11th Circuit, White-Collar Crime

A Limit On the Criminalization of Business

If the law can be interpreted either way, criminal prosecution should be off the table. Let's see if the courts agree.

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Recently, I wrote, with Chris Muha in my office, an amicus brief in the 11th Circuit for the National Association of Criminal Defense Lawyers. It raises an important issue about white-collar criminal cases.

The case, in a highly generalized nutshell, came down to this — WellCare, a company in Florida, that took Medicaid payments made a decision about how to set up a way to provide services under Medicaid that took advantage of an ambiguous statute. Counsel vetted it and signed off on the interpretation as reasonable.

Other companies took essentially the same approach to the ambiguous statute and set up essentially the same approach to providing these services.

The agency in Florida that administers its Medicaid program took a different view of what the statute meant.

For some companies, the state agency took administrative or civil action.

WellCare, though, unlike the other companies that had adopted basically the same approach to what this statute meant, was raided by 200 FBI agents. The company quickly flipped on the executives.

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And, because their company took a different reading of this statute, the executives were convicted and sentenced to prison time.

This seems wrong.

And, as the amicus brief points out (and, of course, the parties’ briefs (linked to here)), there’s an Eleventh Circuit case that should have required a different result and is very important for how criminal laws interact with our increasingly regulated world.

Often in a highly regulated environment (like, basically everything these days), the meaning of a statute or a regulation is ambiguous. It can admit of many different interpretations.

This is a problem for businesses and others who have to act in these ambiguous environments at the same time they have to maximize shareholder value and, you know, try to turn a profit. Businesses aren’t generally required to avoid a strategy that’s legal if it makes them money.

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But, if a regulation or a statute is ambiguous, what’s a business to do?

One option would be to take the most conservative reading of the law. To be sure, lawyers — probably the most risk averse of the professions — often make that recommendation. (and sometimes that’s what companies want).

But shouldn’t there be another viable option? As long as a company acting on a reasonable interpretation of a statute, it seems, as a policy matter, that the company should be shielded from criminal liability. A lawsuit should be available, sure. And administrative action is always an option. But, if the law can be interpreted either way, criminal prosecution should be off the table.

In United States v. Whiteside, the Eleventh Circuit said basically that.

In Whiteside, the court held that if a statement is true on any reasonable interpretation of the underlying law that it’s based on, then, for purposes of a criminal prosecution, it can’t be a false statement. Obviously, what counts as reasonable is a broad inquiry, so there’s room for the government and defense to present evidence from, say, other regulatory guidance or case law. The defense can’t offer this kind of defense if there’s no support for it, or if it’s been foreclosed by other binding law.

That way, the government can still go forward if the interpretation is just off the walls crazy, and the company can have some assurance that it won’t be prosecuted if the government, itself, goes off the wall crazy and starts prosecuting folks for taking an aggressive business approach.

It’s a crazy prevention rule.

But, in the case of these WellCare executives, Whiteside wasn’t applied properly. So, hopefully, the Eleventh Circuit will step in and give strength to its rule to keep the crazy out of our criminal courts.

Matt Kaiser is a lawyer at The Kaiser Law Firm PLLC, which handles complex civil litigation, white collar investigations, and federal criminal cases. On his blog, The Federal Criminal Appeals Blog, he writes about published opinions in criminal cases in the federal circuits where the defendant wins. He can be reached atmattkaiser@thekaiserlawfirm.

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