United States v. John Natale , 719 F.3d 719 ( 2013 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 12-3231
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
JOHN N ATALE,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 11 CR 594—Rebecca R. Pallmeyer, Judge.
A RGUED A PRIL 18, 2013—D ECIDED JUNE 11, 2013
Before B AUER, F LAUM and SYKES, Circuit Judges.
F LAUM, Circuit Judge. When another doctor reviewed the
post-surgical CT scan from one of Dr. John Natale’s
patients, something did not seem right. Natale had previ-
ously repaired the patient’s aortic aneurysm, and the
images from the CT scan did not match the procedure
Natale described in his operative reports. An investiga-
tion culminated in Natale’s indictment for health care
fraud related to his Medicare billing, mail fraud for his
2 No. 12-3231
use of the mails in receiving the Medicare reimburse-
ment checks, and false statements related to health care
for the inaccuracies in his operative reports and other
medical notes. The jury acquitted Natale on the fraud
counts but convicted him of making false statements
in violation of 18 U.S.C. § 1035. When charging the jury
on the false statement counts, the trial court used in-
structions that seemingly permitted conviction for false
statements completely unrelated to Medicare reimburse-
ment. Natale now challenges that instruction along
with several of the district court’s evidentiary rulings.
We agree that the district court’s instruction on the false
statements charges swept too broadly and allowed con-
viction for conduct not covered by the statutory text.
We now clarify the meaning of § 1035 and identify
the proof required for conviction. Because the erroneous
instruction was harmless in Natale’s case, however,
and because we see no error in the district court’s evi-
dentiary rulings, we affirm Natale’s conviction.
I. Background
A. Factual Background
Natale is a vascular surgeon who performed surgeries
out of Northwest Community Hospital in Arlington
Heights, Illinois. He specialized in the treatment of aortic
No. 12-3231 3
aneurysms, a condition involving weakened vascular walls
in the aorta, the main artery exiting the heart. Treatment
for aneurysms generally involves surgery, during which
the surgeon cuts out the weakened arterial tissue and
replaces it with a synthetic graft.
Treatment of aortic aneurysms is especially complex. The
aorta is the main conduit delivering oxygenated blood
from the heart to other body parts. It thus consists of a
wide tube that leaves the heart and extends down the
center of a person’s torso. See Figure 1. As such, it is much
like an interstate highway—large, wide, and designed to
deliver high volumes of blood (which would be like cars
on the highway) quickly to the destination body parts.
And just as an interstate highway has exits that divert
4 No. 12-3231
traffic to smaller local roads, arteries branch off from the
aorta to deliver blood to the various organ systems
throughout the body. For example, the hepatic artery
carries blood to the liver; the gastric artery de-
livers blood to the stomach; and the renal arteries ensure
perfusion of the kidneys. See Figure 2. The aorta ultimately
forks into two branches, becoming the left and right iliac
arteries. The iliac arteries in turn become the femoral
arteries, which carry blood to the legs and lower extremi-
ties.
Surgeons use two different types of synthetic grafts to
repair the weakened aortic walls. A tube graft performs
No. 12-3231 5
exactly as its name implies. A tube replaces the weakened
arterial wall (or is used to create a bypass around the
weakened artery). See Figures 3B and 4B. The tube graft
attaches to the aorta itself, before the vessel splits into
the iliac arteries. In contrast, a bifurcation graft splits
into two branches at its lower end, with the two
branches attaching to the iliac arteries, not the aorta. As
a result, the bifurcation graft itself has the shape of
an upside-down “Y”. See Figures 3A and 4A.
While all aortic aneurysms present complications,
aortic aneurysms above (suprarenal aneurysms) or
near (juxtarenal aneurysms) the renal arteries prove
especially difficult. Treating these aneurysms requires
the surgeon to clamp the renal arteries, sever them from
the aorta, replace the juxtarenal segment of the aorta
with a graft, and reattach the renal arteries to the graft.
As a result, post-operative renal arteries attach to and
branch off from the synthetic graft, not the natural aorta.
Medicare requires doctors to submit bills using a
five-digit “CPT” code, which determines the level of
Medicare reimbursement. Because aneurysms involving
the renal arteries require a more complex procedure,
Medicare reimburses such surgeries at higher rates than
simpler repairs. In this case, the indictment accused Natale
of performing the simpler repair surgery while sub-
mitting the CPT codes and receiving reimbursement
for treatment of the more complex suprarenal aortic
aneurysm. For the surgeries described in the indictment,
use of these billing codes netted Natale about $3,700
more, in total, than the codes for less complex aneurysms
allowed.
6 No. 12-3231
More specifically, Natale faced two counts of health care
fraud, see 18 U.S.C. § 1347, one count of mail fraud, see id.§ 1341, and two counts of making false statements relating
to health care matters, see id. § 1035. At the root of all five
counts sat alleged falsities contained in the operative
reports for several of Natale’s patients. According to the
government, these statements gave the impression that
Natale had performed the more complex procedure
involving the renal arteries. Among other statements, for
example, Natale dictated that he “reimplanted” or “im-
planted” renal arteries of several patients.1 His operative
notes also stated that a “button of the right renal artery
tissue was then cut out and sewn to a portion of the graft
with 5-0 Prolene.” Thus, he described sewing the renal
arteries directly into the synthetic graft (the 5-0 Prolene) as
if he had repaired an aneurysm involving the renal
arteries. In addition to these statements (and others)
suggesting involvement of the renal arteries, Natale’s
operative reports and other notes suggested use of bifurca-
tion grafts rather than tube grafts. For example, one note
explains that he “extended the limbs of the bifurcation
graft down to the external iliac artery bulge.” In reality,
1
Reimplantation involves replacement of the arteries and
reestablishment of blood flow. See Stedman’s Medical Diction-
ary 1672 (28th ed. 2006) (entry for “replantation,” a synonym
of reimplantation). Thus, Natale’s use of this word suggests
he had severed the renal arteries from the aorta and
reattached them after repairing the aneurysm, a procedure
that would have justified the higher billing codes for an aneu-
rysm involving the renal arteries.
No. 12-3231 7
the government charged, Natale had performed a
simple repair below the renal arteries using only a tube
graft. These allegedly false statements in the operative
reports provided both the misrepresentations necessary
for the scheme to defraud and the falsities necessary
for the false statement counts.
B. Procedural History
At trial, the government offered the expert testimony
of Dr. George Anton, a surgeon with Hillcrest Hospital
in Cleveland. Anton testified that Natale supported his
use of the higher-paying billing codes through the state-
ments in the operative reports. Operative reports gen-
erally provide a summary of the surgery—describing
what procedure was done, what the doctor noticed, what
complications, if any, occurred, etc. Northwest Com-
munity policy required completion of and submission of
operative reports following all surgeries.
Anton also identified what he believed were false
statements in Natale’s operative reports. While the
reports indicated that Natale had inserted bifurcation
grafts involving the renal arteries, Anton believed that
Natale had instead used simple tube grafts below the
renal arteries—a procedure that would not justify the
billing codes Natale had submitted. Anton reached this
conclusion by comparing post-surgical CT scans of
Natale’s patients with the procedures described in
Natale’s operative reports and other notes. Anton could
make this comparison because synthetic material
appears differently from natural tissue on the CT scans.
8 No. 12-3231
Thus, when viewing these scans, Anton could see
precisely what type of graft Natale had used and
where these grafts attached to the aorta.
According to Anton, the CT scans showed only a tube
graft, the top of which attached to the aorta below the
renal arteries and the bottom of which attached to the
aorta above the iliac arteries. See Figures 3B and 4B.
Natale’s operative reports and other notes, however,
suggested that Natale had inserted a bifurcation graft
that attached to the aorta above the renal arter-
ies—thereby requiring that the renal arteries attach to
and branch off from the synthetic graft—and below the
end of the aorta, attaching to each iliac artery. See Figures
3A and 4A. Although the operative reports described
bifurcation grafts, Natale did not use billing codes for
bifurcation grafts. Anton also used demonstrative ex-
hibits to help the jury visualize his opinions and testi-
mony.
No. 12-3231 9
Another government witness, Kelly Hartung, described
Medicare practices, policies, and procedures. Hartung
worked for the corporate contractor charged with adminis-
tering the Medicare program in Illinois and several other
Midwest states. She told the jury that Natale had submitted
billing codes for aneurysm repair involving the renal
arteries, consistent with Natale’s notes but inconsistent
with Anton’s reading of the CT scans. Hartung also
testified that, when doctors enroll in the Medicare program
as an authorized biller, they receive notice of Medicare
policies, procedures, and rules, and acknowledge having
read and understood those rules. At various other points
in the claim submission process, doctors reaffirm their
knowledge of Medicare billing rules and policies, verifying
10 No. 12-3231
that the bills they have submitted were for work actually
performed and medically necessary. Finally, Hartung
told the jury about Medicare’s auditing process, ex-
plaining that during an audit, Medicare “would request
documentation. That request . . . can be for the opera-
tive report[,] . . . X-rays, lab notes, [and/or] personal
office notes that a physician may have made.”
Like the Medicare representative, Anton also discussed
operative reports. He made no mention of their relevance
in Medicare billing, but he did explain that operative
reports help doctors make treatment decisions following
surgery. They are especially helpful—and important—for
physicians who did not perform the surgery on the
patient but are tasked with future treatment.
No. 12-3231 11
Medicare never requested, received, or reviewed the
operative reports describing the surgeries at issue in this
case. Nor did this case arise from a Medicare audit. In-
stead, one of Natale’s patients sought treatment from a
competing vascular surgeon at Northwest Community.
(It’s unclear, but ultimately irrelevant, whether the
patient sought treatment for the same or a different
condition.) That surgeon ordered the CT scans and
noticed the discrepancies to which Anton later testified
at trial. He reported Natale to the review committee
at Northwest Community, ultimately resulting in this
investigation and prosecution.
Natale testified in his own defense. He acknowledged
that the grafts at issue did not extend above the renal
arteries, but described the aneurysm as juxtarenal, placing
it just below the renal arteries. As a result, he explained,
“there was insufficient healthy aortic tissue below the renal
arteries with which to sew the top end of the graft.” This
situation ordinarily would require the synthetic graft to
extend beyond the aortic junction with the renal arteries,
thereby requiring the surgeon to incorporate the renal
arteries into the graft. Rather than doing so, however,
Natale told the jury he used a technique that he had
learned as a resident at Rush Presbyterian (dubbed the
“Rush Technique” at trial). According to Dr. Cyrus Serry,
who served as attending physician at Rush during Natale’s
residency, the Rush technique involves folding over the
weakened aortic wall to double its thickness. This dou-
bled-over tissue strengthens the aortic wall, permitting
attachment of the top end of the graft where, previously,
the tissue had been too weak to support such attach-
ment. Because the graft can attach to the doubled-over,
12 No. 12-3231
strengthened aortic wall, the renal arteries need not be
severed and sewn into the graft. This technique, Serry
testified, is more complex than the standard repair for a
suprarenal aneurysm because the surgeon must ensure
that the doubled-over flaps do not obstruct the openings to
the renal arteries. Moreover, because the technique in-
volves a doubling-over of aortic tissue and no synthetics,
use of this technique would not appear on a later CT scan.
Medicare has not designated a billing code for the Rush
Technique. (Nothing in the medical literature has ever
described the Rush Technique.) As a result, Natale ex-
plained, he did as he was instructed at Medicare
training sessions and chose the billing code that most
approximated the procedure he had performed. Because
the Rush Technique was, in Natale’s view, the “functional
equivalent” of a procedure incorporating the renal
arteries into the synthetic graft, Natale submitted the
billing codes for that procedure, rather than the billing
codes for repair of an aortic anuerysm not involving the
renal arteries.
Natale also admitted that his operative reports and
other notes contained inaccuracies. He attempted to
explain away these errors by characterizing them as
innocent mistakes. They arose, he told the jury, from his
status as the “busiest cardiovascular thoracic surgeon
in the Northwest Suburbs” and his sloppiness in dictating
the reports—as many as eighty to one hundred records
at a time, sometimes several weeks after performing
the surgery. Finally, Natale told the jury he did not
have billing in mind when dictating the reports, noting
No. 12-3231 13
that the reports identified several procedures and
items that he should have billed to Medicare but did not.
The government’s rebuttal witness challenged Natale’s
invocation of the Rush Technique. While Dr. John
Peters—Natale’s surgical assistant at the time of the
surgeries at issue—admitted that the Rush Technique
“sounded familiar,” he testified that he did not remem-
ber Natale performing the Rush Technique during
the surgeries in this case.
After closing arguments, the parties agreed on jury
instructions—without objection from Natale on the in-
structions at issue—and the district court so instructed
the jury. The district court also, over Natale’s objection,
permitted the jury to take Anton’s demonstratives into
the jury room during deliberations. Importantly, the
government “stripped down” the demonstratives that the
jury used during deliberations. Unlike the two diagrams
presented in Figures 3 and 4, the demonstratives used
during deliberations did not contain the headings “Op-
erative Report” and “Actual Operation.” Instead, it just
contained the pictures that Anton used when testifying.
The jury ultimately acquitted Natale on all three
fraud counts but found him guilty on the false state-
ment counts. Natale moved for a new trial based on the
jury’s use of the demonstratives during deliberations,
which the district court denied. He made no other
post-trial motions and received a ten-month prison sen-
tence on top of a $40,000 fine. Natale now appeals.
14 No. 12-3231
II. Discussion
A. The Plain Error in the District Court’s False State-
ment Instructions Was Harmless
Natale’s primary challenge to his conviction focuses
on the jury instructions that the trial judge issued on the
false statement counts. The government responds that
Natale has waived any challenge to these instructions
because he affirmatively approved of them at the jury
instruction conference. Moving through the proposed
instructions one by one, the district court asked, “[Pro-
posed Instruction] No. 29 is making false statements
instruction out of 18 United States Code, Section 1001, and
18 United States Code, Section 1035. Any problem with
that?” Defense counsel’s response: “No.” Counsel en-
gaged in a similar question-and-answer colloquy regarding
the remainder of the instructions on the false state-
ments counts, with the trial court asking counsel if he
“had any problem with” each proposed instruction. Each
time, counsel affirmatively expressed having no prob-
lem with the proposed instruction. The government now
suggests that the defense attorney’s comments during
this exchange affirmatively approved the jury instruc-
tion, resulting in waiver.
Ordinarily, when a defendant does not object to a
jury instruction before the jury retires to deliberate, the
defendant may later attack that instruction only for plain
error. Fed. R. Crim. P. 30(d); Johnson v. United States,
520 U.S. 461, 465-66 (1997). However, a defendant who
waives—rather than forfeits—his objection cannot avail
himself of even the demanding plain error standard of
No. 12-3231 15
review. See United States v. Olano, 507 U.S. 725, 732-33
(1993) (“Deviation from a legal rule is ‘error’ unless the
rule has been waived.”); United States v. DiSantis, 565
F.3d 354, 361 (7th Cir. 2009) (“Waiver ‘extinguishes any
error’ and ‘precludes appellate review.’ ” (citing United
States v. Pree, 408 F.3d 855, 872 (7th Cir. 2005)). He has no
recourse and generally must live with his earlier deci-
sion not to press the error. Such waiver occurs only
when a defendant makes a “knowing and intentional
decision” to forgo a challenge before the district court.
United States v. Jaimes-Jaimes, 406 F.3d 845, 848 (7th Cir.
2005). In contrast, when the “defendant negligently
bypasses a valid argument,” he has merely forfeited the
claim and can raise it on appeal, subject to plain error
review. United States v. Vasquez, 673 F.3d 680, 684 (7th Cir.
2012) (citing United States v. Anderson, 604 F.3d 997, 1001
(7th Cir. 2010)). We generally construe waiver “liberally
in favor of the defendant.” Jaimes-Jaimes, 406 F.3d at 848.
Although passive silence with regard to a jury instruc-
tion permits plain error review, see Fed. R. Crim. P. 30(d);
see, e.g., United States v. Mitan, 966 F.2d 1165, 1177 (7th
Cir. 1992), a defendant’s affirmative approval of a pro-
posed instruction results in waiver, e.g., United States
v. Courtright, 632 F.3d 363, 371 (7th Cir. 2011). Our cases
have strictly applied this rule to affirmative expressions
of approval without examining whether the statements
were a “knowing and intentional decision” or resulted
16 No. 12-3231
from “negligently bypass[ing] a valid argument.” 2 See
Courtright, 632 F.3d at 371; United States v. O’Connor, 656
F.3d 630, 644 (7th Cir. 2011); DiSantis, 565 F.3d at 361;
United States v. Griffin, 493 F.3d 856, 863 (7th Cir. 2007)
[hereinafter Griffin I]; United States v. Anifowoshe, 307 F.3d
643, 650 (7th Cir. 2002); United States v. Salerno, 108 F.3d
730, 742 (7th Cir. 1997); United States v. Lakich, 23 F.3d 1203,
1207-08 (7th Cir. 1994); United States v. Canino, 949 F.2d 928,
940 (7th Cir. 1991). As a result, affirmative statements as
simple as “no objection” or “no problem” when asked
about the acceptability of a proposed instruction have
resulted in waiver. See O’Connor, 656 F.3d at 644; Griffin I,
493 F.3d at 863; Anifowoshe, 307 F.3d at 650; United States
v. Griffin, 84 F.3d 912, 923-24 (7th Cir. 1996) [hereinafter
Griffin II ]. But see United States v. Roglieri, 700 F.2d 883, 888
(2d Cir. 1983) (applying plain error review where defense
counsel explicitly expressed no objection to the jury
2
Other circuits have not applied this rigid rule and instead
have analyzed whether a deliberate, strategic reason could
have justified the attorney’s affirmative approval of a jury
instruction. United States v. Rucker, 417 F. App’x 719, 721-22 (10th
Cir. 2011) (non-precedential decision); Virgin Islands v. Rosa, 399
F.3d 283, 291 (3d Cir. 2005); United States v. Perez, 116 F.3d 840,
845-46 (9th Cir. 1997) (en banc); United States v. Drougas, 748
F.2d 8, 30 (1st Cir. 1984) (“Defense counsel explicitly approved
the reasonable doubt instruction and is thus precluded . . .
from now objecting absent plain error.”); United States v.
Wiggins, 530 F.2d 1018, 1020 (D.C. Cir. 1976) (applying plain
error standard when defense counsel expressed satisfaction
with jury instruction).
No. 12-3231 17
instruction). We have applied this rule strictly because of
the difficulty in teasing out the subjective motivations
behind the “no objection” statement—from that statement
alone, a court cannot easily discern whether the attorney
bypassed a challenge for strategic reasons (which would
result in waiver) or whether the attorney simply failed
to recognize error that he otherwise would have raised.
As Anifowoshe explained, failure to find waiver from
affirmative statements of “no objection” and the like
would “create an almost insurmountable standard to
proving waiver.” 307 F.3d at 650.
This approach can sometimes produce especially harsh
results. Just as the district court did in Natale’s case, a
thorough district court judge will almost always hold a
jury instruction conference and put up the proposed
instructions, one by one, for discussion by the attorneys.
See United States v. Hollinger, 553 F.2d 535, 542 (7th Cir.
1977) (“An on-the-record instructions conference . . . clearly
enables the trial judge, in advance of instructing the
jury, to have erroneous aspects [of the instructions]
pointed out to him.”). The result: A trial court will almost
always require of counsel some affirmative response—
such as “no objection” or “no problem”—that will operate
as waiver on appeal. Only rarely will a jury instruc-
tion conference provide the opportunity for agnostic
silence that preserves plain error review. In short, as our
cases have applied this rule, a defense attorney who has
not objected to a proposed instruction will nearly always
waive any potential objection, regardless of whether his
“no objection” resulted from a reasoned, strategic deci-
18 No. 12-3231
sion or from a negligent failure to recognize the error.3
An approach that might mitigate this harshness and
leave open a wider window for forfeiture than our cases
have previously done could be considered when, as in
this case, defense counsel’s affirmative approval of the
jury instruction is nothing more than a simple “no” or
“no objection” during a rote call-and-response colloquy
with the district judge. In such an instance, we could more
closely examine whether the defendant has truly waived
his challenge to the jury instruction or merely forfeited
it. Cf. United States v. Alcala, 678 F.3d 574, 579 (7th Cir.
2012) (“[N]arrative responses in a plea colloquy are
superior to inquiries from the court that elicit ‘yes’ or ‘no’
answers[.]”); United States v. Groll, 992 F.2d 755, 760 n.7
(7th Cir. 1993) (“[S]imple affirmative or negative answers
to the court’s rote interrogatories give us pause in
finding that [the defendant] entered her plea knowingly.”);
United States v. Fountain, 777 F.2d 351, 356 (7th Cir. 1985)
(“Simple affirmative or negative answers or responses
3
Such harshness is only magnified by the importance of the
jury instruction in a trial. Even though erroneous jury instruc-
tions are not the type of structural error that necessarily
creates harm in a criminal trial, see United States v. Griggs, 569
F.3d 341, 344 (7th Cir. 2009), the Rules of Civil Procedure
recognize the weighty role jury instructions fill: In all but the
context of jury instructions, a party who fails to preserve
an error in a civil trial has no recourse on appeal. In contrast,
a party can still challenge a jury instruction in a civil case
for plain error notwithstanding his earlier failure to object.
Fed. R. Civ. P. 51(d).
No. 12-3231 19
which merely mimic the indictment or the plea agree-
ment cannot fully elucidate the defendant’s state of
mind as required by Rule 11.”).
Additionally, we note that waiver is not an absolute
bar on our consideration of issues not preserved below,
even if intentionally foregone for strategic reasons. When
the “interests of justice” so require, we may reach the
merits of a waived issue. See Fleishman v. Cont’l Cas. Co.,
698 F.3d 598, 608 (7th Cir. 2012) (citing Judge v. Quinn, 624
F.3d 352, 360 (7th Cir. 2010)). Perhaps erroneous jury
instructions—especially jury instructions that inac-
curately state the law by minimizing or omitting elements
required for conviction—would more readily present
the circumstances that allow consideration of waived
issues: a “miscarriage of justice,” “equities heavily
preponderat[ing] in favor of correcting” the error, or
“plain error that seriously affected the fairness, in-
tegrity, or public reputation of the judicial proceedings.”
Id. at 608-09 (citing 36 C.J.S. Federal Courts § 458)); see
also Olano, 507 U.S. at 736 (noting that “conviction or
sentencing of an actually innocent defendant” qualifies
as a “miscarriage of justice”).
In any event, we need not reach any of these issues
in this case for even in applying plain error review to the
instructions in Natale’s case, we find no error requiring
a new trial. Thus, we leave open the question of whether
Griffin I, Anifowoshe, and our other waiver cases have
drawn too confining a line by viewing affirmative
approval so expansively as to include “no objection” in
response to a trial court’s inquiry. And neither do we
20 No. 12-3231
address today whether Rule 30(d) requires the more
searching analysis used by other circuits that dives into
the subjective motivations of counsel, hoping to discern
whether strategy or inadvertence motivated the af-
firmative approval. Finally, we express no opinion on
whether the erroneous instructions in this case present
the interests of justice that require our consideration
notwithstanding any waiver. In short, when reviewing
the jury instructions under plain error as Natale asks of
us, we see no reason to vacate his conviction.
Plain error requires “obvious” error that is “clear under
current law.” United States v. McGee, 60 F.3d 1266, 1271-72
(7th Cir. 1995). Even then, reversal is appropriate only
when the error affects the defendant’s substantial rights.
United States v. Garcia, 580 F.3d 528, 536 (7th Cir. 2009).
Natale raises four challenges to the jury instructions in his
case. First, he argues that the district court improperly
failed to instruct the jury that conviction under § 1035
requires that the false statement be made in connection
with a matter involving a health care benefit program.
Second, Natale states that the jury instruction should
have required false statements material to the health care
benefit program. Third, Natale suggests that § 1035 re-
quires specific intent to mislead or deceive and that the
district court did not so inform the jury. Finally, Natale
argues that the jury instruction as given violates due
process by permitting arbitrary or discriminatory en-
forcement. Although portions of the district court’s in-
struction contained errors, these errors did not affect
Natale’s substantial rights.
No. 12-3231 21
1. The District Court’s Plain Error in Omitting the
Health Care Benefit Program Requirement from
the Jury Instruction Was Harmless
Natale’s first challenge to the jury instruction accuses
the trial judge of omitting an essential element of the
offense from the instruction.4 Section 1035 prohibits, “in
4
At trial, the district judge provided the following instructions
on the false statements charges:
Counts IV and V charge the defendant with making false
statements and representations relating to healthcare
matters. To sustain the charge of making false statements
relating to healthcare matters, the government must prove
the following propositions:
First, the defendant made a false, fictitious, or fraudulent
statement or representation.
Second, the statement or representation was material.
Third, the statement or representation was made knowingly
and willfully.
And fourth, the defendant did so in connection with the
delivery of or payment for healthcare benefits, items, or
services.
If you find from your consideration of all the evidence that
each of these propositions has been proved beyond a
reasonable doubt as to a particular count, then you should
find the defendant guilty as to that count.
If, on the other hand, you find from your consideration
of all the evidence that any one of these propositions
has not been proved beyond a reasonable doubt to a
(continued...)
22 No. 12-3231
any matter involving a health care benefit program,5
knowingly and willfully . . . mak[ing] any materially false,
fictitious, or fraudulent statement[] or representation[] . . .
4
(...continued)
particular count, then you should find the defendant not
guilty.
A statement is false or fictitious if untrue when made and
then known to be untrue by the person making it or causing
it to be made.
A statement or representation is fraudulent if known to be
untrue and made or caused to be made with intent to
deceive.
A false or fraudulent statement, pretense, or representation
is material if it had the effect of influencing the action of a
person or entity or was capable of or had the potential to do
so. It is not necessary that the statement, pretense, or
representation actually have that influence or be relied on
by the person or entity so long as it had the potential or
capacity to do so.
An act is done willfully if done voluntarily and intentionally
and with intent to do something the law forbids.
5
A health care benefit program is “any public or private plan
or contract, affecting commerce, under which any medical
benefit, item, or service is provided to any individual and
includes any individual or entity who is providing a medical
benefit, item, or service for which payment may be made
under the plan or contract.” 18 U.S.C. § 24(b). Courts have
interpreted “affecting commerce” to mean affecting interstate
commerce. See United States v. Klein, 543 F.3d 206, 211 (5th
Cir. 2008).
No. 12-3231 23
in connection with the delivery of or payment for
health care benefits, items, or services[.]” 18 U.S.C.
§ 1035(a)(2). Natale argues that the jury instruction erred
in omitting the health care benefit program require-
ment. We agree but find that error harmless.
a. Conviction Under § 1035 Requires as an Essential
Element of Proof that the Defendant Made the
False Statement in a Matter Involving a Health
Care Benefit Program
We cannot find any case in our circuit clearly laying
out the essential elements for § 1035. Nor has our circuit
yet adopted a pattern jury instruction for this offense.
In crafting the jury instruction, though, the district court
appeared to rely on the pattern jury instruction for 18
U.S.C. § 1001 and identified four elements required for
conviction under § 1035: (1) making a false, fictitious,
or fraudulent statement or representation (2) that is
material, (3) knowingly and willfully made, and (4) done
in connection with the delivery of or payment for
healthcare benefits, items, or services. A quick comparison
of § 1035 with this jury instruction reveals that the trial
court never instructed the jury that the false statement
must arise in a “matter involving a health care benefit
program.”
Omission from the jury instruction of an essential
element of the offense is erroneous. See Neder v. United
States, 527 U.S. 1, 9-10 (1999); United States v. Griggs, 569
F.3d 341, 344 (7th Cir. 2009). We conclude that “any matter
24 No. 12-3231
involving a health care benefit program” forms an essential
element of the offense. Other circuits have agreed, explain-
ing that the government must prove a link to a health care
benefit program to secure conviction under § 1035 and
other health care offenses. In reviewing a challenge to the
sufficiency of the evidence, for example, the Sixth Circuit
noted that “[t]o establish guilt under [§ 1035] . . . the
Government must prove that the defendant knowingly
and willfully made false statements or representations
in connection with the delivery of or payment for
health care benefits, items, or services and in a matter
involving a health care benefit program.” United States
v. Hunt, 521 F.3d 636, 647-48 (6th Cir. 2007) (internal
punctuation omitted); see also United States v. Klein, 543
F.3d 206, 211 (5th Cir. 2008) (holding health care benefit
program requirement is essential element of 18 U.S.C.
§ 1347); United States v. Whited, 311 F.3d 259, 261-62
(3d Cir. 2002) (analyzing health care benefit program re-
quirement of 18 U.S.C. § 669 (embezzlement in connec-
tion with health care) as essential element of crime).
The language of 18 U.S.C. § 1001(a) also supports this
conclusion. The health care benefit program require-
ment is the jurisdictional element of § 1035. It largely
tracks, both in words used and placement within the
statute, the jurisdictional element of § 1001(a). Compare
§ 1035(a) (“[w]hoever, in any matter involving a health
care benefit program . . .”), with § 1001(a) (“whoever, in
any matter within the jurisdiction of . . . [a] branch of the
Government of the United States . . .”). The jurisdictional
element of § 1001 is an essential element of that offense, see
No. 12-3231 25
United States v. Moore, 446 F.3d 671, 677 (7th Cir. 2006),
supporting our conclusion that the health care benefit
program requirement likewise qualifies as an essential
element of § 1035. Cf. United States v. Ranum, 96 F.3d 1020,
1027 (7th Cir. 1996) (finding analogy to § 1001 a “useful
avenue of exploration, in light of the dearth of case law
interpreting” the false statement statute at issue). Indeed,
the legislative history makes clear that, in creating health
care fraud and related crimes, Congress worried most
about fraud perpetrated on insurance companies that
drove up the cost of health insurance and, more generally,
health care. See Health Care Fraud: All Public & Private
Payers Need Federal Criminal Anti-Fraud Protections,
H.R. Rep. No. 104-747, at 2, 12 (1996). Labeling a “matter
involving a health care benefit program” anything other
than an essential element of the crime would seem incon-
gruent with the concerns that motivated the law.
The government does not dispute the district court’s
failure to instruct the jury on the statute’s health care
benefit program language. Instead, it argues that the
court’s instruction on the fourth element “came freighted”
with the health care benefit program requirement be-
cause that instruction required a connection to “the
delivery of or payment for health care benefits, items or
services.” Additionally, the government continues, the
judge had instructed the jury on the meaning of “health
care benefit program” several minutes earlier when
describing the health care fraud counts. Bridging the
analytical gap between these two instructions and the
statute’s jurisdictional element, however, is a distance
too wide for the jury to cross on its own: Neither of these
26 No. 12-3231
instructions explicitly requires for conviction under § 1035
finding a matter involving a health care benefit corpora-
tion. And the trial judge gave no indication that any of the
fraud instructions also applied to the false statements
counts. What is more, the instruction on the fourth element
of the false statements charge presented “health care
benefits” alongside “items” and “services,” phrased in the
disjunctive. Thus, the fourth instruction, standing alone,
suggests to the jury that the absence of health care benefits
is irrelevant if the facts demonstrate a false statement
made in connection with health care items or health care
services. But under the statutory text, even conviction
for false statements made in connection with items or
services still must relate to a “matter involving a health
care benefit program.” The district court’s jury instruc-
tions did not convey that requirement.
b. Although this Error Was Plain, Omitting the
Health Care Benefit Program Requirement from
the Jury Instruction Did Not Affect Natale’s
Substantial Rights
The government asserts that even if error occurred, the
error was not “plain” or “clear” because no pattern jury
instruction existed for § 1035 and no case affirmatively
delineated the elements of the offense. See Olano, 507
U.S. at 734. The government ignores the text of the
statute, however, which quite clearly imposes the health
care benefit program requirement. Moreover, other
circuits have found this requirement an essential ele-
ment of § 1035 and other related offenses. See Klein,
No. 12-3231 27
543 F.3d at 211; Hunt, 521 F.3d at 647-48; Whited, 311
F.3d at 261-62. Thus, the error was “clear under
current law.” United States v. Eberhart, 467 F.3d 659, 668
(7th Cir. 2006).6
Nevertheless, we see no harm in the district court’s
failure to instruct the jury on the health care benefit
program requirement. See, e.g., Neder, 527 U.S. at 9-10(harmless error analysis applies to jury instructions
omitting element); Griggs, 569 F.3d at 344-45 (same). No
one disputes that Medicare qualifies as a health care
benefit program. See United States v. Redcorn, 528 F.3d 727,
734 (10th Cir. 2008) (noting Medicare and Medicaid are
“unquestionably” health care benefit programs). And
all agree that the surgeries at issue involved Medicare:
Natale admits billing Medicare for the surgeries and
admits to falsities in his operative reports, which—as we
explain below—are material to Medicare’s payment for
the surgeries. Because “[t]here was never doubt” that the
surgeries “involved” a health care benefit program, no
harm resulted from the district court’s failure to instruct
on this issue. See Griggs, 569 F.3d at 345 (“There was
never doubt that the conspiracy had involved the use
of interstate communications by wire, which may be
6
The government correctly characterizes Natale’s argument
as relying solely upon the “purpose, context, and legislative
history” of the statute. While true that Natale could have
provided more expansive textual analysis, Natale’s failure to
mine the statutory text for favorable arguments does not
require us to close our eyes to the language of Congress.
28 No. 12-3231
why the lawyers and the district judge didn’t notice
the omission from the instructions.”).7
2. The District Court’s Plain Error in Failing to In-
struct the Jury that the False Statements Must
Be Material to the Health Care Benefit Program
Was Harmless
Natale’s next challenge attacks the district court’s
materiality instruction. As given, the instruction per-
mitted the jury to convict as long as the false statement
“had the effect of influencing the action of a person or
entity or was capable of or had the potential to do
so.” (Emphasis added.) He posits that, by requiring
materiality only as to a “person or entity,” the jury instruc-
tion impermissibly broadened the scope of the statute
7
Natale also argues that criminalizing false statements un-
hinged from the health care benefit program requirement
would punish a broad swath of innocent conduct that Congress
never intended to reach. For example, a patient who lies on
the new patient questionnaire regarding his lifestyle habits
(e.g., alcohol or tobacco use), past diseases, etc. may violate
the law because such false statements would be made in
connection with the delivery of health care services. Natale is
correct, but these concerns are assuaged by our holding that
§ 1035 requires a matter involving a health care benefit
program and false statements material to that health care
benefit program. As we explain, these erroneous jury instruc-
tions were harmless in Natale’s case, a result he cannot avoid
by postulating how the government might abusively apply
§ 1035 on a different set of facts.
No. 12-3231 29
to include prosecution for false statements that relate to
the delivery of health care benefits, items, or services
but that have no effect on a health care benefit program.
Natale urges that conviction under § 1035 requires false
statements material to a health care benefit program
rather than to any person or entity. Once again, Natale
provides the proper interpretation of the statute but,
because no harm flowed from this erroneous instruction,
we see no need to overturn Natale’s conviction.
a. False Statements Under § 1035 Must Be Material
to the Health Care Benefit Program
Section 1035 only criminalizes “materially false, fictitious,
or fraudulent statements or representations.” (Emphasis
added.) It does not, however, precisely describe to what
or to whom the statements must be material. The text offers
two possible answers. On one hand, “materially” could
refer backward to the prefatory clause of the statute and
require statements material to a health care benefit pro-
gram. On the other, “materially” could look forward in
the statute, requiring statements material to the delivery
of or payment for health care benefits, items, or services.
Either reading seems plausible from the text.
With the text ambiguous, we turn to similarly worded
statutes and the legislative history for guidance. Analogy
to § 1001 again proves helpful but, at first glance, not
dispositive. Materiality under § 1001 requires “a natural
tendency to influence, or be capable of influencing, the
decision of the decisionmaking body to which it was
addressed.” United States v. Lupton, 620 F.3d 790, 806
30 No. 12-3231
(7th Cir. 2010); accord United States v. Turner, 551 F.3d 657,
663 (7th Cir. 2008) (quoting Kungys v. United States, 485
U.S. 759, 770 (1988)). Thus, courts have applied the mate-
riality requirement of § 1001 to the jurisdictional ele-
ment, requiring statements material to an agency within
the U.S. government. In § 1035, the corresponding juris-
dictional element is the health care benefit program
requirement. Thus, applying the logic of § 1001 cases to
§ 1035 requires false statements material to the health
care benefit program. But § 1001 has no element
analogous to the “in connection with . . .” element in
§ 1035. The text of § 1001 thus contains only one point
of reference for “materially.” In contrast, § 1035 offers
two possible references, making § 1035 more complex
and minimizing the value of § 1001 as a comparator.
A close look at how the materiality requirement
became a part of the statute, however, resolves the am-
biguity and solidifies the comparative relevance of § 1001.
In the beginning, the version of § 1035 passed in the
House contained no materiality requirement. It read:
Whoever, in any matter involving a health care
benefit program, knowingly makes any false, ficti-
tious, or fraudulent statements or representations . . .
in connection with the delivery of or payment
for health care benefits, items, or services, shall
be fined . . . or imprisoned[.]
Health Insurance Portability and Accountability Act of
1996, H.R. 3103, 104th Cong., tit. II, § 244(a) (1996) (as
passed by the House on Mar. 28, 1996). The House
bill largely tracks the language of what ultimately
No. 12-3231 31
became law, with two main differences: It omits “will-
fully,” opting instead for only “knowingly” as the mens
rea. And the House bill also lacks the word “materially,”
which in the final enactment precedes “false, fictitious,
or fraudulent statements or representations.”
These two words are found in the Senate bill, however.
In the Senate version, someone commits a crime when he:
in any matter involving a health care program, know-
ingly and willfully . . . makes any materially false,
fictitious, or fraudulent statement or representation[.]
H.R. 3031, tit. V, § 544(a) (as amended and enacted by
the Senate on Apr. 23, 1996).8 Thus, the Senate bill con-
tains the “materially” language absent from the House
bill. It also much more closely tracks the language of
§ 1001, simply swapping out the federal government
jurisdictional element in § 1001 for the health care
program jurisdictional element relevant to the goals of
§ 1035. Compare H.R. 3031, tit. V, § 544(a) (as amended and
enacted by the Senate on Apr. 23, 1996), with § 1001(a)(2)
(“[W]hoever, in any matter within the jurisdiction of
the executive, legislative, or judicial branch of the Gov-
ernment . . ., knowingly and willfully . . . makes any
materially false, fictitious, or fraudulent statement or
representation . . . shall be fined . . . or imprisoned[.]”).
8
The bills have one other difference as well. The House version
refers to a “health care benefit program” while the Senate
version uses the term “health care program.” Each phrase fills
the same role, however, and we use both phrases interchange-
ably in this discussion.
32 No. 12-3231
More importantly, in the Senate version, “materially” can
only refer to a health care program for precisely the
same reason “materially” in § 1001 refers only to an
entity in the jurisdiction of the federal government:
the Senate version lacked the “in connection with . . .”
language found in the House bill so there was nothing
else in the Senate version to which “materially” could
refer. Thus, the Senate version quite clearly required
false statements material to the health care benefit pro-
gram, not false statements material to the delivery of
health care benefits, items, or services.
The ambiguous language of the final enactment re-
sulted from the combination of the Senate and House
versions in Conference. The Conference Committee
adopted the House language—including its “in connection
with . . .” text—but inserted the “willfully” and “materi-
ally” requirements found in the Senate bill. H.R. Conf. Rep.
No. 104-736, at 259 (1996). Thus, when the Conference
Committee adopted the Senate’s “materially” language, it
also must have adopted the meaning ascribed to that
language by the Senate. See Int’l Ass’n of Bridge, Structural,
& Ornamental Ironworkers v. NLRB, 946 F.2d 1264, 1268-69
(7th Cir. 1991) (looking to Senate Report for statutory
meaning when Conference Committee adopted Senate
version of bill); Frock v. U.S. R.R. Ret. Bd., 685 F.2d 1041,
1046 n.6 (7th Cir. 1982) (looking to explanation of Senate
version of bill in Conference Report when Senate version
ultimately adopted into law); see also Valero Energy Corp.
v. United States, 569 F.3d 626, 634 (7th Cir. 2009) (“A
conference report, unlike the words of a single [legisla-
tor], is often a good record of Congress’s intent[.]”). And
No. 12-3231 33
because the Senate used “materially” to mean “material
to a health care program” so too must that be the
meaning of “materially” in the final enactment.
Finally, if statements material to the delivery of health
care benefits, items, or services were sufficient to
convict, the statute would criminalize a wide swath of
seemingly innocent “white lies” totally unconnected to
the conduct that motivated passage of the statute, see
footnote 7, supra—health care fraud that detriments
health care payers. See H.R. Rep. No. 104-747, at 2, 12
(“Congress should enact legislation to make health care
fraud against public and private payers a Federal criminal
offense.”). Unless compelled to do so by the text, we are
generally skeptical of interpretations of criminal statutes
that broadly criminalize seemingly innocent activity.
Cf. Staples v. United States, 511 U.S. 600, 610 (1994)
(noting “particular care [Supreme Court has] taken to
avoid construing a statute to dispense with mens rea
where doing so would ‘criminalize a broad range of
apparently innocent conduct’ ” (quoting Liparota v. United
States, 471 U.S. 419, 426 (1985)); United States v. Yermian,
468 U.S. 68, 71 (1984) (noting “if Congress had intended
to prohibit all intentional deceit of the Federal Govern-
ment, it would have used . . . broad language . . . which
by its specific terms, extends broadly to every conspiracy
to defraud the United States . . . .” (internal punctuation
omitted)). In the end, nothing supports a reading of
the statute that would require false statements material
to the delivery of health care benefits, items, or services
when the House bill contained no such materiality re-
quirement and the Senate bill tied the materiality require-
34 No. 12-3231
ment to the health care benefit program.
This understanding of “materially” is notably absent
from the district court’s jury instructions, which
broadened materially to include statements influencing
or capable of influencing any person or entity. A proper
instruction on the materiality element in § 1035 would
require that false statements “ha[ve] a natural tendency
to influence, or [are] capable of influencing, the decision
of” the health care benefit program. Kungys, 485 U.S.
at 770.9
b. The District Court’s Erroneous Materiality In-
struction Was Harmless
Although the district court gave an erroneous
materiality instruction, given the proof and arguments
at trial, that error was harmless.1 0 During closing argu-
9
Kungys involved the meaning of materiality under a different
statute, but it also explained that, in the context of criminal
false statements, “material” is a “term[] that ha[s] accumulated
settled meaning under either equity or the common law.” 485
U.S. at 770. Thus, in using the word, “Congress means to
incorporate [its] established meaning[.]” Id. As with the
statute at issue in Kungys, when determining the meaning of
“materiality” in § 1035, “we see no reason not to follow what
has been done with the materiality requirement under other
statutes dealing with misrepresentations[.]” Id. at 772.
10
The ambiguity in the statute combined with the dearth of case
law specifically interpreting the materiality requirement of
(continued...)
No. 12-3231 35
ments, the government told the jury that the false state-
ments must “have the effect of influencing the action
of Medicare or [were] capable of or had the potential to
do so.” Thus, the government never presented at trial
the argument over which Natale now frets—that he
violated the statute because his false statements in the
operative reports were material to future treatment
decisions made by other doctors. Instead, it argued and
presented proof of materiality under the meaning
Natale now advances, that the false statements con-
tained in the operative reports and other notes were
material to Medicare.
To that end, the government offered evidence that,
when Medicare audits claims, it sometimes requests
operative reports as well as other physician notes and
documentation. Admittedly, Medicare never performed
an audit in this case and never actually viewed the op-
erative reports containing the false statements. But mate-
riality requires only a potentiality of influencing the
decisionmaker; it does not require actual reliance. United
States v. Gulley, 992 F.2d 108, 112-13 (7th Cir. 1993). Not-
withstanding Natale’s assertions on appeal, he never
argued to the jury that the false statements in the opera-
tive reports were not material to Medicare and never
challenged the evidence that Medicare would rely on
10
(...continued)
§ 1035 also suggests that such error was not plain. See Olano,
507 U.S. at 734 (plain error requires “error [that] is clear
under current law”).
36 No. 12-3231
operative reports during an audit. Instead, Natale
argued intent. He admitted mistakes in the operative
reports but told the jury those errors resulted from care-
lessness and an aversion to paperwork, not knowing
and willful lies. And neither did the government ever
argue that other doctors’, rather than Medicare’s, reliance
on the operative reports satisfied the materiality require-
ment. True, the government did at times characterize
these reports as important documents for a patient’s
future treatment. But it did so only to attack Natale’s
defense of carelessness: according to the government, a
surgeon who highly valued and deeply cared for his
patients—as Natale told the jury he did—would not
haphazardly prepare documents so important for and
critical to a patient’s future care. Thus, the government
told the jury, he must have knowingly and willfully lied.
In short, Natale’s defense in this court differs from
the defense he presented to the jury. The materiality of
the statements in the operative reports simply was not in
issue at trial. The government conceded that conviction
required materiality as to Medicare and presented proof
that Medicare would look to the operative reports in
the event of an audit. Natale left that evidence unchal-
lenged.
Natale suggests that his acquittal of health care fraud
shows otherwise. “[T]he jury,” he argues, “did not believe
a relationship between the alleged ‘false statements’ and
Medicare was proved beyond a reasonable doubt” or it
would have convicted him of fraud. This conclusion,
however, assumes congruence between all elements of
No. 12-3231 37
health care fraud and false statements. In truth (and
perhaps unsurprisingly), the statutes differ. As explained
more fully below, the health care fraud statute requires
proof of specific intent to defraud while the false state-
ment statute requires only knowing and willful false
statements. Given Natale’s defense focusing heavily on
his innocent state of mind, the jury could have concluded
that Natale lacked the specific intent to deceive required
for a fraud conviction but nevertheless willfully filled
his operative reports with statements he knew were
false. As such, the jury’s verdict is consistent with our
own interpretation of the statute.
Finally, both Natale and amicus lament the possibility
that misstatements in operative reports and other
medical records may lead to federal indictment. Amicus
especially worries about the chilling effect cases such as
Natale’s may have on medical record-keeping and its
consequences on patient care. This concern is not com-
pletely misguided, but it does ignore the knowing and
willful requirement in § 1035. The truly innocent
mistakes over which amicus worries are not the delib-
erate falsehoods that federal law criminalizes. Natale
was not convicted because he made innocent mistakes
arising from carelessness in the preparation of his opera-
tive reports. He was convicted because the jury did not
believe Natale when he told them he made innocent
mistakes. In any event, to the extent § 1035 produces
“unduly harsh result[s] on those who intentionally
make false statements to [health care benefit providers],
it is for Congress and not this [c]ourt to amend the
criminal statute.” Yermian, 468 U.S. at 75.
38 No. 12-3231
For these reasons, no harm accrued from the district
court’s inadequate jury instruction on materiality. That
element held a secondary role to the real focus of the
trial—Natale’s state of mind. Natale cannot now argue
harm from this error by putting forth a new defense on
appeal simply because the jury disbelieved the one he
proffered at trial.
3. The District Court Did Not Err in Omitting a
Specific Intent Instruction
Natale argues that conviction under § 1035 requires
proof of a specific intent to deceive. Neither the text nor
context of the statute suggests § 1035 requires a specific
intent to deceive.
To begin, nothing in the text of § 1035 explicitly
requires that the defendant make a false statement with
intent to deceive. As the Supreme Court explained when
reviewing similar language in § 1001, nothing in the text
“suggest[s] any additional element of intent, such as
a requirement that false statements be [made] . . . ‘with
intent to deceive the Federal Government.’ ” Yermian,
468 U.S. at 69.
Indeed, when Congress has included intent to deceive
as an element of a false statements crime, it has done
so explicitly. See 18 U.S.C. § 513(a) (criminalizing
“mak[ing], utter[ing], or possess[ing] a counterfeited
security of a State . . . with intent to deceive another
person . . .”); id. § 1033(a)(1) (criminalizing certain false
statements made with “intent to deceive” by persons
No. 12-3231 39
“engaged in the business of insurance whose activities
affect interstate commerce”); id. § 1861 (criminalizing
false statements labeling property a public land if made
with “intent to deceive the person to whom such repre-
sentation is made”); id. § 2073 (criminalizing false
entries of official records made with “intent to deceive”).
Each of these statutes predated the enactment of § 1035.
Thus, had Congress wanted to require specific intent in
prosecutions for false statements related to health care
services, it could easily have used the “intent to deceive”
language found in these statutes. 1 1 See Yermian, 468 U.S.
at 73. But Congress did not. Instead, it required false
statements made in connection with the delivery of or
payment for health care in a matter involving a health
care benefit program and nothing more.
Given the absence of such statutory language, Natale
looks to the “willfully” requirement as the textual anchor
11
Explicit “intent to deceive” language was not even the only
way Congress could have achieved this goal. For example,
Congress could have criminalized false statements made for
the purpose of influencing a health care benefit program, language
it has used in other statutes, too. See 15 U.S.C. § 714m(a)
(criminalizing some false statements made “for the purpose
of influencing in any way the action of the Corporation”); 18
U.S.C. § 1014 (criminalizing false statements made “for the
purpose of influencing in any way the action” of various
federal agencies); id. § 1026 (criminalizing false statements
made “for the purpose of influencing in any way the action of
the Secretary of Agriculture”). But Congress did not even
require this somewhat lesser purpose requirement in § 1035.
40 No. 12-3231
for an intent to deceive requirement. “[W]illfully,” how-
ever, is “a notoriously plastic word.” United States v.
Pulungan, 569 F.3d 326, 329 (7th Cir. 2009). And we
have previously refused to find an intent to deceive
requirement in “willfulness” language from other, simi-
larly worded false statement statutes. United States v.
Ranum, for example, found no intent to deceive require-
ment in the “willful” mens rea required for conviction
under the statute criminalizing false statements used to
“obtain” federally-guaranteed student loans. 96 F.3d
at 1027 (analyzing 20 U.S.C. § 1097(a)). In reaching
that conclusion, Ranum strongly suggested conviction
under § 1001 also required no specific intent to deceive.
It specifically approved of the § 1001 pattern jury instruc-
tion on willfulness—used in Natale’s case as well—that
made no mention of intent to deceive. Id. at 1027-29. We do
not stand alone in our suggestion that § 1001 has no
specific intent requirement: the Supreme Court has sug-
gested the same. Dicta in Yermian found language sup-
porting a specific intent to deceive “[n]oticeably lack-
ing” from § 1001. 468 U.S. at 73. Given the absence of
explicit “intent to deceive” language in § 1035, we now
follow the lead of Ranum and “refuse[] to supply, by
judicial interpretation, an additional element of specific
intent to deceive.” Ranum, 96 F.3d at 1027.
Notwithstanding the Supreme Court’s guidance in
Yermian, some circuits have imposed a specific intent
No. 12-3231 41
requirement for conviction under § 1001.1 2 Natale relies
heavily on these cases and also invokes Judge Eschbach’s
Ranum dissent. Neither provides Natale an escape hatch
12
Compare United States v. Riccio, 529 F.3d 40, 46-47 (1st Cir. 2008)
(“willfulness” in § 1001 means “nothing more . . . than that the
defendant knew that his statement was false when he made
it or—which amounts in the law to the same thing—consciously
disregarded or averted his eyes from its likely falsity” (quoting
United States v. Gonsalves, 435 F.3d 64, 72 (1st Cir. 2006)));
United States v. Russo, No. 98-3245, 2000 WL 14298, at *5 (10th
Cir. Jan. 10, 2000) (“willful” in § 1001 “does not require proof
of evil intent but rather only that ‘the act [was] done delib-
erately and with knowledge’ ” (quoting Walker v. United States,
192 F.2d 47, 49 (10th Cir. 1951))); United States v. Hildebrandt, 961
F.2d 116, 118-19 (8th Cir. 1992); (“willful” in § 1001 “simply
means that the defendant did the forbidden act ‘deliberately
and with knowledge.’ It is not necessary that the defendant act
with the intent to deceive the United States” (citations omitted));
and United States v. Verduzco-Contreras, No. 88-5120, 1990 WL
34147, at *3 (9th Cir. Mar. 27, 1990) (“[T]he government need not
prove intent to deceive under 18 U.S.C. § 1001.” (citing United
States v. Vaughn, 797 F.2d 1485, 1490 (9th Cir. 1986))), with
United States v. Guzman, 781 F.2d 428, 431 (5th Cir. 1986) (§ 1001
requires a “false representation . . . that . . . is made with an
intent to deceive or mislead”); United States v. Geisen, 612 F.3d
471, 487 (6th Cir. 2010) (§ 1001 requires that the “statement
was made with knowledge of its falsity and an ‘intent to de-
ceive’ ” (citations omitted)); and United States v. Dothard, 666
F.2d 498, 503 (11th Cir. 1982) (“Proof that the defendant has
the specific intent to deceive by making a false or fraudulent
statement is a prerequisite to conviction under 18 U.S.C. § 1001.”
(citing United States v. Lange, 528 F.2d 1280, 1286 (5th Cir. 1976))).
42 No. 12-3231
from the glaring absence of this requirement in the text
of the statute, though. The circuit split on § 1001 does
nothing to undermine Ranum’s strong suggestion that, in
this circuit, § 1001 requires no intent to deceive. In fact,
Ranum considered and rejected those cases. 96 F.3d at
1029. Nor does the split call into question Ranum’s holding
that § 1097 likewise requires no specific intent. Both
statutes contain language similar to § 1035, and Natale
provides no real explanation for why Ranum erred and
the minority circuits’ interpretation is correct.
Judge Eschbach’s Ranum dissent similarly offers Natale
no support. Judge Eschbach took issue with the Ranum
majority’s comparison to § 1001, rooting his disagree-
ment in textual differences between § 1097(a) and § 1001.
He explained that, in § 1097(a), the word “willfully”
modified the phrase “obtains by” the making of a false
statement. Ranum, 96 F.3d at 1032 (Eschbach, J., dissenting).
Willfully obtaining through a false statement, he argued,
necessarily requires intent to deceive. Id. The dissent even
admitted “agree[ment] with the majority [that § 1097
would have no intent to deceive requirement] if the
statute said ‘any person who knowingly and willfully . . .
makes a false statement . . . .” Id. That precise lan-
guage is found in § 1035(a): “Whoever . . . knowingly
and willfully . . . makes any materially false, fictitious,
or fraudulent statements or representations . . . .”
Thus, Judge Eschbach’s reasoning actively undermines
Natale’s argument.
Placing § 1035 within the context of the entire statutory
scheme that Congress enacted only confirms our reading
No. 12-3231 43
of the plain text. Congress enacted § 1035 as part of the
Health Insurance Portability and Accountability Act of
1996 (HIPAA). Along with the provisions of § 1035,
HIPAA criminalized health care fraud (among other
health care specific criminal offenses). See, e.g., 18 U.S.C.
§ 1347(a)(1) (making it illegal to “knowingly and willfully
execute[], or attempt[] to execute, a scheme or artifice
to defraud any health care benefit program”). And
intent to defraud itself requires a specific intent to
deceive or mislead. United States v. Awad, 551 F.3d 930,
940 (9th Cir. 2009) (noting jury was instructed in § 1347
prosecution that “ ‘intent to defraud’ [is] defined as ‘an
intent to deceive or cheat’ ”); United States v. Choiniere,
517 F.3d 967, 972 (7th Cir. 2008) (noting jury instruction
in § 1347 case defined “ ‘intent to defraud’ to mean ‘that
the acts charged were done knowingly with the intent
to deceive or cheat the victims’ ”); United States v. White,
492 F.3d 380, 393-94 (6th Cir. 2007) (to convict under § 1347
“the government must prove the defendant’s ‘specific
intent to deceive or defraud’ ”); see also United States v.
Vallone, 698 F.3d 416, 483 (7th Cir. 2012) (citing United
States v. Howard, 619 F.3d 723, 727 (7th Cir. 2010));
United States ex rel. Baltazar v. Warden, 635 F.3d 866, 868
(7th Cir. 2011) (citing Merck & Co. v. Reynolds, 130 S. Ct.
1784, 1796 (2010)). If health care fraud and health care
false statements both required specific intent to deceive,
the two statutes would criminalize essentially the same
conduct. Especially because conviction for health care
fraud carries twice the maximum penalty as the false
statements statute, compare § 1035(a) (five-year maxi-
mum prison term), with § 1347(a) (ten-year maximum
44 No. 12-3231
prison term (twenty if the crime results in bodily in-
jury)), an interpretation of the two statutes that covers
substantially the same conduct makes no sense. Some-
thing must warrant the harsher penalty for the fraud
charges. That something is the enhanced culpability
attendant in a person’s specific intent to deceive or mis-
lead. Fraud requires that proof; false statements do not.
Admittedly, “[t]he mere fact that two federal criminal
statutes criminalize similar conduct says little about the
scope of either.” Pasquantino v. United States, 544 U.S. 349,
359 n.4 (2005). But an interpretation of § 1035 that
required intent to deceive would not merely criminalize
conduct similar to that prohibited by § 1347, it would
result in nearly complete overlap: any false statement
made with intent to deceive would necessarily qualify
as a scheme to defraud under § 1347. We find it odd
that Congress would intend such a result from two
statutes enacted in the same piece of legislation.
In short, the text of § 1035, courts’ interpretations of
similar text in other false statements statutes, and the
context in which Congress enacted § 1035 all require
the conclusion that § 1035 does not require proof of
specific intent to deceive. The district court thus properly
instructed the jury on the statute’s willfulness require-
ment.13
13
And just as “willfully” creates no specific intent to deceive
requirement, neither does the statute’s materiality requirement.
A material statement has “ ‘a natural tendency to influence, or
[is] capable of influencing, the decision of’ the decisionmaking
(continued...)
No. 12-3231 45
4. Application of § 1035 to Natale Did Not Violate
Due Process
Natale’s final challenge to the jury instructions asserts
a due process violation. Application of § 1035 to situa-
tions where the false statements have no connection to
Medicare, he argues, presents an unconstitutional lack
of clarity that opens the statute to arbitrary and discrim-
inatory enforcement. Natale concedes, however, that
§ 1035 satisfies constitutional rigor when applied to
false statements material to a health care benefit plan.
As we have explained, the proof at trial places Natale’s
case squarely within this category.
***
To summarize, conviction for false statements relating
to health care matters, 18 U.S.C. § 1035(a)(2), requires
proof that the defendant (1) knowingly and willfully
(2) made false, fictitious, or fraudulent statements or
representations (3) in connection with the delivery of or
payment for health care benefits, items, or services (4) in
13
(...continued)
body to which it was addressed.” Kungys, 485 U.S. at 770. As
such, materiality objectively focuses on a hypothetical listener’s
response to the speech under the circumstances. In contrast,
intent to deceive focuses on the speaker’s motivations for the
speech. Thus, materiality and intent to deceive differ: A
speaker can make materially false statements without in-
tending deception. A speaker can also make immaterial state-
ments hoping to deceive. And, of course, a speaker could
make materially false statements while intending deception.
46 No. 12-3231
any matter involving a health care benefit program, and
(5) the statements were material to the health care
benefit program. While materiality requires a natural
tendency to influence, or be capable of influencing the
health care benefit program, neither the materiality
element nor the willfulness element requires the gov-
ernment to prove the defendant made the false state-
ments with intent to deceive.
The district court’s jury instructions in Natale’s case
did not reflect all of these requirements. Nevertheless,
when viewed against the backdrop of the evidence pre-
sented at trial and Natale’s defense to the jury, these
errors did not affect Natale’s substantial rights or
render his trial unfair.
B. Natale’s Conviction Was Not a Manifest Injustice
Natale attacks the sufficiency of proof on which the
jury convicted him of making false statements. He
admits, however, that trial counsel never renewed his
motion for judgment of acquittal at the close of evidence.
Thus, to successfully attack the sufficiency of the evi-
dence, he must show his conviction resulted in a
manifest miscarriage of justice. Turner, 551 F.3d at 662.
This “most demanding standard of appellate review”
permits reversal only if “the record is devoid of evidence
pointing to guilt, or if the evidence on a key element of
the offense was so tenuous that a conviction would be
shocking.” Id. (quoting United States v. Taylor, 226 F.3d
593, 597-98 (7th Cir. 2000)). In attempting to satisfy
this high bar, Natale argues the government produced
No. 12-3231 47
no evidence of either materiality or intent. Not so. To
show materiality, the government presented testimony
that, had Medicare audited the billing codes Natale
submitted, it would have requested operative reports
and medical notes. Because Medicare would have looked
to and relied on these reports and notes in the event of
an audit, the reports and notes were “capable of influenc-
ing” the decision of the health care benefit program.
Thus, the record is not “devoid” of evidence on materiality.
And neither is the record “devoid” of evidence on
intent. Natale readily admits he “kept inaccurate and
imprecise records.” The crux of argument at trial
centered on whether that inaccuracy and imprecision
resulted from innocent carelessness or knowing and
willful misrepresentations. The Medicare representa-
tive testified that when physicians enroll as providers
under Medicare, they receive multiple notices re-
garding the need to accurately complete forms and truth-
fully represent services rendered. Moreover, at least
some of the false statements occurred during or shortly
after the surgery, casting doubt on Natale’s assertions
that he inadvertently described the incorrect procedure
because of his delay in preparing the notes. On top of
that, many of Natale’s notes proved quite detailed—not
the vague generalities that usually accompany inac-
curacies resulting from carelessness, inadvertence, or
the passage of time. From all this evidence, the jury could
infer that the false statements resulted from knowing
deliberation rather than careless inadvertence. Natale
ignores this evidence and now re-litigates his careless-
ness defense on appeal. The jury disbelieved that story,
48 No. 12-3231
and the evidence permitted the jury to infer knowl-
edge and willfulness. As a result, Natale cannot estab-
lish that a manifest miscarriage of justice occurred.
C. The District Court Did Not Err in Permitting the Jury
to Take Anton’s Demonstratives into the Jury Room
Natale also appeals the district court’s decision to
permit the jury to bring Anton’s demonstratives into the
jury room during deliberations. We review the district
court’s decision to send demonstratives to the jury room
for abuse of discretion. Salerno, 108 F.3d at 742.
So long as the court is “evenhanded” in ruling on the
evidence, it has “wide discretion” in determining
whether to allow the jury to take an exhibit to the jury
room. Id. at 745. The district court here showed such
fairness, offering Natale as well the opportunity to send
demonstrative exhibits to the jury room (which he ulti-
mately accepted). Nevertheless, Natale argues that the
Anton diagrams misled the jury by “strongly suggest[ing]
to the jury that the bifurcation graft versus tube graft
issue was significant because of the gross difference in
shape, size and general appearance of the grafts in the
illustrations.” In reality, he continues, Anton’s assertions
that the operative reports described a bifurcation graft
were immaterial because the government never argued
that he billed Medicare for such grafts.
Natale is correct that the billing codes he submitted
identified procedures related to the renal arteries, not use
of bifurcation grafts. But he does not dispute that the
No. 12-3231 49
operative reports contained inaccuracies and that those
inaccuracies suggested use of a bifurcation graft. The
important question is not whether the demonstratives
accurately reflected what he billed to Medicare but
whether the demonstratives accurately reflected what
they purported to show: Natale’s descriptions of the
procedures in the operative reports as compared to the
procedures depicted in the CT scans. Natale gives no
suggestion that they mislead the jury in that respect. He
admits the operative reports contained inaccuracies but
offers no evidence showing the demonstratives inaccu-
rately depict the statements in his operative reports.1 4 In
that sense, the demonstratives simply portray what, as
the government points out, Natale has conceded.
Nor did the demonstratives have the impermissible
effect of “transporting” Anton into the jury room
during deliberations. The demonstratives used during
Anton’s testimony contained various labels identifying
which diagram depicted Anton’s conclusions and which
diagram depicted the procedure described in Natale’s
operative notes. The government removed these labels
from the exhibits sent to the jury room, however, re-
quiring jurors to identify the content of the demonstra-
14
Natale does point to one inaccuracy in the demonstratives.
Anton admitted at trial that the demonstrative contained one
error, describing the attachment of one tube graft as “end-to-
end” when it should have read “end-to-side.” This minor error
has no bearing on the thrust of Natale’s operative reports. In
any event, Anton corrected himself in front of the jury so
the jury was aware of this small mistake.
50 No. 12-3231
tives from their recollection of Anton’s testimony. Thus,
the demonstratives did not have the effect of sending
Anton himself into the jury room with the jurors. Contrary
to Natale’s suggestion, United States v. Ware does not
require a conclusion otherwise. That case focused on the
admissibility of the evidence, noting only that this error
in admission was “compounded” by the district court’s
decision to allow juror use of the exhibits during delib-
erations. United States v. Ware, 247 F.2d 698, 700-01 (7th
Cir. 1957). Natale does not contest the admission of the
demonstratives here so Ware offers no support for
his argument.
In short, Natale fully admitted discrepancies between
the procedures described in his operative reports and
the procedures he performed. He cannot now suggest
prejudice in permitting the jury during deliberations
to examine demonstrative evidence consistent with
his own admissions.
D. The District Court Did Not Abuse Its Discretion in
Excluding the Government Report
Natale’s final attempt at overturning his conviction
focuses on the district court’s exclusion of a report pub-
lished by the Department of Health and Human Services
(HHS). The report showed error rates in Medicare coding
and payments as high as 46% for claims submitted by
vascular surgeons in this region. The district court ex-
cluded the evidence as irrelevant and as hearsay. We
review evidentiary rulings for abuse of discretion. United
States v. Cunningham, 462 F.3d 708, 712 (7th Cir. 2006).
No. 12-3231 51
Ultimately, we need not consider Natale’s arguments
on this front because any error in the district court’s
exclusion of the report was harmless. See United States v.
Jackson, 540 F.3d 578, 593 (7th Cir. 2008) (“Even if the
district court erred in excluding such evidence, we will
not reverse if the error was harmless.”).
Relevant evidence has the tendency to make any fact
of consequence more or less probable. Fed. R. Evid. 401.
According to Natale, a governmental report demon-
strating a 46% error rate bears directly on his intent,
supporting his argument that he made a good faith
effort to find the Medicare code that most accurately
described the procedure he performed when Medicare
provided no billing code directly on point.
Regardless of the propriety of the district court’s con-
clusions on relevance and hearsay, Natale’s own brief
explains why, as the case stands now, the report has no
relevance and any error from its exclusion is harmless.
“That the error rate approached 50 percent,” he explained,
“strongly suggests significant caution before inferring
intent to defraud or mislead from an inaccuracy.” Thus,
the only relevance Natale offers to justify admission of
the report lies in the jury’s determination of intent to
defraud or mislead. Natale was acquitted on the fraud
charges, though, and as we have explained, § 1035
requires no specific intent to deceive. The only intent
relevant to Natale’s conviction was whether he
knowingly and willfully included false statements in
the operative reports, a question having nothing to do
with Medicare billing inaccuracies.
52 No. 12-3231
Moreover, false statements in Natale’s operative
reports and other physician notes—not his submission
of the Medicare billing codes—provided the basis for
his conviction under § 1035. Other physicians’ errors in
submitting Medicare billing codes tell us nothing about
the mistakes Natale made in his own records and re-
ports. Because the jury acquitted Natale of the fraud
charges related to his Medicare billing, any error in
the district court’s exclusion of the reports now stands
harmless.
III. Conclusion
The instructions under which the jury convicted Natale
were erroneous. They permitted conviction for false
statements having no relation to a health care benefit
program in direct contradiction to the textual require-
ments of the statute. Notwithstanding these erroneous
instructions, the proof at trial was more than sufficient
to show that the surgeries described in the indictment
involved a health care benefit program, Medicare,
and that Natale’s false statements were material to
Medicare. Thus, the erroneous instructions were harmless.
Likewise, the government presented sufficient evidence
of materiality and intent so no manifest miscarriage
of justice resulted from Natale’s conviction. Finally,
neither of the challenged evidentiary decisions requires
reversal. The district court’s permission to send the
demonstratives to the jury room during deliberations
was not erroneous, and Natale’s acquittal on the fraud
counts rendered harmless any error in the district court’s
No. 12-3231 53
exclusion of the HHS report. We A FFIRM Natale’s con-
viction.
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