courthouse and moneyOn September 4, 2020, the Eighth Circuit affirmed Reuben Goodwin’s conviction for his role in a Medicare/Medicaid kickback scheme. Goodwin’s conviction was supported by evidence of his knowledge of the conspiracy and willful participation in the conspiracy. The Eighth Circuit’s decision serves to remind everyone the risks a conspiracy charge pose to even a potentially nominal co-conspirator.

Goodwin Loses His Trial

In July of 2017, a grand jury indicted three defendants, including Goodwin, with healthcare fraud-related crimes concerning the individuals’ involvement with AMS Medical Laboratory, Inc. (“AMS”). AMS tests blood, urine, and other bodily specimens for markers of symptoms to help physicians diagnose potentially dangerous diseases. Southwest Disability Services (“SDS”) is a non-profit agency that provided services to adults with developmental disabilities or alcohol abuse problems; Goodwin was its executive director.

The charges against AMS alleged Stark law anti-kickback violations, 42 U.S.C. § 1320a-7b, prohibiting obtaining “remuneration” in return for referring a person for a medical good or service or purchasing a medical good or service. Similarly, anyone who offers to remunerate another for such referrals or purchases violates the statute.

The indictment alleged that AMS paid a portion of money received from Medicare and Medicaid back to referring individuals, including SDS and Goodwin, in exchange for referrals. The Government claimed that SDS collected specimens without a physician’s prior examination—a prerequisite to collect insurance dollars—while convincing those same physicians to sign off on these unexamined samples. SDS then sent those samples to AMS in exchange for a kickback.

The indictment charged Goodwin with one count of conspiring to defraud the United States by accepting the AMS kickbacks, making fraudulent statements, and eleven counts of healthcare fraud related to specific transactions involving kickbacks. Importantly, there were no allegations that Goodwin himself ever lied to Medicare or Medicaid directly; Goodwin operated entirely through SDS and AMS. Still, Goodwin was convicted of all charges.

The Eighth Circuit Affirms the Conviction Using Classic Conspiracy Principles

Goodwin appealed and argued his conviction was against the manifest weight of the evidence. The Eighth Circuit disagreed and affirmed the conviction. In so affirming, the Eighth Circuit demonstrated the far-reaching implications of even nominal involvement in a conspiracy.

In the Eighth Circuit, conspiracy requires the government prove a conspiracy existed with an illegal purpose, the defendant was aware of the conspiracy, and the defendant knowingly became part of the conspiracy. Goodwin challenged that the government could not establish that he knew his conduct was wrongful or that he intentionally participated in the conspiracy with the intent to further its criminal objectives. Instead, he laid blame at the feet of two co-conspirators who Goodwin alleged were the “primary bad actors.”

The Eighth Circuit disagreed with Goodwin’s arguments. The evidence showed that AMS entered into agreements with Goodwin in violation of the anti-kickback statute, that Goodwin was aware of the agreement, and that Goodwin himself thought of the plan to collect specimens from individuals without a physician. Goodwin even tracked the kickbacks to ensure payment on specimens. The Eighth Circuit also weighed Goodwin’s significant experience working in federal healthcare programs heavily and found that his experience made it more likely he knew about the kickback scheme’s illegality. Notably, the Eighth Circuit also considered Goodwin’s knowledge that his conduct violated a federal statute. While it is generally unnecessary to prove a defendant knows their conduct violates a statute—ignorance of the law is no defense—here, that evidence weighed in favor of finding a conspiracy where an element was that Goodwin knowingly became part of a conspiracy understanding its illegal purpose.

Goodwin’s challenge to the conspiracy charge was the linchpin in his appeal. That is because the Pinkerton Doctrine premised Goodwin’s eleven substantive healthcare fraud convictions on his participation in the conspiracy. Put simply, under Pinkerton, a defendant is responsible for his or her co-conspirators’ substantive crimes which the defendant could reasonably foresee as a necessary or natural consequence of the conspiracy which are committed within the scope and in furtherance of the conspiracy. In Goodwin’s case, that means that his participation in the conspiracy tied him to the foreseeable acts of the other two “bad actors,” including their healthcare fraud. If Goodwin could have overturned the conspiracy charge, he would also overturn the substantive convictions. But, because the Eighth Circuit affirmed the conspiracy conviction, the other convictions stood as well, and the Eighth Circuit affirmed the conviction on all counts.

Conspiratorial Conclusions

Federal conspiracy law is a powerful tool in the Government’s arsenal. The Pinkerton Doctrine permits the government to put great pressure on even a nominal alleged co-conspirator, because, if the government can prove the defendant’s participation in the conspiracy, the government can blame the defendant for his or her co-conspirators’ reasonably foreseeable actions in furtherance of the conspiracy as well. This is a hefty bargaining chip for the government in seeking favorable plea and immunity deals. The Eighth Circuit’s decision in United States v. Goodwin is a textbook example of this practice in action.