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United States Court of Appeals
for the Fifth Circuit
____________ United States Court of Appeals
Fifth Circuit
FILED
No. 22-40617
March 20, 2024
____________
Lyle W. Cayce
United States of America, Clerk
Plaintiff—Appellee,
versus
Vincent Marchetti, Jr.,
Defendant—Appellant.
______________________________
Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 5:19-CR-25-3
______________________________
Before Smith, Graves, and Wilson, Circuit Judges.
Jerry E. Smith, Circuit Judge:
Vincent Marchetti, Jr., was convicted of one count of conspiracy to
commit illegal remunerations in violation of 18 U.S.C. § 371. He appeals that
conviction and challenges the district court’s application of the sentencing
guidelines. We affirm the conviction and sentence.
I.
Vantari Genetics LLC (“Vantari”) was a medical laboratory specializing in pharmacogenetic testing. As of 2014, its key officers included Nicholas
Arroyo (its CEO), Sean Parrish (its COO), Phillip Lamb (its CFO), and
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Shaun Opie (its CSO). Vantari operated in Irvine, California, with a distribution center in Tempe, Arizona. It billed Medicare for providing lab testing
services to Medicare beneficiaries.
Vantari’s main means of obtaining medical samples from patients was
to pay a national network of independent sales groups, or “distributors,” to
attract Medicare referrals to Vantari. Those distributors were mostly health-care professionals with established relationships with physicians; alternatively, the distributors would hire healthcare professionals who had those
established connections. Vantari would pay a distributor a percentage of the
revenue from each Medicare referral. Marchetti, who operated Advanced
Life Sciences LLC (“ALS”), was one of those distributors and had a network
of sub-distributors.
Arroyo “thought that Vantari Genetics would be one of the largest
genetic testing companies in the world. That was [his] goal.” As a part of its
growth, in the fall of 2013, Vantari engaged the law firm of Snell & Wilmer,
LLP, to “put together a road map for [legal] compliance for Vantari.” Lamb
“drove a lot of . . . internal discussions about changes” to “the way that
[Vantari] compensated people.” 1
In January 2014, Vantari agreed to pay ALS 35% of the business it
received from ALS’s referrals. That roughly coincided with growing concern
about the legality of Vantari’s method of compensating its distributors.
In the meantime, while Arroyo and Parrish were in California “running the operation a hundred percent of the time,” Lamb and Opie “were
working remotely.” Arroyo and Parish grew “frustrated by the fact that
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1
Arroyo testified that Lamb joined the company “in early 2014.” This appears to
be slightly inaccurate, as Lamb was communicating with Snell & Wilmer on behalf of
Vantari as early as September 2013.
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[Vantari was] generating all this revenue, and people like Phil Lamb are
partners, and Shaun Opie, our other partner, were sitting in Scottsdale,
Arizona, in their—you know, in his $5 million mansion just hanging out all
day long.”
At some point, presumably between January and July 2014, Arroyo
and Parrish formed a new entity called KNM Global. In July 2014, they
agreed with Marchetti to increase the percentage Vantari paid ALS to 50%.
In exchange, ALS would pass 5% back to KNM Global. That same month,
Snell & Wilmer expressed concerns about the legality of Vantari’s existing
compensation scheme.
Arroyo regularly spoke to Marchetti about issues concerning the payment scheme. In July 2014, Marchetti proposed restructuring the contract.
Vantari discussed possible changes to the compensation structure with Snell
& Wilmer. Vantari ultimately adopted a model that would pay ALS a percentage “net collected non-federal reimbursements” plus a fixed amount per
month per “active” representative. 2 That agreement allowed ALS to hire
“contractor representative[s]” who would, inter alia, “[i]ntroduce and market the Vantari brand to the physician community.”
Arroyo assured Marchetti that there were ways to achieve the same
levels of compensation as before the switch, “whether it was to increase the
compensation on the commercial side of the business, whether it was to give
them a heads up in terms of how many people that they needed to have
actively working under the organizations to hit certain metrics, whether it
was a form of bonus.” And around September, Vantari paid ALS a $75,000
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2
The exact percentages and fixed amounts at any given point are unclear. One
contract, signed by Marchetti on September 2, 2014, says 50% but $0 fixed. A later contract
signed September 1, 2015, 47.5% and $3,000 fixed.
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bonus.
Ultimately, Vantari established a system that would yield ALS what
was being paid under the old system by giving the distributor the data needed
to fabricate a sufficient number of reports to justify the payment. ALS engaged in this practice. In one instance, ALS submitted reports indicating
activity from Drs. Chipotle, Lettuce, McDonald, Carl’s, Burger, and King. 3
In other instances, it appears that ALS submitted reports artificially multiplying the activity of a single representative.
At least as early as 2015, “Parrish was extremely concerned that [his
and Arroyo’s] partners would start to catch on,” so he created CodonDx
(“Codon”), a limited liability partnership, as a “furtherance . . . of what
KNM Global originally was.” Codon was run by Adam Matz, a friend of
Parrish’s. Matz “was placed to artificially buffer us from any kind of feedback or anything that would come to the company from an outside source,
whether that be our partners, whether it be a regulatory body, whether it be
a legal problem.” Matz understood the company “to be a sales and marketing company.” It would also “manage and be lab consultants.”
Codon served as an “independent sales representative organization[]” for a competing lab called Althea. Codon got paid directly by Althea.
Codon, in turn, had an agreement with ALS “to pay them 40 percent commission on each reimbursable assay that pays over $200.”
Now servicing two labs, Marchetti expressed concern about the difficulty of using two distinct test swabs and asked Arroyo whether something
could be done. Arroyo said that was something he “ha[d] the power to
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3
Marchetti contends that (1) a colleague generated the report, and he merely negligently rubber-stamped it, and (2) the report was never submitted for federal business.
Resolving those contentions is not important to the resolution of this case.
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control” and suggested Vantari could “validate Althea’s sampling device for
Vantari’s tests and utilize the sampling device for both laboratories essentially.” There was also a “logistical challenge[] associated with where does
it go to . . . does it go to [Althea], or does it go to [Vantari]?” That led to mixups in shipments. So Arroyo ended up diverting some of the shipments,
based on which physician’s practice it came from, to Vantari’s distribution
center in Tempe instead of sending them right to Irvine.
Which doctors’ practices got rerouted was based on “the book of
business that [Arroyo] . . . intend[ed] to send to Althea.” A substantial number of the practices whose samples were diverted were associated with ALS.
That diversion was effected by Jessica Conn, Codon’s sole employee and
Arroyo’s girlfriend. She would transcribe orders between prescription pads
for the two laboratories. Marchetti would visit the distribution center in
Tempe with some regularity and on at least one occasion left a gift card for
Conn because “she was doing a great job.”
In March 2015, Lamb sent an e-mail to Parrish, Marchetti, and
another person not relevant here, substantiating his concerns about the legality of Vantari’s payment scheme. This appears to be a part of a more extended dialogue among Lamb, Marchetti, and other stakeholders about the
legality of the payment scheme. In October 2015, Lamb tried to convince
Marchetti to adopt a W-2 model instead. After that conversation, Arroyo
told Lamb to “butt out.” Even so, Lamb warned Marchetti at least one more
time in a conversation after November 2015.
In all, Vantari paid ALS over $2 million related to federal healthcare
program referrals.
At trial, the government laid out the facts above. It also introduced
fraud alerts and advisory opinions from the Department of Health and
Human Services’s Office of Inspector General (“HHS-OIG”).
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Marchetti was convicted of one count of conspiracy, 18 U.S.C. § 371,
to commit a violation of the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b).
Subsections 1320a-7b(b)(1)(A) and (B) make it a crime for a person knowingly and willfully to solicit or receive kickbacks, bribes, or illegal remuneration
in return for a referral for services, or in return for arranging for the furnishing
or recommending the ordering of items or services under a federal health care
program. Subsections (b)(2)(A) and (B) make it a crime for a person knowingly and willfully to offer or pay kickbacks, bribes, or illegal remuneration to
induce referral for services, or to induce arranging for the furnishing or recommending the ordering of items or services under a federal health care
program.
Marchetti was sentenced to forty-eight months’ imprisonment and
two years of supervised release. He appeals his conviction and sentencing on
five grounds: (1) whether the government proffered sufficient evidence to
sustain the conviction, (2) whether the district court abused its discretion in
failing to submit Marchetti’s theory of the defense instruction, (3) whether
the court abused its discretion by purportedly constructively amending the
indictment, (4) whether Marchetti is entitled to a new trial for cumulative
error, and (5) whether the court imposed an unreasonable sentence based on
an incorrect application of the guidelines. We reject Marchetti’s challenges
and affirm his conviction and sentence.
II.
First, we examine whether Marchetti has shown the evidence is insufficient to support the conviction.
A.
“Where, as here, a defendant has timely moved for a judgment of
acquittal, this court reviews challenges to the sufficiency of the evidence de
novo.” United States v. Nicholson, 961 F.3d 328, 338 (5th Cir. 2020) (citation
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omitted). “Though de novo, this review is nevertheless highly deferential to
the verdict.” Id. (quoting United States v. Tinghui Xie,
942 F.3d 228, 234
(5th Cir. 2019)). “Because of the shortcomings inherent in examining a ‘cold
appellate record without the benefit of the dramatic insights gained from
watching the trial,’ we review the ‘evidence and all reasonable inferences in
the light most favorable to the prosecution’ and to determine whether ‘any
rational trier of fact could have found the essential elements of the crime
beyond a reasonable doubt.’”
Id. (quoting United States v. Vargas-Ocampo,
747 F.3d 299, 301, 303 (5th Cir. 2014) (en banc)).
To convict Marchetti under § 371, the government must prove:
(1) an agreement between two or more persons to pursue [the]
unlawful objective; (2) the defendant’s knowledge of the unlawful objective and voluntary agreement to join the conspiracy; and (3) an overt act by one or more of the members of the
conspiracy in furtherance of the objective of the conspiracy.
United States v. Barnes, 979 F.3d 283, 295 (5th Cir. 2020) (alteration in
original) (internal quotation marks and citations omitted).
The government offered in its indictment, and now on appeal, two
possible unlawful objectives, namely, violation of either 42 U.S.C. § 1320a-
7b(b)(1)(A)-(B) or 42 U.S.C. § 1320a-7b(b)(2)(A)-(B). Subsection (b)(1)
prohibits, inter alia, “knowingly and willfully solicit[ing] or receiv[ing] any
remuneration . . . in return for referring an individual to a person for the furnishing . . . of any . . . service for which payment may be made . . . under a
Federal health care program.” (Emphasis added.) Subsection (b)(2) prohibits, inter alia, “knowingly and willfully offer[ring] or pay[ing] any remuneration . . . to any person to induce such person . . . to refer an individual to a
person for the furnishing . . . of any . . . service for which payment may be
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made . . . under a Federal health care program.” (Emphasis added.) 4
Although the bulk of Marchetti’s conduct was undoubtedly sketchy
and maybe even criminal, it was not, by and large, a violation of the Anti-Kickback Statute. But because Marchetti’s conduct surrounding Codon is
sufficient to prove that he committed an Anti-Kickback violation, we affirm
the conviction.
B.
Marchetti challenges each prong of the requirement under Barnes. On
the first prong, Marchetti contends that there was no “unlawful objective”
at issue here. Barnes, 979 F.3d at 295 (cleaned up). Although Marchetti is
right that much of his conduct does not implicate the AKS, his conduct
involving the redirection of referrals to Codon was an “unlawful objective”
and violated the AKS.
Miles is this court’s seminal case reversing an AKS conviction on sufficiency. We found that the following scheme did not violate the AKS:
(1) Premier Public Relations (“PPR”) distributed information about
Affiliated Professional Home Health (“APRO”) which provides
home health services.
(2) This included distribution to “local medical offices.”
(3) “When a physician determined that home health care services were
needed for a patient, the physician’s office might contact” PPR.
(4) If so, PPR gave APRO the patient’s information for billing purposes.
(5) APRO pays PPR per client gained.
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4
For some reason, Marchetti cites only (b)(1) when describing the indictment. But
at least some of the cases he mentions interpret (b)(2) rather than (b)(1). See, e.g., United
States v. Miles, 360 F.3d 472 (5th Cir. 2004). The absence of an explicit distinction muddles
his argument.
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Miles, 360 F.3d 479. Our court reversed the APRO owners’ convictions
under the AKS.
Id. at 474.
A major factor in Miles is that “[t]he payments . . . were not made to
the relevant decisionmaker.” Id. at 480. We carefully explained when “nondoctors would fall within the scope of the statute.”
Id. We pointed to a case
in which
(1) A “pacemaker monitor service made payments to a [salesman] based
on the number of patients that he signed up with the service.” Id.
(citing United States v. Polin, 194 F.3d 863, 864–65 (7th Cir. 1999)).
(2) “The salesman’s responsibilities included selling pacemakers, attending implant procedures, and making sure that patients were monitored
following implantation.” Id.
(3) That salesman “[made] the decision as to which service provider to
contact for [a] patient.” Id.
(4) The salesman “had never been overruled in the course of his fourteenyear career.”
Id.
The government responds that our court has walked back Miles, citing
United States v. Shoemaker, 746 F.3d 614, 628 (5th Cir. 2014). The scheme
found unlawful in Shoemaker was as follows:
(1) Tri-Lakes Medical Center (“TLMC”) is a local hospital.
(2) On-Call Staffing (“OCS”) provides nursing services.
(3) The chairman of TLMC’s board of trustees asks the owner of OCS
to pay him per hour of nursing OCS billed at TLMC.
(4) In exchange, the chairman would encourage the usage of OCS by
lobbying the COO.
(5) TLMC’s COO shortly thereafter got a raise from TLMC’s chairman
and began being compensated more directly by OCS’s owner.
In Shoemaker, we concluded that this scheme violated the AKS. Id.
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at 616. 5 The court also distinguished Miles:
Thus, Miles drew a distinction not between types of
payees—“relevant decisionmakers” and others—but between
a payer’s intent to induce “referrals,” which is illegal, and the
intent to compensate advertisers, which is permissible. Moreover, the factual and procedural context of that case constrained our holding. Miles accordingly stands for a narrow
legal proposition: Where advertising facilitates an independent
decision to purchase a healthcare good or service, and where
there is no evidence that the advertiser “unduly influence[s]”
or “act[s] on behalf of” the purchaser, the mere fact that the
good or service provider compensates the advertiser following
each purchase is insufficient to support the provider’s conviction for making a payment “to refer an individual to a person” under 42 U.S.C. § 1320a–7b(b)(2)(A). Miles, 360 F.3d
at 480.
Shoemaker,
746 F.3d at 628 (footnote omitted) (emphasis omitted). Shoemaker also distinguished Miles on the ground that in Shoemaker “advertising
services [were] not at issue.” Id. at 628–29. The court stressed that the focus
needs to be “on intent, not titles or formal authority.” Id. at 629. 6
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5
The exact procedural posture is messy because of the number of counts and separate defendants. In short, our court either affirmed the conviction of or vacated the district
court’s judgment of acquittal for TLMC’s COO and OCS’s owner pertaining to AKS
violations.
6
This is a good spot to deal with the elephant in the room. Miles is about a charge
brought under (b)(2)(A), Shoemaker is predominantly about (b)(2)(B), and Marchetti’s
case involves a conspiracy to violate (b)(1)(A), (b)(1)(B), (b)(2)(A), and (b)(2)(B). No
party makes a big enough point about this. Marchetti seems to miss the distinction entirely.
See supra note 4. And the government makes passing reference to a footnote in Miles that
notes the distinction and mentions it again in refuting Marchetti’s proposed jury
instructions.
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Although Shoemaker takes away from the focus on the identity of the
payee, our court has seemingly embraced the emphasis on “gatekeeping” in
other post-Shoemaker cases. 7 We read our caselaw as a whole to say that the
identity of the payee, while not essential, speaks to the intent of the payer. 8
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The (1)/(2) distinction appears to be purely about the direction the money is
flowing. See supra note 4 & accompanying text. The (A)/(B) distinction is trickier. The
government is right that Miles considered only (b)(2)(A) and not (b)(2)(B). The panel in
Miles explicitly left open the idea that the provisions in (b)(2)(B) might capture the conduct
in that case. See 360 F.3d at 480 n.3. Maybe payments from Vantari to ALS could be payments to “recommend purchasing” Vantari’s services. But it is unclear how much scope
this additional level of removal adds to the AKS. Shoemaker—a case about (b)(2)(B)—
leaves room for permissible advertising. See
746 F.3d at 628. Since the (A)/(B) distinction
cannot be read so broadly as to subsume permissible advertising, the government still needs
to prove something about Marchetti’s exercising undue influence on patients’ selection of
services. Shoemaker is clear about that:
[I]n paying [the chairman], [the owner of OCS] was not asking for a brochure bearing his company’s name to be distributed to TLMC staff;
rather, enough evidence showed that he wanted [the chairman] to exploit
his personal access to TLMC executives, including [the COO], and to
ensure that TLMC favored [the owner’s] company when it chose nursing
services.
Id. at 629. The structure of Vantari’s contract with ALS alone does not do that.
7
See, e.g., United States v. Cooper, 38 F.4th 428, 433 (5th Cir. 2022) (“[T]he referrer typically serves a gatekeeping role, facilitating or approving a ‘patient’s choice of
provider.’” (quoting Stop Ill. Health Care Fraud, LLC v. Sayeed,
957 F.3d 743, 749 (7th Cir.
2020)).
8
A stronger reading of Shoemaker’s cabining of Miles risks placing that panel in
direct opposition to the Miles panel. To the extent that this were the case, “the earlier
[case, Miles,] . . . controls.” Harvey v. Blake, 913 F.2d 226, 228 n.2 (5th Cir. 1990). For
example, one might read Shoemaker for the proposition that Miles is not at all about “relevant decisionmakers.”
746 F.3d at 629. That would flatly contradict Miles. Miles recounts the holding in Polin, noting, “because the salesman in Polin was the relevant decisionmaker and his judgment was shown to have been improperly influenced by the payments
he received from the monitoring service, the Seventh Circuit correctly upheld the conviction of the individuals who paid the salesman in Polin.”
360 F.3d at 481 (citations
omitted). In short, interaction with the relevant decisionmaker has to be a part of the con-
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That is, as between payment to a rancher and a doctor, it is dramatically
easier to infer intent improperly to induce medical referrals from the doctor.
The central question for us is this: Did Vantari “inten[d] to induce
‘referrals,’ which is illegal,” or did Vantari “inten[d] to compensate advertisers, which is permissible”? Shoemaker, 746 F.3d at 629.
First, we address the bulk of Marchetti’s non-Codon related activities.
The government did not produce sufficient evidence to sustain his conviction
on those grounds. The government almost exclusively leans on the fact that
Marchetti was compensated based on the “value of each referral.” But it
also admits that the compensation here was “[l]ike the fact pattern referenced in Miles.” The structure of the contract alone is not sufficient evidence
to produce a conviction under the AKS. 9
Rather, the government must have produced something more. In particular, it needed to prove that Vantari and Marchetti intended “improperly
[to] influence[],” Miles, 360 F.3d at 481, those who make healthcare decisions on behalf of patients. And that is where the government dropped the
ball. Its case connects Marchetti to Vantari and KNM Global. But it does
nothing to connect Marchetti to any referrer. It recounts undoubtedly questionable dealings to backstab co-workers and cover up the structure of payments, but nary a word about how Marchetti interacted with relevant
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sideration in evaluating violations of the AKS. Shoemaker concedes at much. See 746 F.3d
at 628.
9
It may seem as though we are collapsing (1) the distinction between conspiracy to
violate the AKS and (2) a substantive violation of it. Not so. But notably, the analysis
relevant to either crime is the same in this context. That is, for there to be “an agreement
between two or more persons to pursue [the] unlawful objective,” Barnes, 979 F.3d at 295,
there must be an “unlawful objective.” Here, that “unlawful objective” is a substantive
violation of the AKS.
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decisionmakers.
The closest the government comes to providing the missing link is its
assertion that Marchetti had “relationships with, access to, and influence
over” doctors. The first two prongs of this triptych broaden the scope of the
AKS beyond what it can bear. It would allow payments to an advertising
agency, just not an agency that hires marketers with experience in the
industry. That would be a counterintuitive outcome.
The final prong identifies the relevant inquiry. If Marchetti “improperly influenced” doctors, this case is open and shut. But the government
does not provide a drop of color as to what Marchetti’s influence looked like.
Plainly, not every sort of influence is improper. (What are advertisers hired
to do anyway?) Ultimately, the government fell short in providing any detail
on the key relationship: the relationship between Marchetti and relevant
decisionmakers. For a rational trier of fact to find a violation of the AKS, the
government needs to provide some evidence that this relationship was more
like the relationship in Shoemaker and less like the one in Miles.
Next we turn to Codon. Marchetti’s conduct related to Codon was
categorically different. The Codon scheme is much more like the hypothetical that Miles explicitly said would constitute an AKS violation: Medical
service provider pays salesman, salesman makes choice about service provider, salesman is never overruled. Miles, 360 F.3d at 480.
To the same effect: Vantari pays Marchetti, Marchetti is part of a
scheme that selects service provider for patient, that selection is apparently
never overruled—because it seems to have been hidden from the patients and
providers. In short, there is enough evidence that, in the context of the
Codon scheme, Marchetti might have been the relevant decisionmaker. And
he was being compensated per referral. That is a substantive AKS violation.
Recall, Marchetti motivated Vantari to align its swab-related protocols
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with Althea’s to streamline the process of servicing both. And that a substantial number of the practices whose samples were diverted were associated with Marchetti’s company. And that Marchetti would visit the distribution center in Tempe with some regularity. And that on at least one occasion he left a gift card for Conn, the person physically transcribing prescriptions between labs, because “she was doing a great job.” The bar for sufficiency is low, and when the government fails to clear it, it is often because it
focused on the wrong inquiry. A rational trier of fact could infer, from the
evidence presented, that Marchetti was sufficiently aware of and actively participating in the Codon scheme so as to be liable for an AKS violation. 10
C.
Next Marchetti avers that he lacked knowledge of the wrongdoing. A
violation of the AKS requires that the defendant know that his actions were
unlawful. United States v. Nora, 988 F.3d 823, 830 (5th Cir. 2021).
Marchetti’s theory rests on his understanding of Nora, in which we
reversed a conviction of an office manager whose role included
• coordinating patient intake,
• fielding calls from referrers of new patients,
• collecting patient information,
• assigning a field nurse,
• data entry.
See id. at 826–27. “There was abundant evidence at trial showing that Nora
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10
The government inexplicably buries the lede. It was not until oral argument that
Codon became a prominent part of their sufficiency-of-the-evidence argument. We may
still affirm Marchetti’s sentence because (1) while not as prominent, the government does
refer to the Codon scheme in its sufficiency arguments and, perhaps more importantly,
(2) the burden falls on Marchetti to demonstrate that the evidence was insufficient, see
United States v. Moreno-Gonzalez, 662 F.3d 369, 372–73 (5th Cir. 2011).
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was involved in processing . . . payments and that he knew they were for
patient referrals.” Id. at 827. But since “the evidence did not prove that
Nora understood [the] various practices and schemes to be fraudulent or
unlawful,” the evidence was insufficient to sustain Nora’s conviction of conspiracy to violate the AKS. Id. at 831.
Unfortunately for Marchetti, he is no Jonathon Nora. He was not just
a low-level administrative employee caught up unknowingly in somebody
else’s conspiracy. There is sufficient evidence to infer that Marchetti was
put on notice that Lamb thought the scheme violated the AKS, was experienced in the healthcare field, and engaged in suspicious activities that allowed
the jury to infer he was aware of unlawfulness, e.g., generating fake activity
reports to attempt to disguise percentage-based compensation as something
else and discussing compensation related issues personal e-mail address to
personal e-mail address.
Marchetti’s defense is that “he did not accept [Lamb’s] interpretation of the fraud alerts.” It is true that, in his conversations with Lamb, Marchetti seems to have outwardly maintained his preference for 1099s. But we
review for whether “any rational trier of fact” could make the inference that
Marchetti thought the plan was unlawful. Nicholson, 961 F.3d at 338 (emphasis added) (internal quotations marks and citation omitted). Considering all
the evidence, a rational trier of fact could infer that Marchetti knew that
redirection of referrals to Althea violated the AKS.
D.
Finally, Marchetti obliquely challenges whether he committed an
overt act in furtherance of a conspiracy. 11 He avers that “[t]he only overt
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11
We note that this was only in his statement of facts. We assume that is fine and
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acts alleged in the indictment that actually violated the AKS were committed
by parties never shown to have had a relationship with Marchetti.”
(cleaned up).
This seems, at best, circularly based on Marchetti’s theory that his
conduct did not implicate the AKS. But it did. And focusing only on the
Codon-related conduct, there is at least one glaring example of an overt act
by Marchetti to further the Codon-related diversion of referrals, namely,
suggesting the compatibilization of swabs between Vantari and Althea. He
also visited the facility where the diversions took place and rewarded the
employee who was effecting them. A rational jury could readily conclude that
Marchetti committed an overt act in relation to the Codon scheme. 12
Since Marchetti fails to show that the government provided insufficient evidence that his Codon-related conduct violated the AKS, we affirm
his conviction against his sufficiency-of-the-evidence challenge.
III.
We now turn to whether the district court abused its discretion when
it refused to submit Marchetti’s theory-of-the-case instruction.
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address the argument as properly raised. But there are reasons to believe it might not be
proper. See, e.g., McNeal v. City of Katy, 2023 U.S. App. LEXIS 30568 at *11–12 (5th Cir.
2023) (per curiam) (unpublished) (indicating that a “scant[] reference” to something in an
opening brief’s statement of facts that is then fleshed out in the reply brief constitutes
abandonment).
12
It is worth noting that the overt act need not have been committed by Marchetti.
See Pattern Jury Instructions, Criminal Cases, U.S. Fifth Circuit, District Judge
Association, No. 2.15A (2019) (requiring proof “[t]hat at least one of the conspirators
during the existence of the conspiracy knowingly committed at least one of the overt acts
described in the indictment, in order to accomplish some object or purpose of the conspiracy” (emphasis added)).
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No. 22-40617
A.
“A district court’s refusal to include a defendant’s proposed jury
instruction in the charge is reviewed under an abuse of discretion standard,
and the trial judge is afforded substantial latitude in formulating his instructions.” United States v. Daniels, 247 F.3d 598, 601 (5th Cir. 2001) (citations
and internal quotation marks omitted). “A district court abuses its discretion
in omitting a requested jury instruction only if the requested language ‘(1) is
substantively correct; (2) is not substantially covered in the charge given to
the jury; and (3) concerns an important point in the trial so that the failure to
give it seriously impairs the defendant’s ability to present effectively a particular defense.’” United States v. Lucas,
516 F.3d 316, 324 (5th Cir. 2008)
(quoting Treadaway v. Societe Anonyme Louis-Dreyfus,
894 F.2d 161, 168 (5th
Cir. 1990)). “[E]ven if we find that the district court abused its discretion,
‘a conviction [cannot] be overturned for failure to instruct the jury on a
defense unless the requested but omitted instruction has an evidentiary basis
in the record which would lead to acquittal.’” United States v. Hale,
685 F.3d
522, 541–42 (5th Cir. 2012) (quoting United States v. Spires,
79 F.3d 464, 466
(5th Cir. 1996)).
Even so, “[a] defendant is usually entitled to have the court instruct
the jury on the defense’s ‘theory of the case.’” United States v. Robinson,
700 F.2d 205, 211 (5th Cir. 1983) (citation omitted). But that entitlement is
not unlimited. See
id. Inter alia, “a defendant is not entitled to a ‘judicial
narrative of his version of the facts.’” United States v. Lance,
853 F.2d 1177,
1184 (5th Cir. 1988) (citation omitted).
B.
First, there is a threshold matter of which denial Marchetti is appealing. Marchetti (and the government) explicitly quote only one proposed
instruction:
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No. 22-40617
In this case, Mr. Marchetti’s theory of defense is that pure sales
and marketing services are permissible and lawful. If you find
that the defendant, Vincent Marchetti, Jr., was engaged in marketing and sales of PGx testing and was compensated in any
manner for performance of services and did not offer or pay or
solicit or receive remuneration to induce the referral of or arranging for the referral of PGx testing to Vantari, you must find
the defendant not guilty of conspiracy to violate the Anti-Kickback Statute.
(Hereinafter, “Instruction #1.”) But Marchetti complains about at least two
other proposed instructions that were rejected at different points in the trial.
And while later in his opening brief Marchetti refers to “Marchetti’s requested instruction” in the singular, there is no other indicium as to which
instruction he is referring to. In his reply brief, Marchetti refers in the plural
to “the omission of either of Marchetti’s theory of the case instructions.”
Sensing this lack of clarity, the government makes arguments about “Marchetti’s proposed instruction and orally requested instructions.”
The first of the other two instructions that might be appealed was a
written request for an instruction. That instruction read,
During this trial, you may hear evidence regarding Medicare healthcare program’s civil rules and regulations and opinions regarding ethical standards and standards of care for
independent laboratories, physicians, and marketing entities. I
caution you that a violation of civil statutes, rules, regulations,
ethical standards, or standards of care is not a crime. This is
not a civil case. The defendants are not on trial for a civil violation or even medical malpractice. Even if you find that a
Defendant violated the applicable civil statutes, rules, and regulations, a defendant cannot be convicted of a crime merely for
breaching civil standards, rules, regulations, ethical standards,
and standards of care applicable to his or her conduct. However, Medicare health care program’s rules and regulations,
ethical standards, and standards of care may be relevant in
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No. 22-40617
determining whether a defendant acted with criminal intent,
that is, knowingly and willfully to violate the Anti-Kickback
statute. That is how you may consider the evidence. You are
reminded that the Government must prove each element of the
offense charged beyond a reasonable doubt.
(Hereinafter, “Instruction #2.”) 13 The second was an oral request after the
trial:
We ask the Court to instruct the jury that a percentage-based
compensation structure to compensate individuals for performing sales and marketing services is not, per se, unlawful.
(Hereinafter, “Instruction #3.”)
Despite this lack of clarity, we address each in turn, stipulating that
they are all properly preserved and subject to the standard of review above.
C.
We turn to Instruction #1. The government readily has the better of
the argument on all three of the prongs in Lucas. For example, the government is correct that this instruction would require acquittal in a world where
Marchetti was guilty of conspiracy but innocent of the substantive AKS
violation. Because this makes the instruction legally erroneous, the district
court has not abused its discretion. See Lucas, 516 F.3d at 324. That alone
is sufficient. Even were it not, the government is probably right that the
instructions that were issued do not imply that percentage-based compensation structure was per se unlawful.
Instruction #2 deals with the status of the special fraud alerts. This is
where Marchetti’s arguments stemming from United States v. Christo,
_____________________
13
It is unclear, from the record, where and even whether this instruction was withheld or given. We assume arguendo that it was withheld.
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614 F.2d 486, 488 (5th Cir. 1980), are most applicable. In that case, the jury
instruction explicitly linked violations of a civil regulation to violations of the
criminal law under which the defendant was indicted. See
id. at 490–91. The
court concluded that “[a] conviction, resulting from the government’s
attempt to bootstrap a series of checking account overdrafts, a civil regulatory
violation, into an equal amount of misapplication felonies, cannot be allowed
to stand.”
Id. at 492.
But this situation is much different. First, the “non-binding Fraud
Alerts” and other complained-of pieces of evidence do not appear to be
referenced in the jury instructions, as they were in Christo. Second, they were
relevant for other legitimate purposes, such as establishing the state of mind
of the defendants. Indeed, the district court was quite careful to avoid the
confusion that occurred in Christo. Taken together, these facts make applying Christo inappropriate in this circumstance.
Nor was failing to give this instruction otherwise an abuse of discretion. The court, inter alia, gave the instruction recounted in the footnote. 14
We would be hard-pressed to say that failing to do so in a preliminary instruction “seriously impairs the defendant’s ability to present effectively a partic-
_____________________
14
The court said,
Ladies and gentlemen of the jury, I do want to provide a little bit of an
instruction. You’ve heard some evidence from the witness, and you may
hear other evidence from other witnesses, regarding civil statutes, rules
and regulations. I do want to caution you that a violation of a civil statute
or rule or regulation is not a crime. This is not a civil case, and the defendants are not on trial for a civil violation or for medical malpractice. Even
if you find that a defendant violated the applicable civil statutes, rules or
regulations, that alone in and of itself would not be a criminal violation.
However, civil statutes and rules and regulations may be relevant to determining whether a defendant acted with criminal intent. That is, knowingly and willingly or with a specific intent to violate the law, in this case
in particular, the Anti-Kickback Statute.
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No. 22-40617
ular defense.” Lucas, 516 F.3d at 324.
Instruction #3 was an oral request: “We ask the Court to instruct the
jury that a percentage-based compensation structure to compensate individuals for performing sales and marketing services is not, per se, unlawful.”
Refusing to do this was also not an abuse of discretion.
On the first prong, Marchetti is right that it is legally correct to say
that percentage-based compensation structures are not per se unlawful. Our
caselaw makes that clear. But this request fails the second prong. Although
the instructions say nothing about per se unlawfulness or percentage-based
compensation, they are quite clear that the payments have to be made in
order to induce an unlawful referral. That requires proof beyond showing
that a percentage-based compensation contract existed.
The third prong is also enough to affirm under Lucas. In closing argument, Marchetti’s defense was allowed to contend that “an arrangement
based upon activity-based can be compliant with the Anti-Kickback Statute,
and you can also have an arrangement based upon percentage of collections.”
The government promptly objected. But Marchetti’s counsel appears to
have proceeded. Lucas asks whether the instruction “concerns an important
point in the trial so that the failure to give it seriously impairs the defendant’s
ability to present effectively a particular defense.” Id. This is certainly “an
important point in the trial,” but where defense counsel appears to have been
able to argue essentially the same thing in closing, it is hard to say that failure
to give the instruction “seriously impair[ed] the defendant’s ability to
present effectively a particular defense.”
Id.
In short, the district court did not abuse its discretion in failing to give
any of Marchetti’s proposed instructions.
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No. 22-40617
IV.
Next, we ask whether the district court abused its discretion when it
submitted the government’s version of a “good faith defense” instruction.
It did not. The standard of review is the same as for the issue addressed in
Section III.
Marchetti’s requested instruction was as follows:
The good faith of a Defendant is a complete defense to the
charges of the Indictment. This is because good faith on the
part of a Defendant is inconsistent with the finding of willfulness that is required to convict a Defendant of conspiracy to
commit illegal remunerations. These laws are intended to subject to criminal punishment only those people who knowingly
and willfully act to violate the law.
A Defendant is not required to prove good faith. The Government must prove a Defendant’s knowing and willful conduct beyond a reasonable doubt. An honestly held opinion or
an honestly formed belief cannot constitute knowing and willful conduct—even if the opinion or belief is mistaken. Similarly, evidence of a mistake in judgment, an error in management, or carelessness cannot establish knowing and willful conduct. In determining whether or not the Government has met
its burden to prove that a Defendant acted knowingly and willfully, the jury must consider all of the evidence in the case bearing on a Defendant’s state of mind.
If the evidence in the case leaves the jury with a reasonable
doubt as to whether a Defendant acted in good faith, the jury
must find that Defendant not guilty.
The instruction given at trial was as follows:
If you find that a defendant acted in good faith, then he
lacked the willfulness required to prove the offense of conspiracy to commit illegal remunerations charged in Count 1. A defendant does not have to prove his good faith. Rather, the
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No. 22-40617
government must prove beyond a reasonable doubt that the defendant acted willfully as charged in Count 1.
A defendant does not act in good faith if he knowingly
made false or fraudulent representations or promises or
otherwise acted with the intent to defraud or deceive another in connection with the Anti-Kickback Statute as charged in Count 1.
(Emphasis added.)
The government first maintains that the court need not provide an
instruction on good faith defense “where the defense is substantially covered
by the charge given and the defendant has had the opportunity to argue good
faith to the jury.” The cases the government cites are not applicable, because
they deal with situations where no good faith instruction was given. 15 But
here a good faith instruction was given, and Marchetti argues it is legally
erroneous. Surely, the government’s lack of an obligation to provide a good
faith instruction in every case does not absolve it from responsibility where it
provides a legally erroneous one. In that case it would be unlikely the charge
as given would “substantially cover[]” the defense. Cf. Upton, 91 F.3d
at 683.
Marchetti takes three issues with the instructions as given. First, he
objects to the “otherwise acted with the intent to defraud or deceive”
language. But the government correctly points out that this is immediately
qualified by “in connection with the Anti-Kickback Statute as charged in
Count 1.” This cuts the legs out from under Marchetti’s concern. The government must prove fraud in connection with the AKS scheme being
charged, not, as Marchetti puts it, things that “[weren’t] even ‘in connec-
_____________________
15
See United States v. Upton, 91 F.3d 677, 683 (5th Cir. 1996); United States v.
Brooks,
681 F.3d 678, 705 n.22 (5th Cir. 2012).
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No. 22-40617
tion’ with the AKS.”
In particular, Marchetti avers that the instruction allows the jury to
consider what he claims is a negligent action (the submission of the “Chipotle
Report”) as proof of the mens rea required here, “willfulness.” Marchetti’s
theory lacks merit. First, if it was negligent, it does not fall within “intent to
deceive.” Second, nothing in the instruction can be read (as Marchetti seems
to suggest) to allow negligence to substitute for the proper mens rea of
willfulness.
Second, Marchetti objects that the instruction was improperly “truncated.” But it’s unclear what was truncated. The only other reference to an
omission is one to which Marchetti agreed and the government did not.
Either way, the central objection to the “truncation” is that the instruction
did not substantially cover the good faith defense. But that bar is low. As
noted above, it is often the case that instruction on “knowingly” and “willfully” is sufficient to cover the defense. See Upton, 91 F.3d at 683. Given
that the jury not only was instructed on this mens rea requirement, but also
was given a legally correct good faith defense instruction, the instruction
clears the low bar.
Third, Marchetti objects that the instructions “constructively amend-
[ed] the superseding indictment.” “A constructive amendment occurs . . .
when the Government is allowed to prove an essential element of the crime
on an alternative basis permitted by the statute but not charged in the indictment.” United States v. Vargas, 6 F.4th 616, 621 (5th Cir. 2021) (citation and
internal quotation marks omitted). Marchetti posits that he was indicted for
conspiracy to commit an offense and not conspiracy to defraud. Consequently, he says that the additions of “otherwise acted with the intent to
defraud or deceive” allows him to be convicted on something not charged in
the indictment. The government retorts that “the good faith instruction did
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No. 22-40617
not permit the jury, to convict Marchetti for defrauding the United States,”
but instead, “Marchetti’s deceptive conduct proved that he was not acting
in good faith and served as evidence that Marchetti acted willfully.”
The government has the better of this dispute. The good faith instruction speaks to willfulness, not to the underlying conduct. Even the passage
Marchetti points out as “exploiting the flawed instruction in [the government’s] closing” supports the government’s point. The government was
quite clear: “[G]ood faith affects the culpable mental state of the defendant
and can impact willfulness of conduct.” This does not constitute a constructive amendment.
V.
Marchetti’s final objection to his conviction is that he is entitled to a
new trial because of cumulative error. The bar for cumulative error is exceedingly high: “[T]he cumulative error doctrine . . . provides that an aggregation
of non-reversible errors (i.e., plain errors failing to necessitate reversal and
harmless errors) can yield a denial of the constitutional right to a fair trial,
which calls for reversal.” United States v. Delgado, 672 F.3d 320, 343–44 (5th
Cir. 2012) (en banc) (quoting United States v. Munoz,
150 F.3d 401, 418 (5th
Cir. 1998)) (alterations in original). But “[c]umulative error justifies reversal
only when errors so fatally infect the trial that they violated the trial’s fundamental fairness. We have repeatedly emphasized that the cumulative error
doctrine necessitates reversal only in rare instances and have previously
stated en banc that the possibility of cumulative error is often acknowledged
but practically never found persuasive.” Id. at 344 (cleaned up).
Marchetti has not shown any reversible error—let alone any non-reversible error. This case does not meet the extreme requirements of the
cumulative-error doctrine.
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No. 22-40617
VI.
Finally, we turn to whether the district court incorrectly applied the
sentencing guidelines to Marchetti.
“Where a defendant preserves a procedural sentencing error, such as
a Sentencing Guidelines calculation, by objecting before the district court, we
review the sentencing court’s factual findings for clear error and its interpretation or application of the guidelines de novo. . . . If established, such error
shall nevertheless be disregarded if it is harmless . . . .” United States v.
Randall, 924 F.3d 790, 795 (5th Cir. 2019) (citations omitted).
Marchetti was sentenced under U.S.S.G. § 2B4.1(b)(1)(b), which
provides,
(1) If the greater of the value of the bribe or the improper
benefit to be conferred . . . exceeded $6,500, increase by the
number of levels from the table in § 2B1.1 (Theft, Property
Destruction, and Fraud) corresponding to that amount.
Marchetti’s sentence was based on the value of the bribe (the higher of the
two values). Relying on United States v. Ricard, 922 F.3d 639, 657 (5th Cir.
2019), Marchetti appears to challenge the “value of the improper benefit
conferred.” But that is immaterial: He was sentenced per the value of the
bribe.
As with the conviction, there is no error in the sentence.
AFFIRMED.
26
