25 soc.sec.rep.ser. 443, Medicare&medicaid Gu 37,849, 28 Fed. R. Evid. Serv. 223 United States of America v. Bay State Ambulance and Hospital Rental Service, Inc. And Michael G. Kotzen, United States of America v. John L. Felci

This case arises out of the award of a contract for ambulance service to defendant, Bay State Ambulance and Hospital Rental Service, Inc. (Bay State), by the City of Quincy in 1984. The United States indicted Bay State, its president, Michael G. Kotzen, and John L. Felci, an official at the Quincy City Hospital (QCH), of conspiring to commit Medicare fraud (Count 1). 42 U.S.C. Sec. 1395nn.1 The defendants were also charged with illegally paying Felci in the form of a Buick (Count 2), a Mazda (Count 4) and seven checks (Counts 3 and 5-10) in violation of the same statute.2 The jury found the defendants guilty of Counts 1 (the conspiracy), 2 (the Buick) and 4 (the Mazda). The jury was hung on Count 3 and returned a verdict of not guilty on Counts 5 through 10. The defendants appeal on numerous grounds.3 For the reasons set forth below, we affirm their convictions.

"Our review of the facts is made in the light most favorable to the government and drawing all reasonable inferences in its favor." United States v. Foley, 871 F.2d 235, 236 (1st Cir.1989). Because it is relevant to certain issues, we also give the defendants' version of certain events.

(a) Bay State Is Awarded The Contract

Quincy City Hospital is a city-owned hospital which is managed by the Hospital Corporation of America (HCA). With the exception of a handful of top administrators, who are employees of HCA, all QCH employees are city employees; Felci was a city employee at all relevant times. Bay State is an ambulance company which provides mainly front-line service4 to a number of Massachusetts communities. Kotzen is the president and sole shareholder of Bay State. He is also the president and sole shareholder of two other corporations: Bay State Ambulance Sales, Inc. and B & N Realty, Inc. Bay State Ambulance Sales, Inc. (Sales Corp.) is in the business of buying and selling ambulances and other vehicles; Kotzen is a licensed car dealer. B & N Realty is a real estate corporation which holds most of the property owned by Bay State. Neither Sales Corp. nor B & N Realty has any employees, payroll or separate headquarters. But, all three companies have separate checking accounts and books.

In 1980, the City of Quincy decided to remove responsibility for ambulance service from the police department and put it in the private sector. Competitive bids were submitted in 1980, but no contract was awarded. After another round of bids in 1981, Bay State was awarded a zero-subsidy contract.5 Brewster Ambulance Service had also bid for this and the 1980 contract.

The term for the 1981 contract was for three years with separate renewable contracts for each year. The contract was first administered by the Quincy City Purchasing Department; by 1983, the Quincy City Hospital Purchasing Department had been put in charge of administering the contract. At all times, however, Felci, as QCH's director of training, was responsible for the daily oversight of the contract.

In January, 1982, after receiving permission from the then Chief Executive Officer (CEO) of QCH, Michael Kitchen, Felci and Kotzen attended a conference in Kansas City on emergency medical care. All of Felci's expenses were paid by Bay State. In late 1982, a new QCH CEO, James Lowenhagen, concluded that Felci's conference attendance at Bay State's expense raised an appearance of impropriety and ordered, therefore, that Felci was no longer to have any decision-making power with respect to subsequent contracts on which Bay State might bid. Lowenhagen memorialized this order in a letter to Felci. Felci informed Kotzen of this development.

In late 1983, in response to a letter from Brewster Ambulance, QCH started the process for rebidding the ambulance contract due to expire June 30, 1984. Although QCH's CEO, Mark Mundy,6 had the final decision-making authority as to whom the contract would be awarded, a committee was appointed to write the specifications, review the bids and make a recommendation. Agrippino Roccuzzo, QCH's Director of Material Management, recommended a list of people for the panel, which included Felci. Mundy approved the list. When Felci discovered he was on the bid committee, he talked to Roccuzzo about the Lowenhagen letter. Felci assured Roccuzzo that there was no need for concern other than the trip to Kansas City. Based on this assurance, Felci was kept on the committee. Felci failed to tell Roccuzzo that he had been hired by Kotzen as a consultant to Bay State and had been given a 1983 Buick Electra a few months earlier from Bay State Ambulance Sales, Inc., a corporation owned by Kotzen.

Because of Felci's intimate knowledge of the 1981 contract and its subsequent administration, Roccuzzo depended heavily on Felci in preparing information for the committee members. When the committee members were asked for suggestions for improving the bid specifications, only Felci submitted any (except for one financial change by the accounting department member). Felci's suggestions included: a requirement that the company have five years of front-line service; upgrading at least one ambulance to 24 hours a day Advanced Life Saving (ALS)7 by October 1, 1984;8 and cross-referenced computer generated statistics necessary to make ALS effective. All of Felci's suggestions were adopted.

Only two companies submitted bids for the contract: Bay State and Brewster Ambulance Service. Felci and Roccuzzo prepared synopses of the two companies' bids in a comparative format. Because of Felci's superior knowledge and experience, he played a significant role in drafting these documents. The Bay State synopsis is written in very approving terms. The Brewster synopsis raises a number of questions about their proposal. The summary sentence states: "While Brewster has, to a satisfactory degree, met all the bid specifications; they are basically the same company which bid on the proposal to deliver the City of Quincy with Emergency Medical Services three (3) years ago." The synopses were sent to the bid committee members.

In order to assess better the merits of both companies' bids, the bid committee gave each company time to make an oral presentation and to answer questions posed by the committee members. The presentations were held on the morning of April 23, 1984, with Brewster going first, followed immediately by Bay State. Immediately prior to Brewster's presentation, George Brewster, the company's manager, gave Roccuzzo a letter complaining that the contract specifications were too restrictive, that Bay State's rates were higher than Brewster's,9 and that Bay State's reports were not presented in a professional manner.

Roccuzzo directed Felci to investigate and respond to each of the allegations contained in the Brewster complaint letter. Felci did so. The response, though written as the "REVIEW COMMITTEE'S RESPONSES" and signed by Roccuzzo, is in fact Felci's product. In the response, Felci stated that the specifications were not unduly restrictive and that Bay State's reports were fine. With respect to rate differences, Felci stated that "George Linah" (his name is spelled "Lynah") was contacted. Lynah worked for Blue Cross/Blue Shield of Massachusetts, and had responsibility for determining reasonable rates for ambulance companies under the Medicare program.10 Lynah denied talking with anyone from QCH about rate differences. Although Felci's response was not circulated to the bid committee, it was used to placate a city councilman who inquired of the bid process after being contacted by Brewster. At this same time, Felci contacted Arthur Dove, a Bay State employee, and asked him to contact a political associate concerning the councilman's inquiries. Felci was concerned because there might be "a problem" with this councilman.

During both presentations, Felci was present but said little. One of the people who presented information during Bay State's presentation was William Gonsalves, a computer programmer.11 Although Felci and Gonsalves were at that time jointly engaged in developing a computer program to meet the statistical requirements of the contract specifications, neither Felci nor Gonsalves informed the committee members of this fact.

Following Bay State's presentation, Felci gave John Mansfield, Bay State's executive director, a sealed envelope and told him not to open it until he was back at the office. When Mansfield opened it, he discovered a copy of the Brewster complaint letter. When Mansfield asked Kotzen about this, Kotzen told him to cooperate in any way Felci requested.

Following the oral presentations, Roccuzzo, with Felci's help, prepared a summary of the questions asked and the responses given. This document was sent to committee members along with the ballots for voting. The vote was unanimous for Bay State; Felci cast a vote. Every member of the committee who voted and who testified at trial, stated that Bay State had always been their number one choice because of its three years of prior service. The committee's recommendation was followed and the contract was awarded to Bay State. On May 23, 1984, the new contract was signed.

(b) The Relationship Between Felci and Bay State

The relationship between Felci and Bay State began with the 1981 contract. Felci was assigned the responsibility of overseeing that contract and thus had a lot of contact with Bay State and especially with Kotzen. In 1982, the incident involving the trip to Kansas City occurred, with the Lowenhagen letter following.

By the summer of 1983, Felci was working for Bay State as a consultant, as well as carrying on his regular duties at QCH. Felci worked for Bay State as a management consultant for two years. His main duties were training personnel and orchestrating and/or presenting seminars. Felci also developed an Early Awareness Program for Bay State. This was a program targeted at young children to inform them about ambulances and ambulance personnel and how to react if they were involved in a medical emergency. Initially, Felci prepared the program for QCH. After completing the project for QCH, Felci revised it to meet the needs of Bay State. Felci also investigated the feasibility of two projects Bay State was looking into: (1) the purchase of an ambulance service company in Florida and (2) entering the helicopter ambulance field. With respect to the former, Felci travelled to Florida, at Bay State's expense, in February of 1984.

The final area of work Felci performed for Bay State involved the use of computers for generating statistics. Felci and Gonsalves, a computer programmer, decided that there was a niche for a computer program specially geared to needs of ambulance companies. Felci and Gonsalves decided to work on this project with Gonsalves doing the actual programming and Felci working on marketing and determining the actual needs of ambulance companies. They tentatively decided to call any business entity to be formed EMSTAT. Although EMSTAT was never formally organized, Felci treated it as a business entity for certain purposes. Felci had Gonsalves work on a program that would meet the requirements of the QCH 1984 contract. Although Gonsalves wanted to market the program to many companies, he and Felci also discussed selling it exclusively to Bay State for between $10,000 and $20,000. During the development of the program, Felci asked Gonsalves not to tell anyone about his connection with EMSTAT. Gonsalves did not disclose Felci's role in the EMSTAT project. Gonsalves was concerned about being pressured to finish the project by July 1, 1984 (the date of the commencement of the 1984 QCH contract). The project was not completed by Gonsalves and he never received any money from it.

Felci received the following remuneration from Bay State at the following times: (1) June 1983, a 1983 Buick worth $14,200, which was offset by Felci trading in his Volvo, worth $7,800 resulting in a net value of $6,400;12 (2) May 7, 1984, $770 check to EMSTAT drawn on Bay State's account;13 (3) May 24, 1984, a Mazda worth $5,700;14 (4) June 12, 1984, $1,000 check to EMSTAT from Bay State; (5) July 12, 1984, $1,200 check to EMSTAT from Bay State; (6) August 14, 1984, $1,640 check to EMSTAT from Bay State; (7) September 18, 1984, $1,600 check to EMSTAT from Bay State; (8) October 19, 1984, $1,600 check to EMSTAT from Kotzen;15 and (9) November 23, 1984, $1,600 check to EMSTAT from Bay State.

The Mazda was purchased in New York City from an associate of Kotzen. Prior to receiving it, Felci told people he would be getting it but did not explain the Bay State connection. On the day Felci and Kotzen flew to New York to purchase the car, Felci was driven to the airport by an employee of Bay State. As the employee was about to drive away, he noticed Kotzen arrive. Kotzen did not speak to the employee and appeared to attempt to evade him. Upon returning with the Mazda, Felci again told people that he had purchased it and omitted the Bay State connection.

(c) The Investigation

The FBI began investigating Bay State in late 1984 for a different purpose but quickly picked up the trail leading to the indictment on Medicare Fraud. During the course of this investigation, the FBI requested any documents that Bay State had which would corroborate Bay State's contention that Felci was being paid only for actual work done for Bay State. Bay State, through its in-house counsel, Robert Shuman, asked Felci, who had already retained another attorney, for a list of all the times he worked on Bay State projects. Felci provided this list (hereinafter referred to as the Outline of Projects or Outline) to Shuman without informing his attorney of either its creation or its transmittal. Shuman thereafter provided the Outline to the FBI. The Outline contained numerous obvious and not-so-obvious errors. At trial, the government used this document extensively to undercut the defendants' claim that Felci was paid only for actual work done.

Prior to trial, Felci moved to exclude the Outline on the ground that it was prepared as part of a joint defense and therefore Shuman had no right to turn over the confidential information. In the alternative, Felci contended that at the time he prepared the document and gave it to Shuman, Shuman was acting as his attorney. The trial judge denied Felci's motion stating that the Outline had been produced pursuant to an FBI subpoena. When it was pointed out that the subpoena issued months after the Outline was given to the FBI, the judge affirmed her earlier ruling without further explanation.

(d) The Trial

At trial, the Outline and evidence of false or misleading statements made by defendants during the FBI investigation were highlighted. The government's theory of the case was that the payments to Felci were primarily improper inducements to help Bay State get the 1984 contract. Although the government did not attempt to link the payments to Felci as coming from Medicare funds received by Bay State or Kotzen, the parties stipulated that, on the basis of a sampling data for 1985 and 1986, Bay State received between $127,952 and $215,014 from Medicare funds for those years with the most likely amount being $171,883.

The defendants attempted to show that the payments were in fact reasonable amounts for actual services rendered. Government witnesses, as well as those called by defendants, testified that Felci did in fact perform services for Bay State, albeit less than the amount stated on the Outline of Projects. The defendants also called witnesses to describe work that needed to be done, that was done and that might have been done by Felci without anyone specifically knowing that he did it. Finally, defendants presented an expert who testified that the services Felci provided Bay State were worth more than Bay State paid Felci.

The jury returned a verdict of guilty against all three defendants on the conspiracy count and the substantive counts involving the automobiles. The jury could not agree on count 3 which involved the May 7 check in the amount of $770; a mistrial was entered on that count. The jury returned verdicts of not guilty for all three defendants on all other counts. Following the denial of post-trial motions and the sentencing of the defendants,16 the defendants appealed.

Felci contends that the Outline of Projects was improperly admitted against him in violation of the attorney-client privilege.17 The Outline was prepared by Felci after Shuman, Bay State's in-house counsel, requested documentation of the hours Felci worked for Bay State. Although Felci had already retained another attorney, Mr. Gideonse, Felci prepared the Outline and gave it to Shuman without telling Gideonse about it. Shuman then turned it over to the FBI. Later, after a subpoena had issued, Felci supplied Gideonse with substantially the same information in a letter which was not introduced at trial. It was not until even later, according to Gideonse's affidavit, that he was informed of the Outline of Projects and the events surrounding it. In contesting the admission of the Outline, Felci contends that Shuman had no right to turn over the Outline because either Shuman was acting as Felci's attorney (in addition to Gideonse) or the document was prepared as part of a joint defense. In either case Felci contends that the document was intended to be kept confidential and use of it by the government violated the attorney-client privilege.

A district court's determination regarding the existence of a privilege is factual in nature. United States v. Wilson, 798 F.2d 509, 512 (1st Cir.1986). Thus, "the district court's finding of no privilege can be overturned only if clearly erroneous." Id. In order to assert the attorney-client privilege with respect to a document provided by an attorney, the person asserting the privilege is

required to make four showings: (1) that he was or sought to be a client of [the attorney]; (2) that [the attorney] in connection with the [document] acted as a lawyer; (3) that the [document] relates to facts communicated for the purpose of securing a legal opinion, legal services or assistance in a legal proceeding; and (4) that the privilege has not been waived.

Id. The burden of proving the existence of the privilege is on the party asserting the privilege. Id. at 512-13.

The evidence presented at the hearing on this issue amply supports the district court's finding that no attorney-client relationship existed between Felci and Shuman: Felci had retained separate counsel; Felci had contacted the FBI through his separate counsel; Felci never paid Shuman for his services; Felci never asked Shuman to take any action on his behalf. The most that can be said is that Felci had ongoing talks with Shuman concerning the investigation and that Shuman helped Felci polish the Outline and the subsequent letter to Gideonse containing the same information. On these facts, the district court did not make a clear error in finding no attorney-client relationship. Because Felci failed to meet his burden on the first prong of the test, we need not address the other three. Wilson, 798 F.2d at 512-13.

We turn now to Felci's alternative argument of joint defense. The joint defense privilege "is an extension of the attorney client privilege." Waller v. Financial Corp. of America, 828 F.2d 579, 583 n. 7 (9th Cir.1987).

The joint defense privilege protects communications between an individual and an attorney for another when the communications are "part of an on-going and joint effort to set up a common defense strategy." In order to establish the existence of a joint defense privilege, the party asserting the privilege must show that (1) the communications were made in the course of a joint defense effort, (2) the statements were designed to further the effort, and (3) the privilege has not been waived.

In re Bevill, Bresler & Schulman Asset Management Corp., 805 F.2d 120, 126 (3d Cir.1986) (citation omitted). "Communications to an attorney to establish a common defense strategy are privileged even though the attorney represents another client with some adverse interests." Eisenberg v. Gagnon, 766 F.2d 770, 787-88 (3d Cir.), cert. denied, 474 U.S. 946, 106 S.Ct. 342, 343, 88 L.Ed.2d 290 (1985); see also United States v. McPartlin, 595 F.2d 1321, 1336 (7th Cir.), cert. denied, 444 U.S. 833, 100 S.Ct. 65, 62 L.Ed.2d 43 (1979). To qualify for the privilege, the communication must have been made in confidence. See United States v. Keplinger, 776 F.2d 678, 701 (7th Cir.1985), cert. denied, 476 U.S. 1183, 106 S.Ct. 2919, 91 L.Ed.2d 548 (1986); United States v. Friedman, 445 F.2d 1076, 1085 n. 4 (9th Cir.), cert. denied, 404 U.S. 958, 92 S.Ct. 326, 30 L.Ed.2d 275 (1971). In addressing whether a given communication was meant to be confidential, what "the client reasonably understood" is "the key question." Kevlik v. Goldstein, 724 F.2d 844, 849 (1st Cir.1984) (quoting McCormick on Evidence, Sec. 91 (1972)) (emphasis added). "[T]his circuit also looks to the intent of the client." Id. Finally, "it is well established that an appellate court must affirm a judgment of a district court if it is correct as a matter of law, even if for reasons other than those cited by the district court itself." United States v. Jodoin, 672 F.2d 232, 238 (1st Cir.1982).

The district court initially relied upon a clearly erroneous finding of fact in holding no joint defense privilege existed. The Outline was not transmitted to the FBI by Shuman pursuant to a subpoena. Once this was pointed out to the court, the judge reaffirmed her earlier ruling, but gave no reason.18 Even assuming the district judge relied on incorrect grounds in finding no privilege, we affirm her ruling for two reasons, either of which is sufficient to defeat the privilege.

First, Felci failed to meet his burden of showing that the Outline was prepared as part of a joint defense. It is true that Felci, Kotzen and Bay State had many interests in common and thus much of the information shared by the parties would fall under the privilege. The Outline itself, however, does not fall into this category because it was not prepared as part of the joint defense. It is significant that Felci failed to consult his attorney about the Outline. Indeed, Felci did not provide his own attorney with the same information until months later. And, Felci did not inform his own attorney of the existence of the actual Outline and its subsequent travel until even after that time. When a person provides information to another without first consulting his own attorney, it is difficult to see how the information was given as part of a joint defense, even when the recipient may be viewed as a party with similar interests. The difficulty grows when the person furnishing the information fails to inform his attorney of what he has done for several months. This raises the inference that the information was not intended to be used for that person's defense much less a joint defense. Under these circumstances, the joint defense privilege is not available.

Second, there was no reasonable basis upon which to believe the communications would be kept confidential. At the hearing on this issue, Felci admitted that Shuman requested the information in order to address certain questions raised by the FBI. Under such circumstances, Felci could not have reasonably thought that the information would have been kept confidential. Although Felci might have subjectively thought otherwise, the "key question" is what was objectively reasonable under the circumstances. See Kevlik, 724 F.2d at 849. Here, Felci was told that Shuman wanted the information for one who clearly had an adverse interest in the information. There being no reasonable basis for believing that Shuman would not share the information in some form with the FBI, there can be no privilege.

The trial court refused to give instructions requested by the defendants to the effect that the government had to show the payments to Felci were "not as compensation for services performed ... or were of substantially more value than the services performed or to be performed" and that Felci could not be guilty unless he was "substantially overpaid" for his services. Instead, the judge instructed

that the Government has to prove that the payments were made with a corrupt intent, that they were made for an improper purpose. If you find that payments were made for two or more purposes, then the Government has to prove that the improper purpose is the primary purpose or was the primary purpose in making and receiving the payments. It need not be the only purpose, but it must be the primary purpose for making the payments and for receiving them. You cannot convict if you find that the improper purpose was an incidental or minor one in making the payments.

This was part of the court's instruction on inducement. Although there is a question as to whether a proper objection was taken to this instruction, we will assume that it was.

The trial court did not err in not specifically instructing the jury that the government had to prove that the payments received were not reasonable for the actual work done. The gravamen of Medicare Fraud is inducement. Giving a person an opportunity to earn money may well be an inducement to that person to channel potential Medicare payments towards a particular recipient. We are impressed by the Third Circuit's reasoning:

Even if the physician performs some service for the money received, the potential for unnecessary drain on the Medicare system remains. The statute is aimed at the inducement factor.

The text refers to "any remuneration." That includes not only sums for which no actual service was performed but also those amounts for which some professional time was expended. "Remunerates" is defined as "to pay an equivalent for service." Webster Third New International Dictionary (1966). By including such items as kickbacks and bribes, the statute expands "remuneration" to cover situations where no service is performed. That a particular payment was a remuneration (which implies that a service was rendered) rather than a kickback, does not foreclose the possibility that a violation nevertheless could exist.

United States v. Greber, 760 F.2d 68, 71 (3d Cir.) (emphasis added), cert. denied, 474 U.S. 988, 106 S.Ct. 396, 88 L.Ed.2d 348 (1985); see also United States v. Hancock, 604 F.2d 999, 1001-02 (7th Cir.) (under older statute which did not include "remuneration," rejecting argument that fees for legitimate services could not be illegal kickbacks), cert. denied, 444 U.S. 991, 100 S.Ct. 521, 62 L.Ed.2d 420 (1979).

Whether the payments were at least in part for services rendered raises the issue of whether the government must show that such payments were made primarily or solely with a corrupt intent. In Greber, the court held that "[i]f the payments were intended to induce the physician to use Cardio-Med's services, the statute was violated, even if the payments were also intended to compensate for professional services." 760 F.2d at 72 (emphasis added). This "more expansive reading" of the statute, id., implies that the issue of the sole versus primary reason for payments is irrelevant since any amount of inducement is illegal. We need not decide the exact reach of the statute since, in this case, the district court instructed that the defendants could only be found guilty if the payments were made primarily as inducements. At a minimum this comports with congressional intent. Greber, 760 F.2d at 71-72 (collecting and discussing cases).

The defendants based their case on the theory that the payments to Felci were only made for actual services performed. This, they contended, was the sole reason for the payments. They, therefore, object to the following instruction:

If you find the payments were made for two or more purposes, then the government has to prove that the improper purpose is the primary purpose or was the primary purpose in making and receiving the payments.... You cannot convict if you find that the improper purpose was an incidental or minor one in making the payments.

We find that this instruction was not reversible error.

The verdicts rendered indicate that the jury followed this instruction. The jury found the defendants guilty on the conspiracy and the two automobile payment charges, and not guilty on all but one check payment, on which they failed to agree. The jury could have believed that the check payments were compensation for work done with only an incidental improper purpose, but that the two automobiles were primarily given for an improper purpose and not for work done.

Finally, defendants argue that in light of recent congressional and administrative actions, reasonable payments for actual work is not a crime proscribed by the Medicare Fraud statute. The defendants, however, read too much into the amended statute and subsequent administrative actions. In 1987, Congress repealed 42 U.S.C. Sec. 1395nn and reenacted the provision in altered form at 42 U.S.C. Sec. 1320a-7b. The basic substantive provision for criminal liability has not been materially changed. 42 U.S.C. Sec. 1320a-7b(b)(1) and (2). Under this revision, the Secretary of Health and Human Services (HHS) is directed to promulgate regulations specifying payment practices that shall not be treated as a criminal offense. 42 U.S.C. Sec. 1320a-7b(b)(3)(D). Pursuant to this mandate, the Secretary of HHS initially proposed regulations on December 21, 1988, 53 Fed.Reg. 51,862 (1988), withdrew them on December 23, 1988, 53 Fed.Reg. 52,448 (1988), and reissued them on January 23, 1989, 54 Fed.Reg. 3088 (1989). Under these proposed regulations, a consulting arrangement would be exempted from illegality so long as the amount paid was "consistent with fair market value in arms-length transactions."19 The regulations have to our knowledge not been adopted; they have only been published for comment.

As defendants concede, these proposed changes do not govern their actions since the law was different at the time. They nonetheless contend that the proposed changes should inform our determination of whether reasonable payments for actual services can ever be illegal. Our response is twofold. First, even assuming that the statutory changes and proposed administrative actions show that a later Congress agrees with the defendants that Congress never intended to criminalize the kind of payments involved here, courts are chary of allowing a subsequent Congress' comments on the intent of prior legislation to control. CPSC v. GTE Sylvania, Inc., 447 U.S. 102, 117, 100 S.Ct. 2051, 2061, 64 L.Ed.2d 766 (1980) ("we begin with the oft-repeated warning that 'the views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one.' ") (citation omitted).

Second, and more importantly, the relied upon changes in the statute do not support defendants' contentions and may in fact belie them. Congress did not explicitly change the statute to exclude reasonable payments for actual work done. At best, Congress allowed HHS to create "safe harbors" for certain types of transactions. The proposed regulation does not exempt every transaction in which the amount paid for services is an amount "consistent with fair market value;" rather, it exempts only a small subset of such transactions. To qualify, there must also be: (1) an agreement in writing; (2) specifying the services to be rendered; (3) for a term of more than one year; (4) with the compensation set in advance. Furthermore, under circumstances such as the present case where the consulting arrangement is not full-time, even more stringent requirements are necessary to meet the exemption from criminal liability.20 HHS has thus decided not to create a safe harbor for transactions such as the present case. While we need not decide whether this implies that HHS deems such transactions to be illegal, we certainly do not see how this shows that HHS finds such transactions to be legal.

Moreover, the fact that Congress, in reenacting the substantive sections of the Medicare Fraud statute did not change them, implies that Congress approved prior interpretations such as Greber, 760 F.2d 68. See, e.g., Sierra Club v. Secretary of Army, 820 F.2d 513, 522 (1st Cir.1987); see also United States v. Tapert, 625 F.2d 111, 121 (6th Cir.) ("An amendment to an existing statute is not an acknowledgement by Congress that the original statute is invalid."), cert. denied, 449 U.S. 1034, 101 S.Ct. 609, 610, 66 L.Ed.2d 496 (1980).B. Unconstitutionally Vague Statute

Defendants next claim that, if we read the Medicare Fraud statute to criminalize, under certain circumstances, reasonable payment for services rendered, the statute becomes unconstitutionally vague.

The Supreme Court has set forth the standards for determining whether a statute is void for vagueness:

A criminal statute must be sufficiently definite to give notice of the required conduct to one who would avoid its penalties, and to guide the judge in its application and the lawyer in defending one charged with its violation. But few words possess the precision of mathematical symbols, most statutes must deal with untold and unforeseen variations in factual situations, and th