettered access to the books and records of p p h to try to do a cost estimate an indigent defendant isn't going to have the ability to subpoena books and records and then hire a forensic accountant to try to determine a per cost per patient cost basis for determining what the net benefits were so that there was there was nothing in the hospital record as to any of these patients as to direct cautions to caution medication of disposable equipment or other things like that there were no nothing shown on their account of her bill mr william logan a drafting valve they they just built apparently they built patients they have a a per day charge and then they have medications charges i guess that are attributable to a specific patient but all of the other costs like like the overhead beds staff employees things like that it's not done on the per patient basis and that's mr locust testimony into the record and i want to just one more question  what what do you say the correct guideline ranges pretty gardyn range if we use the figure of forty thousand dollars which is actually what exhibit number forty one for the government shows that the i believe it's forty one shows that  that the amount of the bride's paid work that gives you a guideline total guidelines of twelve increases eight by eight plus the baby are i'm sorry to increase by four plus the base defense level of eight that gives you a guideline is range of twelve twelve produces a range of ten to sixteen months a total of its level of twelve is ten to sixteen months and we believe that that's the correct guidelines range in this case all right thank you