this morning is to convince the court that this case is a little bit different than most of them it's an argument that's often made sufficiency but this case is different and it's different for three reasons one of those reasons relates to the nature of the charges in the case and the other two relate to the character of the evidence trial figuring out what dark what hospitals kind of business arrangements hospitals can do with doctors is among the most difficult tasks in the law also it's an extremely complicated regulatory framework is the treatise that we cited in our reply brief indicates it's a very quick statute and a lot of commentary a lot of regulations and safe harbors and whenever you see safe harbors that's a sign of something that's there something you need to be safe from there's a great deal of danger in anti kickback cases that you're going to catch somebody who is trying to go as far maybe trying to go as far as he can but not too far and he's not going to know where the line is there are whole practice groups and law firms full of lawyers trying to figure out where the line is and you go to these conferences they don't agree with each other so it's very murky to start the cho mr pathak you could say much the same thing about any trust you know there's a whole cottage industry of people who give any trust advice to their clients and tell them you can do this when you go to your trade association meeting or that in there are safe harbors in areas any trust guidelines and nonetheless some any trust violations are per se violations they're pursued criminal try to figure out where to look at a hospital executive crying to figure out what you can and can't do their job so isn't a lens important obviously you know i would never say this was a case in which the and it seems to me you know the government has put together a fair amount of evidence indicating that mr novak was aware that these were the forbidden kinds of referrals payments for referrals as it were not fair market value services or any of the other you know the lease all these other things are going on well your honor i am not sure if you're asking me when you say he was aware there's a lot of there's a pretty fair amount of evidence  was aware that you're not supposed to do things like this although right now i think and it was happening and they know you're honest your honor i don't think there is because and again this gets me to my second point about why this case is different this is a case this is not a case about white on loads full of cash one of the cooperating witnesses for the government testified in this case that he took your credit somewhere else and they left the money at it cash wise dr weiss yes so that happens this is a case about contracts and again this is another field filter or lens that you look through this is a case where people did work and the issue here is did they do enough that's a very tough standard to apply  so the argument they made to the jury is they didn't do enough yet and it's important to emphasize that the record in this case reflects that every doctor who had a contract did some of the work and the question  it yes i mean maybe the doctors did something but the the point is i think that if with that something wasn't important enough to i mean you know if they're doing ten percent of the pretty ninety percent is is the kickback right well there was evidence that some of the some of the there was actually testimony all over the place about your talk about the physician's assistants about whether they did ninety percent or different percentages of their work for doctors which would be patients but what mr novak was saying on the tapes about that is they've got to be seeing other doctors patients they can't just work for him that's that's a tape of a guy telling people they have to comply with the law if if they're just working for him it's illegal the government takes that that tape and says well he knows the law so he must be violating it that's their argument here but what about his comment at one point you know if i'm going down you're going down to again you have to take a look at context that's a conversation where they're talking about an audit it seems like a he's talking about an audit and they're saying and the hospital has been admonished by this group that's auditing them before and so he say you've got to make sure people keep their records because the auditors are saying they're not keeping records and he said we're going to get in trouble for this and so again you're talking you have conversations where somebody is trying to get people you know people's kosher which really can't be interpreted as as in koper make it legal talk to outside counsel all by itself i certainly know which is to keep it kosher that can't possibly be a problem that you know this was a in  context kind of remark i think the government's position was well they're all yes there are your honor and i would urge you to take a look at context when you look at those records because when mr gottlieb the one remarked t number of ways but look at the context when he's having a conversation with somebody about are we doing our jobs are people doing the work they're supposed to be doing is somebody going to them a clip if not we have to correct that those are those are not the kind of conversations you normally have in this kind of case well except i wonder if it is because look if they are as the jury found engaged in the kickbacks and then impermissible referrals they don't want to just recordings made between almost all of which the main ones are made between mr novak and his number two guy and suppose a coconspirator is no reason perot in any pro and there's no reason for mr novak to talk that way if he's talking about concealing if you means if he doesn't mean follow the law he doesn't he's not going to say follow what he's going to say make sure this looks good the kind of conversations that you would see if he was concealing with there's never been any hint in this case that m outside consultant for the house we lived there for about three and a half years a very discreet period of time he had no ownership interest in the hospital he had no interest in the profits of the hospital and with respect to the evidence in this case regarding the transaction contracts the agreements that mr nagle board was involved in the evidence is sorely lacking as to any intent to do anything improper much less to willfully violate the and i kicked back statute so you don't have any of the here mark says mr pataki said throughout this but in particular with respect to the contracts and agreements mr nagle court was involved with all those contracts are documented all those contracts with doctors the work call for was actually done it was actually done and i'm happy to talk about any of those contracts the ones with dr machinery to teach residents the government in its response says most sure it did very little if anything with respect to the residents well other than conducting five hundred eighty five surgeries with  started his consulting with that hospital the only thing clarence nagel ford did was reduce the amount paid for that lease from five thousand to two thousand that's not the act of a coconspirator it was the act of somebody who was in the in the role of operating officer of the company recognizing that the hospital and this is undisputed evidence the hospital was using the space that dr may's office less frequently than it had at the outset of that lease and he reduces that amount there was no evidence in the record that dr may was every significant source of referrals to the hospital for anything in any event there are zero tapes no tapes involving clarence nagel he was gone over a year before any of these tapes were made so you don't have anything tory on any of the tapes with respect to clarence nagel for work out of his role in discussing with outside counsel this opinion letter they were after the government says that he in particular mr novak as well was responsible for giving misleading information to know yet in the end you know this is always puzzled me that the issue of giving misleading information at trial the government's  the misleading information that mr nagle work gave to attorney the ball was this that he said in one of his emails we can afford to hire a ph the physician's assistant full time and that's why we want to do this employee sharing arrangement attorney well and this was at a time that they actually had a couple of full time that's right on the staff that's right but attorney the boy was asked directly does it matter whether they could afford or not afford a physician's assistant full time and she said irrelevant entirely irrelevant  opinion the fact is mr nader who spent seven months in the discussions and not constant because internally but was occupied with other things and you see the iterations of her opinions in the exhibits but her opinion never changed there is nothing improper about having this type of shared employment relationship and it but it seems that the employment relationship and it's a complex record so you know trying to keep it all straight that one of the problems was that these people  sensually potentially double dipping if the fire was working for the hospital and being paid by the hospital and the physician was at the same time able to bill medicare medicaid here was here was the testimony about that a let's share the employment they did that doctor at the end going in the idea was about a seventy five twenty five split seventy thirty seventy five twenty five in terms of time and in terms of salary and that's what they did in fact they had joan will go and she testified about this they had on the bow do some fair market value research on what the the appropriate salary would be for a physician's assistant inside the hospital versus outside the hospital john about testifying outside the hospital a physician's assistant that time probably was about sixty five thousand inside a hospital about one hundred thousand they divided the salary fairly and appropriately joy and honest work outside the hospital for dr who when she worked inside the hospital she worked for all doctors she saw all patients and i'll tell you the only tape the only tape admitted into evidence in this case that had any real direct evidence about what was and clarence made over its mind was a defense exhibit the government didn't play  way you know that when you put your head on who you say you know could the jury have concluded that mr nagle four was aware that the kickbacks were going on that the paid referrals i guess as you call them were going on there seems to be evidence that he was aware of this and that you know there is there is no evidence that he was aware that anything was improper in fact the only evidence that the government relies on is the fact that there is a financial relationship ok so so he's deeply involved all of these things he's talking to novak all the time well there was an evidence about that really and the fact is as i said with respect to each of the contracts he's involved in the people did the work surgeries over the course of a few years with resins which is which is required by the c p a they meet in order for the residents to become doctors mean that is essential work and you have to have cases and you have to have churches and procedures so to to attack doctor  sure is contract i would love for the court to look into what the evidence was about what dr machinery did you know how valuable that was i want to touch i don't want to say one minute you can save or not on withdrawal  unequivocally he never had any contact whatsoever with secret or do anything about covering him from going forward i'm sorry did he do anything about stopping it from going forward well so just to name the damage yeah i guess the answer is to the when you abandon any future involvement and when you receive no future benefits that constitutes withdrawal that is disavowal of the conspiracy all right you have you have your minute thank you very much  morning your honour's may it please the court my name is matthew kutcher on behalf of the united states the jury's verdict in this case were supported by abundant evidence which prove the defendants knowingly and willfully cause secret heart to pay doctors for patients furloughs they set up dozens of arrangements that appeared to be legitimate but in reality were mechanisms to pay doctors for patients that evidence included testimonies of doctors themselves who received the quid pro quo payments they talked about their arrangements and the contracts that were used to cover them the defendant the test the evidence also included the defendant's own statements about these arrangements for example in the record board told the doctor his name was sort of shot that in exchange for a physician's assistant he would need to provide five to ten patients per month to sacred heart the evidence also included recordings  doctors came to mr perot seeking payment and mr novak in seeking payment for their checks and they talked explicitly about their patient admissions and  payments so what's what's so crazy about somebody in mr novak's position head of heading the hospital talking about patient missions you would think that any hospital chief executive officer would be concerned see if the hospital is shows that he was acutely aware of admissions for these doctors the doctors that were receiving these payments so that the evidence shows that he talked about for example in a memo when he was budgeting for the hospital admissions for d it in particular or in the records he talks about doctor can dollars admissions and he needs to get them up because he was withholding the check and dr can dollar wasn't providing admissions well again even if a c is looking at particular doctors you would agree wouldn't you if there's no quid pro quo involved maybe the c e o is just monitoring what the doctors are doing absolutely your honor it but that that wasn't the only that in this case it was in step payment you know it and i think critical to the government's position here is the notion that whether it's the lease whether it's the provision of physicians services whether it's  the teaching contracts whatever the other devices were there was some reality and a lot of fiction to them i guess is your theory or that the jury could so have found and the fiction part is what that's right your honor so for example dr shah dr shah was an oncologist he had a purported contract to create a cancer screening program his testimony was that his understanding was he was being paid for and mr nader for said mr de wardes had just signed the contract and this was after a discussion where mr dr shah explicitly talked about he was looking for a place to refer his two hundred fifty patients just out that take a leap of logic is just sign it and you could imagine the implicit part of the sentence being and we'll pay you anyway which would be a problem or you could imagine the rest and sense being you know i'm sure you'll find a way you know maybe we can work this out so that you can do it maybe it won't be as hard as you think it may yet in other words you may be benign explanation has a jury supposed to have a basis for one or the other throughout and there was other evidence in the case about dr scholl's conduct that would give context to that statement so for example dr shah then testified that he didn't do much of the work that's in that contract sure he had a cancer screening fair here once in a while and fair every couple of years every couple years that's writing on it every couple of years which he spent maybe six dollars so the evidence was that he didn't do that the evidence was that he testified that he filled out fake time sheets that he put in nonsense in the time sheets that then he submitted for this and the evidence was at the end and who knows about that nowak unable for they could pull they have to know right they do and they were and this goes back to how involved mr novak was in every expense in the hospital he would review the time sheets he was the one who was signing off at he and mr nagle board and mr pale all signing off on all of these checks one was there evidence about that as novak's role that he did it just in these particular cases with these particular doctors or did was it his practice to sign off on leases and contracts for everybody the evidence was that he was signing off on on everything in the hospital when when appropriate that is when he was there he would do this when he wasn't there mr nagle board could do it but there was evidence that he was signing off on all types of contracts that is true but the evidence is also that he reviewed every expense down to he was reviewing according to one tape a twenty eight dollar expense questioning that so when he was reviewing he you know from the record in this case that he was really reviewing it and the other piece of evidence with respect to doctor shop was that when dr shah had a stroke and i think it was two thousand and eleven and he said he could no longer refer patients the payments just stopped there was no question about his cancer screening program there is no discussion about that what are we going to do about this cancer screening program program the payments stopped and that and that is consistent corroborated by other doctors dr weiss for example the same pattern and this one was where mr novak spoke directly with doctor dr weiss and the same thing happened he said he had patients he wanted to refer he they came up with a contract a teaching contract he says he testified that he didn't perform under that contract he kept the ledger of what he called the legal payments from or words in that substance from sacred heart and then when he had to close his practice that was near to the hospital and told mr novak that he would no longer be able to refer patients the payment stopped and again no discussion about what are we going to do about your teaching in the  program it was connected to the payments now if there are no further questions on the sufficiency i could turn to withdraw mr so other than taking this bonus at the time of i guess they're calling it the fire and what i did a little odd that he would go and say please fire me but anyway i guess that's what he said but other than taking this money which is just a couple of days later what else did mr unable for to let what in your one of the government's few should he have done in order to complete the act of withdrawing from the conspiracy to answer the first part of the question he did nothing he was terminated from and the only stand ready no more financial relationship with sacred heart other than cashing the of the national or thirty thousand dollars check correct her that was just three days later so after so let's say he w extending his participation through the cashing of the check understood yes so to answer question that's right that was the last financial dealing that is in the record the the record on which the district court base its finding that there was no withdrawing matter of law was the stipulation that simply said mr nader wharton's terminated from his employment and he received no financial benefit after that day he took no further action and to answer the second part of the question what could he have done in the seventh circuit there needs to be more than simply ceasing activity he needs to take some affirmative act to defeat or disavow the conspiracy if you think he had i mean short of calling your office may i assume if he had come over here to the dirksen building and had a meeting with the u s attorney that would have been enough but other than that is there anything else well he could have actually done something to stop the ongoing violations that he set in motion that he specifically set in motion so for example he could have gone in talk to dr koocher prudy and said you know what these were provided these physicians assistants these nurse practitioners these doctors in exchange for your patient referrals that has to stop or he could have you know said that to mr novak i'm expecting you to tell everybody else this must stop he needed to do some more affirmative step from the record in this case we don't know what he even said to mr novak and in that sense the end for inference that the jury could have drawn and that the district court could have drawn was that during that conversation he said good luck to you i hope you succeed in this thank you for your thirty thousand dollars check which would put him in the vallone category which is exactly the facts and below he wrote a letter mr hopper wrote a letter to the other conspirators and said good luck and the seventh circuit found that was not enough for withdrawal now i mean people say stuff like that when they leave a place of business even if they don't mean it telling you know they'll say good luck or seems pretty meaningless that is true i would think the jury can infer that taking a thirty thousand dollar check isn't a money maybe a little different so mr campbell has argued that  business conspiracies are somehow different from drug conspiracies or other kinds of conspiracies wire fraud conspiracies and business conspiracies you just have to leave it right and i and i don't believe closing the account by which that coconspirators conspiracy was able to effectuate itself to some sort of disabling act like selling the dairy farmer you know closing count that's right your honor ther defeat the conspiracy so it's a good example your honor in a drug case you can't just submit your letter of resignation right you've somehow you can start with his huge fish pardon me just saying i here that it was ok for him to say i quit and let all of these illegal payments just keep going with very payments that he set in motion so i saw no back i quit and you should stop this would not have been enough against your i know depend on how he said it but if he did say something more affirmative that yes that i do i do not believe in this and we should tell all of our folk in spirit that i don't believe in this that might be sufficient under those we well yes and and it with respect to the recordings again you know these are this is english language the jury listened to them they could understand the english language has nuance and they could listen to those recordings in context both in the context of a seven week trial with fifty seven witnesses and also in the context of the recordings themselves so for example in the recording in which  doctor x whoever it might be is it just as the hospital can't pay dollars to somebody for referrals the server says are functionally dollars their thing of value they are being for that's right without any money yes trying to go to the record shows he went for two and a half years without any money came looking for the money because mr neg aboard had promised that sacred heart would take care of him and when he comes to look for the money mr the recordings make clear t novak knows exactly what's happening here he at first says i don't know we're talking about but mr crow explains that and he says that would be inducement we can't do that and so he says mr novak says at different points in this conversation go to the outside counsel to make it legal and by that the jury could have inferred what he meant was get legal cover for this get a contract and what and what he says is the contract should be for a hospitalist not seeing dust just doctor good to put it and it should be retroactive it should offense april what is it twenty thirteen down back to twenty eleven correct your honor it's handwritten and that is exactly what happens they make a retroactive contract that that's not accurately reflect what happens and so when what happened with this arrangement and so when he said make it legal he meant or the jury could infer that he meant let's go get some legal cover for  has no further questions on that i can turn very briefly to the brassy argument that mr newdow fourth raises mr nader mort attempts to challenge the constitutionality of this court reading of the entire kickback statute that it applies when any part or purpose of a payment is made for a kickback and in in this case it's a not as applied challenge and there's really no no there there isn't much dispute at least what make a difference in this case i mean reading the government's brief gives me the impression that you are arguing that you would survive even if it were a substantial part in this case the evidence was not know that some of the jury was instructed i mean so so there's some fuzziness there but it does doesn't seem like the five percent of the contract was phony and the other ninety five percent was correct that's right your honor with respect to most of these contracts the majority of the contracts the substantial part of the contracts were for so as you thought if you thought that's what the first circuit test is and if you thought that's they were using some of the space but the evidence in the record demonstrated that they weren't using it sufficient to cover a five thousand dollars payment and that was that was their evidence of what of what medical lease space goes for in the chicago  market how do we know the five thousand is a bad price well there was an expert testimony on that but there were there was testimony about other leases other similar spaces that were people that was getting much lower rent than that the i'm in the five have been there two thousand  nagle four pulled it down to is that more reasonable well again it is it with respect to that the record is mr nadler pulled that down at exactly the same time that he provided a physician's assistant to dr may so there was some question about whether the amount that sacred heart was paying for that space changed at all and in fact what happened was as admission as dr mays and referrals went down  happened that could be an inference that the jury could have taken from that but the other inference could be that that they were tying the payments to the amount of referrals and the evidence in the record was that they actually reviewed  may's referral levels when they decided to withdraw withdraw the physician's assistant and so there was a reasonable inference that they were connecting that it could be as as much of an inference as any other there but it but we think the most reasonable inference would have been that he that he was connecting those that are that mr nader bork was connecting those two things amazing to me as somebody who's been on both sides of the tape cases in this district in this district in the circuit for a long time that these tapes were played without explanation so that the jury could decide what they meant that's not the way it's done and that's that's the only way you can do it i was involved in cases on both sides and the idea is you put a witness on to say when the guy says make it legal he doesn't really mean it can mean something else the government says that's the way mr novak talk but there's no evidence for that but couldn't the jury have taken that as an item though and then looked at you know what was actually happening and looked at the statements from the doctors and look to the first well there are no there's no testimony from any doctor that mr novak ever talked to them about bringing in patients if there's just that doesn't exist take a look at the example mr cutter it is that they have believed mr now that doesn't know that this is what's happening a person who is you know let's just say a careful manager of his hospital well bear in mind your honor mr novak can be as you suggested keenly interested in the census he can be keenly interested in referrals under the mcclatchy case from the tenth circuit he can hope for them he can expect that  just can't make a deal so the fact that he might be talking about them even in the context of a doctor that he might say and i don't think there's tape like this in the record but even if you know it even that that he might say you know if we hire this doctor to do this job maybe we'll bring context the context for the backdating of the contract is that it was done after mr novak reviewed it by the hospital's outside counsel in consultation with mr perot so again the question is what did mr novak know thank the government over and over in this case is confusing motive with intent and that's that goes beyond what jackson's versus virginia ones ok thank you very much and i think you have a minute left and mr campbell thank you her and i want to make two two quick points if i can one is with respect to the doctor's job to shaw contract that the government talked about the fact is your honor if you look at the record dr shaw testified he did do the work that was called coroner that contract we've laid it out it's on page six of our lead brief and it's on pages ten and eleven of our reply brief with citations to the record dr scholl's testimony was i did do a lot of stuff that was new but the whole purpose of this arrangement was dr shaw said i've been doing a bunch of additional work for you guys can i get paid for that and clarence says talk to novak comes back and says yeah we'll pay you two thousand bucks a month dr shah was work he testified four to five million dollars at the time that the idea that he would sell his soul for two thousand dollars a month is simply not believable but he did the work he did the work and it's documented on with drawl there is confusion in the government's argument between disavowal and defeat you are not required to defeat the conspiracy in order to withdraw you are required to disavow it and the cases we cited knurling or the dairy case leaving the conspiracy depriving them of any of of your your work and not receiving any future benefits constitutes disavowal his only mechanism to participate in the conspiracy was his employment he asked noveck to fire him he was fired and enable twenty he got a check that was severance pay for unused vacation he cashed it that day if it's the bank a couple days later there is nothing in the record that would support his continuation in any alleged conspiracy and it ignores the realities of of how business conspiracies operate to say that