[00:00:01] Speaker 00: Good morning. [00:00:01] Speaker 00: May it please the court. [00:00:02] Speaker 00: My name is David Schlesinger. [00:00:03] Speaker 00: I represent the appellant, Juan Carlos Enriquez. [00:00:07] Speaker 00: On its face, the Supreme Court's opinion in Rouen, the United States, seems to concern itself only with the accept as authorized language in Section 841A. [00:00:18] Speaker 04: Mr. Schlesinger, could you speak up a little bit or? [00:00:22] Speaker 04: My apologies, Your Honor. [00:00:23] Speaker 04: Yeah, you have a very soft voice. [00:00:26] Speaker 00: As I was saying, Your Honor, the accept as authorized language in 21 USC 841A appears to be the only question at issue in Rwanda. [00:00:39] Speaker 00: But when one looks at the case in much more detail and takes a close look at Justice Alito's concurrence in judgment, which reads much more like a dissent, [00:00:51] Speaker 00: This case actually deals with much more profound concerns of statutory construction, particularly when one has to determine whether a particular exception in a statute is [00:01:07] Speaker 00: actually a quasi-element or an implied element that needs to be pleaded in an indictment, much like an actually articulated essential. [00:01:16] Speaker 04: Mr. Schlesinger, I'm having a hard time reading Rouen quite that broadly. [00:01:21] Speaker 04: It seems to me that Rouen talked about who bore the burden of proof in proving or disproving the existence of a fact. [00:01:30] Speaker 04: And what the statute seems to say here is to erect a rebuttable, excuse me, affirmative defense that the government may or may not have to negate at trial, but it's buried in along with a list of almost two dozen other what I would call affirmative defenses. [00:01:54] Speaker 04: And why does the government have to include that as in the draft of the indictment? [00:02:01] Speaker 00: Well, a couple of points, Your Honor. [00:02:03] Speaker 00: I'd refer you to page 2380 in Ruan from Justice Breyer's majority opinion. [00:02:09] Speaker 00: He writes, that statutory requirement, while differing from an element in some respects, is sufficiently like an element in respect to the matter at issue here as to warrant similar legal treatment. [00:02:20] Speaker 00: So that's where we develop the term quasi-element or implied element, that it's more than just simply a burden shifting analysis that he engages in in his majority opinion. [00:02:34] Speaker 04: But your appeal specifically is an attack on the drafting of the indictment. [00:02:38] Speaker 00: That's correct, Your Honor. [00:02:40] Speaker 04: And that's where I'm wondering whether Ruan goes quite that far. [00:02:47] Speaker 04: I mean, isn't it the office of a bill of particulars if the defendant is uncertain as to whether or not this particular affirmative defense may or may not apply that you can move the court to ask the government to further articulate their theory of prosecution? [00:03:06] Speaker 00: I think that there's more required of the government in drafting an indictment than simply waiting, Your Honor, based on Ruan for a later bill of particulars. [00:03:19] Speaker 00: We've cited, and I know that the case law is rather skeletal and slow to develop in this area, but we have cited two published district court opinions that actually require [00:03:32] Speaker 00: the government in drafting indictments under Section 841A to charge the accept as authorized specifically in the indictment and essentially to plead around it and show why it doesn't apply. [00:03:47] Speaker 02: So... Council, if I could just jump in because I want to follow up on that. [00:03:50] Speaker 02: Sure. [00:03:50] Speaker 02: I know when the government gets up, they're going to point to pages 2379 and 2380 and the language where the court says Section 885 merely absolves the government of having to allege in an indictment [00:04:02] Speaker 02: the applicability of every statutory exception. [00:04:05] Speaker 02: They're going to say Ruan says exactly the opposite of what you're saying, and that it does not need to be alleged an indictment. [00:04:11] Speaker 02: I want to know what's your response to that language in Ruan? [00:04:15] Speaker 00: Sure. [00:04:15] Speaker 00: I would point you to separate language in Judge Justice Breyer's opinion, Your Honor, page 2380. [00:04:25] Speaker 00: Section 885 merely absolves the government of having to allege an indictment the inapplicability of every statutory exception in each controlled substances act prosecution. [00:04:35] Speaker 00: So we're not saying that the government here in drafting the indictment would have to plead around every single one of the exceptions. [00:04:44] Speaker 00: And I'll refer to it as B3B, because the full statutory side is quite kind of a mouthful. [00:04:50] Speaker 00: But here on its face, the indictment alleged that Mr. Enriquez [00:04:55] Speaker 00: was a pharmacy technician at Five Star and Ultimate Pharmacies in Vietnam. [00:05:01] Speaker 00: So it would have been relatively easy, and I even took a stab at trying to draft some language that the government could have put into the indictment. [00:05:11] Speaker 00: I'm sure they appreciate the help. [00:05:13] Speaker 00: I'm not usually in the business of trying to help the government, Your Honor, but I think for these purposes I want to try to illustrate just how basic this could have been. [00:05:21] Speaker 00: My attempt is, as an employee of Five Star and Ultimate Pharmacies, Enriquez knowingly and willfully conspired to receive payments from Sadowsky that were not for the provision of covered items or services. [00:05:34] Speaker 00: So that would have been relatively easy to have done. [00:05:36] Speaker 04: But the question is, is the indictment constitutionally infirm for failing to allege all the elements of the crime? [00:05:43] Speaker 04: And that's where I'm having a hard time extending rule on. [00:05:47] Speaker 04: I'm also having a hard time, in light of your answer, squaring it with what [00:05:53] Speaker 04: the court said in Ruan, we now hold that section 841's knowingly or intentionally mens rea applies to the accept as authorized clause. [00:06:06] Speaker 04: This means that once a defendant meets the burden of producing evidence that his or her conduct was authorized, [00:06:11] Speaker 04: The government must prove beyond a reasonable doubt that the defendant knowingly or intentionally acted in an unauthorized manner. [00:06:19] Speaker 04: To me, that speaks to burden of proof and shifting burdens once the defendant picks the defense out of the laundry list that the statute provides and then allocates to the government the obligation to prove by proof beyond a reasonable doubt that that safe harbor provision is not a safe harbor for them. [00:06:39] Speaker 00: I understand your concern, Your Honor, but I would direct you to the essentially position that Justice Alito took in his concurrence and judgment, in which he emphasized that this goes beyond simply burden-shifting concerns except as authorized, which similar language appears in the statute. [00:07:03] Speaker 00: He deemed this to essentially [00:07:06] Speaker 00: create somewhat of a sea change. [00:07:08] Speaker 00: He called it a radical new course using his exact language. [00:07:12] Speaker 00: In terms of how courts approach exceptions, in terms of how they approach language such as what appears in B3B. [00:07:21] Speaker 04: But don't you think there's a difference between whether or not a doctor who is authorized to write prescriptions for controlled substances versus this individual who was paid apparently commissions in addition to a salary [00:07:35] Speaker 04: might find a safe harbor in what amounts to a Medicare fraud case. [00:07:42] Speaker 04: I mean, we're dealing with two different statutory provisions, are we not? [00:07:47] Speaker 00: The language is different, I'd acknowledge that, Your Honor, but the principles are similar in that you have accepting language, accept as authorized in 841A, [00:07:57] Speaker 00: and here you have a series of exemptions, only one of which squarely on its face applies. [00:08:04] Speaker 04: But I guess what I'm focusing upon in the drug distribution situation is that a statute makes it illegal to distribute controlled substances, but we all know that doctors, for legitimate medical reasons, can prescribe, by prescription, controlled substances in order to treat recognized diseases. [00:08:25] Speaker 04: And it seems to me that's a world of difference from a statute that holds you liable for Medicare fraud, but provides some affirmative defenses that you might be eligible for. [00:08:38] Speaker 04: And if you raise them, the government then has the burden to disprove them by proof beyond a reasonable doubt. [00:08:45] Speaker 00: I would like to answer your question, Your Honor. [00:08:48] Speaker 00: I would note that I would like to reserve some time. [00:08:50] Speaker 00: I'll give you a little time. [00:08:51] Speaker 00: Thank you very much, Your Honor. [00:08:54] Speaker 00: The key area, Your Honor, and again, I understand your concern, is that the government, in contrast to other defendants charged in Count 9, such as Rosales and Sultnikov, was specifically alleged to be an employee. [00:09:08] Speaker 00: And so that immediately implicated B3B because he was receiving compensation as an employee at Five Star and Ultimate Pharmacy. [00:09:21] Speaker 00: So it was incumbent [00:09:24] Speaker 00: in our view under Ruan for that kind of specific allegation to be made in the indictment to show that his receipt of compensation from Ms. [00:09:35] Speaker 00: Sadowsky [00:09:37] Speaker 00: was in the government's view as charged as should have been charged in the indictment was not purely. [00:09:43] Speaker 04: So how was he prejudiced by the lack of the allegation? [00:09:47] Speaker 04: I mean he obviously knew in the indictment that he was being charged for work related receipt of federal funds. [00:09:57] Speaker 04: And it seems to me that it's sort of incumbent upon him at that point, if he thinks he might qualify for this safe harbor, to raise it as a defense. [00:10:12] Speaker 04: I mean, is he saying I had no idea that when I was charged with Medicare fraud that there might be a safe harbor provision for me under this statute? [00:10:20] Speaker 00: I think your concerns, Your Honor, certainly go to what would have been considerations if the case had been tried and what would have been- I'm trying to see what prejudice might attend here to him. [00:10:33] Speaker 04: I mean, the whole purpose of the indictment is to put the defendant on due process notice of what he has to meet at trial. [00:10:39] Speaker 04: And in this case, the fact that he was alleged to have committed the fraud within the course and scope of his employment seems to me adequate notice that he's being charged for acts that he committed while he was employed by the pharmacy. [00:10:56] Speaker 04: So he clearly had notice of what the government was accusing him of. [00:11:01] Speaker 00: I would know, Your Honor, that the one overt act that Count 9 specifically charges regarding Mr. Enriquez which shows up as a separate violation of B1B charged in Count 12 is a receipt of payment from one of the pharmacies on April 20, 2016. [00:11:25] Speaker 00: That in itself, on its face, doesn't give him notice that that specific payment, which could have been for innocuous, bona fide employment-related purposes, it didn't put him on notice that that specific overt act was for prescribed conduct. [00:11:42] Speaker 00: So our view, Your Honor, is that, yes, I think some of the concerns you've raised [00:11:48] Speaker 00: go to how this case would have proceeded if it had gone to trial. [00:11:52] Speaker 00: But looking at just the four corners of the indictment, which this case, this court's case law has said is all that this court looks at in this particular motion context, there simply wasn't enough for Mr. Enriquez to be on notice regarding the potential applicability of this [00:12:11] Speaker 00: exception, which as we've argued, needs to be charged as a quasar or implied element. [00:12:17] Speaker 01: So you've argued that the indictment must plead the inapplicability of a facially applicable safe harbor. [00:12:24] Speaker 01: But how should facially applicable be defined? [00:12:29] Speaker 01: And what would trigger it? [00:12:31] Speaker 00: I think here, Your Honor, it's some sort of factual allegation that would fit the exception [00:12:39] Speaker 00: that would bring the exception into play. [00:12:42] Speaker 00: And as I said here, the distinguishing allegation in the indictment was that Mr. Enriquez was an employee, Ms. [00:12:50] Speaker 00: Rosales and Mr. Saltnikoff were just described as marketers. [00:12:53] Speaker 00: They were not employees of the pharmacy. [00:12:55] Speaker 00: So the exception necessarily didn't apply to them. [00:13:01] Speaker 00: There's enough in this indictment to make the court, I think, [00:13:09] Speaker 00: less hesitant about expanding the rule we propose in a very, in a vast way that would be too onerous on the government. [00:13:18] Speaker 00: As I said, it's the charging of Mr. Enriquez as the employee that triggers this requirement. [00:13:25] Speaker 00: And I note that in the memorandum of disposition in Equebalem that Judge Owens joined, [00:13:35] Speaker 00: The panel did have some concerns about this, so that's why we're proposing a very narrow rule. [00:13:41] Speaker 00: If it's clear on the face of the indictment that an exception would apply, then that's where the charging requirement comes into play. [00:13:50] Speaker 02: Unless my colleagues have any more questions, I'm going to stop you there, but I'm going to give you two minutes for rebuttal. [00:13:54] Speaker 02: Thank you so much, Your Honor. [00:13:55] Speaker 04: I appreciate it. [00:13:55] Speaker 04: Thank you. [00:14:10] Speaker 03: Good morning. [00:14:11] Speaker 03: May it please the Court, I'm Ethan Sacks on behalf of the United States. [00:14:15] Speaker 03: As Your Honors have been discussing with my colleague this morning, Mr. Enriquez asked this Court to stretch and read Ruan and also the anti-kickback statute in a way that no Court has done before. [00:14:28] Speaker 03: I'd like to focus on two primary reasons why we think that request is misguided, and some of them relate to things we've been discussing this morning. [00:14:37] Speaker 03: The first is that Rouen dealt with the Controlled Substances Act, which, as some of your Honor's questions got to, is a very different statute than the anti-kickback statute at issue here. [00:14:47] Speaker 03: And the second is that, as we've also discussed, Rouen dealt with not a pleading standard for the indictment, but the burden of persuasion or proof to prove at trial, and it was a jury instruction case. [00:15:01] Speaker 03: So that's that first issue. [00:15:02] Speaker 03: I think it's most helpful to see the difference to just look at the two statutes at issue. [00:15:07] Speaker 03: Just look at the text of them. [00:15:09] Speaker 03: The Controlled Substances Act 21 U.S.C. [00:15:11] Speaker 03: A41A lays out in one provision, it says, except as authorized, it shall be unlawful for any person knowingly or intentionally, skipping a couple words, to manufacture, distribute, and perform other conducts with a controlled substance. [00:15:28] Speaker 03: The AKS by contract, as we've discussed this morning, in this 42 USC 1320A-7B and then little b, illegal remunerations, lays out essentially whoever knowingly and willfully solicits or receives any remuneration in section one, [00:15:45] Speaker 03: And then two, whoever knowingly and willfully offers or pays any remunerations, that's section two. [00:15:51] Speaker 03: And then in a whole new subsection three, it says paragraphs one and two shall not apply to, and then it lists dozens of what have been called safe harbors and are effectively, or we think are, affirmative defenses to the statute. [00:16:07] Speaker 03: And I just want to mention that every court [00:16:10] Speaker 03: including this one, to have ever considered that question have held or at least endorsed the principle that those are affirmative defenses. [00:16:18] Speaker 03: No one has suggested otherwise. [00:16:23] Speaker 03: That principle that separate provisions lay out affirmative defenses is one of the most bedrock principles we have in the criminal law. [00:16:31] Speaker 03: We signed an 1841 decision from the Supreme Court, Dixon saying it has always been the rule. [00:16:37] Speaker 03: So by 1841, it was already always the rule that affirmative defenses, that these type of provisions are affirmative defenses. [00:16:45] Speaker 03: That hasn't changed. [00:16:47] Speaker 03: We understand Mr. Enriquez has suggested that Rouen was this sea change that has sort of changed that principle. [00:16:53] Speaker 03: One, our response to that would be quite remarkable to have done that silently. [00:16:58] Speaker 03: You know, this is hundreds of years of consistently applied precedent and to overturn those [00:17:03] Speaker 03: that consistent strand of case law silently would be truly remarkable. [00:17:07] Speaker 03: And we can see that it's not, and I just want to point to court's attention, we cite this case in our brief, I apologize if I'm pronouncing it incorrectly, I think it's Chow Chun, it's from the Seventh Circuit, interpreting the FARA, the Foreign Agent Registration Act, and that statute is [00:17:22] Speaker 03: structured very similarly to the anti-kickback statute, and Judge St. [00:17:26] Speaker 03: Eve's decision for that court lays out why that principle that I've been articulating from Dixon through McKelvey, through more recent cases, shows that those are affirmative defenses. [00:17:38] Speaker 03: When they're in a separate provision, defenses like that are affirmative defenses that remain the defendant's burden. [00:17:44] Speaker 03: If I could just quickly mention a couple of the other reasons why we think the statutes are different. [00:17:50] Speaker 03: One is that, Judge Tolman, your question got to this earlier, Ruan actually mentions this, that the Controlled Substances Act, the Accept As Authorized Clause, changes what is really societally necessary in good conduct upon which many of us rely on a daily basis for a doctor to prescribe us a controlled substance. [00:18:11] Speaker 03: That same conduct can be criminal if unauthorized. [00:18:15] Speaker 03: And so that accept as authorized clause is really doing a ton of work in the statute. [00:18:20] Speaker 03: Kickbacks don't really work that way. [00:18:22] Speaker 03: Kickbacks are largely in an unlawful behavior to which there are some narrow exceptions laid out in the affirmative defenses. [00:18:31] Speaker 03: And just the third point on this is that the case law reflects this. [00:18:35] Speaker 03: Courts pre-ruan, including this court, had treated the accept as authorized clause in the Controlled Substances Act in many different ways. [00:18:45] Speaker 03: This court effectively treated it as an element of the statute. [00:18:49] Speaker 03: The 11th Circuit treated something much closer to an affirmative defense, and there were circuits in between those that sort of, you know, treated as a quasi-element, if you will, and what the court ultimately adopted. [00:19:02] Speaker 03: Here, by contrast, there's no such similar history, as I've mentioned, with the anti-kickback statute. [00:19:07] Speaker 03: For decades, courts have held that the [00:19:10] Speaker 03: the provisions, the safe harbors or affirmative defenses. [00:19:13] Speaker 03: So we think that's really all that's necessary for this court to [00:19:18] Speaker 03: say that the statutes are dissimilar enough that Rwanda has no bearing on this case. [00:19:23] Speaker 04: Counsel, this was a conditional plea case, is that right? [00:19:27] Speaker 04: That's correct. [00:19:28] Speaker 04: So let me ask you a hypothetical. [00:19:31] Speaker 04: If the government took the position that the defendant's solicitation of prescriptions, let's say from nursing homes and so on, to steer work business to the pharmacy to fill them, [00:19:46] Speaker 04: And he was paid a commission based on the number of prescriptions that were so referred. [00:19:53] Speaker 04: Had he simply gone around and marketed the services of the pharmacy, but was just paid his regular salary? [00:20:02] Speaker 04: Would that be a violation of the statute under the government's view of the law? [00:20:07] Speaker 03: So I think the answer is yes. [00:20:10] Speaker 03: It still would be a case. [00:20:11] Speaker 03: Yes, under this circuit's case law. [00:20:15] Speaker 03: That, of course, hasn't been litigated or briefed in this case. [00:20:18] Speaker 03: But I think the answer is yes. [00:20:19] Speaker 03: And I will acknowledge that there is some [00:20:22] Speaker 03: disagreement among the courts of appeals of really how broadly to read the bona fide employment safe harbor. [00:20:28] Speaker 03: But I think it would be helpful to, this is not in my brief, and so I just want to mention this case in response to your question. [00:20:35] Speaker 03: There's a Fifth Circuit case that I think is really on point. [00:20:37] Speaker 03: It's unpublished. [00:20:38] Speaker 03: It's Jackson. [00:20:39] Speaker 03: It's 220, Federal Appendix 317, Fifth Circuit case from 2007. [00:20:45] Speaker 03: that defendant was an employee of the pharmacy. [00:20:48] Speaker 03: We don't dispute that he was an employee of the pharmacy, but just that's not what the kickback scheme involved. [00:20:54] Speaker 03: And that court said, well sure, you have separate employment, but you have a scheme based on separate checks that qualifies. [00:21:01] Speaker 03: Now I understand your hypothetical is slightly different than that because there are [00:21:05] Speaker 03: titles or roles of people who go out and promote a pharmacy, and we think that gets closer to the line. [00:21:10] Speaker 03: So I think I would, you know, not to fight the hypothetical, we need to know more facts, but I think in some cases, yes, that could still be a violation of the statute, depending on where the payment comes from. [00:21:20] Speaker 04: Wouldn't it be a violation if a, what do they call them, the sales reps go around and flog their pharmaceutical company's latest miracle to get doctors to prescribe them? [00:21:33] Speaker 03: I hesitate to say in every case, but I think generally you're right, Your Honor. [00:21:36] Speaker 03: We agree with you that that probably would not violate the statute. [00:21:40] Speaker 03: One thing that might be helpful to note is that many employers who are trying to be above board with this will write in to the agency, to the Office of the Inspector General, who will issue advisory opinions. [00:21:51] Speaker 03: And there are some, we haven't cited some, that [00:21:54] Speaker 03: say, yes, this employment arrangement would be okay, but if you did it slightly differently, we may raise concerns. [00:21:59] Speaker 03: And so there is a process by which an employer who's concerned, a legitimate employer concerned of reaching that line can check. [00:22:06] Speaker 03: One last thing I'd like to say is just, given the reasons why we think the two statutes are very different, but just to reinforce that even if the statutes were similar, Ruan doesn't go so far in the controlled substance of that context to change the pleading standard. [00:22:20] Speaker 03: It still remains upon the defendant carries the burden of production, and then once the defendant has satisfied that burden, the government carries the burden of persuasion. [00:22:29] Speaker 04: That's why I read that provision out of Ruan, because that's how I read Ruan. [00:22:33] Speaker 03: Yes, we completely agree with that. [00:22:35] Speaker 03: We think it says that expressly and we think there's no way around it. [00:22:37] Speaker 03: So even if the statutes were similar, which we don't think they are, but even if they were, we think Ruan wouldn't have any effect on the pleading standard at issue in this case. [00:22:51] Speaker 03: We ask that you affirm. [00:22:52] Speaker 03: Thank you very much. [00:22:52] Speaker 03: Thank you, Counselor. [00:23:00] Speaker 00: I would like to quickly address three separate points that Mr. Sacks on behalf of the government raised. [00:23:07] Speaker 00: First, as we've noted in our briefing, particularly in our reply brief, much of the case law, if not all the case law, that the government relies on to contend that provisions such as Section 3B3, our peer affirmative defenses, is pre-ruan. [00:23:23] Speaker 00: So again, our position is that Ruan has affected a significant change in this area. [00:23:29] Speaker 04: So would your position be that all 19 or however many of those statutory subsections are contained, all of those are quasi-elements, depending on the facts of a particular... Depending on what is charged in the indictment, yes, Your Honor. [00:23:44] Speaker 00: But again, as I stated earlier, the narrow rule we're proposing doesn't require the government drafting an indictment to [00:23:53] Speaker 00: played around every single one of those exceptions. [00:23:56] Speaker 00: It's only if it alleges facts sufficient to show that... I mean, that's a pretty broad extension of Ruan. [00:24:04] Speaker 00: I don't think so, Your Honor, to the extent that, again, we're just dealing with the face of the indictment and whether there are sufficient facts alleged to implicate one of those exceptions. [00:24:14] Speaker 00: And here, because the, as I mentioned earlier, because the indictment specifically charged, specifically alleged that Mr. Enriquez was an employee of the two pharmacies, that brought B3B into play. [00:24:28] Speaker 00: Second, regarding Mr. Sachs's contention that [00:24:32] Speaker 00: The Supreme Court in Rouen wouldn't have sub silencio essentially created this new approach. [00:24:38] Speaker 00: I refer the court again to Justice Alito's concurrence in the judgment 2383. [00:24:44] Speaker 00: He writes, in these cases, however, the court recognizes a new hybrid that has some characteristics of an element and some characteristics of an affirmative defense. [00:24:54] Speaker 00: The consequences of this innovation are hard to foresee, but the result may well be confusion, disruption. [00:25:00] Speaker 00: The narrow rule that we propose, I think, helps to alleviate some of that confusion and disruption, but otherwise I think that Justice Alito's analysis is correct. [00:25:11] Speaker 00: Oftentimes these concurrences and judgments that read as dissents often foresee significant changes. [00:25:17] Speaker 00: I would refer the court, for example, to Justice O'Connor's dissent in Apprendi, which correctly foresaw that [00:25:23] Speaker 00: mandatory determinate sentencing schemes would later be invalidated and indeed that happened including with the US sentencing guidelines. [00:25:31] Speaker 00: So I think that there is significant analysis in Justice Alito's concurrence in judgment from which this court can infer that indeed Ruan goes beyond just a simple matter of interpreting the accept as authorized clause in section 841A. [00:25:49] Speaker 00: I see that I'm over time. [00:25:51] Speaker 00: Unless the court has any further questions, I'd be pleased to submit. [00:25:54] Speaker 00: Thank you very much, counsel. [00:25:56] Speaker 02: Thank you to both of you for your briefing and argument in this very interesting case. [00:26:00] Speaker 02: This matter is submitted and we'll move on to the final case on calendar today.