Court Opinion

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Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

11-19-2002

USA v. Whited
Precedential or Non-Precedential: Precedential

Docket No. 02-1112

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PRECEDENTIAL

       Filed November 19, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 02-1112

UNITED STATES OF AMERICA

v.

RUTH WHITED,
       Appellant

Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Criminal No. 01-cr-00008)
District Judge: Honorable Edwin M. Kosik

Argued July 29, 2002

Before: BECKER, Chief Judge, ROTH and
RENDELL, Circuit Judges

(Filed: November 19, 2002)

       William Ruzzo, Esq., [ARGUED]
       590 Rutter Avenue
       Kingston, PA 18704
        Counsel for Appellant

       Lorna N. Graham, Esq., [ARGUED]
       Office of the U.S. Attorney
       235 North Washington Avenue
       P.O. Box 309, Suite 311
       Scranton, PA 18501
        Counsel for Appellee

OPINION OF THE COURT

RENDELL, Circuit Judge.

Ruth Whited appeals from the District Court’s order
sentencing her to prison and requiring her to make
restitution for embezzling from a health care provider in
violation of 18 U.S.C. S 669. Whited challenges the
sufficiency of the charging indictment and the District
Court’s jurisdiction to adjudicate the charge as set forth
therein. She also contends that the Commerce Clause does
not grant Congress the power to criminalize her actions,
and that 18 U.S.C. S 669 is thus unconstitutional as
applied to the facts of her case. We note that we are the
first court to address the constitutionality of this statute as
an exercise of Congress’ power under the Commerce
Clause. We agree with the District Court that Whited’s
indictment sufficiently alleged the material elements of the
offense and that her conviction withstands constitutional
scrutiny, and will affirm.

I.

The relevant facts are not in dispute and may be briefly
recounted. As a receptionist for the Back Mountain
Chiropractic Center ("the Center"), Whited was responsible
for receiving payment from Center patients. It was common
practice for patients to pay by endorsing a check from their
insurance provider, Blue Cross of Northeastern
Pennsylvania ("Blue Cross"), to the Center. During 1996
and 1997, Whited deposited over fifty of those checks into
her personal account, totaling over $34,000.

In early 2001, Whited was charged by indictment of one
count of theft or embezzlement in connection with health
care, in violation of 18 U.S.C. S 669. That provision
provides, in relevant part:

       Whoever knowingly   and willfully embezzles, steals, or
       otherwise without   authority converts to the use of any
       person other than   the rightful owner, or intentionally
       misapplies any of   the moneys, funds, securities,

                                  2

       premiums, credits, property, or other assets of a health
       care benefit program, shall be fined under this title or
       imprisoned not more than 10 years, or both . . . .

18 U.S.C. S 669.

The term "health care benefit program" is defined as:

       any public or private plan or contract, affecting
       commerce, under which any medical benefit, item, or
       service is provided to any individual, and includes any
       individual or entity who is providing a medical benefit,
       item, or service for which payment may be made under
       the plan or contract.

Id. S 24(b).

The government’s indictment charged:

       That from on or about November 1996 and continuing
       up to and including on or about November 1997, in the
       Middle District of Pennsylvania, the Defendant, Ruth
       Whited, knowing and willfully embezzled, stole or
       otherwise without authority converted to the use of any
       person other than the rightful owner, or intentionally
       misapplied any of the monies, funds, securities,
       premiums, credits, property or other assets of a health
       care benefit program to wit: approximately $5,956.52 of
       subscriber checks from Blue Cross of Northeastern
       Pennsylvania, a health care benefit program within the
       meaning of 18 United States Code Section 24(b), which
       checks rightfully belonged to the Back Mountain
       Chiropractic Center located in Dallas, Pennsylvania. 1

Whited originally pled not guilty, and subsequently filed
a motion to dismiss the indictment. She argued that the
indictment was insufficient because, although she admitted
she stole checks from the Center, the indictment appeared
to charge that Blue Cross, rather than the Center, was the
victim "health care benefit program." Further, she urged
that Congress did not have the authority to criminalize
_________________________________________________________________

1. Although the indictment charged Whited with embezzling $5,956.52,
there was evidence indicating that the amount actually involved was far
greater. Whited and the government eventually agreed on $34,327 as a
reasonable figure for restitution purposes.

                                3

embezzlement from individual medical care providers such
as the Center. After the District Court denied the motion,
Whited withdrew her original plea and pled guilty to the
indictment. She was sentenced in January, 2002, and this
timely appeal followed.

On appeal, Whited reiterates the challenges to the
indictment she made in the District Court. First, she argues
that the indictment does not allege an essential element of
S 669, the theft or embezzlement from a "health care benefit
program." In her view, the indictment refers to subscriber
checks from Blue Cross, not the Center. She also contends
that the Center is not a "health care benefit program" as
defined in the statute. Thus, she asserts, the District Court
lacked subject matter jurisdiction to adjudicate this matter
because Congress did not criminalize embezzlement from a
mere medical care provider such as a chiropractor. Finally,
Whited argues that S 669 is unconstitutional as applied to
this case. She admits to embezzlement from the Center, a
medical care provider, but argues that Congress is without
the authority under the Commerce Clause to criminalize
that behavior because her theft from the Center lacked the
requisite relation to interstate commerce.

The District Court exercised jurisdiction to determine the
sufficiency of the indictment and interpret the relevant
statutes pursuant to 18 U.S.C. S 3231, and we have
jurisdiction under 28 U.S.C. S 1291. Although Whited did
not preserve her right to appeal the pretrial motion by
entering a conditional guilty plea, see Fed. R. Crim. P.
11(a)(2), all of the issues presented here properly fall within
the narrow scope of review not barred by a guilty plea. See
United States v. Rodia, 194 F.3d 465, 469 (3d Cir. 1999)
(stating that notwithstanding a guilty plea we retain
jurisdiction over issues that "go[ ] to the jurisdiction of the
District Court"); see also United States v. Garcia-Valenzuela,
232 F.3d 1003, 1006 (9th Cir. 2000) (listing issues
reviewable after an unconditional guilty plea, including the
constitutionality of the underlying statute and that the
indictment fails to state an offense); 15B Charles Alan
Wright, Arthur R. Miller & Edward H. Cooper, Federal
Practice and Procedure S 3918.7 (2d ed. 1991) (same).

                                4

II.

Preliminarily, Whited argues that the indictment against
her was insufficient because it failed to allege an essential
element of the crime, and that the District Court was
without subject matter jurisdiction to adjudicate the matter
as set forth in the indictment. We find little merit to these
arguments, and will treat them only briefly.

A.

We exercise plenary review over Whited’s challenge to the
sufficiency of the indictment. See Virgin Islands v.
Moolenaar, 133 F.3d 246, 247 (3d Cir. 1998). Whited
argues that the indictment does not allege an essential
element of S 669, specifically the theft or embezzlement
from a health care benefit program. She notes that the
indictment identifies Blue Cross as a health care benefit
program, but reiterates that her theft was from the Center,
which is never explicitly identified as a qualifying program
in the indictment.

We consider an indictment sufficient if, when considered
in its entirety, it adequately informs the defendant of the
charges against her such that she may prepare a defense
and invoke the double jeopardy clause when appropriate.
See, e.g., United States v. Stansfield, 171 F.3d 806, 812 (3d
Cir. 1999); United States v. Turley, 891 F.2d 57, 59 (3d Cir.
1989).

Whited’s argument hinges on the unfortunate fact that
the indictment says both too much and too little. Because
Blue Cross was not the entity defrauded by Whited,
whether or not Blue Cross is a health care benefit program
under 24(b) was entirely irrelevant, and the indictment’s
identification of Blue Cross as a qualifying program was
thus entirely superfluous. But because the indictment did
identify Blue Cross as a health care benefit program under
24(b), the indictment was problematic in that it did not
similarly identify the Center as a qualifying program.

Despite this carelessness in language, the facts alleged
do amount to a crime under 669. Again, the indictment
reads, in relevant part:

                                5

       [T]he Defendant, Ruth Whited, knowing and willfully
       embezzled, stole or otherwise without authority
       converted to the use of any person other than the
       rightful owner, or intentionally misapplied any of the
       monies, funds, securities, premiums, credits, property
       or other assets of a health care benefit program to wit:
       approximately $5,956.52 of subscriber checks from
       Blue Cross of Northeastern Pennsylvania, a health care
       benefit program within the meaning of 18 United
       States Code Section 24(b), which checks rightfully
       belonged to the Back Mountain Chiropractic Center
       located in Dallas, Pennsylvania.

The indictment clearly states that the checks at issue
"belonged to" the Center, and that the theft was from a
health care benefit program. The Center is thus identified
as a health care benefit program by implication. As we
discuss below, the Center is in fact a qualifying"health care
benefit program" because it is an "individual or entity who
is providing a medical benefit, item, or service for which
payment may be made under [a qualifying health care] plan
or contract." 18 U.S.C. S 24(b). Consequently, when
considered in its entirety the indictment’s charge-- that
there was a theft from a health care benefit program of
subscriber checks belonging to the Center -- suffered from
no material omissions, sufficiently apprised Whited of the
charges against her, and would enable her to invoke the
bar of double jeopardy if necessary. See Turley , 891 F.2d at
59; see also Hamling v. United States, 418 U.S. 87, 117
(1974) ("[A]n indictment is sufficient if it, first, contains the
elements of the offense charged and fairly informs a
defendant of the charge against which he must defend,
and, second, enables him to plead an acquittal or
conviction in bar of future prosecutions for the same
offense."). Further, we note that there is no evidence that
Whited was prejudiced by the potentially confusing
indictment. See Stansfield, 171 F.3d at 811-12. Whited
"acknowledge[d]" in her brief that the"indictment language
[was] sufficient to put [her] on notice that she [was] accused
of stealing property of Back Mountain Chiropractic Clinic,"
App. Br. at 12., and Whited’s counsel conceded at oral
argument that Whited in fact understood the document to

                                6

charge her with that crime. Thus, although poorly drafted,
the indictment was legally sufficient.

B.

In the alternative, Whited contends that the Center is not
a qualifying health care benefit program at all, and that
consequently the District Court was without subject matter
jurisdiction because the general theft or embezzlement from
a medical care provider is not a federal crime. We disagree.

Our review over matters of statutory interpretation is
plenary, and our role is limited to effectuating the intent of
Congress. Rosenberg v. XM Ventures, 274 F.3d 137, 140
n.1, 141 (3d Cir. 2001). Congressional intent is presumed
to be expressed through the ordinary meaning of the
statute’s plain language. Id. at 141. Here, Whited’s
contention that the Center is not a health care benefit
program as defined in 18 U.S.C. S 24(b) is belied by the
statutory language, which provides:
       [T]he term "health care benefit program" means any
       public or private plan or contract, affecting commerce,
       under which any medical benefit, item, or service is
       provided to any individual, and includes any individual
       or entity who is providing a medical benefit, item, or
       service for which payment may be made under the plan
       or contract.

18 U.S.C. S 24(b) (emphasis added).

The Center is a local provider of chiropractic services,
and even Whited concedes that payment is made for those
services through Blue Cross, which is undisputably a
health care benefit program. Section 24(b) explicitly
"includes" precisely those types of local medical service
providers. The statute thus makes clear Congress’s intent
to criminalize theft or embezzlement under 18 U.S.C.S 669
when the victim of that theft or embezzlement is a medical
services provider -- such as the Center -- being
compensated pursuant to a public or private plan, such as
Blue Cross.

Despite the clarity of the statute’s plain language, Whited
invokes certain portions of the statute’s legislative history
in arguing that Congress did not intend to criminalize theft

                                7

from a local medical service provider. Where a statute is
"plain and unambiguous" on its face, however, further
inquiry into legislative intent is unnecessary. Rosenberg,
274 F.3d at 141. Here, nothing in the "language itself, the
specific context in which the language is used,[or] the
broader context of the statute as a whole" suggests any
ambiguity whatsoever. Id. Instead, the plain language of the
statute is strongly supported by the broader context of the
legislation, an extensive attack on frauds against the health
care industry. See Health Insurance Portability Act of 1996,
Pub. L. No. 104-191, 110 Stat. 1936. Accordingly, we
conclude that the Center is a qualifying "health care benefit
program" as defined in the statute, and that the District
Court therefore properly exercised subject matter
jurisdiction over Whited’s criminal indictment.

III.

Having concluded that neither of Whited’s arguments
relating to her particular indictment have merit, we turn to
Whited’s constitutional challenge to her prosecution for a
federal offense. Whited argues that authorizing the
prosecution of individuals like herself who have simply
stolen from local medical service providers exceeds the
limited powers vested in Congress under the Commerce
Clause. Thus, Whited argues, 18 U.S.C. S 669 is
unconstitutional insofar as it was applied here.

The District Court disagreed. After noting that we are to
accord deference to Congressional determinations that
particular legislation is within its constitutional authority,
the District Court wrote:

       [T]he United States correctly points out that a payer
       such as Blue Cross of Northeastern Pennsylvania made
       payments to Back Mountain under a contract with its
       subscriber under a health care program which
       Congress has deemed appropriate to regulate as an
       economic and commercial enterprise which affects
       interstate commerce by prohibiting fraud.

United States v. Whited, No. CR-01-0008, slip op. at 4 (M.D.
Pa. May 12, 2001).

                                8

In its opinion, the District Court emphasized the
interstate nature of the commercial enterprises and
contractual relationships through which the payment for
health care services is made. Ultimately, although
reiterating its view that Congressional authority under the
Commerce Clause is and should be limited, it held that
Congress was within the appropriate scope of its power in
criminalizing the actions at issue here. We exercise plenary
review of the District Court’s determination of the statute’s
constitutionality, United States v. Singletary , 268 F.3d 196,
198-99 (3d Cir. 2001), and will affirm.

A.

We are presented once again with the difficult and
delicate task of determining whether Congress has
exceeded its authority "[t]o regulate Commerce . . . among
the several States," U.S. Const. art I, S 8, cl. 3, an issue
that is now commonplace in our courts as a result of the
Supreme Court’s ruling in United States v. Lopez , 514 U.S.
549 (1995). In Lopez, the Court held that Congress had
exceeded its Commerce Clause authority in adopting the
Gun-Free School Zones Act of 1990, which essentially made
it a federal crime to possess a firearm near a school. In
doing so, the Court first clearly identified the three areas
within which Congress is authorized to regulate pursuant
to the Commerce Clause: (1) "the use of the channels of
interstate commerce;" (2) "the instrumentalities of interstate
commerce, or persons or things in interstate commerce,
even though the threat may come only from intrastate
activities;" and (3) "those activities having a substantial
relation to interstate commerce." Id. at 558-59. Because the
Gun-Free School Zones Act regulated neither the channels
nor instrumentalities of commerce, the Court was left to
consider whether the Act could be sustained as a regulation
of activities substantially affecting interstate commerce. Id.
at 559.

The Court reiterated that laws regulating intrastate
economic activity have been upheld against Commerce
Clause challenges where the underlying intrastate
"economic activity substantially affects interstate
commerce," or where the law regulates "activities that arise
out of or are connected with a commercial transaction,

                                9

which viewed in the aggregate, substantially affects
interstate commerce." Id. at 560-61. In Wickard v. Filburn,
317 U.S. 111 (1942), for instance, the Court upheld
Congressional regulation of production limits for wheat that
was exclusively produced and consumed by a single local
farm. The Court reasoned that even homegrown wheat in
some sense competes with wheat traded in interstate
commerce, particularly when considered in the aggregate.
Id. at 127-28.

By contrast, the Gun-Free School Zones Act on its face
criminalized an action -- gun possession near a school --
that is wholly unrelated to " ‘commerce’ or any sort of
economic enterprise, however broadly one might define
those terms." Lopez, 514 U.S. at 561. Nor was the Act "part
of a larger regulation of economic activity, in which the
regulatory scheme could be undercut unless the intrastate
activity were regulated." Id.

The Court further took note of two additional factors.
First, the Act did not contain an "express jurisdictional
element" that would limit its application to particular
instances in which the "firearm possession[ ] . . . ha[d] an
explicit connection with or effect on interstate commerce."
Id. at 561-62. Second, "neither the statute nor its legislative
history contain express congressional findings regarding
the effects upon interstate commerce of gun possession in
a school zone." Id. at 562 (quotations omitted). Although
making clear that congressional findings are not required,
the Court suggested that findings indicating the"legislative
judgment that the activity in question substantially affected
interstate commerce," would be helpful where the
"substantial effect was [not] visible to the naked eye." Id. at
563.

Ultimately, the Lopez Court was unpersuaded by the
proffered nexus between gun possession near schools and
interstate commerce, the theory "that possession of a
firearm in a school zone may result in violent crime and
that violent crime can be expected to affect the functioning
of the national economy." Id. at 563. That sort of tenuous
connection, the Court reasoned, would impermissibly allow
Congressional intervention in areas far beyond the scope of
their necessarily limited powers. Id. at 564-67. In sum, the

                                10

Court concluded, "The possession of a gun in a local school
zone is in no sense an economic activity that might,
through repetition elsewhere, substantially affect any sort
of interstate commerce." Id. at 567.

Five years later the Court struck down the Violence
Against Women Act ("VAWA") in United States v. Morrison,
529 U.S. 598 (2000), which echoed both the holding of
Lopez and its underlying reasoning. In Morrison, the Court
again emphasized that the general nature of the regulated
activity was not commercial or economic in character. Id. at
610-11. Although the Court specifically avoided adopting "a
categorical rule against aggregating the effects of any
noneconomic activity," it relied heavily for its ultimate
conclusion on the fact that "[g]ender motivated crimes of
violence are not, in any sense of the phrase, economic
activity." Id. at 613.

The Morrison Court also followed the Lopez Court in
taking note of the lack of a "jurisdictional element" in the
VAWA, and in considering the presence or absence of
congressional findings. Id. at 613. Unlike the Gun-Free
School Zones Act, however, the legislative history of the
VAWA was replete with extensive congressional findings
"regarding the serious impact that gender-motivated
violence has on victims and their families." Id. at 614. But
the mere presence of congressional findings was not
deemed dispositive, and the Court found that Congress’s
findings failed to support the requisite connection between
gender-motivated violence and interstate commerce. Id. at
614-15. According to the Court, the findings at best
demonstrated an attenuated but-for relation of the type
specifically rejected in Lopez. Id. at 615-19. With or without
congressional findings, the Morrison Court made clear that
the Commerce Clause does not authorize Congress to
"regulate noneconomic, violent criminal conduct based
solely on that conduct’s aggregate effect on interstate
commerce." Id. at 617.

B.

At the outset, we note that our analysis is to be
conducted with the understanding that congressional acts
are entitled to a "presumption of constitutionality," and will

                                11

only be invalidated upon a "plain showing that Congress
has exceeded its constitutional bounds." Id . at 607. That
presumption is "not a mere polite gesture. It is a deference
due to deliberate judgment by constitutional majorities of
the two Houses of Congress that an Act is within their
delegated power . . . ." United States v. Five Gambling
Devices, 346 U.S. 441, 449 (1953). Accordingly,"[a]lthough
the judicial branch is the final arbiter of the
constitutionality of a statute," we review Congress’s
determination that it was within its constitutional authority
with "substantial deference." United States v. Gregg, 226
F.3d 253, 261 (3d Cir. 2000). In the particular context of
the Commerce Clause, we have frequently framed our
inquiry as the narrow one of whether Congress had a
"rational basis" for concluding that the activity it was
regulating -- here, theft involving the health care industry
-- was sufficiently related to interstate commerce to
support the statute’s constitutionality. See, e.g., United
States v. Spinello, 265 F.3d 150, 153 (3d Cir. 2001); Gregg,
226 F.3d at 261-62; see also Hodel v. Virginia Surface
Mining & Reclamation Assn., 452 U.S. 264, 276 (1981)
(same).

Like the statutes considered in Lopez and Morrison, 18
U.S.C. S 669 is properly analyzed as an attempt by
Congress to regulate within the third category of its powers
as enumerated by the Court -- those activities that are
substantially related to interstate commerce. As suggested
in our discussion above, there are four considerations
relevant to the determination of whether a particular law
regulates activity that has a substantial effect on interstate
commerce:

       1) the economic nature of the regulated activity; 2) a
       jurisdictional element limiting the reach of the law to a
       discrete set of activities that additionally has an
       explicit connection with or effect on interstate
       commerce; 3) express congressional findings regarding
       the effects upon interstate commerce of the activity in
       question; and 4) the link between the regulated activity
       and interstate commerce.

Gregg, 226 F.3d at 262 (citations omitted).

                                12

We conclude that, unlike the statutes considered in
Lopez and Morrison, Congress had a rational basis for
believing that S 669 regulates distinctly economic activity
bearing a clear and significant relation to interstate
commerce. Accordingly, we hold that Congress’s
criminalization of the activity in question here was a proper
exercise of Congress’s Commerce Clause authority.

1. The Economic Nature of the Regulated Activity

The first stage of our Commerce Clause analysis is an
inquiry into the fundamental character of the activity being
regulated. Our recent decisions in this area reflect the
importance of the initial inquiry into the character of the
underlying activity, and illustrate the crucial distinction
between real economic activity and the fundamentally
noneconomic activity at issue in Lopez and Morrison. Most
recently, in United States v. Spinello, 265 F.3d 150 (3d Cir.
2001), we upheld Congress’s authority to criminalize bank
robbery pursuant to its Commerce Clause powers. In doing
so, we noted particularly that bank robbery is an
" ‘economic’ activity almost by definition" given that it is
motivated by money, explicitly affects money, and moreover
imposes substantial difficulties on the victim banks with
regard to their ability to interact appropriately with their
business partners. Id. at 156-57. Similarly, in United States
v. Bishop, 66 F.3d 569 (3d Cir. 1995), in which we upheld
the federal criminalization of carjacking, we stated that
"[w]hen a criminal points a gun at a victim and takes his or
her car, the criminal has made an economic gain and the
victim has suffered an undeniable and substantial loss." Id.
at 581. Thus, although we have held that "economic activity
can be understood in broad terms," Gregg, 226 F.3d at 262,
we have also distinguished between activities that are
essentially economic and those that "ha[ve] nothing to do
with ‘commerce’ or any sort of economic enterprise,
however broadly one might define those terms." Lopez, 514
U.S. at 561; see also United States v. Orozco , 98 F.3d 105,
107 (1996) ("Drug trafficking is an inherently economic
activity; the mere possession of a fiream is not.").

Here, following these precedents, we can readily conclude
that the activity regulated by S 669 -- theft in connection
with health care -- is economic in nature. The theft itself is

                                13

motivated exclusively by an immediate pecuniary gain, see
Spinello, 265 F.3d at 156, and effects an explicit economic
transfer. See Bishop, 66 F.3d at 581. Moreover, S 669 is
crucially "an essential part of a larger regulation of
economic activity." Lopez, 514 U.S. at 561. The
criminalization of theft in connection with health care was
just one of a number of broad measures Congress enacted
in its effort to "combat waste, fraud, and abuse in health
insurance and health care delivery." Health Insurance
Portability and Accountability Act of 1996 ("HIPAA"), Pub. L.
No. 104-191, 110 Stat. 1936. Accordingly, it can hardly be
disputed that the theft criminalized by Congress here is
fundamentally an economic endeavor.

2. The Presence of a Jurisdictional Element

The presence or absence of a jurisdictional element
limiting the statute’s scope to those cases with"an explicit
connection with or effect on interstate commerce," is a
second important factor in the constitutional analysis.
Morrison, 529 U.S. at 611-612. Although the Supreme
Court has made it unequivocally clear that the presence of
a jurisdictional element is not dispositive of the statute’s
constitutionality, it is equally clear that its presence may
"lend support" for that conclusion. Id. at 613. In short, a
jurisdictional element can "ensure, through case-by-case
inquiry, that the [crime] in question affects interstate
commerce." Lopez, 514 U.S. at 561; see also Jones v.
United States, 529 U.S. 848 (2000) (analyzing the federal
arson statute’s jurisdictional element to avoid potential
constitutional issues and ensure the requisite nexus to
interstate commerce).

The statute at issue here does benefit from the existence
of a jurisdictional element. In relevant part, S 669
criminalizes theft from a health care benefit program, the
definition of which is explicitly qualified with the phrase
"affecting commerce." 18 U.S.C. S 24(b). Section 669
therefore criminalizes only thefts from health care plans or
contracts -- or medical providers under those plans or
contracts -- that affect commerce. See Jones , 529 U.S. at
854 (noting that the qualifying phrase "affecting commerce"
generally "signal[s] Congress’ intent to invoke its full
authority under the Commerce Clause").
                                14

We recognize that this particular jurisdictional element
could be said to be of little practical import. Given the
complex state of modern health care delivery, it is difficult
to envision any public or private health care plan or
contract that does not affect commerce. That is, this
jurisdictional element in actuality likely eliminates little
from the scope of the statute’s operation. If anything,
however, that fact simply serves to strengthen our
conclusion that Congress properly exercised its
constitutional authority in criminalizing this activity under
S 669. See Gregg, 226 F.3d at 263 (suggesting that a
jurisdictional element is not essential where the regulated
activity necessarily affects interstate commerce). And, if
there is in fact a set of health care benefit programs that do
not affect commerce, the presence of the jurisdictional
element will properly exclude them. See, e.g., United States
v. McGuire, 178 F.3d 203, 212 (3d Cir. 1999) (reversing a
conviction because there was an insufficient connection to
interstate commerce to satisfy the jurisdictional element).
Overall, then, the jurisdictional element provides support
for the conclusion that the crimes at issue here are
sufficiently related to interstate commerce to be validly
regulated pursuant to Congress’s Commerce Clause
authority.

3. The Presence of Congressional Findings

Although the Court has not departed from the general
rule that Congress need not make explicit findings detailing
the relationship some particular activity has with interstate
commerce, it has directed that such findings may, on the
margins, bolster an argument that such a relationship
exists where it is not evident "to the naked eye." Lopez, 514
U.S. at 563. If Congress does make relevant findings, we
must ask whether they actually support the existence of the
requisite relationship. Morrison, 529 U.S. at 614-15. Thus,
congressional findings may provide independent support for
a determination of constitutionality, and may also serve to
indicate whether Congress had a rational basis for
concluding that the activity being regulated was sufficiently
related to interstate commerce. See Gregg, 226 F.3d at 263.

Section 669 was enacted as part of the HIPAA, a massive
statute marking significant legislative reform of the health

                                15

insurance industry. The most relevant and helpful piece of
the legislative history with regard to the anti-fraud and
abuse provisions of the HIPAA is a report prepared on that
subject by the House Committee on Government Reform
and Oversight ("Reform Report"). H.R. Rep. No. 104-747
(1996). The Reform Report summarizes the progression of
earlier attempts at legislation to address fraud and abuse in
the health care industry, and details the extensive need for
reform.

The Report states that according to 1995 figures, health
care spending in the United States was approximately $1
trillion, divided among Medicare, Medicaid, and various
State and private programs. Id. at 2. Strikingly, estimates
indicated that as much as 10% of every health care dollar
spent -- or $100 billion ($274 million a day)-- was lost to
fraud and abuse. Id. at 2, 7.

These startling figures prompted numerous efforts at
legislation, frequently including efforts to craft more
efficient and effective federal criminal sanctions. Id. at 2-3.
Not surprisingly, Congress was particularly concerned with
large scale schemes to defraud Medicare, Medicaid, and
massive private insurers operating on a national level, such
as Aetna and Blue Cross. Nonetheless, Congress was
presented with the unfortunate fact that the problems
existed in "all segments of the health care industry" and "in
every geographic area of the country." Id. at 3 (quoting
United States General Accounting Office, Health Insurance:
Vulnerable Payers Lose Billions to Fraud and Abuse 2
(1992)). That ubiquity suggests a rational basis for
concluding, as Congress did, that even seemingly minor
local thefts in connection with health care have direct and
significant effects on interstate commerce.

First, the health care industry’s troubling afflictions
simply are not confined by "the jurisdictional boundaries
that divide Federal, State and local health care finance and
law enforcement." Id. at 1. The relationships among
patients, providers, and insurers are extraordinarily
complex, and Congress could certainly have reasonably
determined that those sophisticated relationships made
traditional distinctions between federal, state, and local
governments at best unhelpful. Second, at its most general

                                16

level, Congress’s motivation for the legislation was the
simple fact that billions of dollars were being illegally
removed from the health care system at the expense of
ordinary citizens, who, as both taxpayers and consumers of
health care services, bear directly the dramatic costs of
those losses. With regard to the disturbing "scope and
variety of health care fraud," the Reform Report quoted a
Department of Justice report stating, "Everyone pays the
price for health care fraud: beneficiaries for Government
health care insurance such as Medicare and Medicaid pay
more for medical services and equipment; consumers of
private health insurance pay higher premiums; and
taxpayers pay more to cover health care expenditures." Id.
at 4 (quoting United States Department of Justice,
Department of Justice Health Care Fraud Report, Fiscal Year
1994 3 (1995)).

In sum, this history provides independent support for the
conclusion that fraud and abuse within the health care
industry is a massive national problem that transcends the
traditional boundaries of policing as between local, state,
and federal governments. It is also readily apparent that
such activity -- the illegal conversion of many billions of
dollars annually -- has a substantial effect on interstate
commerce. And given the scope and variety of the defects in
the system, we cannot conclude that Congress was without
a rational basis for determining that it was within its
constitutional authority in criminalizing even seemingly
minor local thefts or embezzlements in connection with
health care. Thus, although the absence of detailed
congressional findings would not alter our ultimate decision
in this case, we find that the legislative history supports
our conclusion that S 669 is a valid exercise of Congress’s
Commerce Clause authority.2
_________________________________________________________________

2. It is worth noting that the Reform Report explicitly, if briefly,
considered the question of whether criminalizing these activities was
within Congress’s Commerce Clause authority, and concluded that
"Lopez and the subsequent lower court cases indicate [that Congress]
may prescribe health care fraud under its commerce clause powers"
because of health care fraud’s "interstate attributes." Reform Report, at
14 n.46.

                                17

4. The Nexus Between the Regulated Activity and
Interstate Commerce

At the core of the Supreme Court’s analysis in Lopez and
Morrison was a justifiable if somewhat visceral skepticism
about whether the activity being regulated could be
sufficiently linked to interstate commerce. In short, the
relationship was simply too attenuated -- a test for but-for
causation may have been satisfied, but it was a search for
proximate causation that was ultimately needed. Indeed,
both opinions quoted Justice Cardozo’s graphic allusion to
this dilemma of causation in his concurring opinion in
Schechter Poultry:

       There is a view of causation that would obliterate the
       distinction between what is national and what is local
       in the activities of commerce. Motion at the outer rim
       is communicated perceptibly, though minutely, to
       recording instruments at the center. A society such as
       ours ‘is an elastic medium which transmits all tremors
       throughout its territory; the only question is of their
       size.’

A.L.A. Schechter Poultry Corp. v. United States , 295 U.S.
495, 554 (1935) (Cardozo, J., concurring) (quoting United
States v. A.L.A. Schechter Poultry Corp., 76 F.2d 617, 624
(2d Cir. 1935 (Hand, J. concurring)).

The Supreme Court’s opinions in Lopez and Morrison
make clear that the Court has ultimately been most
concerned with the potential slipperiness of but-for
reasoning. "In a sense any conduct in this interdependent
world of ours has an ultimate commercial origin or
consequence," Justice Kennedy noted, "but we have not yet
said the commerce power may reach so far." Lopez, 514
U.S. at 580 (Kennedy, J., concurring). Allowing Congress to
regulate in areas with such an attenuated connection to
interstate commerce would be "unworkable if we are to
maintain the Constitution’s enumeration of powers,"
Morrison, 529 U.S. at 615, and would ultimately threaten
the "distinction between what is truly national and what is
truly local." Lopez, 514 U.S. at 567-68. In sum, the Court
has simply been unwilling to "pile inference upon inference
in a manner that would bid fair to convert congressional

                                18

authority under the Commerce Clause to a general police
power of the sort retained by the States." Lopez, 514 U.S.
at 567.

The question "is necessarily one of degree." Lopez, 514
U.S. at 567 (quoting NLRB v. Jones & Laughlin Steel Corp.,
301 U.S. 1, 37 (1937)). Whatever the "precise formulations"
of the boundaries, however, we believe this case presents
little worry of Congress overstepping its constitutional
bounds. In essence, Whited argues that her minor theft
from a local chiropractor has not even the most attenuated
connection to interstate commerce. We disagree."If
interstate commerce feels the pinch, it does not matter how
local the operation which applies the squeeze." United
States v. Women’s Sportswear Mfg. Ass’n., 336 U.S. 460,
464 (1949).

In Wickard, the Court "emphasized that although
Filburn’s own contribution to the demand for wheat may
have been trivial by itself, that was not ‘enough to remove
him from the scope of federal regulation where, as here, his
contribution, taken together with that of many others
similarly situated, is far from trivial,’ " Lopez, 514 U.S. at
556 (quoting Wickard, 317 U.S. at 127-28). That long-
standing principle of aggregation is directly applicable to
our facts. Although the wheat Wickard himself produced
could scarcely be considered to have a substantial effect on
the national wheat industry, when considered in
conjunction with all those similarly situated it is evident
that homegrown wheat does impact interstate commerce.
Similarly, although Whited’s $34,000 theft may seem
relatively inconsequential or even de minimis when viewed
within the broader context of the trillion dollar health care
industry, when replicated over and again the economic
effects of such acts are "indeed profound." 3 Bishop, 66 F.3d
at 581. Thus, like the production of homegrown wheat in
Wickard, theft or embezzlement in connection with health
care is "an economic activity that . . . through repetition
elsewhere, substantially affect[s] . . . interstate commerce."4
_________________________________________________________________

3. Notably, Congress was apparently concerned with thefts as small as
$100, providing specifically in S 669 that such crimes could be
punishable with up to a year in prison.
4. Moreover, because Congress had a rational basis for concluding that
theft in connection with health care substantially affects interstate

                                19

Lopez, 514 U.S. at 567. This case is therefore clearly
distinguishable from those cases in which the requisite
connection to interstate commerce was found to be lacking.
See, e.g., McGuire, 178 F.3d at 212 ("Proof that [a] single
bottle of orange juice was to have been used by a business
that is . . . concededly local in character . . . is simply not
sufficient" to satisfy the nexus to interstate commerce).

Unlike the attenuated but-for relationships present in
Lopez and Morrison, the relation between theft in
connection with health care and interstate commerce is
direct and present. At the very least, we will not"second-
guess" Congress’s reasonable determination on that score.5
Bishop, 66 F.3d at 577.
_________________________________________________________________

commerce, "we do not have the power to excise, as trivial, individual
instances falling within that rationally defined class of activities." Bishop,
66 F.3d at 584 (quoting Maryland v. Wirtz, 392 U.S. 183, 193 (1968).
5. The reliance by Whited’s counsel on United States v. Five Gambling
Devices, 346 U.S. 441 (1953), is wholly without merit. We note in
particular counsel’s mischaracterization of that opinion in stating that
the Court "invalidated a portion of the statute," and "reasoned [that]
limits on the commerce power do exist, and [that] Congress had
exceeded them in that case." App. Br. at 18. At issue in Five Gambling
Devices was a statute that "prohibit[ed] shipment of gambling machines
in interstate commerce [and] included incidental registration and
reporting provisions" that were not expressly limited to interstate
commerce. Five Gambling Devices, 346 U.S. at 442-45. Notwithstanding
counsel’s statements to the contrary, not a single member of the Court
voted to invalidate any portion of the statute on Commerce Clause
grounds. Moreover, not a single member of the Court even stated that it
was his opinion that the statute was unconstitutional on those grounds.
The judgment of the Court was announced by Justice Jackson who, in
a plurality opinion joined by two other justices, employed the canon of
avoidance and construed the statute to avoid any troublesome
constitutional issues. Id. at 442-52. In doing so, Justice Jackson noted
the potentially difficult Commerce Clause issues, but made absolutely no
statement as to their merits. Id. Justice Black wrote a brief concurrence,
joined by Justice Douglas, expressing his belief that the statute was
unconstitutionally vague. Id. at 452-54. Justice Black’s concurrence
expressed no view whatsoever as to the Commerce Clause issues. Id.
Justice Clark’s dissent, which was joined by the three remaining
members of the Court, was the only opinion to confront the Commerce
Clause issue directly, and it argued strenuously that the statute at issue
fell within Congress’s authority. Id. at 454-463.

                                20

IV.

Although poorly drafted, Whited’s indictment charged her
with embezzling from the Center, a qualifying health care
benefit program under the plain statutory language, and
thus sufficiently alleged the material elements of the
offense. We further conclude that the application of 669 to
Whited’s theft was not a violation of the Commerce Clause.
Section 669’s regulation of theft or embezzlement from local
medical service providers such as the Center is regulation
of inherently economic activity. The statute contains a
jurisdictional element limiting its applicability to particular
instances affecting interstate commerce, and it is supported
by a legislative history indicating its part in a
comprehensive legislative response to profound problems in
the health care industry that are not confined by traditional
jurisdictional or geographic borders. Finally, within the
broader context of medical service plans and contracts,
Congress was certainly justified in concluding that the theft
or embezzlement from even a local chiropractor such as the
Center has a direct, present, and substantial relation to
interstate commerce.

For all of the reasons recited above, the order of the
District Court will be AFFIRMED.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

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