Supreme Court rules feds overreached by freezing assets in fraud case

The Supreme Court has overturned a decision from the Eleventh Circuit Court of Appeals, allowing a home health owner accused of fraud access to $2 million in funds that were frozen by federal investigators.

In October 2012, Sila Luis, owner of LTC Professional Consultants and Professional Home Care Solutions in Florida, was charged with submitting more than $45 million in fraudulent claims to Medicare and paying kickbacks to recruiters. In an effort to recover some of the stolen funds, the government froze $2 million in assets, which Luis claimed was obtained legally.

In the 5-3 ruling, the justices ruled that the government violated the Fifth and Sixth amendments of the Constitution by freezing Luis' assets that weren't linked to the fraudulent bills. The Court indicated that although the government is permitted to seize "tainted" assets that were obtained illegally, since those assets belong to the victims of the crime, in this case, the government overreached when it froze funds that were obtained legally.

"The property at issue here, however, is not loot, contraband, or otherwise 'tainted,'" Justice Stephen Breyer wrote for the majority. "It belongs to the defendant."

In a dissenting opinion, justices Anthony Kennedy and Samuel Alito argued that in financial fraud cases, legitimate and illegal earning are often merged together, embezzled or stategically hidden from investigators. They pointed out that on the day Luis was charged, she "opened and closed well over 40 bank accounts and withdrew large amounts of cash to hide the conspiracy's proceeds."

The decision comes several weeks before the opening arguments of another case with healthcare fraud implications--the government's use of "implied certification" in False Claims Act cases.

To learn more:
- read the Supreme Court's decision