On July 5, 2017, Dr. Mayura Kanekar was indicted by a grand jury in New York for federal healthcare fraud.

Kanekar was charged with conspiracy to commit health care fraud in violation of 18 U.S.C. § 1349, and conspiracy to defraud by obstructing the lawful function of the Internal Revenue Service in violation of 18 U.S.C. § 371. On June 20, 2018, a grand jury returned a superseding indictment charging Kanekar with the following additional charges: conspiracy to pay healthcare kickbacks, in violation of 18 U.S.C. § 371; money laundering conspiracy in violation of 18 U.S.C. § 1956(h); subscribing to a false and fraudulent tax return in violation of 26 U.S.C. § 7206(1), and two counts of submitting false claims in violation of 18 U.S.C. § 287.

On June 13, 2022, after two weeks in trial, a jury found Kanekar not guilty. And her two co-defendants were also found not guilty. A positive outcome for her.

Kanekar filed a motion pursuant to the Hyde Amendment (more on that shortly) to be reimbursed for attorneys’ fees and other litigation expenses.

How much? $845,750.

On June 29, 2023, a judge denied Dr. Kanekar’s request. Freedom will have to be good enough.

What did the prosecution allege:

First, the “kickback scheme,” in which Kanekar purportedly paid the managers of the clinic in which Kanekar maintained an occupational therapy practice, in order to provide patients to Kanekar in exchange for payments; and second, the “false claims scheme,” in which Kanekar allegedly submitted fraudulent claims to Medicare using her unique national provider identifier number during periods when she was out of the country. The evidence introduced by the prosecution showed that from April 2010 through June 2016, Kanekar, through two companies owned by her, billed nearly $35 million to Medicare, and received $15 million from Medicare in return.

That was no trivial allegation.

In 1997, Congress passed the Hyde Amendment which allows district courts to award a prevailing criminal defendant, “a reasonable attorney’s fee and other litigation expenses, where the court finds that the position of the United States was vexatious, frivolous, or in bad faith, unless the court finds that special circumstances make such an award unjust.”

This is a tough climb.

“For the government’s position to be ‘vexatious, frivolous, or in bad faith,’ the prosecution must have been brought (a) to hector or intimidate the defendant on shaky factual or legal grounds (vexatious); (b) without even a reasonably arguable factual and legal basis (frivolous); or (c) with an element of intentional deceit or dishonesty (in bad faith).” Id. at 608-09; see also id. at 609 n.12 (summarizing the legislative history of the Hyde Amendment as discussed at length in United States v. Gilbert, 198 F.3d 1293 (11th Cir. 1999)).

“Vexatious” means: “[w]ithout reasonable or probable cause or excuse.” A “frivolous” pleading is one that is “clearly insufficient on its face,” a “frivolous” claim as one for which its proponent “can present no rational argument based upon the evidence or law in support of that claim,” and “bad faith” is “not simply bad judgment or negligence, but rather the conscious doing of a wrong because of dishonest purpose of moral obliquity.”

As the court noted:

Thus, the standard for awarding attorneys’ fees under the Hyde Amendment is “intentionally demanding.” Bove, 888 F.3d at 609 n.12; accord United States v. Reyes-Romero, 959 F.3d 80, 92 (3d Cir. 2020) (“[A] criminal defendant seeking costs and fees under the Hyde Amendment faces a ‘daunting obstacle.’”) (quoting United States v. Isaiah, 434 F.3d 513, 519 (6th Cir. 2006)); United States v. Manchester Farming P’ship, 315 F.3d 1176, 1184 (9th Cir. 2003) (remarking that the policy reason for the Hyde Amendment is “to protect defendants from outlandish Government prosecutorial misconduct” (emphasis added)). “An acquittal, without more, will not lead to a successful Hyde Amendment claim, as it was Congress’s intent to ‘limit Hyde Amendment awards to cases of affirmative prosecutorial misconduct rather than simply any prosecution which failed.’” Schneider, 395 F.3d at 88 (quoting United States v. Knott, 256 F.3d 20, 29 (1st Cir. 2001)). Nor is a 6 motion for attorneys’ fees under the Hyde Amendment “an exercise in 20/20 hindsight,” as “[t]he trial process is fluid and involves multiple strategic and evidentiary decisions, many of which cannot be predicted at the outset, and many of which depend on contested evidentiary and other trial rulings—not to mention the uncertainties associated with witnesses’ testimony.” Schneider, 395 F.3d at 87-88 (quoting United States v. Sherburne, 249 F.3d 1121, 1127 (9th Cir. 2001)). Therefore, “trivial instances of offending conduct” do not suffice to justify an award of fees under the Hyde Amendment; rather, the vexatious, frivolous, or bad faith conduct must be “substantial or significant.” Schneider, 395 F.3d at 90.

The judge ruled against Kanekar’s claim for lawyers’ fees. The judge noted that the prosecution’s claims were not vexatious, frivolous, or in bad faith.

The indictment charging Kanekar and her codefendants was just one part of a wide-ranging and sophisticated criminal scheme occurring over the course of years involving over a dozen defendants defrauding government healthcare programs of tens of millions of dollars.

The judge distilled Kanekar’s claims as follows:

In my assessment of the evidence presented at Kanekar’s trial, insofar as there may have been some weakness in the prosecution’s case, it amounted simply to its failure to convince the jury beyond a reasonable doubt that the defendants, including Kanekar, knew either that the employees or other agents they paid to manage their clinics were paying patients to come to those clinics for health services, or that it was illegal to pay the managers to refer them patients (even if the managers did not pay the patients).

In other words, the judge was not persuaded.

In effect, then, Kanekar’s motion is premised on the faulty conclusion that the government should have (or did) know Kanekar’s state of mind. Indeed, had the defendants waived their right to a jury and elected to proceed with a bench trial before me in this case, I would have found them guilty in light of the evidence establishing their knowing involvement in the underlying fraudulent schemes.

The judge seemed to believe that Kanekar should have kissed the ground because the jury allowed her to walk free. That would have to suffice. The fees paid to her lawyers apparently was her price for freedom. The Hyde Amendment would be of no help.

One of Kanekar’s arguments was that her billing company was the bad actor. And she was innocent.

The judge’s response:

To the extent that Kanekar had authorized Brunswick Billing to submit claims on her behalf, Kanekar was nevertheless obliged to submit accurate bills. Indeed, Kanekar understood that electronic billing using her personal and unique national provider identification number reflected her “legal electronic signature[,] and constitute[d] an assurance by the provider that the services were performed as billed,” and that Kanekar was “responsible for all Medicare claims submitted.” GX 1401. And the trial evidence demonstrated that the claims at issue were submitted under Kanekar’s national provider identical number during periods when Kanekar was traveling out of the country.

Three take home points:

If you have a bad billing company, odds are high you will be one of multiple defendants. Burying your head in the ground with willful blindness is not a great defense. Here, Kanekar got lucky.

Next, the Hyde Amendment was put in place as a remedy for prosecutorial misconduct. Prosecutorial misconduct, as articulated in the Hyde Amendment, is not common. The threshold for proving such misconduct is high. Here, Kanekar was unable to meet that threshold. Most criminal defendants exonerated at trial will likewise be unable to meet that threshold.

Finally, criminal defense lawyers are not inexpensive. But when your freedom is on the line, that is not the time to go cheap.

What do you think?

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Jeffrey Segal, MD, JD

Chief Executive Officer and Founder

Dr. Jeffrey Segal, Chief Executive Officer and Founder of Medical Justice, is a board-certified neurosurgeon. Dr. Segal is a Fellow of the American College of Surgeons; the American College of Legal Medicine; and the American Association of Neurological Surgeons. He is also a member of the North American Spine Society. In the process of conceiving, funding, developing, and growing Medical Justice, Dr. Segal has established himself as one of the country’s leading authorities on medical malpractice issues, counterclaims, and internet-based assaults on reputation.

Dr. Segal was a practicing neurosurgeon for approximately ten years, during which time he also played an active role as a participant on various state-sanctioned medical review panels designed to decrease the incidence of meritless medical malpractice cases.

Dr. Segal holds a M.D. from Baylor College of Medicine, where he also completed a neurosurgical residency. Dr. Segal served as a Spinal Surgery Fellow at The University of South Florida Medical School. He is a member of Phi Beta Kappa as well as the AOA Medical Honor Society. Dr. Segal received his B.A. from the University of Texas and graduated with a J.D. from Concord Law School with highest honors.

In 2000, he co-founded and served as CEO of DarPharma, Inc, a biotechnology company in Chapel Hill, NC, focused on the discovery and development of first-of-class pharmaceuticals for neuropsychiatric disorders.

Dr. Segal is also a partner at Byrd Adatto, a national business and health care law firm. Byrd Adatto was selected as a Best Law Firm in the 2023 edition of the “Best Law Firms” list by U.S. News – Best Lawyers. With over 50 combined years of experience in serving doctors, dentists, and other providers, Byrd Adatto has a national pedigree to address most legal issues that arise in the business and practice of medicine.