Unreported / Non-Citable
Background
Keith J. Gray controlled laboratories that performed cardiovascular genetic testing. He hired American Health Screening, or AHS, to market those services to Medicare beneficiaries. AHS telemarketers screened beneficiaries, and a contractor sent pre-filled testing orders to their physicians. When a physician signed an order, the beneficiary’s sample was sent to one of Gray’s laboratories, which then billed Medicare.
A jury found Gray guilty of conspiring to defraud the United States and to violate the federal Anti-Kickback Statute, five substantive kickback counts, and three counts involving monetary transactions in criminally derived property. Gray moved for acquittal under Federal Rule of Criminal Procedure 29 and for a new trial under Rule 33, principally disputing whether the evidence established an intent to improperly influence health care decisionmakers.
The Court’s Holding
The court denied Gray’s motions for acquittal. Viewing the evidence in the light most favorable to the verdict, as Rule 29 requires, the court concluded that a rational jury could find the elements of each offense beyond a reasonable doubt. Evidence that Gray paid AHS on a per-sample basis to identify beneficiaries, send pre-filled orders, and direct samples to his laboratories was legally sufficient to support the kickback-related verdicts. Evidence that he used Medicare proceeds to purchase three vehicles was likewise sufficient for the monetary-transaction counts.
The court nevertheless granted a new trial on all counts under Rule 33. After independently weighing the evidence and assessing witness credibility, it found that the evidence heavily preponderated against a finding that Gray intended to improperly influence the physicians who made the relevant testing decisions. Physicians retained independent judgment, declined to sign 80% to 90% of the order forms, and received no financial or other incentives from Gray or AHS. The court also gave little weight to key cooperating witnesses’ testimony about an alleged cover-up and found insufficient evidence that Gray knowingly joined a scheme to bill Medicare for medically unnecessary testing. Because the monetary-transaction counts depended on the alleged kickback and conspiracy offenses, those counts also required retrial.
Key Takeaways
- Evidence may be sufficient to survive Rule 29 while still weighing so heavily against the verdict that Rule 33 requires a new trial.
- For the kickback counts, the relevant decisionmakers were the beneficiaries’ physicians, and the evidence showed that they retained authority to approve or reject testing.
- The court ordered a new trial on all nine counts but did not enter a judgment of acquittal.
Why It Matters
The decision illustrates the distinct roles of Rules 29 and 33. Although the court could not reweigh evidence or assess credibility when reviewing legal sufficiency, it could do both when deciding whether allowing the verdict to stand would produce a miscarriage of justice.
The ruling also emphasizes that compensation arrangements with health care marketers do not establish illegal kickbacks by themselves. The government must prove the required intent to improperly influence a health care decisionmaker, and evidence that physicians exercised independent judgment can bear directly on that issue.