Weekly Case Digests – February 7, 2022 – February 11, 2022

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7^th Circuit Digests

7^th Circuit Court of Appeals

Case Name: United States of America, et al., v. Molina Healthcare of Illinois, Inc., et al.,

Case No.: 20-2243

Officials: SYKES, Chief Judge, and WOOD and HAMILTON, Circuit Judges.

Focus: Breach of Contract – FCA Violation

Sophisticated players in the healthcare market know that services come at a cost; providers charge fees commensurate with the services rendered; and payors expect to receive value for their money. There are many options from which to choose when designing a payment scheme, including fee-for-service, prepaid services using the health-maintenance organization model (HMO), and capitation payments, to name just a few. Each of these models attempts to balance expected services against expected costs.

The present case involves a capitation system, which is similar to the traditional HMO approach in which parties agree to a fixed per-patient fee that covers all services within the scope of a governing plan. Molina Healthcare of Illinois (Molina) contracted with the state’s Medicaid program (which in turn is largely funded by the federal government, see Illinois Medicaid, https://www.benefits.gov/benefit/1628) to provide multiple tiers of medical-service plans with scaled capitation rates. Among those, the Nursing Facility (NF) plan required Molina to provide Skilled Nursing Facility (SNF) services. Molina itself, however, did not deliver those services; instead, it subcontracted with GenMed to cover this obligation. Molina received a general capitation payment from the state, out of which it was to pay GenMed for the SNF component. But little time passed before Molina breached its contract with GenMed and GenMed terminated the contract. After GenMed quit, Molina continued to collect money from the state for the SNF services, but it was neither providing those services itself nor making them available through any third party. Molina never told the government about this breakdown, nor did it seek out a replacement service provider.

Thomas Prose, the founder of GenMed, brought this qui tam action under both the federal and the state False Claims Acts. See 31 U.S.C. § 3729 et seq.; 740 ILCS 175/1 et seq. (Because the state law does not differ in any meaningful way from the federal law, we refer in this opinion only to the federal law for the sake of simplicity.) Prose alleged that Molina submitted fraudulent claims for payments to the Department (which was for the most part just a conduit for federal funds—a point we will not repeat) for skilled nursing facility services. Although the district court agreed with Prose that the SNF services were material to the contract, it dismissed the case at the pleading stage because it found that the complaint insufficiently alleged that Molina knew that this condition was material. But on our independent reading of the complaint, we conclude that it plausibly alleges that as a sophisticated player in the medical-services industry, Molina was aware that these kinds of services play a material role in the delivery of Medicaid benefits. We therefore reverse and remand for further proceedings.

Reversed and remanded
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7^th Circuit Court of Appeals

Case Name: United States of America, et al., v. Molina Healthcare of Illinois, Inc., et al.,

Case No.: 20-2243

Officials: SYKES, Chief Judge, and WOOD and HAMILTON, Circuit Judges.

Focus: Order Correcting Opinion – Rehearing Denial Order

Defendants-Appellees filed a petition for rehearing and rehearing en banc on September 2, 2021. All judges on the original panel have voted to deny rehearing and a majority of judges in active service have voted to deny rehearing en banc, with the following amendments to the opinion: On page 14 of the Slip Opinion, the first full paragraph is amended to remove: “and so Molina is mistaken when it suggests that the implied version requires express representations about the goods or services to be provided. Material omissions can suffice.” The final sentence of the amended paragraph now reads: “Implied and express statements raise distinct issues, however.”

On page 15 of the Slip Opinion, the final sentence of the carryover paragraph is amended to read: “The complaint must include specific allegations that show that the omission in context significantly affected the government’s actions.” On page 29 of the Slip Opinion (Dissent of Chief Judge Sykes), the first paragraph after “C. Implied False Certification” is amended to remove: “That is, the majority simply states, without explanation, that material omissions are implied false certifications. Majority op. at 14 (‘Material omissions can suffice.’)” In the same paragraph, the final sentence is amended to read: “That approach cannot be squared with Escobar’s requirements for this type of FCA claim.” IT IS HERBY ORDERED that the petition for panel rehearing and rehearing en banc is DENIED. IT IS FURTHER ORDERED that this court’s opinion issued August 19, 2021, is amended as indicated in this order in a separately filed opinion issued November 15, 2021.

Petition denied
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7^th Circuit Court of Appeals

Case Name: Samuel Moreland v. Cheryl Eplett, Warden

Case No.: 20-1600

Officials: BRENNAN, SCUDDER, and St. Eve, Circuit Judges.

Focus: Habeas Relief – Equitable Tolling

Samuel Moreland argues his federal habeas corpus petition was erroneously dismissed when the district court concluded that the petition was time barred and circumstances did not warrant equitable tolling. But Moreland’s arguments either fall short of the relevant legal and equitable standards or fall outside the scope of the certificate of appealability. So, we affirm the district court’s denial of habeas relief.

Affirmed
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7^th Circuit Court of Appeals

Case Name: Beth A. Sweet v. Town of Bargersville, et al.,

Case No.: 20-2061

Officials: SYKES, Chief Judge, and BRENNAN and ST. EVE, Circuit Judges.

Focus: Prima Facie – 1^st Amendment Violation – Retaliation Claim

After a steady buildup of performance problems, Beth Sweet lost her job as a customer-service representative in the clerk-treasurer’s office in the Town of Bargersville, Indiana. Several months before she was fired, Sweet criticized Steve Longstreet, the elected clerk-treasurer, for reconnecting the utility service of a delinquent customer who happened to be Longstreet’s wealthy business partner. Sweet contends that she was fired for vocalizing her opposition to the reconnection, so she sued Longstreet and the Town alleging a claim of retaliation in violation of her First Amendment right to freedom of speech. Her evidence in support of retaliatory motive is paltry—“suspicious timing” in the form of a five-month gap between her criticism and the termination of her employment; an ambiguous affidavit from a fellow employee; and the fact that her former employer offered several reasons for her termination rather than a single, consistent explanation. The district court held that Sweet failed to establish a prima facie case of retaliation and entered summary judgment for the defendants. We affirm.

Affirmed
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7^th Circuit Court of Appeals

Case Name: Joel M. Reinebold v. Steve Bruce, et al.,

Case No.: 21-1092

Officials: KANNE, ROVNER, and WOOD, Circuit Judges.

Focus: ADEA Violation

Joel Reinebold applied to be the head baseball coach of Indiana University South Bend (“IUSB”). After IUSB declined to hire Reinebold, he sued IUSB, Athletic Director Steve Bruce, and Assistant Athletic Director Tom Norris under the Age Discrimination in Employment Act (“ADEA”) and 42 U.S.C. § 1983. The district court dismissed all of Reinebold’s claims with his concession except for his § 1983 claims against Bruce and Norris in their individual capacities. Bruce and Norris then moved for summary judgment on the remaining claims. The district court ruled in favor of Bruce and Norris, granting them summary judgment on both claims because Reinebold did not identify a suitable comparator and did not show that he was intentionally treated differently because of his age. We agree with the district court and therefore affirm.

Affirmed
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7^th Circuit Court of Appeals

Case Name: United States of America v. Juan Zamudio

Case No.: 20-3016

Officials: KANNE, HAMILTON, and ST. EVE, Circuit Judges.

Focus: Sentencing Guidelines – Enhancement

Following an investigation of an Indianapolis‐based drug trafficking organization, the government secured a warrant to search Juan Zamudio’s residence, where they found large amounts of methamphetamine, a digital scale, and a loaded firearm. Zamudio pled guilty to two drug‐related offenses and was sentenced to 300 months’ imprisonment. Zamudio now challenges three aspects of his sentence: the district court’s calculation of his base offense level based on the amount of drugs attributed to him; the court’s application of a 2‐level firearm enhancement; and the court’s application of a 2‐level enhancement for maintaining a drug premises. We affirm the judgment of the district court on each of these issues.

Affirm
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7^th Circuit Court of Appeals

Case Name: United States of America v. Ya Yang

Case No.: 21-1059

Officials: SCUDDER, KIRSCH, and JACKSON-AKIWUMI, Circuit Judges.

Focus: Sentencing Guidelines

Ya Yang appeals his below-guidelines sentence, arguing that the district court erred because it considered an audio file at sentencing that was not publicly available on the court’s electronic docket. Finding no merit in that argument, we affirm.

Affirmed
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7^th Circuit Court of Appeals

Case Name: United Stats of America v. Thomas J. Owens

Case No.: 20-3189

Officials: FLAUM, KANNE, and SCUDDER, Circuit Judges.

Focus: Court Error – Abuse of Discretion

It is criminal “distribut[ion]” of child pornography within the meaning of 18 U.S.C. § 2252(a)(2) to knowingly make a file containing child pornography available for others to access and download via a peer-to-peer filesharing network. See United States v. Ryan, 885 F.3d 449, 453 (7th Cir. 2018). The government has developed an investigative practice where it employs a confidential software program to participate in the peer-to-peer network and detect and download child pornography files shared therein. Once a file is downloaded and its illicit contents verified, the government ascertains the IP address of the sharing user, contacts the Internet service provider to identify the residence associated with the IP address, obtains a search warrant, and seizes the suspect’s electronics. Often, the downloaded file is then located on the suspect’s device, and the government can verify that the file was indeed made available for downloading. Yet sometimes the file cannot be located on the device or there are questions about the defendant’s sharing settings.

In the case before us now, Thomas Owens was arrested and charged with the distribution and possession of child pornography after a government investigator used such a program, Torrential Downpour Receptor (“TDR”), to download a video file containing child pornography from a folder shared via the BitTorrent network at an IP address later associated with Owens. Nonetheless, a forensic search of Owens’s computer at the time he was arrested failed to locate the file on his computer. Owens moved to compel the production of information relating to the government’s download of the file pursuant to Federal Rule of Criminal Procedure 16. The district court held an evidentiary hearing and denied the motion; Owens now appeals that decision after entering a guilty plea preserving that right.

Given that we review a district court’s Rule 16 decision only for abuse of discretion, we reverse only if a defendant can demonstrate that the pretrial disclosure of the disputed evidence would have enabled the defendant “to substantially alter the quantum of proof in his favor.” United States v. Orzechowski, 547 F.2d 978, 984–85 (7th Cir. 1976) (quoting United States v. Marshall, 532 F.2d 1279, 1285 (9th Cir. 1976)). Because Owens falls short of meeting that burden, we affirm.

Affirmed
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WI Court of Appeals Digests

WI Court of Appeals – District I

Case Name: State of Wisconsin v. Lamont Donnell Sholar

Case No.: 2019AP1636

Officials: Donald, P.J., Dugan and White, JJ.

Focus: Postconviction Relief – Evidentiary Hearing

Lamont Donnell Sholar, pro se, appeals his judgment of conviction for five counts related to sex trafficking and the circuit court order denying his motion for postconviction relief without a hearing. Sholar requested an evidentiary hearing on his claim of ineffective assistance of postconviction counsel for failing to pursue claims of ineffective assistance of trial counsel based on the failure to move to suppress hotel room evidence and failure to investigate a cell phone the alleged victim gave the police. Sholar fails to show that his claims now are clearly stronger than the claims pursued by postconviction counsel; therefore, his claims do not overcome the procedural bar for successive postconviction motions. Accordingly, we affirm.

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WI Court of Appeals – District I

Case Name: State of Wisconsin v. Roman T. Wise

Case No.: 2020AP1756-CR

Officials: Brash, C.J., Donald, P.J., and Dugan, J.

Focus: Ineffective Assistance of Counsel

Roman T. Wise appeals from a judgment of conviction for four counts of fleeing or eluding an officer and an order of the postconviction court denying, without a hearing, his motion seeking to vacate three of his convictions on the basis that he received ineffective assistance of counsel. On appeal, Wise again argues that he received ineffective assistance of counsel when his trial counsel failed to seek the dismissal of three of his four charges on the grounds that they were multiplicitous. Upon review, we conclude that they are not. The charges are different in law and fact, and Wise has failed to overcome the presumption that the legislature intended for multiple punishments. Thus, for the reasons set forth below, we affirm.

Recommended for Publication

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WI Court of Appeals – District II

Case Name: State of Wisconsin v. Alex Scott Stone

Case No.: 2020AP1661

Officials: Neubauer, Reilly and Grogan, JJ.

Focus: Abuse of Discretion – Restitution

Alex Scott Stone appeals from an order requiring him to pay restitution of $6,008.60 to the victim, M.S. Stone claims the circuit court erroneously exercised its discretion in making the restitution award either in misinterpreting WIS. STAT. § 973.20 (2017-18)2 or because Stone did not have the ability to pay. We affirm.

Recommended for Publication

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WI Court of Appeals – District IV

Case Name: Joan Scalcucci, et al., v. County of Dane and City of Madison

Case No.: 2020AP937

Officials: Kloppenburg, Fitzpatrick, and Nashold, JJ.

Focus: Court Error – Abuse of Discretion

Joan and Rick Scalcucci appeal a summary judgment order dismissing their personal injury suit against the City of Madison and the County of Dane (collectively, “the Municipalities”). We conclude that the Municipalities are immune from suit under WIS. STAT. § 893.80(4) (2019-20).  We further conclude that the circuit court did not erroneously exercise its discretion by not permitting the Scalcuccis to amend their pleadings. Accordingly, we affirm.

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WI Court of Appeals – District IV

Case Name: State of Wisconsin v. Carl Lee McAdory

Case No.: 2020AP2001-CR

Officials: Blanchard, P.J., Fitzpatrick, and Graham, JJ.

Focus: Sufficiency of Evidence

A jury found Carl McAdory guilty of two driving-related offenses after hearing evidence that a chemical test of a sample of his blood, drawn after he was arrested following a traffic stop, showed the presence of cocaine and marijuana. The two driving-related offenses were operating a motor vehicle while intoxicated, in violation of WIS. STAT. § 346.63(1)(a) (2019-20) (which we refer to as “the impaired-by-drugs offense”), and operating with a restricted controlled substance, in violation of § 346.63(1)(am) (which we refer to as “the strict-liability offense”). Under the statutory dual prosecution scheme, in this situation there can be only one conviction, not two. See § 346.63(1)(c). After the trial, the State elected to move to dismiss the strict-liability offense, and the circuit court entered a conviction on the impaired-by-drugs offense and proceeded to sentencing.

We address two arguments that McAdory makes on appeal challenging his conviction on the impaired-by-drugs offense. First, he argues that the evidence at trial was insufficient to sustain the conviction. We conclude that the evidence was sufficient. Second, McAdory makes a due process argument based on the following facts: the prosecution misled the jury in its opening statement and closing argument about what the State had to show to prove that he was “under the influence,” one element of the impaired-by-drugs offense, and there was no direct correction of these misleading statements; the evidence was weak that McAdory operated his car while he was under the influence of cocaine and marijuana; and, over the defense attorney’s objection, the circuit court modified the pattern jury instruction for the impaired-by-drugs offense in a manner that created ambiguity regarding the “under the influence” element. We conclude that when these trial events are considered together there is a reasonable likelihood that the State was effectively relieved of its burden to prove that McAdory was “under the influence” of cocaine and marijuana while driving. Based on this violation of his right to due process of law, we reverse and remand for a new trial on the impaired-by-drugs offense.

Recommended for Publication

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WI Court of Appeals – District III

Case Name: Marathon County Department of Human Services

Case No.: 2021AP1124; 2021AP1125

Officials: STARK, P.J.

Focus: Termination of Parental Rights

Sarah appeals from orders terminating her parental rights to her two daughters, Nora and Abby, based upon her failure to assume parental responsibility for them. Sarah argues that there are genuine issues of material fact and competing reasonable inferences as to whether she had a substantial relationship with her children. She asserts that the circuit court therefore erred by granting partial summary judgment to the Marathon County Department of Human Services (the County) and finding her unfit during the grounds phase of these termination of parental rights (TPR) proceedings.

We conclude that when viewed in the light most favorable to Sarah, there are competing material and reasonable inferences that can be drawn from the undisputed facts as to whether Sarah had a substantial relationship with her daughters, rendering summary judgment improper. Accordingly, we reverse the orders terminating Sarah’s parental rights to Nora and Abby, and we remand for the circuit court to conduct a jury trial on the grounds phase of the TPR proceedings.

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WI Supreme Court Digests

WI Supreme Court

Case Name: State of Wisconsin v. Cesar Antonio Lira

Case No.: 2021 WI 81

Focus: Sentence Credit

This is a review of an unpublished decision of the court of appeals, State v. Lira, Nos. 2019AP691-CR & 2019AP692-CR, unpublished slip op. (Wis. Ct. App. Sep. 29, 2020), affirming in part and reversing in part the Milwaukee County circuit court’s order denying Cesar Antonio Lira’s motion for sentence credit. Lira argues that he is entitled to sentence credit against his 1992 and 1999 sentences for time he spent incarcerated in Oklahoma between 2006 and 2017. According to Lira, he was “made available” to Oklahoma and, under Wis. Stat. § 973.15(5) (2017- 18), he is entitled to credit for time served. In addition, Lira claims that under Wis. Stat. §§ 304.072(5) and 973.155,4 he must receive credit for time he spent detained in Wisconsin and Texas from 2005 to 2006.

Both Wis. Stat. §§ 973.15(5) and 304.072(5) incorporate Wisconsin’s foundational sentence-credit statute, Wis. Stat. § 973.155, and under § 973.155, Lira is not entitled to credit. Neither his incarceration in Oklahoma between 2006 and 2017 nor his detention in Wisconsin and Texas between 2005 and 2006 were “in connection with the course of conduct for which [the 1992 and 1999 sentences were] imposed.” § 973.155(1)(a). Thus, we reverse the court of appeals and conclude that Lira is not entitled to sentence credit.

Reversed

Concur:

Dissent:
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