May 09, 2016 22:39 ET

WellCare Legal Case -- United States v. Clay -- Court May Reshape Approach on Criminal Intent

WASHINGTON, DC--(Marketwired - May 09, 2016) - The US Court of Appeals for the Eleventh Circuit heard arguments for United States v. Clay, which examined whether a contract dispute between a health care provider and the government can be criminalized where there was a reasonable interpretation of the law and where there was a lack of criminal intent. In United States v. Clay, federal prosecutors took unfair advantage of an ambiguous law and contract between health care service provider, WellCare, and the state of Florida regarding the Medicaid premiums that should be returned by HMOs. A clear calculation was never properly defined between the parties, allowing federal prosecutors to prosecute WellCare executives for not following the 'appropriate' reimbursement guidelines, which they deemed necessary.

The Washington Legal Foundation (WLF), which has covered the Clay case at great length, writes about the case in WLF's Legal Pulse online publication about how WellCare fell victim to overcriminalization, a disturbing trend which is affecting individuals and businesses across the country. As the WLF article explains, "[Florida's] interpretation [of the reimbursement formula] was not memorialized in a state regulation or guidance document. Despite this lack of guidance, federal prosecutors indicted WellCare and its executives for health care fraud. The company entered into a deferred-prosecution agreement, leaving the executives to fend for themselves."

The Eleventh Circuit heard arguments from lawyers who expressed concern over such details. Notably, the trial judge in United States v. Clay ignored the essential precedent set forth by United States v. Whiteside which explicitly states that the government must prove beyond a reasonable doubt that a defendant's statement or submission "is not true under a reasonable interpretation of the law" -- or, actus reus. The court case of United States v. Clay has attracted the attention of many lawyers, public policy organizations, and policymakers who are concerned about the problem of overcriminalization and the erosion of criminal intent, aiming to protect citizens from unjust prosecutions, fines, and imprisonment.

In a recent piece on the Washington Legal Foundation's blog, Matt Kaiser, a partner at KaiserDillon PLLC, described the case as raising an important issue for when business executives can be prosecuted for ordinary business decisions. Kaiser frames the issue by giving an example of a supposed IRS Code's provision that can be reasonably interpreted one of two ways, with no existing formal guidance or rule on how is it to be interpreted. "One interpretation requires you to pay $10,000 extra in taxes. Another would save you that $10,000." Kaiser then questions in the given situation if the IRS should have the ability to assess penalties against an individual who interprets the statute in a way that saves him/her $10,000 when filing taxes and then fails to amend the return upon being contacted by an IRS agent who interpreted the provision differently; And furthermore, if that individual should be subject to criminal prosecution. Virtually no one thinks that a person in that situation should be prosecuted. Yet something very similar has taken place in United States v. Clay. The consequences of opening anyone -- executive or not -- to this kind of arbitrary prosecution risk is dangerous. The Eleventh Circuit has a chance to right that wrong and clarify when executives can be prosecuted for making decisions based on an objectively reasonable interpretation of law.

'Eleventh Circuit Has Opportunity in "U.S. v. Clay" to Reshape Prosecutors' & Courts' Approach on Criminal Intent' was published by The Legal Pulse of Washington Legal Foundation (WLF) in October, 2015. WLF remains dedicated to the preservation of America's free-enterprise system and advocates for free-market principles. It has published many case studies that aim to decrease the power of federal government and expand individual and business civil liberties.

For more information about the WellCare Criminal Prosecution Case, visit:

Eleventh Circuit Has Opportunity in "U.S. v. Clay" to Reshape Prosecutors' & Courts' Approach on Criminal Intent:

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