Kaitlyn Downs is a Associate in Holland & Knight's Orlando office.
In United States of Am. v. McCardell, No. 17-30919, 2018 WL 4697252 (5th Cir. 2018), the court of appeals affirmed the conviction and enhanced sentencing under U.S.S.G §2B41 of registered nurse administrator Thomas McCardell for Physicians Behavioral Health (PBH) under the AKS. McCardell paid an individual, Gloria Himmons, to refer patients to PBH through the guise of employing Himmons' son as a community educator. Because Himmons was already referring patients to another hospital in Florida, Himmons agreed that all payments should be made through her son. After Himmons was charged for violating the AKS in relation to her dealings with the hospital, she cooperated with authorities to provide evidence to charge McCardell. A jury determined McCardell was guilty. The lower court exercised its discretion to depart from the applicable guideline ranges to enhance the sentence based upon the amount of improper benefit conferred, rather than the amount of the bribe.
Among other arguments, McCardell asserted that the lower court's conviction was not supported by sufficient evidence because McCardell did not knowingly or willfully make payments to Himmons with specific intent to violate the AKS, and because McCardell attempted to comply with the safe harbor provision of personal services and management contracts by entering into the contract with Himmons' son. The court found McCardell's arguments unconvincing. The court relied on the fact that McCardell agreed to abide by PBH's employee handbook, which specifically prohibited McCardell from offering kickbacks. Furthermore, the court reasoned that McCardell's contract with Himmons' son lacked an agency agreement set out in writing and signed by the parties (as required under 42 C.F.R. §1001.952(d)(1)) and that the agreement was in reality an agreement between McCardell and Himmons signed by Himmons' son.
Moving to sentencing, McCardell argued that the government bore the burden of proof to show that the sentence was warranted and the value of the bribe should have been used to determine the appropriate increase in the offense level because direct costs were not calculable. The court disagreed, finding that the lower court did not improperly place the burden of proof on McCardell and did not err in determining that the value of the improper benefit to be conferred was the appropriate basis to increase the offense level. The court reasoned that (1) McCardell admitted that he had the burden of proof during the lower court hearing, and that (2) the statement of PBH's owner that he did not have time to calculate all direct costs demonstrated that such costs could have been calculated. The court also ruled that even if it had found that the lower court had erred in its sentencing determination, the error was harmless. The court relied on the fact that the lower court explicitly laid out an alternative ground for its decision as compared to the guideline range based on independent factors.
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