U.S. v. Shoemaker (Summary)

ANTI-KICKBACK

U.S. v. Shoemaker, Nos. 12-60754, 12-60791 (5th Cir. Mar. 25, 2014)

The United States Court of Appeals for the Fifth Circuit reversed a trial court’s ruling and reinstated the criminal convictions of Earnest Levi Garner (“Garner”) and Raymond Lamont Shoemaker (“Shoemaker”) (collectively, “defendants”) and remanded the case to the trial court for sentencing.

The defendants were alleged to have engaged in a bribery and kickback scheme involving a community hospital.  Garner, the owner and operator of a nurse staffing business, alleged that David Chandler (“Chandler”), the chairman of the hospital’s board of trustees, requested that Garner pay him $5 for every nursing hour billed at the hospital in return for Chandler securing Garner business.  It was alleged that, about once a month, Garner would pressure Chandler to increase the hours billed and Chandler would lobby Shoemaker, the hospital’s chief operating officer and later its chief executive officer, accordingly.  In total Garner paid Chandler $268,000 and the hospital paid Garner’s company $2.3 million for nursing service.  Shoemaker was then alleged to solicit kickbacks and bribes and for making false statements in a subsequent transaction.

After an FBI investigation, Garner and Shoemaker stood trial for various federal crimes, including, among others, conspiracy and federal program bribery.  After the jury returned guilty verdicts on all counts against the defendants, the trial court entered judgments of acquittal and, in the alternative, granted new trials as to the conspiracy charges against the defendants and the bribery charges against Garner.

The appeals court held that Chandler was an agent of the hospital for the purposes of federal law and thus any bribes sought to influence his decision-making were sufficient to establish a conspiracy.  Also, Chandler was a director, who was authorized to act on behalf of the hospital with respect to its funds and, more specifically, he scheduled and set the agenda for hospital board meetings, contacted department heads for reports at board meetings, worked closely with Shoemaker, approved a $50,000 raise for Shoemaker and signed a contract on behalf of the hospital providing a nonprofit with the right to purchase the hospital.

The appeals court also held that the conspiracy claims were actionable notwithstanding the lack of direct evidence linking Garner and Shoemaker.  Chandler testified that Shoemaker requested money of him, that Garner verbally agreed to let him pay Shoemaker, and that he did in fact pay Shoemaker.  This testimony was sufficient to establish a conspiratorial relationship and the trial court’s rejection of such testimony amounted to an impermissible judgment of credibility.