Supreme Court Medicare fraud case raises questions over seized assets | McClatchy Washington Bureau

The Supreme Court on Tuesday seemed divided over a Miami woman’s argument that the government’s freeze on her assets after she was indicted for fraud prevented her from hiring a criminal defense lawyer.

The woman, home health care provider Sila Luis, contends the asset seizure violated her Sixth Amendment guarantee of a fair trial. The case is different from precedent, which allows money associated with crimes to be seized before trial, because portions of Luis’ frozen assets were personal property unrelated to the alleged fraud.

Some justices weren’t so sure.

“I just don’t understand that if you can freeze the assets despite the Sixth Amendment when they’re tainted, why it’s not the same rule when they’re untainted,” Chief Justice John Roberts Jr. told Luis’ attorney.

Other justices, though, voiced skepticism about the government’s unfettered ability to seize assets.

“The principle is that the government, without proving that he’s guilty of any crime beyond a reasonable doubt, can take all his money. Oh, because he might be fined,” Justice Stephen Breyer said. “I’ve never heard of such a principle, frankly.”

The hour-long oral argument Tuesday marked the latest development for Luis since her 2012 indictment for allegedly conspiring to defraud the Medicare program. As the owner and operator of LTC Professional Consultants Inc., Luis was charged with bribing patient recruiters and submitting false claims to Medicare, along with two co-defendants, according to the FBI.

The alleged scheme led to $74 million in fraudulent billings to Medicare, officials say, and Medicare paid the woman’s companies $50 million for the false claims.

The government froze Luis’ property to ensure that the victims could be paid back if she was determined guilty, as is standard in financial and health care fraud cases.

The freeze included assets Luis obtained legally, like family jewelry and real estate, which left her nothing to use to hire a lawyer, according to her Miami attorney, Howard Srebnick.

“The right to representation by private counsel must allow a defendant to use assets which she rightfully owns, assets over which there is no dispute that she has good title, so that she may be represented by the lawyer that she prefers,” Srebnick told the justices.

Deputy Solicitor General Michael Dreeben countered that it was important to ensure financial relief for victims.

“Either there will be money available at the end of the case for the victims, or the money will have been spent on lawyers,” Dreeben said.

The ultimate decision in Luis’ case will lean, in part, on a 1989 Supreme Court ruling in a case called United States v. Monsanto. In that case, the high court ruled that tainted assets directly resulting from a crime could be “restrained” before trial, even if the assets were needed to hire a lawyer.

Justice Elena Kagan likened Luis’ case to the Monsanto precedent, despite Srebnick’s argument that Luis’ case is different, since some of the restrained assets in Luis’ case were unaffiliated with the fraud and lawfully owned.

“There’s a very powerful intuition behind your argument, but it’s a powerful intuition that was explicitly rejected by us, and this case doesn’t seem to present any different circumstances than that one,” Kagan said in reference to Monsanto.

Justice Samuel Alito said that because money is changeable and fluid, determining tainted money from untainted money is difficult, lessening the distinction between the two cases.

“The problem . . . is that as a matter of economics and common sense, money is fungible,” Alito said.

If the Supreme Court continues to support the government’s ability to restrain assets before trials under the presumption that the money will later go to victims, cases across the country could be implicated, Justice Anthony Kennedy noted.

Carried to its full extent, the government would be able to freeze money before trials for defendants charged with drunk driving or domestic violence or any crime where funds would be needed to provide medical care or restitution to the victim after a guilty verdict.

“This would, in effect, prevent the private bar from practicing law unless it did so on a contingent basis,” Kennedy said.