The Supreme Court reaffirms specific intent mens rea requirement for certain health care cases
The presence of a “guilty mind”, commonly known as mens rea, is a significant consideration in criminal law. A recent Supreme Court decision on the mens rea requirements for a particular heath care offense may have long-ranging impacts for those in health care law, and to corporate compliance programs.
The Latin phrase, actus non facit reum nisi mens sit rea means “an act does not render a man guilty of a crime unless his mind is equally guilty.” This phrase sums up the foundation of criminal law―almost every crime requires a mental intent element. This element is commonly known as mens rea, meaning a “guilty mind.” While it seems like a very simple concept (enough so to constitute famous pop lyrics), analyzing the mens rea requirements for a particular crime can be extremely complex. Courts routinely review these issues in determining whether a particular criminal statute requires a specific mental state. This article provides an overview of various mental-state requirements with a focus on federal health care offenses. We also address the impact of a recent Supreme Court case that decided the mens rea required for a particular federal health care offense and the breadth of its reach. Finally, we provide some “lessons learned” from that Supreme Court case and general observations regarding the importance of mens rea to a corporate compliance program.
Requisite Mens Rea (Guilty Mind)
The Supreme Court has “long recognized that determining the mental state required for commission of a federal crime requires construction of the statute and inference of the intent of Congress.”1 Three questions are generally considered in determining the requisite mental state for a particular the statute prescribe a mental state; (2) if so, which elements of the offense must meet which requirements; and (3) what the mental-state requirements mean.2
If the statute includes a mens rea term, such as “knowledge,” “willfulness,” or “intent,” the courts presume Congress’ intent to require a culpable mental state. Far too often, however, drafters fail to include a specific mens rea term, and in those cases the courts presume that the criminal statute requires the “degree of knowledge sufficient to make a person legally responsible for the consequences of his or her act or omission.”3
Omitting such a requirement would “impose criminal sanctions on a class of persons whose mental state…makes their actions entirely innocent.”4 Such a result runs counter to traditional concepts of criminality.
The relevance of the mens rea standard cannot be understated. It is directly linked to the extent and nature of culpability. Congress has shown interest for decades in establishing more systematized mens rea standards and application rules, and on June 30, 2021, the Congressional Research Service (CRS) published a comprehensive report entitled, Mens Rea: An Overview of State-of-Mind Requirements.5 The CRS identified the Model Penal Code (MPC) as one source of mens rea principles, including the development of five levels of mental culpability attached to a prohibited act: (1) purposely; (2) knowingly; (3) recklessly; (4) negligently; and (5) none (strict liability). These are reflected in the following chart published in the CRS Report:
|TABLE 1. MPC CULPABILITY LEVELS|
|Purposely||Conscious object to engage in conduct of that nature||Aware of the existence of such circumstances or believes or hopes that they exist||Conscious object to cause such a result|
|Knowingly||Aware that conduct is of that nature||Aware of at least a high probability that such circumstances exist, unless actor actually believes they do not exist||Aware that it is practically certain that conduct will cause such a result|
|Recklessly||None||Consciously disregards a substantial and unjustifiable risk that the material element exists||Consciously disregards a substantial and unjustifiable risk that the material element will result from conduct|
|Negligently||None||Should be aware of a substantial and unjustifiable risk that the material element exists||Should be aware of a substantial and unjustifiable risk that the material element will result from conduct|
The table reflects culpability levels in a descending order of intentionality ranging from “purposely,” which generally requires the individual’s “conscious object” to engage in the criminal conduct, to “negligently” which requires that the individual, objectively, “should be aware” of a substantial risk. A small number of crimes, such as adulterated food crimes, require no mens rea and thus impose “strict liability” to conduct.
In the health care context, the mens rea standard of “knowingly” is often required. As the chart indicates, just below “purposefully,” “knowingly” requires an awareness that the conduct is “of that nature.” Importantly, the statutory “knowledge” element can be satisfied, even in the absence of actual knowledge, by “deliberate avoidance of knowledge,” also known as the “willful blindness” or “deliberate ignorance” standard. To prove “deliberate ignorance,” the Government must establish that (1) the defendant was subjectively aware of a high probability of the existence of the illegal nature of the conduct; and (2) thereafter purposely contrived to avoid learning of the illegal conduct.6
The Government traditionally looks to circumstantial evidence to establish these elements. “An oft-repeated rationale for the doctrine is that one who acts like that is ‘just as culpable’ as one who has ‘actual knowledge’—in other words, ‘persons who know enough to blind themselves to direct proof of critical facts in effect have actual knowledge of those facts.’”7
Both business organizations and individuals can be found criminally liable.8 Under federal law, the actions of corporate officers, employees, or agents, if acting within the scope of their employment or for the benefit for the entity, can be imputed to the entity.9 So can their mens rea. Similar to the “deliberate ignorance” standard for individuals, an entity may nonetheless be found criminally liable in instances where “no single employee possesses the requisite mens rea necessary for the offense but a number of employees have, together, committed the unlawful act.”10 Thus, mens rea requirements warrant caution in assessing both corporate and individual criminal risk.
Recent Supreme Court Analyzing Mens Rea Regarding the Controlled Substances Act
Just this summer, the United States Supreme Court ruled on the requisite mens rea relating to the Controlled Substances Act (CSA). In Ruan v. United States,11 the Supreme Court was asked to determine whether a physician could be convicted of unlawful distribution of controlled substances without regard to whether, in good faith, the physician “reasonably believed” or “subjectively intended” that his or her prescriptions fall within that course of professional practice. The CSA makes it unlawful for “any person knowingly or intentionally … to manufacture, distribute, or dispense” a controlled substance, “except as authorized.” A prescription is authorized when it is “issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.”12 The “vague and highly general regulatory language” left open the question of what conduct would fall under the statute’s exception and thus be considered legal.
Dr. Xiulu Ruan and Dr. Shakeel Kahn were physicians specializing in pain management. Both physicians were convicted, after jury trials, of violations of the CSA. Prosecutors argued that the physicians were prescribing medicine outside the standard of care, arguing that scienter should be defined as either an “objectively reasonable good-faith effort” or an “objective honest-effort standard.” The physicians denied the allegations, arguing they always acted in “good faith,” believing that the medications they prescribed were for legitimate medical purposes. While both physicians admitted they could have been more careful, they argued that there was a difference between criminal activity and malpractice. They argued the Government needed to prove absence of subjective good faith and that establishing only failure to meet an objective standard of care was insufficient.
The Supreme Court sided with the physicians, finding that once a defendant met the burden of producing some evidence that his or her conduct was “authorized,” the Government had the burden to prove beyond a reasonable doubt that the defendant knowingly or intentionally acted in an unauthorized manner. The Court noted that the statute uses the words “knowingly or intentionally,” rather than “good faith,” “objectively,” “reasonable,” or “honest effort.” Such a standard, the Court said, “would turn a defendant’s criminal liability on the mental state of a hypothetical ‘reasonable’ doctor, not the mental state of the defendant himself or herself” which is necessary in the criminal context. Thus, the Court rejected an objective standard in favor of a subjective standard. The Supreme Court invited the Government to prove knowledge of a lack of authorization through circumstantial evidence but reiterated it was still the Government’s burden to carry and it had to prove a defendant actually and subjectively knew or intended that his or her conduct was unauthorized.
Ruan is an important victory for medical practitioners of all types facing not only CSA allegations, but also health care fraud in general. In line with the long-standing proviso that “the act is not culpable unless the mind is guilty,” courts should apply this same principle to similar statutes in other complicated, highly regulated industries.
As the Supreme Court noted, “the Government, of course, can prove knowledge of a lack of authorization through circumstantial evidence” to establish a defendant’s subjective intent. The more “unreasonable” a defendant’s “asserted beliefs or misunderstandings are,” especially as measured against objective criteria, “the more likely the jury…will find that the Government has carried its burden of proving knowledge.”
In business and individual liability contexts, a strong compliance program can limit the ability of the Government to carry its burden of proof with regard to any mens rea standard. According to the US Sentencing Guidelines, an effective compliance program requires an organization to “(1) exercise due diligence to prevent and detect criminal conduct; and (2) otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.”13 Such efforts go a long way to protect an organization from the consequences of intentional wrong-doing of employees, officers and other agents. A key aspect of an effective compliance program is actively searching for and detecting issues and not ignoring issues when red flags are identified. Once a red flag is raised internally, then the compliance team must document any effort to remedy the situation, the department’s understanding of the appropriate reporting agency, and all correspondence regarding the matter both internally and with the reporting agency.
An organization could be vulnerable to a claim of willful blindness if a strong compliance program is not fully embraced throughout the organization. Willful blindness requires a subjective belief in a high probability a fact existed followed by deliberate inaction to avoid confirming the fact. It is the legal version of “hear no evil, see no evil.” Even in the event of an incident or some act that is problematic, the absence of criminal mens rea will arm the organization with good arguments for a civil resolution. In highly regulated industries, such as health care, the existence of “red flags” without relevant inquiries can establish willful blindness. Failure to “clear” a known red flag may be used as circumstantial evidence of the requisite mens rea. When in doubt, seeking legal or other professional advice can demonstrate that the organization was not willfully blind.
Strong compliance programs will not always eliminate the risk of criminal liability, but reasonable responses to known situations can serve as a barrier to the Government’s ability to establish mens rea especially in light of the Supreme Court’s decision in Ruan. In the past, the Government had successfully convinced lower courts that defendants bear the burden of proving good faith allowing defendants to be convicted of crimes merely because they “should have known” better. Mere negligence is not sufficient. The Supreme Court has made it clear—the Government must now meet the exacting mens rea requirements of a traditional criminal offences and truly show that a defendant’s “mind is equally guilty.”
1 Staples v. United States, 511 U.S. 600, 605, 114 S. Ct. 1793, 128 L. Ed. 2d 608 (1994)
2 Michael Foster, Cong. Rsch. Serv., R46836, Mens Rea: An Overview of State-of-Mind Requirements for Federal Criminal Offenses (2021) (“CSR Report”).
3 Rehaif v. United States, 139 S. Ct. 2191, 2195, 204 L. Ed. 2d 594 (2019)
4 Staples, 511 U.S. at 605.
5 CRS Report, supra note 3.
6 United States v. Delgado, 668 F.3d 219, 227 (5th Cir. 2012).
7 United States v. Parker, 872 F.3d 1 (1st Cir. 2017) (quoting Glob.-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766, 131 S. Ct. 2060, 179 L. Ed. 2d 1167 (2011)).
8 See, e.g., 18 U.S.C. § 1347 (Health care fraud).
9 United States v. Grayson Enterprises, Inc., 950 F.3d 386, 407 (7th Cir. 2020)
10 Erin L. Sheley, Tort Answers to the Problem of Corporate Criminal Mens Rea, 97 N.C. L. Rev. 773, 782 (2019).
11 142 S. Ct. 2370, 213 L. Ed. 2d 706 (2022)
12 21 C.F.R. § 1306.04(a).
13 See U.S.S.G. §8B2.1(a).
About the Authors
Steve Holtshouser is a Partner with Husch Blackwell. He practices both intellectual property litigation and white collar defense/internal investigations.
Christina Moore is a Partner with Husch Blackwell. She is healthcare litigator with special expertise in the area of healthcare finance and operations.
Kate Ledden is an Associate with Husch Blackwell. She represents healthcare clients in complex litigation.
This article is from the Fall 2022 issue of Ethisphere Magazine. To read the full issue, click here.