Fischer v. United States

FISCHER v. UNITED STATES No. 99-116. Argued 22, February 2000 Decided May 15, 2000 Oh oo

Kennedy, J., delivered the opinion of the Court, in which Rehnquist, C. J., and Stevens, O’Connor, Souter, Ginsburg, JJ., Breyer, joined. Thomas, J., filed a dissenting opinion, in Scaua, which J., joined, post, p. 682. Mark L. Horwitz argued the cause for petitioner. -With him on the briefs were Glen J. Ioffredo, Jeffrey T Green, and Kristin G. Koehler.

Lisa Schiavo Blatt argued the cause for the United States. With her on the brief were Solicitor General Waxman, As sistant Attorney General Robinson, and Deputy Solicitor General Dreeben.* Kennedy

Justice delivered the opinion of the Court. The federal bribery prohibits statute defrauding organiza- tions which “receiv[e], in any year one period, benefits in excess of $10,000 under a program.” Federal 18 U. S. C. §666(b). granted We certiorari to determine whether statute covers fraud perpetrated organizations on participat- ing in the Medicare program. Upon consideration of role and regulated status of hospitals as health provid- ers under the Medicare program, we they hold receive “bene- fits” within the meaning of statute. We petition- affirm er’s convictions.

I Petitioner Jeffrey Allan president Fischer was partial and owner Quality Medical Consultants, (QMC), Inc. eorpora- a *Lisa Kemler filed a brief for the National Association of Criminal Defense Lawyers as amicus curiae urging reversal.

670 organiza- health billing for audits performed which . tion a negotiated $1.2 behalf, on petitioner, QMC’s tions. (WVHA), Authority Hospital Volusia from West loan million hospitals two operating responsible municipal agency hospitals Both Florida. County, Volusia in West located WVHA program, Medicare in the participate funds. million $15 $10 between received raised affairs financial February WVHA’s audit A investigation revealed An loan. about QMC questions raise to creditors repay to proceeds the loan used QMC petitioner. including owner-employees, five itsof salaries arranged QMC petitioner had determined It was by an company owned private $100,000 a least at advance letter securing QMC had assisted who individual peti- at loan. QMC, the WVHA with in connection credit loan portions committed also directive, tioner’s yielded investments These speculative securities. ceeds uncov- investigation further $400,000. of almost losses through intermediate pay, proceeds the loan use ered officer, financial chief to WVHA’s kickback $10,000 transfer, a loan negotiated had petitioner whom individual obligation its on defaulted QMC instance. first in the bankruptcy. and filed WVHA jury on grand by federal a indicted petitioner was 1996 organization defrauding charges of including counts, 13 program, assistance a under benefits receives which of one kickback a 666(a)(1)(A), paying § C. U. 18 S. all on petitioner 666(a)(2). jury convicted § A agents, its to 65 him sentenced Court District charged, counts supervised term 3-year imprisonment months’ pay $1.2 was ordered addition, Petitioner, release. restitution. million failed argued petitioner appeal On wrongdo- by his affected organization WVHA, as prove Federal $10,000 excess “benefits ing, received 666(b). Rejecting the § C. by 18 U. S. required as program,”

671 argument, the United States Court of Appeals for the Elev- enth Circuit affirmed the convictions. 168 F. 3d 1273 It held that funds received an organization constitute "benefits” within the § meaning 666(b) if the source of the funds is a federal program, like Medicare, which provides aid or assistance to participating organizations. Id., at 1276- 1277. Entities receiving federal funding under ordinary commercial contracts, the court stated, fall outside the stat- ute’s Ibid., coverage. (citing and discussing United States v. Copeland, (CA11 143 F. 3d 1998) 1439 (holding that federal funds received under a contract to construct military aircraft did not constitute “benefits” within the meaning 666(b))). The court added that its construction furthered “the stat- ute’s purpose of protecting from fraud, theft, and undue influence by bribery the money distributed to health care providers, and WVHA in particular, through the federal Medicare program and other similar federal grams.” 168 F. 3d, at rejected 1277. It the view that the Medicare program provides benefits only to its “targeted re- cipients,” the qualifying patients. Id., at 1278 (disagreeing with United States v. LaHue, 998 (Kan. F. Supp. 1182 1998), aff’d, 170 (CA10 F. 3d 1026 1999)). granted

We certiorari, 528 U. S. (1999), and we affirm.

I I

A The nature and purposes of the Medicare program give us essential instruction in resolving present controversy. Established in part Social Security Act, U. S. C. (1994 1395 et seq. ed. and Supp. Ill), Medicare is a federally funded medical insurance program for the elderly and disabled. In fiscal 1997 some 38.8 million individuals were enrolled in the program, and over 6,100hospitals were provide authorized to services to them. U. S. Dept, of Health and Human Services, Health Care Financing Admin- istration, 1998Data Compendium 45, 1998). 75 (Aug. , Medi-

672 billion $123 exceeded services hospital for expenditures

care largest single Government the Federal 1998, making Cowen hospitals. for participating of funds source Care Health 21 1998, Expenditures, Health ah, National et 11). This (Table 1999) (Winter 165, Review Financing receipts. total of the hospitals’ 32% constituted amount Ibid. hospitals two such services, of health

Providers in the program to participate WVHA, qualify operated and statutory of series a comprehensive satisfying upon accreditation including particular requirements, regulatory licensing satisfy instance, must for Hospitals, standards. body a governing (1999); possess §482.11 standards, CFR quality effective, hospital-wide there to "ensure care,” of patient the provision to evaluate assurance account- staff medical “well organized” 482.21; and employ § medical to “the quality relating matters on able implementing 482.22(b). Medicare’s § to patients,” provided stand- other many among hospitals, require also regulations services, nursing 24-hour and provide ards, maintain 482.24; § services, “pharma- record medical 482.23; complete the patients,” needs meet services ceutical qualified with staffed services dietary 482.25; organized and further, requiring go regulations §482.28. personnel, main- and arranged, constructed, “be facilities hospital to provide and the patient, safety to ensure tained hospi- for special treatment diagnosis facilities community.” the needs appropriate tal services provides standards these with Compliance §482.41. pos- that participating assurance with obligation statutory their fulfill capacity sess which “of quality services necessary” “medically viding care.” health standards recognized professionally meets monitor organizations review 1320c-5(a). Peer §C. 42 U. S. obligations. these compliance providers’ non- (1999). Sanctions §466.71 §1320c-3(a); CFR compliance include dismissal from program. 42 U. S. C. § 1320c-5(b)(l). Medicare attains objectives its through an elaborate fund- ing structure. Participating health care organizations, in exchange for rendering services, receive federal funds on periodic basis. §§1395g, 13951. The amounts received reflect the “reasonable cost” of services rendered, defined as “the costs necessary in the efficient delivery of needed health services to individuals [by covered the program].” § 1395x(v)(l)(A). Necessary costs are not limited to the im- mediate costs of an individual procedure. treatment Instead they are defined in broader terms: “Necessary and proper costs are costs that are appropriate and helpful in developing and maintaining the operation of patient care facilities and § activities.” 42 413.9(b)(2) CFR (1999). Allowable costs include amounts which enhance the organization's capacity provide ongoing, quality services not only eligible pa- tients but also to the community at large. By way of exam- ple, amounts incurred for “certain programs educational interns and residents, known [graduate medical education] programs, are ‘allowable cost[s]’for (a which a hospital vider) may receive reimbursement.” Regions Hospital v. Shalala, 522 U. S. (1998) 448, 452 (citing 413.85(a) CFR (1996)); see 413.85(b) also (1999); Thomas Univ. Jefferson v. Shalala, 512 U. S. (1994) 504, 507-508 (describing regula- tion of education programs). “These programs,” the Medi- regulations explain, “contribute to the quality patient care within an institution and are necessary to meet the com- munity’s needs for paramedical medical personnel. . . . [M]any communities have not assumed responsibility for fi- nancing these programs and it is necessary that support be provided by those purchasing healthcare. Until communi- ties undertake to bear these costs, the program partici- will pate appropriately in the support of these activities.” 42 §413.85(e) CFR (1999). Medicare permits, also indeed en- courages, these deposit the amounts of reim- cash costs depreciation received bursements accounts.” depreciation “funded called sinking funds into does funds on these §413.134(e). earned income Investment expense, interest provider’s a operate to reduce not modern maintain to §413.153(b)(2)(iii),creating incentives facilities. equipment and medical certain afford furthermore, regulations, The Medicare ensure to intended treatment,” “special organizations vider qualifying for services availability medical ongoing qualify- (1999). Providers pt. 412G 42 CFR See patients. in- for hospitals],” rural small “Medicare-dependent, ing as to payments “lump sum” additional, to entitled stance, are patient in demand declines significant compensate for to provider enable funds § additional The 412.108. care. sat- to services” necessary staff core [its] “maintain] 412.108(d)(3)(A), §§ semi-fixed) (and costs.” isfy “fixed its “special authorize (B). Medicare does the too So community hos- “sole providers, among other for, treatment” “hospitals centers,” transplantation “renal pitals,” patients.” low-income share disproportionate serve providers assist subsidies The §§412.92,412.100,412.106. necessary continue obligations financial satisfying those require- program’s with the in accordance concerns going 412.92(d)(2). e.g., See, ments. a on occur disbursements course normal In the rendering provider’s of a in advance basis, often periodic 413.64 §§413.60, §1395g(a); 42 CFR U.S.C. services, providers’ “protect system serves payment U. S. Shalala, 508 v. Hospital Samaritan liquidity,” Good provision ongoing assisting in (1993),thereby 402, 406 (1999) reimburse (requiring 413.5(b)(1) 42 CFR services. institu so payment current “result method ment they sometimes disadvantaged, as be tions will pur money up put having arrangements, reim they receive before well services goods and chase oper- must system 413.5(b)(6)(reimbursement bursement”); § ate under “recognition of the need of hospitals and other keep pace with growing needs and to make im- provements”). The program, then, establishes correlating and reinforcing incentives: The Government has an interest in making available a high level of quality of care for the elderly and disabled; and providers, because of their financial dependence upon the program, have incentives to achieve program goals. . The nature of the program bears on the question of statutory coverage.

B Section 666 of Title 18 of the United States Code prohibits acts of theft and against fraud organizations receiving funds under federal assistance programs. The statute in relevant part provides as follows:

“(a) Whoever, if the circumstance described in sub- (b) section of this section exists— “(1) being an agent of an organization, or of a State, local, or Indian tribal government, or any agency thereof —' “(A) embezzles, steals, obtains fraud, or otherwise without authority knowingly converts to the use any of

person other than rightful owner or intentionally misapplies, property that— “(i) is valued at $5,000 or more, and “(ii) is by, owned or is under the care, custody, or con- trol of such organization, government, or agency; or “(B) corruptly solicits or demands benefit of any person, or accepts or agrees to accept, anything value any from person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of such organization, govern- ment, or agency involving anything of value of $5,000or more; or “(2) corruptly gives, offers, agrees or give anything

of value any person, with intent to influence or re- State, local a or of organization agent anof

ward in thereof, agency any or government, tribal or Indian series transaction, or any business, connection or government, organization, of such of transactions more; $5,000or value anything involving agency more than not imprisoned title, this fined under be “shall or both. years, (a) of subsection to in “(b) referred circumstance or government, organization, is that section this in period, benefits year any one receives, in agency involving Federal a under $10,000 excess insurance, guarantee, subsidy, loan, contract, grant, assistance. Federal form of or other salary, fide to bona apply “(c) does section This expenses paid, or compensation or fees, wages, of business.” course usual in the reimbursed, paid or (a) predi- is by subsection prohibited acts Liability for the “re- organization defrauded showing that the upon cated $10,000 excess period, benefits any one ceive[d], 666(b). can be benefits Those program.” a Federal guarantee, subsidy, loan, contract, grant, of “a form All Ibid. assistance.” of Federal form insurance, or other 42 CFR see program, a federal agree de- organization WVHA, as (1999), §400.200 $10,000 excess in received actions, by petitioner’s frauded in conten- point sole The program. payments in within “benefits” payments constituted those is whether tion (b). meaning of subsection provides program Medicare argues Petitioner health but elderly disabled to benefits view, petitioner’s organizations, Provider organizations. compensa- exchange for services render than no more do the Medicare submission petitioner’s tion. Under patient. qualifying beneficiary, the single envisions determination urges that a opposition, Government, whether an organization receives “benefits” within the meaning 666(b) turns on whether the Federal Govern- ment was the source of payment. Funds received under a federal assistance program, the Government asserts, can be traced from federal coffers, often through an intermediary or carrier, to the health provider. Under its view, the “federal-program source of the funds” satisfies the benefits definition. Brief for United States 11. reject

We petitioner’s reading of the statute but without endorsing the Government’s position. broader We conclude Medicare payments are “benefits,” as the term is used in its ordinary sense and as it is intended in the statute. The noun “benefit” means “something that guards, aids, or motes well-being: advantage, good”; “useful aid”; “payment, gift [such as] financial help in time of sickness, old age, or unemployment”; or “a cash payment or service provided for under an annuity, pension plan, or insurance policy.” Webster’s Third New International Dictionary These support definitions petitioner’s assertion that qualify- ing patients receive benefits under the Medicare program. It is commonplacefor individuals to refer to their retirement or health plans as “benefits.” itSo ought not to be disputed that the elderly and disabled rank as the primary beneficiar- ies of Medicare program. See §§ U. S. C. 1395j; 1395c, 42 CFR (1999) 400.202 (defining “beneficiary” “per- son who is entitled to Medicare benefits”); Shalala v. Guern- sey Memorial Hospital, 514 U. S. (1995) (“Under 87, 91 Medicare reimbursement scheme . . . participating hospitals furnish services to program beneficiaries and are reimbursed by the Secretary through fiscal intermediaries”); Good Sa- maritan Hospital, 508 S., U. (same). at 404

That one beneficiary of an assistance program can be iden- tified does not foreclose the existence others, however. this respect petitioner’s construction give would incomplete meaning to the term “benefits.” operates with a purpose and design above and beyond point-of-sale patient extend program the of benefits the that it follows and care, limiting the argument as well. manner a broader bene- primary or targeted program’s the “benefits”

term intermedi- example, Medicare exclude, for would ficiaries par- Shield), both a result (such Blue as Cross ary Blue disputed be it cannot purposes present For disavow. ties by advantage significant derive themselves the Gov- the imposed standards participation satisfying the the within benefits advantages constitute These ernment. have we statute bribery statute, a meaning of the forbidden [conduct] to the as “expansive,” “both as described States, 522 v. United Salinas covered.” entities the 52, 56 U. S. bene- providing (b) sources several identifies Subsection subsidy, contract, grant, a federal

fits —“a assist- of Federal form other insurance, or guarantee, loan, that 666(b). language indicates This U. S. C. ance.” programs as assistance many federal Congress viewed Coupled with organizations. participating viding benefits (a), the lan- of subsection prohibitions substantive broad the unam- expansive, (b) Congress’ reveals guage subsection of par- organizations integrity the to ensure biguous intent programs. in federal ticipating analysis. The the (c) on bears the statute Subsection fide any “bona coverage statute’s the from removes provision expenses paid, or compensation wages, or fees, salary, business.” course usual in the reimbursed, paid or operates subsection argues the that 666(e). Petitioner either they are because question payments exclude some or reimbursed,” paid or “expenses or “compensation” made are payments two, combination disagree. We of business.” course “usual pay- sorts specified provides that The subsection infer- One applies. section which not ones ments payments described formulation this from ence (c) exemp- subsection but benefits been have would tion. We go need not so far. Even assuming the examples (c) of subsection upon bear the definition of benefits, statu- tory examples of nonapplieability do not necessarily give rise to the inference that absent the enumeration the statute would apply. otherwise To define (c) all subsection pay- ments as exempted benefits go would beyond well the ordi- nary meaning of thé word. On the other hand, the statute is not written say: “The term ‘benefits’ does not include bona fide salary, wages, fees, or other compensation paid, or expenses paid or reimbursed, in the usual course of busi- ness.” We must construe the term “benefits,” then, in a manner consistent Congress’ intent not to reach the enumerated class of transactions. See Rep. S. No. 98-225, p. (1984)(“[N]ot every Federal contract or disbursement of funds would be [under § covered 666]. For example, if a government agency lawfully purchases more than $10,000in equipment from a supplier, it is not the intent of this section to make a theft of $5,000 or more from supplier thé a Fed- crime”). eral

We do not accept the view that the Medicare, payments question here in are for the purposes limited of compensating providers or reimbursing them for ordinary expendi- course tures. payments The are made for significant and substan- tial reasons in addition to compensation or reimbursement, so that neither these terms nor the usual course of business conditions set forth (c) subsection are met here. pay- The ments question have attributes and purposes well beyond those described in (c). subsection These attributes pur- poses are consistent with definition “benefit.” While payments might have similarities payments an insurer would remit to a hospital quite without regard to the Medi- care program, the Government does not make the payment unless the hospital complies with its intricate regulatory scheme. payments are made not simply to reimburse for treatment of qualifying patients but to assist the hospital in making available and maintaining a certain level qual- hospital both the interest inall care,

ity of medical community. greater the ob- itself provider explained, have we Here, as is de- regulation. Government substantial ject of only re- receives end that signed to long-term also but transactions isolated from value ciprocal effective and sound of a existence the advantages from Gov- The disabled. elderly and the system for care health to secure regulations and statutes specific enacted ernment advantage being and well promoting interests its own who patient to the addition provider, in care health of the receiving a bene- is provider care health The care. receives aof case unlike term, of the sense conventional fit assist or regulate does whom contractor beyond purposes significant or for objectives long-term for pay- Adequate transaction. immediate of an performance one itself provider care the health and ment ef- purposes These program. objectives of of the the mean- within benefit payment a make the suffice fects statute. ing of the program the Medicare operation of structure The enterprise aimed assistance' comprehensive

reveal care quality health availability ensuring at organiza- health Participating community. broader a series satisfy must shows, discussion our above tions, standards requirements, accreditation qualification and quality certain of a provision ensuring the part at aimed reimbursing partic- (1999). By pt. 482 42 CFR of care. expenses, of costs range a wide ipating costs, and edu- overhead costs, including treatment medical this system furthers reimbursement Medicare’s costs, cation provid- to ensure is structured scheme This objective. basis, medi- ongoing anon render, capacity possess the ers struc- patients. qualifying program’s to the cal assertion petitioner’s untenable proves moreover, ture, stability financial in the interest Congress has no viders once services are rendered patients. Payments are made in a manner calculated to provider maintain § stability. 413.5(b); Good Samaritan Hospital, 508 U. S., at 406. Incentives given for long-term improvements, such as capital costs and education. §§413.85, 413.134(e), 413.153(b)(2)(iii). Subsidies, defined as “special treatment,” are awarded to providers. certain pt. Id., 412G. In short, provider organizations play a vital role and high maintain a level of responsibility in carrying out the program’s pur- poses. Medicare funds, in provide turn, benefits extending beyond point-of-sale isolated, treatment transactions. The funds health care organizations receive for participating in constitute “benefits” within the mean- ing of 666(b). U. S. C. Our discussion should not be taken suggest that'federal funds disbursed under an assistance program will result in coverage of all recipient fraud 666(b). Any receipt of federal funds can, at some level of generality, be character- ized as a benefit. The statute does not employ this broad, almost limitless use of the term. Doing so would turn al- most every act of fraud or bribery into a federal offense, upsetting the proper federal balance. To determine whether organization an participating in a federal program receives “benefits,” an examination must be under- taken of program’s the structure, operation, purpose. and The inquiry should examine the conditions under which the organization receives the federal payments. The answer could depend, as it does here, on whether the recipient’s own operations are one of the reasons for maintaining the gram. Health care organizations participating in the Medi- care program satisfy this standard. The Government has a legitimate significant and interest

in prohibiting financial fraud or acts bribery being perpe- trated upon providers. Medicare Fraudulent acts threaten the program’s integrity. They raise the risk participating organizations will lack the requisite resources provide the Sa- Cf. program. by the envisioned care quality of and

level bribes of acceptance (stating that at 61 S., U. linas, an pursuant prisoners housing federal jail of a official an integ- to the threat “was Government agreement with program”). of the federal operation rity proper ex- further requiring questions may present cases Other it Here “benefits.” term of the elaboration amination the one such providers health hold that suffices meaning within benefits receive by petitioner defrauded Appeals Court judgment The statute. affirmed. ordered. so It is joins, whom Scalia Justice Thomas,

Justice dissenting. under “benefits” receive who only persons my view, Medicare elderly disabled individual Pay- them. serve who medical not the patients, to a Medicare by the Federal made

ments costs for the provider reimburse provider to health aid provide financial than rather rendered, services dissent. respectfully I “benefits.” hospital, are I 666(b)requires U. C. of 18 S. provision jurisdictional receiv[e], agency government, or “organization, $10,000 in excess year period, benefits any one subsidy, loan, contract, grant, involving a Federal assistance.” Federal form or insurance, guarantee, beneficiary of a organization is notes, Court As the receives organization merely because a federal 681, ad- Rather, as the Court 677, Ante, at funds. promotes or aids, “guards, something that amits, “benefit” [as] finan- gift “payment, or a aid”; well-being”; “useful unemployment.” age, or old sickness, time help in cial Dictionary International New Third Webster’s Therefore, the Court acknowledges, an organization “re- . ceives . . benefits” within §of meaning 666(b) if only the federal funds are designed to guard, aid, or promote the well-being organization, to provide useful aid to the organization, or to give the organization financial help time of trouble. my view, payments made by Federal to a Medicare health care provider as part of a market transaction are not “benefits.”1 statutory regulatory scheme governing Medicare reimbursements leaves no doubt that hospitals do not receive “benefits” from the Federal Government within this meaning of the term, but merely receive payments for costs pursuant to a market transaction. Although Medicare reimburse- ment scheme is quite it complex, suffices to point out a few critical components.2

Under the “reasonable cost” reimbursement provisions re- lied on Court, ante, at 673-675, the Federal Govern- ment reimburses providers for “the cost actually incurred, excluding therefrom any part of incurred cost found to be unnecessary in the efficient delivery needed health serv- 1Even if I thought that, under a reading §of 666(b) standing alone, a market exchange of payment for services might amount to “benefits,” §666(c) would eliminate that doubt. 666(c) Section makes clear that “bona fide ... expenses paid or reimbursed, in the usual course of business,” are not covered by the statute. As discussed below, Medicare payments to health care providers are precisely this type of payment. 22In 1993, year relevant to the instant case, Medicare consisted of two separate programs, Parts A and B. Part A provides insurance for certain elderly or disabled persons to cover the costs of inpatient hospital care, nursing facility care, home health services, and hospice care. See generally 42 U. §§ S. C. 1395c to 1395Í-4. Part B is a voluntary program that provides supplemental benefits to elderly or disabled Medicare partic ipants to cover the of, costs among other things, physician services, labora tory and diagnostic tests, ambulance services, and prescription drugs. §§ generally 1395j to 1395w-4. The Government did not present evi dence at petitioner’s trial regarding which provisions of Medicare ac counted for the payments made to the West Volusia Hospital Authority in 1993.

684 Act Security Social 1395x(v)(l)(A). The C. § S.

ices.” U. of Health Secretary the instructed Medicare created the establishing regulations to promulgate Human Services and specifically costs” “reasonable of methods determining reim- things, other consider, among to Secretary directed the Ibid. See insurers. private used by methods bursement Hospital, 87, Guernsey Memorial S. U. also Shalala v. (1995). 91-92 reim- the Federal regulations, these

Under the of provid- lower based upon providers burses medical to benefici- services these furnishing of cost reasonable er’s services. for the charges customary or the provider’s aries designed are 413.1(b) regulations § 42 CFR of cost providing for the actual reimbursement to provide See beneficiaries. Medicare disabled elderly care to ap- with of this approach, 413.5(a) (“Thus, application § actual in meeting result will support, accounting propriate make beneficiaries”). The regulations of services costs hospitals reimburse will Federal Government clear that to Medicare medical of the costs providing for only 413.80(d) § patients. nonbeneficiary as opposed patients, of services provided costs . . . (“Under Medicare Medicare be borne not to than beneficiaries of services 413.9(a) (“All payments § gram”); covered services cost on the reasonable be based must beneficiaries”); to the related Medicare under of serv- cost of reasonable (“The 413.9(c)(3) determination care of related on cost be based ices must beneficiaries”). hospi- permit provisions reimbursement these

Although maintaining the cost costs, such recover capital tals to reimbursement the allowable 413.9(c), facilities, § building attribut- reasonably amount is only these expenditures maintenance to general as opposed patients able to Medicare (“The 413.9(b) objective facilities. respect costs costs, determining the methods individuals covered by the program will not be borne by indi- viduals not so covered, and the costs respect to individ- uals not so covered will not be borne program”). The “prospective payment system” adopted by Congress in 1988to increase efficiencyand reduce operates costs some- what differently from the “reasonable provisions cost” but is also designed to reimburse hospitals for the provid- cost of ing care to Medicare beneficiaries. § 42 U. S. C. 1395ww; 42 pt. (1999). CFR 412 Under this system, the Medicare program pays hospitals a fixed price for each case based on patient’s diagnosis related grouping (DRG), which is assigned based on patient’s diagnosis, age, and sex, among other things. 42 § U. S. 1395ww(e); C. 24 CFR §412.60 (1999). The figure DRG represents the average cost of treating patients within the DRG. 42 U. S. C. § 1395ww(d)(2);49 Fed. Reg. (1984). Significantly, be- cause hospitals paid are fixed amounts based on the DRG, the hospital, any like private contractor, bears the risk of higher costs. See Kinney, Making Hard Choices under Prospective Payment System: One Administra- tive Model for Allocating Medical Resources under a Govern- ment Health Insurance Program, 19 Ind. L. Rev. 1151,1151—

Thus, the statute and regulations make clear that medical providers are entitled only to reimbursement for the actual or estimated cost services rendered to Medicare patients and that individual elderly patients disabled hospi- —not tals—are the beneficiaries of the Medicare program. In- deed, Social Security Act explicitly says so. See 42 § U. S. 1395a(b)(5)(1994 C. Ill) (“The ed., Supp. term ‘medi- care beneficiary’ means an individual who is entitled to benefits” (emphasis added)). The Act repeatedly refers to Medicare “benefits” as provided to individual participants, rather than to providers. medical g., See, e. §1395a (“Any individual entitled to insurance benefits under this § subchapter”); (“Such 1395b-2 notice shall be mailed an- part or part A under benefits entitled

nually individuals for bene- applies individual when subchapter and ofB this part B under subchapter or enrolls part of this A under fits (“health cover- 1395b-4(a) insurance § subchapter”); this benefits eligible receive who age to individuals (“information that 1395b-4(b)(2)(A)(i) subchapter”); this benefits”). contrast, obtaining individuals may assist of medi- “payments” commonly refers Act tljie cal shall (“no payments g., such 1395g(a) See, e. services. infor- such furnished it has unless any provider made be 1395f(a)(“payment request”); may Secretary the mation only to may made be an individual furnished services for Ill) Supp. §1395n(a) (1994 and services”); ed. providers may be individual furnished . .. services for (“payment eligible”). are which of services providers only to made defining al- regulations Medicare terminology, and the This for is a that Medicare fact the costs,,reflect lowable elderly disabled and individual help” to providing “financial treat who providers health care to the than patients rather providers’ reimbursing provisions Medicare’s them. exchange of market a than establish nothing more do costs provide “bene- said to be cannot and so services, payment 666(b). §C. meaning 18 S. of U. fits” within II cited regulations and statutory provisions Although reimburse- operates as that demonstrate above and providers, respect to health with ment scheme help,” “financial or aid” them “useful providing means aas regulations evidence statute in the finds the Court elderly individual along are, health target beneficiaries patients, also disabled unpersua- reasoning both Court’s I gram. think assist- flowing from any funds boundless; sive Court’s under “benefits” deemed be program could ance concluding disclaimer Court’s notwithstanding the rationale, of such a result. Thus, although the Court purports to reject argument Government’s that “benefits” means “funds that originate in a federal assistance program,” the Court, practice, adopts it.

A First, the Court describes Medicare’s elaborate funding structure and notes that Medicare’sreasonable cost recovery system allows recovery of certain capital costs and the costs of education and training. Ante, at 678-674. provi- These sions of Medicare do not establish that hospitals receive “benefits.” To the contrary, the capital costs recoverable provisions those of Medicare are the costs tied to the treatment of Medicare patients. See supra, at 684-685. this sense, the cost provisions of Medicare expressly defeat any suggestion that they are meant provide a “benefit” to the hospital. provisions These are not designed provide financial assistance to the hospital; they designed to en- sure that Medicare beneficiaries receive quality medical care. again, And the Medicare program picks up only portion of the costs attributable to the care of Medicare beneficiaries. 42 CFR §§413.50,413.85 (1999). In fact, the Court does not grapple with the evidence that Medicare systematically mder-compensates health care providers, evidence that would further undermine notion hospitals that are re- ceiving some form financial assistance from the program. See Utz, Federalism in Health Care: Costs and Benefits, 28 Conn. L. Rev. 127,138-139 (1995). Second, the Court relies on the obligations numerous im- posed on health providers care participating in Medicare. to 677, 680. Ante, at community.” capacity possess “providers guarantees Medicare program’s care medical basis, ongoing on render, words, Medi- Ante, 680. at patients.” qualifying medical quality access patients’ guarantee exists care care. Quality medical care is available only if pro- medical

viders remain financially viable. payments create demand for medical services and, therefore, provide “bene- fits” to health providers. care This syllogism, however, amounts to nothing more than the point self-evident .Medicare aims to ensure that the beneficiaries of gram patients—are able to — receive the program’s intended benefits. It does not establish that Medicare put exists to hospitals on the dole. In short, none of the components of Medicare cited the Court establishes that benefits flow to hospitals. It is significant that, although the Court repeatedly invokes, mantra-like, its conclusion that Medicare exists for a purpose above beyond reimbursing hospitals for treating Medi- patients, care g., see, e. ante, at 677-678, 679, 680, 681, when the Court comes around to actually identifying purpose, this it can only state: “The structure operation of the Medi- reveal a comprehensive federal assistance en- terprise aimed at ensuring the availability of quality health care for the broader community.” Ante, at 680. The Court cannot bring itself say, itas must, that Medicare exists for hospital.3

3And even if I were to accept that some provisions of Medicare —the special treatment provisions, for example provide a benefit to health — providers, there is no evidence in the record that West Volusia Hospital Authority received any such payments. Without such evidence, Court’s reliance on special provisions to uphold petitioner’s conviction is improper. Title 18 U. §666(b) S. C. is, all, after a jurisdictional provision that allows federal prosecution only if the specific organization at issue received more $10,000 than in “benefits.” The Court treats provision as window dressing. It is not necessary, under the Court’s view, to show that this organization received benefits. It is sufficient to show that some hospitals receive them. This approach is particularly inappropriate because 666(b), or some similar jurisdictional provision, is constitutionally required. Section 666 was adopted pursuant to Congress’ spending power, I, 8,§ Art. cl. 1. We have held that the spending power requires, least, at that the exercise of federal power be related “to the federal interest particular national

690

.B argument the Government’s disclaims Although the Court federal a under provided funds only means “benefits” that it. adopts practice, Court, in the program, assistance any federal applied be could rationale expansive Court's organization. any funds provides that program assistance stat- meaning the of plain the is inconsistent This result organiza- any 666 apply Congress had meant If ute. per $10,000 than totaling more “funds” receives tion that (‘Who- §665 C. U. S. 18Cf. so. said have it would annum, agency any capacity with any in connected . being . . ever, any funds or assistance receiving financial organization or ineli- knowingly enrolls program] federal [a certain or steals, misapplies, willfully embezzles, gible participant, prop- or assets, funds, moneys, any the by of fraud obtains agree- subject a financial the erty which [punished]”). be Act shall to such pursuant contract or ment “ben- word omitted have matter, could Congress, that organi- any simply that provided statute from efits” in excess period, year any one “receives, that zation involving . form . . a a Federal $10,000 under Con- That statute. is covered assistance” federal ahas “benefits” the word suggests that so gress do did not (1987) 203, 207 Dole, U. S. 483 Dakota v. South or projects programs.” J., dis- (O’Connor, id., omitted). at (internal marks quotation or theft acts to criminalize attempted Congress if senting). Arguably, to the unrelated circumstances that —in fact solely on bribery based pay- as funds federal received organization victim bribery or theft —the would requirement transaction, constitutional this for market ment that ensure would provision jurisdictional Without be satisfied. interest federal is related power of federal the exercise each case or brib- fraud acts routine criminalize §666 would program, in a federal bal- proper admits, “upse[t] would which, Court ery, (1995) 549, 561 U. S. Lopez, States v. United Ante, Cf. at 681. ance.” ensure, would which element no jurisdictional contains (“[Section] 922(q) af- question possession firearm inquiry, ease-by-case through commerce”). interstate fects meaning separate apart from the words “under a Federal program involving a . . . form of federal assistance.” I am doubtful that the Court’s interpretation gives any meaning at all to the word § 666(b) “benefits” in because, under the Court’s rationale, any organization that receives $10,000 under a federal program involving federal assistance re- ceives “benefits” such an amount. expansive

This §666(b) construction of is, at the very least, inconsistent with the rule of lenity the Court does —which not discuss. This principle requires that, to the extent that there is any ambiguity in the term “benefits,” we should re- solve that ambiguity in favor of the defendant. See United States v. Bass, 404 U. S. (1971) (“In 336, 347 ways various over years, we have stated that when choice has be made between two readings of what conduct Congress has made a crime, it is appropriate, before we choose the harsher require alternative, to that Congress spoken should have language that is clear (internal and definite” quotation omitted)). marks

C I doubt that there any provide does not “benefits” to organizations under the expansive Court’s rationale, but will illustrate my point with

just one example employed by two lower courts. See United States v. Wyncoop, 11 (CA9 F. 3d 119, 123 1993); United States v. LaHue, 998 (Kan. F. Supp. 1182, 1998), 1187 aff’d, (CA10 170 F. 3d 1026 1999). Many grocery stores ac- cept more than $10,000per annum in stamps food distributed to individual part beneficiaries as Federal Food Stamp and Food Distribution Program. Like providers, Medicare stores participating in the Food Stamp Program are required satisfy a comprehensive series of statutory and regulatory requirements. See pt. CFR For example, stores qualified to participate only they if sell an ade- quate percentage staple foods such meat, as cereal, and dairy products. §278.1(b)(1). Stores must document an demonstrate and business stamp food attract ability owners store reputation and integrity

business Food Medicare, Like §§278.1(b)(2)-(3). managers. with compliance the providers’ monitors Stamp Program Medicare, 278.1(n). Like requirements. program’s dis- noncomplianee sanctions Program Stamp Food Stamp And, the Food §278.1(1). the program. from missal hav- described be can it in that is like Program point-of-sale” beyond above design “a ing purpose Program Stamp the Food Ante, at Undoubtedly, 677. food. avail- lack is, gap,” “grocery address helps low- some foods nutritional priced reasonably ability Trafficking: Stamp Food Note, See areas. rural and income De- the from Protection Judicial Need Groceries Small Why Employees), Own Their from (And of Agriculture partment of Agri- (1998); Department 2156,2176-2177 L. Rev. 96 Mich. Retailers Evaluation, Food & of Analysis culture, Office and Service Characteristics Program: Stamp Food the is 6). There (Table 1997) (Feb. 15 Participants Program regulations the statute face on evidence ample ensure the need mind had the agency Congress that stores. access grocery have communities low-income that IV) (1994 (requiring ed., 2021(a) Supp. §C. 7 U. S. in making community to the hardship to consider Secretary §278.1(b)(l)(ii)(C) determinations); CFR disqualification community stores food availability (1999) (listing in the to participate a application firm’s relevant a factor that therefore, grocery said, be It could program). maintain- reasons are one “own operations store’s Ante, at 681. the program.” ing does grocery corner that the reason mind, my To payment receives merely that it is simply “benefits” receive see, fail I transaction. market ain from the that conclusion same reach could Court however, how holding its us assures the Court Although I would. “structure, on factbound, depending narrow is today operation, and purpose” of Medicare, ibid., the consequences of the Court’s reasoning are far reaching. In fact, the Court candidly acknowledges that its interpretation expansive when it reads 666(b) 18 U. S. C. to suggest that “Congress many viewed programs as providing bene- fits to participating organizations.” Ante, at (emphasis added). In contrast, I think that the plain language of §666(b) reflects congressional intent to reach only those organizations that are themselves the beneficiaries of “useful aid” or “financial help in time of sickness, age, old or unem- ployment,” rather organizations than merely receive part funds as of a market transaction goods or services.

[*] ^{[*] [*]} For the foregoing reasons, I respectfully dissent. Ante, at 672-675. The Court notes that health provid- care ers must satisfy licensing provide standards, a laundry list particular of health care services, and ensure an effective quality-assurance program. I assume, , however, that the same could be said of most Government contractors. The defense contractor who agrees to build the military’s equip- statutory of list extensive to subject doubt, is, no ment the Government because not requirements, regulatory because contractor, but the provide “benefits” intends ex the on place controls intends Government Federal the Copeland, v. States United dollars. penditure of 1998) bur regulatory (discussing (CA11 1439, 1442 3dF. no contractors). insurers Similarly, private defense on dens re receive who those on requirements impose various doubt to meet hospitals requiring In them. from imbursements no different is Federal the standards, certain Govern Federal the except that insurers, private from these power. market vástly greater exercises ment an intricate of providers care on imposition health the words, whether question the irrelevant is scheme regulatory benefits. are that scheme pursuant to paid funds care health some contends Court Third, the pay- lump sum form the “special treatment” receive satisfy ability to providers’ designed to ensure ments Medi- feature This 674. Ante, at obligations. financial re- were any “benefits” show also insufficient payments, Authority. These Hospital Volusia West ceived system, see payment prospective part which serv- providing costs on estimated are based 685, at supra, §412.108 CFR g., See, e. beneficiaries. to Medicare ices outlined schemes reimbursement standard Like hospital, subsidize system does payment this above, service. performing prospectively hospital pays it its observations on concludes, based Finally, the Court design purpose awith operates that “Medicare Medicare, namely, “ensur- care,” patient point-of-sale beyond above broader quality health availability of ing Court, According

Case Details

Case Name: Fischer v. United States

Court Name: Supreme Court of the United States

Date Published: May 15, 2000

Citation: 529 U.S. 667

Docket Number: 99-116

Court Abbreviation: SCOTUS