UNITED STATES OF AMERICA v. RUTH WHITED
No. 02-1112
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
November 19, 2002
Honorable Edwin M. Kosik, District Judge; RENDELL, Circuit Judge
PRECEDENTIAL; Argued July 29, 2002
Appeal from the United States District Court for the Middle District of Pennsylvania (D.C. Criminal No. 01-cr-00008)
William Ruzzo, Esq., [ARGUED] 590 Rutter Avenue Kingston, PA 18704 Counsel
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
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 indictmеnt of one count of theft or embezzlement in connection with health care, in violation of
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, 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 . . . .
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.
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 аppeared 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 embezzlement from individual medical care providers such as the Center. After the District Court denied the motion, Whited
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
The District Court exercised jurisdiction to determine the sufficiency of the indictment and interpret the relevant statutes pursuant to
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 argumеnts, 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
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
[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 а 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.”
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
[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.
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 сlear Congress‘s intent to criminalize theft or embezzlement under
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 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 arguеs,
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).
In its opinion, the District Court emphasized the interstate nature of the commercial enterprises and contractual relationships through which the payment for
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,”
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, 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 actiоn -- 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
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 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 аuthorize 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 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
Like the statutes considered in Lopez and Morrison,
- the economic nature of the regulated activity;
- a jurisdictionаl 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;
- express congressional findings regarding the effects upon interstate commerce of the activity in question; and
- the link between the regulated activity and interstate commerce.
Gregg, 226 F.3d at 262 (citations omitted).
We conclude that, unlike the statutes considered in Lopez and Morrison, Congress had a rational basis for believing that
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 rеflect 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 economiс 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
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 nоt 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,
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
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 insurance industry. The most relevant and helpful piece of the legislative history with regard to thе 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.
These startling figures prompted numerous efforts at legislation, frequently including efforts to craft more efficient аnd effective federal criminal sanctions.
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.”
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 boundariеs 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
4. The Nexus Between the Regulated Activity and Interstate Cоmmerce
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 territоry; 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.
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
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
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.
IV.
Although poorly drafted, Whited‘s indictment charged her with embezzling from the Center, a qualifying health care benefit progrаm under the plain statutory language, and thus sufficiently alleged the material elements of the offense. We further conclude that the application of
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