kathleen sullivan for dr groups and the defendant companies this case involves a novel prosecution on multiple federal fraud counts premised on the idea that there were bribes paid for the referral of workman's compensation patients in violation of california law the bribery instructions were crucial to the case and they were fatally erroneous all four favorably is i guess the question for us if erroneous my question was whether they were harmless beyond a reasonable doubt because of the overwhelming evidence and correct your honor and let me explain why the error was not harmless if i could st describe the error the error was the failure to require that a bribe be an exchange of something of value in exchange for an unlawful act now why did you not could you could i interrupt you for a moment because you said this was a novel prosecution  so could you explain to me could you explain simply how it worked and why it is so novel yes your honor the reason is that workman's compensation statutes are different from medicare medicaid chip statutes they have their own statutory structure under california law and the most important thing i have to say to you today and in answer to judge graders crucial question is the instructions here were not harmless because the structure of workman's compensation law in california novelty comes from the government's ignoring the fact that there can be lawful payments by for example doctor groups the radiologist to for example the martinez's the alleged cappers marketers  b of the business and professions code to permit exactly the kind of payment dr drew's alleged in his defense he was paying now your honor here's the novelty if it was legal for dr bruce to pay the marketers to solicit dr wrigglers description of the patient's referral of the patients for the m r i then it was crucial for the court to distinguish to the jury unlawful payments from lawful payments and judge so that the martinez's could solicit patient referrals from doctor regular as long as it was that martinez was acting as a kind of an agent for both sides so you know that's exactly right and that's legal under california workman's compensation on that's what the court missed by failing to distinguish lawful from unlawful acts and your honor that's the key to the fatal part well the purpose of workers comp laws is to provide compensation for people who are injured on the job that's right your so the reason for permitting the solicit payment for solicitation of the people who have been injured is what system wants to have is patient referrals no no radiologist is the initial prescribing doctor the prescribing doctor here was doctor regular doctor regular season patient he may not have the fish and access to information about all the available radiologist to offer the liver receiver except any rebate re from commission preference patronage to madame discount or other consideration whether in the form of money or otherwise as compensation or inducement for referred paid anything to dr regard there's no evidence of payment from grues to rigor anywhere in the record and point to your honor there is no evidence that dr drew's ever knew before or after rigor became a government cooperate or that martinez's were paying kickbacks from the e r three hundred and seventy nine dollars is alex martinez's admission on exactly that point he said only regular andrew ben and alex martinez knew about the payment so they backed up to this your honor is which says except as otherwise permitted by law anyone who offers a kickback as compensation for referring a patient is it is unlawful if that crucial clause your honor that gets us to six  by section six hundred and fifty b of the labor of the business and professional code in simple language your honor what the problem here is bribes are at the core of the caves and the instructions never said a bribe has to be in exchange for an unlawful act four sets  something in exchange for one or more acts by dr regular in his capacity as a physician but just as in mcconnell governor mcconnell couldn't be found guilty according to the supreme court for taking money for anything he did in his course customary acts as a public official it had to be for an official act so to hear it should have been specified that there could be no payment wriggler by on the martinez's for unlawful activity and i know it's a little confusing but remember there is no evidence cruise never paid regular and there's no evidence produced ever knew that the martinez's ever paid reg'lar which they only did after the f b i told rigor to hit the mob there is no therefore the key issue in the case for the jury to decide but it wasn't properly instructed to do so is was the flow of payments from groups to the martinez's lawful or unlawful and without an instruction that said it had to be for an unlawful they didn't have a chance to buy the theory of the defense the travel act instruction is even not harmless beyond a reasonable doubt such graber because they permitted the jury to believe every word dr drew said and still convict him because they were told any payment that flows toward  unlawful and that is incorrect as a matter of law and i don't want to lose my chance to discover the constructive amendment if there are no further questions on the bribery if you will i still do it with the reason that it's lawful to pay your agent to get the to to get the doctors to refer you the patients is what what is the california system trying to accomplish is it trying to make sure that those patients get to the specialized services or what it was as a special amendment it's explained and is more that the legislature amended the statute in response to a case that had stopped these intermediaries from operating and the legislature thought for some good  mean it was efficient to have the intermediaries have a market and go betweens so that workers could get to doctors and the doctors could get them service is no obvious reason ok runner it's california law and it wasn't it wasn't the instruction six  submit that there was a classic constructive amendment here under ship c and under ward this was a case in which the government chose to charge the case with forty five dollars very specific counts naming very specific fraudulent statements allege fraudulent statements thirty nine dollars of them went to trial and the district court did not charge a single one of the the thirty times specific fact patterns to the jury twenty nine dollars of those twenty eight of those  twenty nine counts that dr grooved had made that statement or that had it was false or that he knew it was false not made now similarly as to the other eleven statements the court did not instruct the jury as to any of the content of the other eleven alleged counts that went to the jury that is a constructive amendment you may say well wasn't it ok that there was sort of back around fraud and the answer is no and i'd like to point the court to two specific passages in the district court instructions which i think reveal the construct of amendment the district court said the jury could find fraud for a variety of reasons that's excerpts of record five thousand nine hundred and sixty five pages later excerpts of record six hundred and four the district court said it doesn't matter if the mailed material was false and when the government chooses to say the gravity of the offense is sending out a false statement that i complied with one hundred and thirty nine three and that when it wasn't true we say it was finding workman's comp a government health care program and presuming all last of all billings were intended loss even if you disagree with that dr bruce plainly rebutted the presumption that he any presumption that he intended there was eighty percent there's a fee cap schedule only eighty percent of the claims would be paid and all the ninety percent of value and last your honor back to the ok there was a legal error on sentencing there this case the court treated the  as if it had no fair market value that was legal or if there was no evidence that the services here were not medically necessary no evidence all of the evidence was that they were medically necessary i commend the court's attention to and twenty seven dr reg'lar the government's own cooperator said everything was medically necessary i commend the court's attention to e r for two hundred and three were dr altman also a government witness said all the procedures were medically necessary this case should not have been sentenced as if every as if the m r i were not performed at all i respectfully request reserving the right thank you you have a little over a minute good money may it please the court mccovey fox the united states these jury instructions when read as a whole and in context of this case made it impossible for the jury to convict dr groups if it had concluded that he was paying the martinez's for legitimate marketing services the only way that the jury could have convicted dr groups is this if they concluded as the great weight of the evidence showed that dr groups knew that when he was paying those making those payments he was paying the martinez's for those regular referrals if you look at the honest services mail fraud instruction which is that you are one hundred and forty four dollars this the alleged scheme or plan was to deprive patients of their right to talk to regulars on a services the payment of legitimate marketing fees to the martinez's would not have deprived those patients of that right to honest services and that's why the bribery deficient we see the bribery definition we submit is also sufficient because it works it's not just quid pro quo in isolation it's a quid pro quo that is the intent to give dr regler something of value for one or more acts by dr regular in his capacity as a physician payments to the martinez's for legitimate marketing would not have satisfied that definition legitimate marketing is want it is it is payments to a marketer so alex martinez actually testified what he viewed marketing as he said we weren't doing this would be a good place to and his patient and made that decision in his independent judgment he could ask the martinez it as gru threat presented as to help with scheduling and other things but the fundamental idea of marketing is that they're working as d threat presented as they're not working as doctor wrigley's representatives and what they told the jury over and over again is that we were here to service one doctor and one doctor only meaning alex and ruben martinez they were there even they managed question from the evidence that the jury heard that these payments were not for legitimate marketing so there is no risk that the jury could have convicted dr groups of any of these counts had they believed his story but the evidence showed but the jur unanimous verdict and everything showed that the jury didn't believe his testimony and neither did the district court when the district court said that it believed that he had perjured himself i have a question about the sentencing issue and that is that thing the court did not reduce the amount of loss by the fair market value of services that were medically necessary that were provided and if it seemed to me relatively clear that it at least some of the services were medically necessary even was testimony to that effect from doctor regularly and i think possibly others since well then at least you know i didn't send someone from an medically necessary well that the pressure and if it's an incentive but it's an incentive that if it's not carried out at least it's clear that at least to some people these were medically necessary procedures and if you felt pressured to send someone to and stand before a medically necessary thing it doesn't make it not necessary and indeed dr reg'lar testified that everything was medically necessary  did so why did the trial judge not take that into consideration she did and she said that it is just and let me follow up i'm sorry is this a government health program we believe that it is is it funded federally at all it doesn't need to be funded federally it needs to be funded by government by state government qualifies and that the california and government the taxpayers of california fund this program in a variety of ways  that's what led to the to the district court playing the presumption that this with the amount of loss though as to the offset the only question then is who bears the burden of proving that no offset for legitimate services should be applied and the district court found that applying the presumption that dr bruce had not proven that enough that should be replied should be applied that the other reason that she gave was that the what what the insurance companies pay for what these patients expected were services that were rendered in dr regulars professional judgment and in line with his fiduciary duty and it was a violation of that duty a violation of his professional judgment to send patients to a provider because  calculation is reviewed for clear error and i don't really write an article or in that well that's i'm just saying speaking only for myself it seems quite illogical to me and also doesn't really take account of the where they were referring for multiple m r i s and i'd be happy to provide i don't have the citation i'd be happy to provide it but where they were standing referrals for multiple m r i so they were going to get a higher kickback feel if they did it over consecutive days as opposed to having the patient go and get all her is in one day so yes maybe she needed all of those m arise but she had to then go twice in order to there but that has to do with the amount of credit it seems to me not whether credit is that is the fair market value may be vastly reduced because of what you say but it still doesn't tell me why there shouldn't be any offset and the other point i would make i understand the court's concern as the district court applied the  presumption applied and so it was dr groups burden to show that offset and his view was this is a no q near the last case what they wrote in their sentencing memorandum as he didn't commit a crime he committed no fraud he did nothing wrong and there's stuff was not metal medically necessary there there was little testimony about it there were there was i believe that julian garcia testified that there would be times where they were for two limbs where only one was necessary but then one of the providers also testified that in his practice if he thought one wasn't necessary he wouldn't provide it so i fully i fully admit that there is not evidence that these were medically necessary and that wasn't the court's reasoning in the court's reasoning is that she couldn't tell what was legitimate and what was not because the whole purpose of the theme was to get as much referrals to doctors correct fact i don't disagree with you about that but the problem i have is with the guidelines seems to require that if it was medically necessary that the fair market value be harsh set and that seems to me to have nothing to do with which physician they were sent to and of course because it's in the sentencing guidelines i and figure out how this possibly be off that given the nature of the fraud well there's there's a schedule of this there is but that's assuming that every that that he was billing at a higher amount yet who would get credit for the fees so if we were reducing the amount just to the few schedule that still doesn't account for your for the courts concern that these are medically necessary i think that if the court's view is that  any procedures that were medically necessary there for a result in no loss i think we'd have to we have to somehow just aggregate which procedures were medically necessary and which weren't and that i mean that would require i guess going back to providers i'm not sure  who would have the burden of proof here well i think that would depend on if it's a government health care program and the district court applied that guideline and found that those are the presumption with matt and therefore it was the defendant's  by employers it's a it's a combined taxpayers foot some of the bell employers and sure but some of the bell but that the administration of it's all the agencies that ensure compliance that deal with  the lean process of who gets paid what that's all state administrators and they're hearing officers that determine the amounts and their employees by the state ye i think we've covered everything but i'd be happy to answer any further questions or something i don't believe we have any additional lives thank you very much is some evidence on both sides which i think there is there was one person who testified that something seemed unnecessary and dr regular said no if it is the defendant's burden did he simply for you fail to meet it because he didn't noonan's words for the court the burden as always is on the government to establish what services were not medically necessary well true if that's a government program to yes because the burden shift is about no three f the burden shift is about intended loss and this court's decision in united states against popof says if it's a government program which again judge watson it most clearly is not it is not a government funded program at all it is entirely employer funded including  california when it's an employer but your honor it pop off allows a shift unintended loss that refers to no three f three is the relevant provision that says that you have to take into account have to take into account as you said correctly judge testimony we corrected it in the blue in the graybar if dr altman said sometimes we were sent to patients and we didn't think the tests were met medically necessary and the government failed to tell you the next sentence on four o three and then we did not perform them there was zero evidence of medically unnecessary procedures but it was the government's burden they failed to meet it you must send it back for these thank you counselor thank you just argued is submitted we appreciate the arguments of both coun