Identity Theft Statute Narrowed — A Little Bit

June 5, 2015

By: Sara KropfFleet

In recent years, the government has increasingly prosecuted individuals under the federal aggravated identity theft statute. This increase may be from the legitimate increase in identity theft but it may also result from the government’s realization that the statute’s mandatory minimum sentence makes it an attractive charging decision to force a plea bargain.

The statute covers a broad range of wrongful activities, from using someone’s stolen credit card to the unauthorized use of someone’s health information. The question in these cases is often whether the defendant “used” the information.

The recent decision in United States v. Medlock from the Sixth Circuit placed an important limitation on the government’s use of the statute by clarifying what constitutes the “use” of another individual’s identity.

The Alleged Ambulance Scheme

In Medlock, a married couple owned and operated a company, Murfreesboro Ambulance Service (MAS), which transported patients via ambulance to kidney dialysis appointments. Medicare reimbursed the Medlocks when it was medically necessary for a patient to travel by ambulance.

Medicare required submission of several forms before reimbursement, including a Certification of Medical Necessity (CMN) for the ambulance travel that is signed by the patient’s doctor and a “run sheet.” On the run sheet, a person other than an employee of the ambulance company reviews whether reimbursement is appropriate. Medicare also dictates that these ambulances be staffed with a Certified Medical Technician, along with the driver.

After identifying MAS as the fifth-highest Medicare biller for these services in the State of Tennessee, a third party company audited MAS. During this audit, the government discovered that the Medlocks were missing several CMNs.

Contemporaneously, a government agent covertly observed MAS operating its ambulances with only one employee, failing to use a stretcher to transport patients into the vehicle, and transporting multiple patients at a time. These practices render the trips non-reimbursable.

After executing a search warrant on the Medlocks’ home, the government discovered multiple forged or altered CMNs and “run sheets.” These documents had allegedly been forged under the direction of Ms. Medlock. The falsified documents correctly listed the patients who were transported but fabricated other details regarding the trips, such as the number of employees in the ambulance.

The government charged the Medlocks with conspiracy, wire fraud, false statements, health care fraud and multiple counts of aggravated identity theft under 18 U.S.C. § 1028A(a)(1).

The Statute

The aggravated identity theft statute, 18 U.S.C. §1028(A)(1), provides that:

(a) Offenses.—

(1) In general.— Whoever, during and in relation to any felony violation enumerated in subsection (c), knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of 2 years.

There is also a separate provision providing for a 5 year mandatory minimum sentence if the offense is terrorism related, but this provision has rarely been used.

For the purposes of § 1028A(a)(1), a “means of identification” is defined by 18 U.S.C. § 1028(d)(7) as:

any name or number that may be used, alone or in conjunction with any other information, to identify a specific individual.

Aggravated identity theft only occurs when the identity theft happens “during and in relation” to one of several other federal crimes. What it does in effect, then, is to establish a mandatory minimum sentence for over 60 predicate offenses. You can see the list here.

This is a powerful statute.

The Government’s Theory of the Case and the Medlocks’ Response

The government alleged that the Medlocks violated this statute by their “use” of the patients’ names on the partially falsified forms.

The Medlocks argued, however, that because the patients listed on the forms were actually transported, there was no misuse of their identities. Even though the company lied about the details of the trip, such as whether the patients entered the ambulance via stretcher or wheelchair, the company still had the permission from the passengers to list their names on the forms.

On the face of it, this is not a bad argument. The Medlocks, however, lost the argument at trial and were convicted on all counts. They were sentenced to 70 months (Ms. Medlock) and 75 months (Mr. Medlock) in prison.

The Win on Appeal

On appeal, however, they were victorious. The Court of Appeals found that the Medlocks did not “use” the patients’ identities in a manner that rose to the level of a §1028(A) violation. Although lying about the medical necessity of these trips was certainly a violation of other statutes and constituted health care fraud, it was not a theft of these patient’s identities. The Court reasoned that although

the Medlocks acted “without lawful authority” for statutory purposes, the Medlocks’ misrepresentation that certain beneficiaries were transported by stretchers does not constitute a “use” of those beneficiaries’ identification under the federal aggravated-identity-theft statute, 18 U.S.C. § 1028A, because their company really did transport them.

The court quoted a 2013 Sixth Circuit case that “the term must have practical boundaries.”

This is not an entirely groundbreaking case. It relies on highly fact-intensive analysis and other courts will no doubt distinguish it on its facts.

As always, though, it is nice to see a court limiting what the government can charge under any criminal statute. This particular statute’s breadth is staggering and the sentencing consequences—for fairly minor conduct—are severe.

Even a minor win is a very big deal. Congrats to the Medlocks’ counsel.

Published by Kropf Moseley

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