New Yorker Article by Malcolm Gladwell On "To Kill A Mockingbird" And My Thoughts On California's Prison System

One of my favorite legal movies is "To Kill A Mockingbird" based on the great novel by Harper Lee who grew up in Alabama. One of my favorite writers is Malcolm Gladwell, author of "Blink" and other interesting books. In the latest "New Yorker," Malcolm Gladwell writes about Atticus Finch and the limits of Southern liberalism. This politics meets prose article is well worth reading.

If you recall, the lead character Atticus Finch was played by Gregory Peck. Finch defended Tom Robinson, the black man falsely accused of what in nineteen-thirties Alabama was the gravest of sins, the rape of a white woman. In the years since, Finch has become a role model for the legal profession. Gladwell's article discusses James (Big Jim) Folsom, governor of Alabama in the 1950s and explains why Finch's politics is closer to Jim Folsom’s side of the race question than he is to the civil-rights activists who were arriving in the South as Harper Lee wrote her novel.

For the New Yorker article, go to:
http://www.newyorker.com/reporting/2009/08/10/090810fa_fact_gladwell?currentPage=all

Attorney Commentary: Although criminal defense is only a part of our practice, one of the reasons we remain dedicated to it is that we see the issues in the justice system in the United States, the prison industry that has arisen and the lives that can get thrown away in the "fight against crime." Most of our clients have never been charged before, have often broken government program rules and regulations (that are man made and were never something that Moses brought down from the Mount), and risk having their careers and lives ruined without an aggressive defense and commitment to seeking justice.

I believe that in the future, we will look back on the present justice and prison system and wonder how it could have ever existed. Unfortunately, it is a more socially acceptable cause to promote the equality of man than to support the humane treatment of those accused of or convicted of crimes and urge that youthful and first time offenders be given an opportunity to overcome their offenses.

Most of our clients and their families, after experiencing first-hand the criminal justice system, become committed to changing it and cannot believe it operates in the way that it does. The saddest part is when we're in court and they see the scores of poor, minority defendants who do not have private counsel or the resources for investigation whose cases are on a treadmill and who often do not get true "justice."

The current prison system is a breeding ground for recidivism and the local county jails (which are racially segregated and in racial wars) are terrible and unsafe. The 9th Circuit Court of Appeal just issued a groundbreaking and scathing 184 page opinion that is startling in parts about California's prison system. A copy of the opinion can be found here:
http://www.ca9.uscourts.gov/datastore/general/2009/08/04/Opinion%20&%20Order%20FINAL.pdf

The panel of federal judges said state officials had failed to comply with previous orders to fix the prison health care system and reduce crowding. The opinion ordered the California prison system on Tuesday to reduce its inmate population of 150,000 by 40,000 — roughly 27 percent — within two years. The judges said that reducing prison crowding in California was the only way to change what they called an unconstitutional prison health care system that causes one unnecessary death a week. If that death were one of your relatives, what would you do to change the prison system?

For those who think that dying in prison is a just punishment for those who have committed a crime, I recommend thinking like Atticus Finch. Put yourself in the skin of that person or their family. I can think of young adults who had an auto accident while drinking that caused the injury or death of someone else. If that young man were your son or nephew and had to go to prison for 4 years for an offense, would you want him treated so poorly that he risked death?

I can think of young adults we've represented who hacked into a computer system for "fun" and have great futures ahead of them after they pay their debt to society. Should part of their punishment be placed in a gang-infested prison where there are race riots and where a serious medical problem will be ignored?
There are people in our society who should not be in the streets based on the crimes they have committed. Those individuals should be incarcerated. But only after receiving proper legal representation and a fair trial and then should be incarcerated in a humane condition so we are not breeding sociapaths and criminals for life. These are not the vast majority of people in our country's prisons and jails.

For example, the majority of offenders in prisons are for drug-related offenses. How many families have faced addiction issues? If you have resources, there are treatment programs -- but if you don't the treatment center is state prison. I also believe that the high percentage of minorities and the poor in prisons show why justice and prison reform should also be an equal rights and civil rights issue.

This is one of the many reasons I am on the Board of the National Association of Criminal Defense Lawyers (NACDL) and support strongly its tireless work on improving the criminal justice system in the United States. For those interested in learning more about the NACDL's work on behalf of the criminal justice system, go to: http://www.nacdl.org

Any questions or comments should be directed to: tgreen@greenassoc.com at 213-233-2260. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of individuals, licensed professionals and businesses in civil, business, administrative and criminal proceedings. The firm's website is at: http://www.greenassoc.com/

New California Decision: Unlicensed Contractor Required To Return All Compensation For Unlicensed Services With No Offset For Materials

A recent California Court of Appeal decision reminds us why being unlicensed can cause severe consequenses in many professions. In White v. Cridlebaugh, F053843 (5th Dist., Jul. 29, 2009) ("White"), it was determined that a corporation which acted as the building contractor on a project but which violated California’s licensure requirements was required to return to the homeowner all compensation paid for the unlicensed work, without offset for materials or services provided in connection with the unlicensed work.

The decision in the White case notes a departure from prior law due to a 2001 amendment to Business and Professions Code (BPC) section 7031. Before the amendment, unlicensed contractors were prohibited from filing an action to collect compensation for unlicensed services but were not required to return compensation already collected from the property owner. The 2001 amendment addressed this loophole, adding a provision which allowed a property owner to sue an unlicensed contractor to recover all compensation paid to the unlicensed contractor.

A summary of the law and the facts of the case are set forth below.

CONTRACTORS' STATE LICENSE LAW, BPC § 7000 ET SEQ. (CSLL)

The CSLL is a comprehensive legislative scheme governing the construction business in California, designed to protect the public from incompetent or dishonest providers of building and construction services. The CSLL provides that contractors (whether an individual, firm, partnership, corporation, or other association) performing construction work must be licensed unless exempt. BPC §§ 7026 et seq. and 7040 et seq.

To obtain a contractor's license, a corporation must qualify through either a “responsible managing officer” (RMO) or “responsible managing employee” (RME), who is, him or herself, eligible for the same license qualification. BPC § 7068(b)(3). The “qualifier” RMO or RME must be a bona fide officer or employee of the corporation and actively engaged in work encompassed by the license. BPC § 7068(c).

Under section 7068.2, if the qualifier is disassociated from the licensed entity, the entity has 90 days to replace the qualifier. If the qualifier is not replaced, the contractor’s license issued to the entity is automatically suspended. BPC § 7068.2. The CSLL encourages licensure by subjecting unlicensed contractors to criminal and civil penalties.

The criminal provisions state it is a misdemeanor for a person without a license or an exemption to act in the capacity of a contractor. BPC § 7028(a). The civil penalties affect the unlicensed contractor’s right to receive or retain compensation for unlicensed work. Thus, an unlicensed contractor who has not "substantially complied" with the licensure requirement may not maintain an action to collect compensation for work performed for which a licensed was required. BPC § 7031(a).

Further, a person utilizing the services of an unlicensed contractor who has not "substantially complied with the licensure requirement may bring an action to recover "all compensation paid to the unlicensed contractor for performance of any act or contract.” BPC § 7031(b) (emphasis added).

Notably, section 7031(b) makes no exception for a property owner who hired a contractor with knowledge of his or her unlicensed status. An April 2001 Assembly Committee analysis of the bill which enacted section 7031(b) (Stats. 2001, ch. 226, § 1 (Assem. Bill No. 678)), stated:

"AB No. 678 . . . specifically [recognizes] the capacity of an owner to recover money already paid an unlicensed contractor, even if the person knew the contractor was unlicensed.” (Assem. Com. on Judiciary, Analysis of Assem. Bill No. 678 (2001-2002 Reg. Sess.), as introduced Feb. 22, 2001, pp. 2-3,http://www.leginfo.ca.gov/pub/01-02/bill/asm/ab_0651-700/ab_678_cfa_20010423_102730_asm_comm.html [as of July 28, 2009].)

FACTS OF THE CASE

The Project. In March 2006, Robert White (White) contracted entered into a written time and materials contract with Terry Cridlebaugh (Cridlebaugh) to build a retirement home. Although the contract listed White as the general contractor, White understood that Cridlebaugh would do the actual work on the site and was responsible for reading the plans and doing the work on the drawings.

After the rough grading was completed, White and Cridlebaugh disputed whether the excavation was in accordance with the plans. White also contended that the JC Master Builders, Inc. (a general engineering and building contractor operated by Cridlebaugh) had substantially exceeded the budget for site preparation and presented him with convoluted invoices.

Eventually, White terminated the project. JC Master Builders filed a mechanic’s lien in the amount of $13,561.62 against the White's lot. The Contractor’s License Robert Diani ("Diani") was the "qualifying" RMO for the corporation. Diani testified that had been an absentee officer of the corporation since August 2004, when he turned over all management and supervisory responsibilities of JC Master Builders to Cridlebaugh. Cridlebaugh had never held a California contractor’s license.

The Trial Court Proceedings. White filed a complaint against Cridlebaugh and JC Master Builders alleging breach of contract and other counts. JC Master Builders filed a separate action against White on its mechanic's lien for $13,561.62.

White filed a motion for a directed verdict on JC Master Builders' mechanic's lien claim under BPC § 7031. The trial court granted White's motion. However, the trial court found that White was not entitled to reimbursement of $84,621.45 in compensation previously paid to JC Master Builders. White appealed that portion of the verdict.

LEGAL ANALYSIS

The appellate court determined that, at the time JC Master Builders performed services for White, it was not qualified for a contractor’s license because:

(1) its qualifying RMO (Diani) was not actively engaged in its construction business after August 2004,

(2) Cridlebaugh did not have a contractor’s license, and

(3) no replacement RMO was ever qualified in Diani’s place.

Therefore, JC Master Builders’ contractor’s license was suspended by operation of law. BPC § 7068.2. The court of appeal then considered whether JC Master Builders was entitled to retain any portion of the $84,621.45 for materials and services provided or by claims for indemnity and contribution. The court concluded that it was not. The court interpreted BPC section 7031(b) – authorizing recovery of “all compensation paid to the unlicensed contractor for performance of any act or contract” (italics added) – as as meaning that unlicensed contractors are required to return all compensation received without reductions or offsets for the value of material or services provided.

ATTORNEY COMMENTARY

Unless an unlicensed contractor has "substantially complied" with licensure requirements, it faces the prospect of recovering no compensation for its work, no matter how competently it is performed and no matter if the property owner is fully informed of the contractor's unlicensed status. This case illustrates the need for those in the construction business to understand the regulatory aspect of the industry.

Construction firms considering a change in operations are wise to invest the services of an attorney with knowledge of licensing laws to ensure that they are managed and staffed appropriately. Better to undertake a small expenditure of legal fees than to lose one's entire income.

Any questions or comments should be directed to: tgreen@greenassoc.com at at 213-233-2260

Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of individuals, licensed professionals and businesses in civil, business, administrative and criminal proceedings. The firm's website is at: http://www.greenassoc.com/

Oakland Man Pleads Guilty To Distributing Drugs On Internet Without Prescription

The internet prescription cases continue to be filed around the country. On June 18, 2009, in San Francisco Federal Court, Roger L. Hollins Roberts pled guilty to distributing drugs purported to be Viagra and Cialis without a prescription. Specifically, he plead guilty to misbranding drugs while held for sale with intent to defraud or mislead, in violation of 21 U.S.C. §§ 331(k) and 333(a)(2).

In pleading guilty, Mr. Roberts admitted to operating Internet Web sites known as www.viagra-on-wheels.com and www.sexpills-on-wheels.com, which advertised delivery services specializing in local delivery or overnight mail delivery of brand-name prescription erectile dysfunction drugs, particularly Viagra and Cialis. The drugs the defendant advertised and sold on these Web sites were drugs that he imported from the People’s Republic of China and Mexico.

They bore the labels “Viagra” and “Cialis” and contained the same active ingredients as those drugs. Roberts also admitted that the Web sites falsely stated that the drugs were approved by the U.S. Food and Drug Administration, that they were obtained directly from licensed pharmaceutical manufacturers, and that they were sold in compliance with FDA regulations.

One aggravating fact was that Mr. Roberts had never been registered as a pharmacist or licensed medical practitioner with the State of California.

The sentencing of Mr. Roberts is scheduled for September 24 before Judge White in San Francisco. Any sentence following conviction would be imposed by the court after consideration of the plea agreement, the U.S. Sentencing Guidelines, and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Any questions or comments should be directed to: tgreen@greenassoc.com or 213-233-2260.

Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Physician Assistant Convicted By Jury For Medicare Fraud And Stealing Physician's Identity In Los Angeles Federal Trial

One recent criminal Medicare fraud case shows the links between identity theft, patient recruiting and illegal kickbacks. These issues do not affect most health care providers but it is important to understand what is happening in the criminal fraud cases to see why the government is pursuing all "fraud" cases with a vengeance. There is outright fraud like this case here. There are also "fraud" cases where there are simply violations of rules and regulations but where services are provided and medically necessary.

On Jule 30, 2009, after a 7-day trial , a federal jury in Los Angeles found physician assistant, Ronald Luis Bradshaw, guilty on all charged counts, including conspiracy to commit health care fraud, multiple counts of health fraud and aggravated identity theft for prescribing medically unnecessary durable medical equipment to hundreds of Medicare beneficiaries under the stolen identity of a doctor. The loss alleged was $7.7 million. There were two related guilty pleas in this case by a patient recruiter/capper and an owner of a medical equipment company.

According to the evidence presented at trial, Mr. Bradshaw worked as a licensed physician assistant at a Los Angeles clinic, Glenmountain Medical Group (Glenmountain). Under physician assistant rules, Mr. Bradshaw was supposed to be working under the supervision of a doctor. It was alleged in the trial that the doctor supervision was a sham.

The doctor, whose unique physician identification number (called a UPIN) had been used by Mr. Bradshaw to forge medically unnecessary prescriptions, testified that he never worked at Glenmountain and that he never authorized Mr. Bradshaw to use his number. The total amount billed under this doctor’s name for medical equipment and tests prescribed by Mr. Bradshaw was $7,708,069.

Evidence at trial established that from approximately April 2005 to April 2008, Mr. Bradshaw prescribed hundreds of motorized wheelchairs and custom-fitted orthotics to Medicare beneficiaries under the apparent authority and supervision of this same doctor. Mr. Bradshaw also ordered diagnostic tests for these beneficiaries under the same doctor’s apparent authority.

Several beneficiaries (patients) testified at trial that they were recruited by patient recruiters to be examined at Glenmountain. Some beneficiaries testified that they were enticed by the promise of a free exam, while others were promised free, expensive medical equipment.

Juana Aranda, a professional patient recruiter/capper who previously pleaded guilty in connection with this case, testified that she was paid cash for bringing Medicare beneficiaries to Glenmountain and that she was paid more if the beneficiary was prescribed a motorized wheelchair.

Each of the beneficiaries who testified at trial stated that they had no difficulties walking and that they did not complain about any difficulties during their respective examinations. After their examinations, however, each received a motorized wheelchair delivered to them by Star Medical Supply Inc., a durable medical equipment company owned and operated by Karen Arakelyan, who previously pleaded guilty in connection with the facts in this case.

Mr. Arakelyan testified that he paid a Glenmountain representative $1,200 per prescription. Mr. Arakelyan admitted he then delivered a motorized wheelchair to the beneficiary and filed a fraudulent claim with Medicare based on the bogus prescription that he purchased from Glenmountain.

At sentencing, scheduled for November 12, 2009, Mr. Bradshaw faces a maximum penalty of 10 years in prison on each of the four health care fraud counts as well as the conspiracy to commit health care fraud count for which he was convicted. In addition, he faces a mandatory two-year prison sentence on the aggravated identity theft count, which must be served consecutive to the sentence on the fraud counts. In determining the actual sentence, the federal judge will consult the advisory U.S. Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant's criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining a sentence.

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  Ms. Green's office at Green and Associates is located in Los Angeles, California. 

Any questions or comments  should be directed to Tracy Green, a very experienced California health care fraud attorney, Los Angeles physician assistant attorney, and Los Angeles health care attorney at tgreen@greenassoc.com. The  firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers including physician assistants. Their website is: http://www.greenassoc.com/

Physician And Two Hospital Employees Plead Guilty To Misdemeanor Violations Of HIPAA In Arkansas Federal Court

HIPAA is becoming an increased basis for criminal prosecutions of licensed health care professionals and health care workers. In Arkansas, there was one of the first federal criminal prosecutions for accessing patient records out of curiosity -- where there was no identity theft or related criminal conduct.

On July 20, 2009, a physician and two former employees of St. Vincent Infirmary Medical Center (SVIMC) in Little Rock, Arkansas, pleaded guilty to misdemeanor violations of the health information privacy provisions of the Health Insurance Portability and Accountability Act.

Each admitted he or she had accessed patient records out of curiosity. All three acknowledged they had participated in HIPAA training provided by SVIMC, and understood the prohibition on accessing records without a legitimate reason for doing so.

The records accessed related to the treatment of Anne Pressly, a local television personality who was brutally beaten by a home intruder on October 20, 2008. Ms. Pressly died at SVIMC on October 25.

Dr. Jay Holland, medical director for Select Specialty Hospital located on one floor within SVIMC, admitted that he logged into the medical center's electronic medical record system from home seeking to determine the accuracy of a television news report concerning Ms. Pressly. The medical center suspended Dr. Holland for two weeks and ordered him to complete additional HIPAA training. Sarah Elizabeth Miller, an account representative for SVIMC, admitted viewing Ms. Pressley's medical records twelve times, and Candida Griffin, an emergency room unit coordinator, accessed the file on three occasions. SVIMC terminated Miller's and Griffin's employment.

Each of the individuals faces up to a year in jail and a $ 50,000 fine for the violation they admitted. Sentencing should take place within the next two months. In determining the actual sentence, the federal judge will consult the advisory U.S. Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant's criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining a sentence. A probation sentence given these individual's lack of prior criminal history seems likely here.

Attorney Commentary: The misdemeanor conviction will be just the beginning of the individuals' legal issues. There are employment issues, the misdemeanor conviction will need to be reported to the licensing boards, potential national reporting, and other collateral consequences.

To understand how a HIPAA violation is reported, you can review the US Department of Health and Human Services Office for Civil Rights website: www.hhs.gov/ocr/privacyhowtofile.htm

As part of compliance plans and a professional's pattern and practice, HIPAA will become more important. This particular case probably obtained the government's attention due to the fact that the patient was a local news celebrity. As records become increasingly electronic and accessible, there are greater risks of unauthorized access.

Any questions or comments should be directed to: tgreen@greenassoc.com or 213-233-2260.

Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

California Hospital Pays $2.4 Million To Settle Qui Tam Lawsuit Alleging Unlawful Arrangements Between Hospital And Referring Physicians

On July 27, 2009, the United States Attorney's Office Central District of California, issued Press Release No. 09-087, announcing that Tulare Local Healthcare District, Tulare District Healthcare System and Tulare District Hospital (collectively, “Tulare Healthcare”) have agreed to pay more than $2.4 million to settle allegations that they submitted claims to the Medicare system as part of a scheme to illegally reimburse doctors who referred patients to Tulare Healthcare.

The settlement stemmed from an investigation by the Department of Health and Human Services, Office of Inspector General and the United States Attorney’s Office. Tulare Healthcare agreed to pay the settlement without admitting any wrongdoing. The alleged acts in the lawsuit occurred under prior Tulare Healthcare management, and the current management cooperated fully with the government’s investigation. The settlement, was announced when the United States Attorney’s Office learned that United States District Judge Christina Snyder had unsealed a “whistleblower” lawsuit filed last year by Maria Lucy Reimche, Tulare Healthcare’s former chief financial officer.

Reimche’s lawsuit alleged that Tulare Healthcare made prohibited remuneration to physicians who referred Medicare patients to Tulare Healthcare. The doctors who allegedly received prohibited remuneration from 2001 through 2007:

(1) were given rental arrangements at below-market rates,

(2) were able to purchase commercial real estate lots at below-market value, and

(3) had debts forgiven.

Reimche's lawsuit alleges that when Tulare Healthcare made claims to Medicare for reimbursement for services provided to the patients that had been referred, it violated the federal False Claims Act, as well as the federal Anti-Kickback Statute and an anti-referral law known as “the Stark law.”

The Anti-Kickback Statute prohibits anyone from offering, paying, soliciting or receiving anything of value to generate referrals for items or services payable by any federal health care program. The Stark law provides that, subject to certain exceptions, a physician may not refer patients for specified Medicare-covered health services to a hospital or other entity with which the physician or an immediate family member has a financial relationship. The law also prohibits hospitals from billing for any services provided as a result of a prohibited referral.

The Press Release can be read at: http://www.usdoj.gov/usao/cac/pressroom/pr2009/087.html

Attorney Commentary

Given the budgetary crises in Medicare and Medi-Cal and the emphasis on health care reform, we can expect to see an increase in scrutiny of hospital-physician business relationships. During tough economic times, enforcement actions serve not only to weed out those practitioners who intend to bilk the government, but also as a revenue source.

For physicians, it is important for you not to rely solely on the hospital's administrators (or other health care clinics) to assess the legality of these arrangements. We have had clients who said "well, if the hospital is proposing the idea it must be legal!" Hospitals face financial pressures too to build relationships and fill beds. Certainly, they may seek to comply with the law but in health care what was accepted one year ago or five years ago -- may be reviewed differently now.

Why is this important? If the government (or a whistleblower former employee) can prove that you have violated the Stark or Anti-Kickback statute, every claim you submit related to those referral relationships or arrangements is a "false" claim and must return 100% of the amount paid even if it was medically necessary. Look at the last page of your Medicare application where you specificially have signed that you understand this concept.

As this case illustrates, kickbacks do not always take the form of cash payments. Even something as seemingly innocuous as a discount on rent can be interpreted as a kickback. Given the current climate, it is a good idea for the practitioner wishing to avoid problems with Medicare and Medi-Cal to have their contracts reviewed by an attorney specializing in health care law.

Further, the practitioner would be wise to have an attorney visit the premises and observe the operations, talk to the office manager, observe the patient flow and understand your business relationships. Not only must practitioners ensure that their written contracts pass muster, they must also ensure that actual day-to-day business practices comply with the law. We would much rather prevent problems rather than assist a client defending a whistleblower lawsuit or health care fraud investigation.

For the physicians who entered into these arrangements, they are at significant risk of losing their Medicare provider numbers and having exclusions or negative reporting to the national database based on a qui tam lawsuit. There can be further fall-out from the state as well. These business relationships which do not comply with the law are never worth the risks in the long-term. Having objective legal advise by an attorney who represents you and thinks of your long-term career and practice is important.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/