Dr. Philip Bobo appeals his convictions for conspiracy to defraud the United States and a health care benefit program, as well as attempting to defraud a health care benefit program, under various sections of the U.S. Code. The primary issue on appeal is the district court's denial of Bobo's motion to dismiss the indictment, which he argues was based on legally insufficient allegations to support his convictions for health care fraud. The appellate court finds merit in this argument, concluding that the district court erred in not dismissing the indictment, leading to the reversal of Bobo's convictions.
Additionally, Bobo raises several other claims, including insufficient evidence for conviction, material variances between the indictment and trial evidence, bias from the district court, incorrect jury instructions on reasonable doubt, and errors in sentencing related to loss calculations and abuse of public trust. The government cross-appeals, challenging the district court's decisions regarding sentencing enhancements, the completion status of the conspiracy scheme, Bobo's role in the scheme, and claims of obstructing justice.
The procedural history reveals that Bobo was indicted on multiple counts, pled not guilty, and had his motion to dismiss partially granted. Following a trial, he was convicted on two counts and sentenced to 27 months in prison, concurrent, along with a fine and supervised release. Bobo is noted to have a long-standing career in emergency medicine, having served in various capacities, including as a State Emergency Medical Director under Governor Don Siegelman.
Dr. Bobo has held various medical positions, including team physician for the University of Alabama football and plant physician at Uniroyal Goodrich. He founded Emergicare, a no-appointment clinic, and co-established Neighborhood Health Services (NHS) in the 1980s with three other doctors to provide primary care to patients who would otherwise use emergency rooms. Dr. Bobo is the managing partner and majority owner (51%) of NHS, which includes Mary Jo Looser as executive program director and two additional employees, Charlotte Jamison and Dr. Pat Lagrone.
The Medicaid Maternity Waiver Program (MWP) was created by Congress in 1997 to improve prenatal care and reduce Alabama’s high infant mortality rate. Testimony from Gwendolyn Williams, former Commissioner of the Alabama Medicaid Agency, highlighted that the MWP waives certain Medicaid requirements in exchange for a network of designated medical providers. The program assigns case managers to oversee mothers' medical care and has expanded statewide after initial tests. Alabama is divided into 13 districts for MWP services, with competitive bidding for providers. Approximately 70% of the program's funding comes from federal sources, with a total initial budget of $100 million.
Ms. Williams recounted her first meeting with Dr. Bobo in early 1998, where he showed interest in the MWP. Their interactions became increasingly contentious, leading her to refuse his calls. In July 1998, they discussed the procurement method for selecting MWP providers, where Dr. Bobo advocated for requests for proposals (RFPs) instead of invitations to bid (ITBs) to consider factors beyond just pricing. However, Ms. Williams stated she lacked the authority to use RFPs, resulting in the release of ITBs in October 1998.
Bidders were required to submit comprehensive documentation about access to care, participating hospitals, and average patient care time, either through contracts or signed letters of intent. NHS submitted bids for most districts, with Ms. Vicki Huff, former director of medical services at the Alabama Medicaid Agency, testifying that her office prepared the 1998 Invitation to Bid (ITB). The bids reflected the estimated cost per birth, with NHS and Alabama Health Network (AHN) as the primary bidders in District 4. NHS bid $4,260 and AHN bid $3,889 for services under the Maternal Wellness Program (MWP). After evaluation, NHS was awarded the contract for District 4 by Dr. Henry C. Mabry, III, State Finance Director. In District 7, NHS's higher bid of $4,516 was not awarded, as AHN's bid of $3,949 was selected instead.
On March 19, 1999, a letter was sent to bidders announcing NHS as the MWP recipient for Districts 1, 4, and 9. However, on May 13, 1999, Bill Newton, acting purchasing director, canceled all bids for District 4, stating that it would be rebid due to irregularities. AHN subsequently filed a lawsuit against the rebid, which was settled, and NHS did not submit a second bid for District 4, which was then awarded to AHN.
Additionally, Ms. Pam Parsons testified that Dr. Bobo contacted her on May 11, 1999, requesting her to relay an offer from NHS to the University of Alabama, proposing $800,000 for AHN to withdraw its bids in exchange for guaranteed admissions to Capstone Medical Center and contracts for resident services at Alabama football games. University officials, including Dr. Sorenson, declined involvement in the bidding process, while Dr. Armstrong acknowledged his roles with both Capstone and AHN but stated he held no authority with AHN.
Dr. Armstrong testified about multiple phone calls with Dr. Bobo and Ms. Parsons regarding the MWP bidding process. In his initial conversation, Dr. Bobo claimed NHS would win the re-bid for District 4 due to the Governor's assurances. He proposed that if AHN did not participate, he would arrange for the College of Community Health Sciences to receive $550,000 annually for training and would pay $250,000 for Capstone to manage NHS's Medicaid inpatients. Troubled by these offers, Dr. Armstrong sought advice from Dean Bill Curry and Capstone's business manager, John Maxwell. Following their guidance, he documented the conversation and was instructed to record any further discussions with Dr. Bobo.
Ms. Parsons later contacted Dr. Armstrong, expressing support for Dr. Bobo’s offer and inquiring how she could assist in finalizing the deal. During a May 18, 1999, call, Dr. Bobo reassured Dr. Armstrong that the proposal was a legitimate business opportunity, not a bribe, and outlined that NHS would perform contracts for Capstone. Dr. Armstrong conveyed to Ms. Parsons that the total funding consisted of $800,000 from Dr. Bobo, combining $550,000 from the Fire College and $250,000 from NHS. Ms. Parsons acknowledged that Dr. Sorenson interpreted the offer as either receiving $800,000 or nothing.
At Dr. Bobo’s trial, Maxwell testified to his dual compensation roles and recounted Dr. Bobo's assurance that he would maintain legal delivery numbers. Maxwell noted that no bid was active for District 4 during their discussions at the end of May. In a May 27, 1999, call, Dr. Bobo reiterated his favorable offer and emphasized the importance of District 4 as NHS's base amid surrounding district bids. He discussed plans to leverage the Fire College for additional funding and suggested making contracts with existing programs. In a June 1, 1999, conversation, Dr. Bobo urged Maxwell to persuade others about the deal, promising annual payments of $800,000 due to the purported contracts he held.
Mr. Maxwell considered their discussion a deal, while Dr. Karl Harbin of NHS indicated that the agency would evaluate bids based on comprehensive criteria rather than just price. Although Dr. Harbin did not participate in the bidding, he communicated with Dr. Bobo, who relayed that Mr. Maxwell and Dr. Armstrong were hesitant to bid due to concerns about Capstone's financial status and the belief that NHS had the superior program. Dr. Bobo claimed he could leverage his political connections to secure funding for Capstone, similar to a program at UAB. He allegedly warned that if he procured funding, AHN should not pursue a bid for District 4. Dr. Bobo also mentioned a meeting with an individual referred to as 'Nick' from Montgomery, who provided a budget figure to guide NHS’s bidding strategy. Dr. Bobo later denied any wrongdoing during trial, asserting he believed his actions were legitimate and aimed at improving medical services for vulnerable populations while also seeking to profit from the arrangement. He sought to keep his dealings with the Fire College private, not out of illegality, but due to incomplete details. His defense argued he was negotiating rather than obstructing competition among providers.
The legal discussion emphasized that an indictment must clearly convey the essential elements of the offense and sufficiently inform the defendant of the charges. The court reviews whether an indictment is legally sufficient and if it adequately describes the accusations, noting that mere adherence to statutory language is insufficient if it fails to provide a clear understanding of the charges.
An indictment must use specific language to detail the offense and allow the defendant to plead in a way that prevents future prosecution for the same action. In this case, the indictment asserts that the Alabama Medicaid Agency set a deadline for the MWP bid process on March 29, 1999, and that NHS and AHN submitted bids. It describes Dr. Armstrong and AHN as a network involving several hospitals and a health foundation. Following initial bid submissions, the agency communicated a new deadline of June 21, 1999, due to bidding confusion.
Count I charges Dr. Bobo with conspiracy to defraud the Maternity Care Program administered by the Alabama Medicaid Agency, in violation of Title 18, U.S.C., Section 1347(1). It alleges that Dr. Bobo offered AHN $800,000 annually to refrain from rebidding on District 4 and relinquish their contract for District 7, identifying this as part of a fraudulent scheme. The overt acts include phone calls between Dr. Bobo, Dr. Armstrong, and an unindicted co-conspirator regarding the offer.
Count II incorporates the allegations of Count I and charges Dr. Bobo with executing the same fraudulent scheme without detailing the specific means of the fraud, relying instead on the previous count's description. However, it omits essential language from the statute that requires the fraud to be related to the delivery or payment for health care benefits, items, or services. Moreover, the indictment does not clarify what Dr. Bobo allegedly aimed to defraud the MWP program of, whether benefits, items, services, or money.
The indictment against Dr. Bobo alleges fraud in a health care benefit program but lacks the necessary specificity and detail regarding the alleged scheme or conduct that constitutes a crime. The government claimed that the benefits or services in question could have influenced prior bids between AHN and NHS, or could represent funding from the legislature for Capstone. However, the indictment does not clearly outline the illegal nature of Dr. Bobo’s actions, nor does it reference any federal statute prohibiting the alleged conduct.
Key points include:
- The indictment broadly alleges fraud but requires speculation about its core elements, which is insufficient under legal standards.
- The government’s references to Dr. Bobo’s $800,000 offer as a bribe or part of bid rigging were not substantiated in the indictment.
- Dr. Armstrong, a witness, testified that he had no authority over AHN, undermining the bribery claim.
- The indictment does not specify that Dr. Bobo's offer related to health care fraud or violated Alabama law, which does not require competitive bidding for professional service contracts.
- There is no indication that Dr. Bobo's actions would have harmed the bidding process or the MWP’s interests.
- The jury's reliance on alleged overt acts to support the conspiracy charge was flawed, as these acts do not adequately describe the scheme to defraud. Furthermore, the jury could not unanimously agree on which overt acts constituted the scheme, violating Dr. Bobo’s right to a unanimous verdict.
- Due to these deficiencies, both Count I and Count II of the indictment fail to state an offense, leading to the conclusion that the district court erred by not dismissing the indictment.
The district court accepted the magistrate judge's findings regarding Dr. Bobo's motion to dismiss the indictment. The magistrate incorrectly determined that Dr. Bobo's alleged scheme involved winning a contract through a higher bid, while the indictment only charged him under subsection (1) of 18 U.S.C. 1347, not subsection (2). Although Dr. Bobo's actions were not condoned, the legal conclusion was that he did not violate the health care fraud statute as charged. Consequently, the district court's denial of the motion to dismiss was reversed, and Dr. Bobo's convictions were vacated. Additionally, even if the denial had been appropriate, concerns about the sufficiency of evidence, a material variance between the indictment and trial evidence, and issues with the district court’s trial rulings suggested that Dr. Bobo may not have received a fundamentally fair trial.
