Category: HealthLaw Blog

“Please Tell Me you Didn’t. . . How to Keep Client’s Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

It’s another week and again my phone blew up, because another round of doctors and Pharmacy executives have been indicted under the Travel Act, (which is code for a “commercial only,” non-federal payer kickback case, like Forest Park.)

This iteration is US v. Mortazavi, in 3:24 -CR-049-S filed in the Northern District of Texas Dallas Division, involving something that happened just a squeak under 6 years ago which I believe is code for “an AUSA was looking for something to do,” and decided to see which cases had a statute of limitations coming up. It’s a “fish or cut bait” issue.

At any rate, the grand jury indicted the defendants for violations of the Travel Act 18 USC §1953, Commercial Bribery, Tex. Penal Code §32.43, Money Laundering, 18 USC §1956 and “Conspiracy to Deprive Patients of the Intangible Right to Honest Services,” 18 USC §1346 (which is a federal “bribery of a fiduciary” statute ).

All of this is related to Andrew Hillman’s Next Health, which was an amalgamation of MSO’s, CLIA Labs, pharmacies, surgical implant and device distributors, and only God knows what else (well, the government knows). Next Health has spun off more civil and criminal litigation than I have fingers and toes to count them with.

Tex. Patient Anti-Solicitation Statute. But what I really want to talk about is the Patient Solicitation Statute. Once again, an indictment mentions, but does not actually charge anybody with violations of the Texas Patient Anti-Solicitation Statute, Tex. Occ. Code 102.001. (The indictment opens with an observation that the Tex. Patient Anti-solicitation statute exists, but then makes no more mention of it in remainder of the entire indictment.)

Which if you ask me, is a clear violation of the narrative principle of “Chekhov’s Gun” (if you show a gun on the wall in Act I of a play, you are supposed to shoot somebody with it the end of Act III.) But nobody asked me.

Why no one is ever charged with 102.001. I have a three-part theory why no one ever is charged with Patient Solicitation under Occ, Code 102.001: (1) it stupidly written (it doesn’t outlaw anything it is supposed to outlaw (2) is probably unconstitutional as a violation of “commercial free speech” problems under the Central Hudson test and (3) it is only a Class C misdemeanor, so the “juice” isn’t worth the prosecutorial “squeeze.”

On the first point, take a look at Sec. 102.003. “Federal Law; Construction.” “Section 102.001 permits any payment, business arrangement, or payment practice permitted by 42 U.S.C. Section 1320a-7b(b) [the AKS] or any regulation adopted under that law.”

Trouble is, every kickback arrangement that does not involve federal payers, is permitted under 42 U.S.C. Section 1320a-7b(b), which only forbids kickbacks in government payer cases. Therefore, kickbacks of every other kind are permitted by 102.001 by the express wording of the statute. There is a reason 102.001 is written this way, it is supposed to recognize the supremacy of federal safe harbors over state law to the contrary. The legislature just butchered the drafting and execution.

Commercial Free Speech. Under 102.001, “(a) A person commits an offense if the person knowingly offers to pay or agrees to accept, directly or indirectly, overtly or covertly, any remuneration in cash or in kind to or from another for securing or soliciting a patient or patronage for or from a person licensed, certified, or registered by a state healthcare regulatory agency.”

The problem here is that unlike, say “soliciting prostitution,” providing pharmacy services is a lawful act. The statute completely bans paying someone to say truthful, non-misleading, commercial speech about a lawful activity, that is not restricted as to time or place. (There is a reason lawyer barratry statutes are specific as to when and how a lawyer can contact a car wreck victim.) These laws must be narrowly tailored to pass “strict scrutiny.”

That is the very definition of a Central Hudson free speech violation found in Virginia State Pharmacy Board v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976), where Justice Blackmun wrote for the majority explaining that states still retained the power to regulate some commercial speech, via content-neutral time, place, and manner regulations. Likewise, states retain the power to prohibit false or deceptive advertisements. However, he held that the states could not suppress truthful information about a lawful economic activity, simply out of fear of potential consequences (people might use too many services paid for by commercial insurance, for example.)

“Please Tell Me you Didn’t. . . How to Keep Client’s Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

“Help! The FBI is in my lobby!” The call usually begins, but even that is an understatement. When I get there, the client’s lobby looks more like an explosion at an alphabet soup factory. There will be swarms of blue and gold law enforcement jackets emblazoned with “FBI,” “DEA,” the “HHS OIG,” and the “DOD OIG.”

A March 2024 D Magazine article describes these scenes as “a hawk descending on a field mouse.” I can vouch that this is the one time the government doesn’t seem to skimp on the expense of throwing a party.

Most lawyers hope to go their entire careers without their clients ever meeting an FBI agent in person. I would like to help keep it that way. I can start by pointing out that some of the blue blazers often read “IRS.” Even stolen or ill-gotten money is considered “income” for tax purposes. Tax evasion is usually less difficult to prove than underlying crimes. That is after all, how Al Capone ended up in Alcatraz.

But the IRS codes have even nastier cousins down the hall at the Treasury Department, beginning with 18 USC § 1956 “Money Laundering” and the long list of ancillary crimes, like conspiracy and aiding and abetting.

In healthcare crimes, I often see cases where a search warrant results in agents finding a safe with hundreds of thousands of dollars in cash in it (that no one can explain). The “no apparent legitimate business purpose” is one of the tests for tax evasion and money laundering.

Usually, where a lot of money is in a healthcare client’s safe, it is difficult for clients to deny they were “in on” some kind of “white envelope” shenanigans, such as payments are being made under the table to hide illegal kickbacks.

In other client’s cases, it is not so apparent to the recipient that the money is from an illegal source. Other than the obvious fact that there is an awful lot of it. Either way, it’s a fun day for federal agents, when they open a client’s safe and find hundreds of thousands of dollars in cash.

What is “money laundering?” The problem for criminals, which I suppose may of us learned from the television show Breaking Bad, is that it is really hard for them to spend or accumulate cash that hasn’t been reported as legitimate income. They often need to recruit witting and unwitting helpers to launder it.

In layman’s terms, money laundering is taking the proceeds from ill-gotten gains, and making it look like it came from legitimate sources. This often includes a scheme to pay taxes on cash “earned” by a seemingly legitimate business, to cover the money’s illegal origins.

“Smurfing” and other Ancillary Crimes. A really good overview of what money laundering is, and how clients can unwittingly become involved, can be found in the U.S. Department of Treasury FinCen website, entitled “Money Laundering Prevention.” (Just Google it, it will pop right up.) According to the FinCen website money laundering can be a complex process. It involves three different, and sometimes overlapping, stages:

Placement involves physically placing illegally obtained money into the financial system or the retail economy. This can involve “Smurfing” also known as “structuring,” whereby illegal funds are divided into smaller amounts by multiple people (like little “Smurfs”) who deposit smaller amounts into multiple bank accounts or financial institutions. This is done to circumvent financial regulations that require banks to report large transactions.

Layering involves separating the illegally obtained money from its criminal source by layering it through a series of financial transactions, which makes it difficult to trace the money back to its original source.

Integration involves moving the proceeds into a seemingly legitimate form. Integration may include the purchase of automobiles, businesses, real estate, etc.

The “accidental criminal,” meaning the unwitting client who might not know he is doing something wrong, can sometimes end up being charged with “conspiracy” or “aiding and abetting” when he simply thought he was helping out some acquaintance.

Any time large sums of unexplained cash are involved, it is always a good idea to advise clients to tread carefully if not, “run the other way.” Otherwise, they could end up covered in alphabet soup.

This is a topic that has been on my mind for a while, because I see it so much in my health law practice. Sometimes I put partnerships together, and sometimes, they get business “divorced.” And a big reason is today’s topic.

According to Medical News Today, “Emotional Blackmail” can be defined as “using another party’s fear, guilt, or sense of obligation to pressure them to comply with a demand.” Essentially, someone, whether a business partner, a boss, an employee, co-employee, a parent, children, good friends (or maybe someone you just met) expects you to do something you don’t want to do, and there will be consequences (to you or them) if you don’t comply.

Emotional blackmail is a natural phenomenon which requires two people. Much like lighting, which happens because of friction when the wind blows and two clouds rub together. You get people together, there will be friction, there will be flashes, some of it will be emotional blackmail. My point being, you can’t eliminate nature, in fact, you’d have better luck talking to the clouds. But you might just be able to help yourself get out of harms way.

Psychological “splitting.” Psychological “splitting” starts when we are infants. Little versions of humans can’t tell whether our wants and needs are life-threatening. So, just to be safe, infants will go “all out” with temper tantrums.

Psychologists also believe that for a long time, infants can’t tell that the “withholding” parent and the “giving” parent are actually the same person. Hence the “splitting.” The tantrum is designed to make the withholding parent go away, and cause the gratifying parent to come back. You can see where I am going here. You are a saint if you give them what they want, and the devil if you don’t. Emotional blackmailers are often infants that never grew up.

Do you have a “dog problem” or an “owner problem. Some “monsters” are born, and some are created. You first have to figure out if you caused the problem, by giving the emotional blackmailer permission to feel entitled to your help.

In other words, if we had followed you around with a court reporter and a videographer, would we find a point where you gave the emotional blackmailer the idea that they could rely on you to give them money, services, support that you now don’t want to give? If so, you don’t have a dog problem, you have an owner problem.

“Oedipal parenting” behavior. There is a range of possibilities why this would happen, some good and some pathological. On one end of the spectrum, “you are just nice” and therefore a doormat (also pronounced, “target.”) At the extreme other end, you might be a covert narcissist who loves volunteering, then sucking all the air out of the room complaining about being a victim to anyone who will listen.

Somewhere in between is “Oedipal parenting” behavior, where we might tend to infantilize our friends, children or coworkers, to keep them close. Often because we have nothing going on in our own lives. So, we make others weak and dependent on us. Like giving a drunk a drink. It isn’t good for them. But maybe we keep giving, to keep them close and needy. Either way, you’ve got work to do.

What if the problem is you? If you started it, then you can end it, if you want to. Dave Ramsey, the financial guru puts it this way when speaking of cutting off financial resources, “better to feel guilty, than resentful.” But it might take a while to turn the ship around. There might be some anger involved. You might lose friends when you say, “hey, I don’t want to do this anymore.” That’s what infantilizing your relationships will do– turn others into babies. Maybe you can’t go cold turkey, but you can set a deadline for when your help ends. Which takes a lot of courage and resolve, especially if the problem is you.

At the end of the day, only you can decide if you want to continue to allow others’ expectations to become your obligations.

What if the problem is them? Some people are just unfixable. The DSM-5 (a/k/a “The Big Book of Crazy”) classifies some of these people as “Cluster B” (sociopathic, narcissistic, borderline disordered.) I would just call them “parasites,” who don’t care that you don’t want to help them. They feel entitled to your time, money and services. The way to tell, is that they do it to everyone (not just you.) If you have one of those, “run.” You can’t fix them.

What if the problem is both of you? But you don’t have to be a clinical narcissist, nor a co-dependent, to get locked into this type of behavior. There is a book by Ross Rosenberg called The Human Magnet Syndrome, which explains that some people are simply co-dependent “fixers” who are drawn magnetically to narcissistic “takers.” You put a co-dependent and a narcissist in a crowed room, they will find each other. Narcissists just know who you are and vice versa. The same thing seems true for sub-clinical “takers” and “givers.”

The only thing you can do is work on yourself. That is what The Human Magnet Syndrome is all about. How to realize you are worthy of relationships, without giving away unreasonable amounts of resources to others by setting boundaries and enforcing them.

“Please Tell Me you Didn’t. . . How to Keep Client’s Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

Last week, I found myself in day “one” of a trial, defending a sort of healthcare civil fraud case in small town just north of “Nowhere, Texas.” At the first break, my client was absolutely freaking out. “I can’t believe they are saying such bad things about me! All lies! This is awful! We are going to lose!”

I looked at him calmly and replied, “Yes, it’s war.” I assured him, “they are shooting at us and they are trying to win.” I then leaned in and whispered, “you can either panic, sorta like you are doing now, or suck it up and help me shoot down the next thing they send over the ridge. That’s how we deal with it.”

I would like to say this advice helped. (It didn’t.) But it did occur to me, that I have tried maybe 600 healthcare cases, and I forget that I am used to it. Not everyone is. Maybe I can help other lawyers who are in a similar situation, and are experiencing fear of a courtroom.

Competence vs. Smoothness, or “the zone.” “Competence,” in my way of thinking, refers to the technical ability to get through a hearing or trial. I and do mean, “get through it.” If you are brand new to courtroom work, the rules of civil procedure and evidence are like learning a foreign language.

I remember the first time I asked an Italian person, “Come ti chiami?” And she told me her name. I couldn’t believe it actually worked, since I don’t speak Italian, at least, not until then.

Same with rules of court. There are five steps, for example, when using a writing to refresh recollection, then, getting the writing admitted, when the witness still can’t remember. It’s just a rule, and it does work. Some of the fear of a courtroom, I think, is simply the kind of fear that comes from not believing any of this is actually going to work– that the judge might give you what you want. (They will).

“Smoothness,” or getting in “the zone” on the other hand, is “competence,” plus, being “chilled out” enough to think clearly, free of fear of your own incompetence. Athletes call this being “in the zone.” This is the point where you can reflexively handle anything that gets thrown at you. You aren’t thinking about screwing it up, you are thinking, “I’ve got this.” It is a wonderful place to be.

Exposure therapy.

Here is the thing I think most lawyers don’t realize about “smoothness” or “the zone” in court. It usually doesn’t arrive until day two of a trial. Day one, is more for “ancillary” issues, such as “are we going to settle,” or “is the trial really going to take place at all?” And my all-time favorite, “have I left my trial notebook back at the hotel?”

It usually isn’t until “day two,” that you get “locked in,” that fear melts away and you get in “the zone.” This a problem if all you ever do is 30-minute hearings, or maybe single-day temporary injunctions cases. You might come to believe that “smoothness” or “the zone,” isn’t part of your abilities. When it just might be that you have not had a chance for “smoothness” or “the zone” to arrive for you. You aren’t getting the benefit of “exposure therapy,” because all you ever get is the “day one” jitters, when there simply isn’t a “day two” in a one-day hearing.

“Scary,” “really scary” and “not scary at all.” I used to have the same problem with email which might help you with day-one trial jitters. Every day, there are 50 to 100 emails in my inbox. And I used to dread them. Then, while watching the Stephen King movie “It,” there was a scene where the ghost had three doors, marked “scary,” “really scary” and “not scary at all.” Which was a joke for “comic relief.”

So, one day, I took a yellow notepad, and made three columns for my emails, marked “scary,” “really scary” and “not scary at all.” As I went through my emails for one week, I made a mark in each column to keep up with each type of email (the kind of mark where you make four vertical lines and one diagonal to make “five.” Then you count up the groups of five to see how many you’ve got in total.)

And you know what, at the end of the week, there weren’t any “really scary” and practically no “scary” emails at all. Almost all of them were marked, “not scary at all.” You could do the same thing with “competence.” Make a chart of things that scare you, and keep track of whether or not you could or could not, “handle it with ease,” “handle with difficulty,” or “it was a complete disaster.” My point being, maybe, it isn’t just “exposure” to something, (I was clearly “exposed” to my email inbox) but instead, the trick is in realizing, that your fear is completely unfounded.

Good name in man and woman . . .is the immediate jewel of their souls. Who steals my purse
steals trash . ..’twas mine, now ‘tis his, but he that steals my good name, robs me of that which
enriches him not, and makes me poor indeed. –OTHELLO ACT 3, SCENE 3, 155–161

“Good name in man and woman . . .is the immediate jewel of their souls. Who steals my purse steals trash . ..’twas mine, now ‘tis his, but he that steals my good name, robs me of that which enriches him not, and makes me poor indeed.” –OTHELLO ACT 3, SCENE 3, 155–161

I sure miss high school English class, which harkens me back to a day when entertainment had more . . .“class.”

Dominion Voting Systems v. Fox News. Late night talk shows exploded this week, over The Tucker Carlson Show’s depiction of the January 6th incursion into the Capitol. If you haven’t seen it, the show broadcast a highly-edited version of video taken inside the Capitol on January 6th , with Carlson’s narrative claiming the incursion was nothing more than a peaceful “tourism” trip. The question being raised by liberal hosts, like Stephen Colbert, is simply, “has Tucker Carlson gone insane?”

Short Answer: “I don’t think so.” I stay away politics, left or right, other than to register the opinion, “some sins carry their own penance.” But I am fascinated by the practice of law, and in particular, defamation cases, with their odd twists and turns. That said, let’s unpack this thing.

“Crazy like a Fox.” In order to make sense of what’s going on, first consider, Fox News is being sued for $1.6 billion by voting machine vendor, Dominion Voting Systems, which argues that Fox repeatedly aired allegations that the company helped rig the general election against former President Trump, despite many at the news organization privately believing the claims were false. Emails uncovered in the case seem to bear this out.

Fox Chairman, Rupert Murdoch, was among several at Fox to say privately they didn’t believe the claims made by Trump and his allies, that widespread fraud cost him reelection. In his deposition, Murdoch said he could have prevented guests who were spouting conspiracies from going on the air, but didn’t.

AP reporter, David Bauder described it this way in a March 6 article, “Eye-catching evidence has emerged from court filings in recent weeks revealing a split screen between what Fox was portraying to its viewers about the false claims of election fraud and what hosts and executives were saying about them behind the scenes. “Sydney Powell is lying,” Fox News host Tucker Carlson said in a text to a producer, referencing one of the attorneys pushing the claims for Trump.”

The fact that Fox News executives don’t believe their own stories would be, oddly enough, the most comforting thing I have heard in a long time. It would indicate that the folks at Fox News actually have good sense (maybe even don’t like our former President), but were playing along for higher ratings, because “money.” They aren’t really crazy. Fox’s stock price is directly related to their audience size.

It appears that while “Truth,” is an absolute defense to defamation, Fox executives’ text messages and emails make this claim a bit “dodgy.” Instead, Fox appears to be relying on the back up defense, “what we say is so absurd, no reasonable person would believe us.” Which might explain Carlson’s increasingly “silly” broadcasts. They are playing the “satire” card.

Why would I suspect the “satire” defense by Fox News? Two reasons. First, I have a nearly pathological need for things to make sense in the world. Second, because they have done it before. In a September 29, 2020, NPR news article, David Folkenflik reported on another federal slander case, “You Literally Can’t Believe The Facts Tucker Carlson Tells You. So Say Fox’s Lawyers.” And the federal judge agreed.

This was in the 2020 defamation case, Karen McDougal v. Fox News Network. McDougal had sued Fox News, because Carlson said she had engaged in an “extortion scheme,” when she demanded money from President Trump. Fox lawyers countered and U.S. District Judge Mary Kay Vyskocil agreed, in her 12(b)(6) dismissal opinion, holding that the “‘general tenor’ of the show should then inform a viewer that [Carlson] is not ‘stating actual facts’ about the topics he discusses and is instead engaging in ‘exaggeration’ and ‘non-literal commentary.'”

Trump’s Texas attorney, Sidney Powell, made the same argument in her motion to dismiss another $1.3 billion defamation lawsuit brought by Dominion Voting Systems, “No reasonable person would conclude that the statements were truly statements of fact.” Instead, she was making “Rhetorical hyperbole,” which, especially when made of a public figure about politics, is often claimed not to be a statement of “fact” and therefore, incapable of being defamatory.

Usually, when someone is joking, there is a “tell,” a slight smile, a raised eyebrow, or other signal that let’s us “in on it.” But “satire,” which is also protected by the First Amendment, doesn’t always have a tell.

According to the First Amendment Encyclopedia’s James Walker. “Satire is a literary form that humorously mocks, ridicules, and scorns individuals and political or social practices, is one of the most effective means of criticism. Since the time of the ancient Greeks, it has been used to lampoon the comfortable, the rich, the famous and, most important from a constitutional standpoint, the powerful.”

If you are trying to make sense out of all this litigation, “don’t.” (Because “it doesn’t.”) I feel like I am watching Steve Martin in the movie, The Jerk, describing carnival prizes on a shelf. “Somewhere, on a continuum, between uttering public criticism as hyperbole, and right there, next to a joke that is so absurd that no one would believe it,” sits a tiny little “sweet spot” where a person can be sued for defamation.” I just don’t know where it might be