Title: The People v. James O. Boothe

State: new-york

Issuer: New York Appellate Court

Document:

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This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 31  
The People &c.,
            Appellant,
        v.
James O. Boothe,
            Respondent.
Hannah Stith Long, for appellant.
Paul Shechtman, for respondent.
PIGOTT, J.:
Defendant, the chief operating officer and executive
vice president of a managed health care provider, was indicted on
charges that included two counts of insurance fraud in the first
degree (Penal Law § 176.30).  A person is guilty of that offense
"when he commits a fraudulent insurance act and thereby
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No. 031
wrongfully takes, obtains or withholds, or attempts to wrongfully
take, obtain or withhold property with a value in excess of one
million dollars" (emphasis supplied).  The indictment charges
that defendant committed "fraudulent insurance act[s]" in 2003
when he submitted marketing plans to Medicaid that he knew
contained materially false information.
As relevant here, Penal Law § 176.05(1) provides that a
person commits a "fraudulent insurance act" when he:
"knowingly and with intent to defraud
presents . . . any written statement as part
of, or in support of, an application for the
issuance of, or the rating of a commercial
insurance policy, . . . or a claim for
payment or other benefit pursuant to an
insurance policy . . . for commercial or
personal insurance which he knows to: (i)
contain materially false information
concerning any fact material thereto . . ."
Prior to 1998, the above was the only definition
contained in section 176.05, which is entitled "Insurance fraud;
defined."  In 1998, however, the Legislature amended a number of
state laws to expand health coverage and eligibility for children
through the Child Health Plus program and Medicaid, and
concomitantly amended the Penal Law to "strengthen[ ] the State's
ability to deter Medicaid fraud and abuse" (Budget Report on
Bills, Bill Jacket, L 1998, ch 2, at 3).  As part of these
amendments, the Legislature added a new subsection to section
176.05, namely, "fraudulent health care insurance act" which, as
relevant here, a person commits when he:
"knowingly and with intent to defraud,
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presents . . . any written statement . . . as
part of, or in support of, an application for
the issuance of a health insurance policy, or
a policy or contract or other authorization
that provides or allows coverage for,
membership or enrollment in, or other
services of a public or private health plan,
or a claim for payment, services or other
benefit pursuant to such policy, contract or
plan, which he knows to: (a) contain
materially false information concerning any
material fact thereto . . ." (Penal Law §
176.05 [2] [emphasis supplied]).   
While amending section 176.05 in this fashion, the
Legislature failed to amend the substantive offense provisions to
include a "fraudulent health care insurance act".  Specifically,
Penal Law §§ 176.10 through 176.30--which describe five degrees
of insurance fraud--all contain the core requirement that the
defendant "commit[ ] a fraudulent insurance act."  At the time,
the State Division of Criminal Justice Services warned that the
proposed amendments to section 176.05 "may not accomplish their
apparent objective of including certain activities related to
health care insurance within the scope of current insurance fraud
offenses" because the new legislation did not include "fraudulent
health care insurance act" as an alternative means of committing
the crimes spelled out in sections 176.10 through 176.30 (Letter
from St Div of Crim Justice Servs, July 9, 1998, at 32, Bill
Jacket, L 1998, ch 2). 
In the case before us, defendant, noting these
deficiencies, moved to dismiss the insurance fraud counts,
asserting that he did not commit a "fraudulent insurance act" as
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charged in the indictment and defined by the Penal Law.  As
relevant to this appeal, Supreme Court granted defendant's motion
and the Appellate Division affirmed.  A Judge of this Court
granted the People leave to appeal, and we now affirm. 
A "[f]raudulent insurance act," as defined by statute,
is limited to certain defined commercial and personal insurance. 
In fact, the People concede that the marketing plans allegedly
submitted by defendant do not fall under this definition. 
Rather, they argue that a "fraudulent health care insurance act"
is a "species" of "fraudulent insurance act," and that section
176.05(2) can be read as specifying an expanded set of
"fraudulent insurance acts" relating to health care that are
punishable under sections 176.10 through 176.30.  We reject that
contention.
Here, the Legislature plainly failed to criminalize the
conduct at issue.  This statutory infirmity cannot be overlooked,
nor can it be remedied through statutory interpretation.  It is
well settled "that courts are not to legislate under the guise of
interpretation" (People v Finnegan, 85 NY2d 53, 58 [1995] cert
denied 516 US 919 [1995] citing People v Heine, 9 NY2d 925, 929
[1961]).  If this deficiency is to be corrected, it must be done
through legislative action, as the Legislature is better equipped
to correct any deficiencies that might exist (see Bright Homes,
Inc. v Wright, 8 NY2d 157, 162 [1960]).  
In fact, that is the precise action the Judicial
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Conference of the State of New York proposed in its 2003
Legislative Agenda Report, noting that the Chief Administrative
Judge, in accordance with his responsibilities set forth in
Judiciary Law § 212(1)(g), should "at the recommendation of his
Advisory Committee on Criminal Law and Procedure, . . . recommend
repair of this [legislative] oversight so that fraudulent health
care insurance act is included as a fraudulent insurance act and
thereby constitutes the crime of insurance fraud" (The Judicial
Conference of the State of New York, 2003 Legislative Agenda
[January 2003]).  Because there has been no such repair, a
"fraudulent health care insurance act" is not included within the
definition of "fraudulent insurance act" and therefore defendant
did not violate Penal Law § 176.05(1).  Therefore, the order of
the Appellate Division should be affirmed.  
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Order affirmed.  Opinion by Judge Pigott.  Judges Ciparick,
Graffeo, Read, Smith and Jones concur.  Chief Judge Lippman took
no part.
Decided February 24, 2011
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