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United States v. Hall

United States Court of Appeals for the Fifth Circuit · 2025 · Constitutional Law

Constitutional LawCriminal LawStatutory InterpretationFederal Criminal ProcedureRestitutionAnti-Kickback Statutesafe harboraffirmative defense

Facts

Hall and his partners operated compounding pharmacies that billed private and federal insurers for high-reimbursement compounded drugs. When they created Xpress Compounding to process federally reimbursed prescriptions, they claimed marketers were converted to W-2 employees, but the marketers continued to receive commission-based payments tied to prescription value and offered physicians various incentives to secure prescriptions. Between 2014 and 2016, Xpress received over $59 million in federal healthcare reimbursements. Hall was convicted on AKS counts and conspiracy to commit money laundering, and the district court ordered restitution of $59,879,871.

Issue

Whether the district court erred by instructing the jury that Hall bore the burden of persuasion on the AKS bona fide employee safe-harbor defense, by defining employee under a multi-factor common-law test rather than Hall's proposed control-focused instruction, by refusing Hall's proposed instruction about the recipients of the payments, and by ordering restitution based on the government's total loss.

Rule

Under the Anti-Kickback Statute, the bona fide employee safe harbor in 42 U.S.C. § 1320a-7b(b)(3)(B) is an affirmative defense that the defendant must establish by a preponderance of the evidence because it is a separate statutory exception that does not negate any element of the offense. For determining whether a worker is an employee for that safe harbor, courts apply the common-law multi-factor test described in Darden, under which no single factor, including the right to control, is dispositive. Under the MVRA, when the conviction involves a conspiracy or scheme, restitution may include all direct and proximate losses within the scope of the conspiracy, and conspirators may be held jointly and severally liable for foreseeable losses.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Houston, a federal prosecutor charges Nolan Pierce, owner of Gulf Meridian Pharmacy, with knowingly paying commissions to sales staff to induce referrals of prescriptions reimbursable by federal health programs. At trial, Pierce argues the payments fall within the statute's bona fide employee exception because the sales staff were on payroll and received W-2s.

If the trial judge properly follows the governing rule, which party bears the burden of persuasion on the bona fide employee exception, and by what standard?

Explanation. The bona fide employee safe harbor is a separate statutory exception, not an element of the Anti-Kickback Statute offense. Because it excuses conduct that otherwise satisfies the offense rather than negating an element, the defendant bears the burden of persuasion to establish it by a preponderance of the evidence. (Derived from United States v. Hall (n.d.).)