United States v. Chris Vernon
723 F.3d 1234
| 11th Cir. | 2013Background
- MedfusionRx, a specialty pharmacy in Alabama, paid large commission-style fees (45–50% of profits) to non-employee third parties (HMS/Lori Brill and Leroy Waters) to secure referrals of hemophilia patients whose factor medication claims were reimbursed by Alabama Medicaid.
- Chris Vernon (CFO) and Jeff Vernon (CEO/co-owner) managed Medfusion during the relevant period and were involved in authorizing and processing these commission payments; checks to HMS are central to counts 10–12.
- Lori Brill/HMS and Waters supplied existing patient lists and oversight of patients; evidence showed little actual clinical/service work was performed by them despite Medicaid’s required specialty-pharmacy services.
- A jury convicted Jeff Vernon (counts 10–12, 14–17) and Butch Brill (count 1 conspiracy to commit health-care fraud); the jury convicted Chris Vernon on counts 10–12 but the district court post-trial granted his Rule 29 acquittal (alternatively a new trial).
- On appeal the Eleventh Circuit: affirmed Jeff Vernon’s and Butch Brill’s convictions; vacated the district court’s Rule 29 acquittal for Chris Vernon, reversed the new-trial grant, and remanded to reinstate the jury verdicts and for sentencing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Government appeal of district court's Rule 29 acquittal for Chris Vernon on counts 10–12 (Anti‑Kickback) | Payments documented by corporate checks and CFO role establish Chris paid remuneration to induce referrals and acted willfully | Chris argued he did not sign the checks, that "refer" is limited to physicians, and that willfulness was not proven | Court reversed acquittal: evidence supported that Chris (CFO) signed checks, payments were to induce referrals by a non‑physician decisionmaker, and willfulness was established by emails, knowledge of commission structure, and failed safe‑harbor counsel advice |
| Jeff Vernon: indictment duplicity / jury instruction / constructive amendment / Rule 29 (Anti‑Kickback and conspiracy counts) | Government: counts alleged paying kickbacks (subsection (b)(2)); evidence and charge made that clear | Jeff: indictment duplicitous (mixing b(1) and b(2)), instructions misstated elements, and insufficient evidence/willfulness; relied on advice of counsel and safe‑harbor/employee defenses | Court found objections untimely (plain‑error review) and without prejudice; instructions and indictment reasonably read as charging paying/offering kickbacks, evidence supported willfulness, jury reasonably rejected advice‑of‑counsel and bona‑fide‑employee defenses; convictions affirmed |
| Butch Brill: sufficiency of evidence for conspiracy to commit health‑care fraud (count 1) | Government: circumstantial proof—participation in enrolling a Florida resident in Alabama Medicaid, presence at planning, receipt of proceeds used to buy truck—establish knowledge and voluntary joining | Butch argued insufficient proof he joined or knew purpose of conspiracy | Court affirmed: circumstantial evidence supported a rational jury finding he knew the scheme’s nature, voluntarily joined, acted in furtherance, and profited |
| Whether "refer" in Anti‑Kickback statute requires physician or initial referral only | Government: statute applies to "any person" who induces referrals; non‑physicians who control choice are covered; continuing payments for ongoing referrals are covered | Defendants argued restrictive reading limited to physician prescriptions or only initial referral | Court held "refer" is not limited to physicians; non‑physician decisionmakers (HMS/Waters) can refer; continuing payments for maintained referrals are unlawful under statute |
Key Cases Cited
- Miranda v. United States, 425 F.3d 953 (11th Cir. 2005) (standard for reviewing sufficiency of evidence and Rule 29 de novo)
- Khanani v. United States, 502 F.3d 1281 (11th Cir. 2007) (de novo review of judgment of acquittal)
- United States v. Polin, 194 F.3d 863 (7th Cir. 1999) (Anti‑Kickback covers payments to non‑physicians who functionally refer patients)
- United States v. Starks, 157 F.3d 833 (11th Cir. 1998) (definition of "willfully" for Anti‑Kickback prosecutions and upholding convictions where non‑physicians received kickbacks)
- United States v. Miles, 360 F.3d 472 (5th Cir. 2004) (distinguishing advertising firms from decisionmakers for referral liability)
- Johnson v. United States, 520 U.S. 461 (U.S. 1997) (plain‑error framework and harmlessness where omitted instructional element supported by overwhelming evidence)
- Neder v. United States, 527 U.S. 1 (U.S. 1999) (omitted jury element may be harmless where overwhelming evidence supports it)