The White Collar Appeal: The Ninth Circuit Joins the Fourth Circuit in Paring Back Aggravated Identity Theft Statute

• Following shortly after the Fourth Circuit’s decision in United States v. McDonald, the Ninth Circuit in United States v. Motley also reversed a conviction for aggravated identity theft under 18 U.S.C. § 1028A.
• The Ninth Circuit, however, employed a seemingly more exacting standard than the Fourth Circuit.  Motley held that, to violate Section 1028A, a defendant’s use of another’s identity must (1) “stand on its own as fraudulent or deceitful [and] cannot be considered so simply because it is part of a broader fraudulent scheme,” and (2) “be critical to the success of the underlying fraud.”
• Motley thus continues the trend toward narrow application of the aggravated identity theft statute and introduces a new standard for evaluating these claims.  Defense counsel should be aware of the nuances in the caselaw and, where not foreclosed by applicable precedent, propose Motley’s two-step analysis.

Background

Tamara Motley ordered durable medical equipment and related repair services from Medicare for patients who didn’t need them.  Medicare paid more than $13 million based on the more than $24 million in claims Motley and her co-conspirators submitted. 

Motley used two companies to submit the Medicare claims.  Neither one was incorporated in her name, nor did she legally own them, but Motley effectively ran the companies.  The people who incorporated and legally owned the companies—Motley’s mother for one of the companies, and her nephew for the other—signed powers of attorney granting Motley full authority to run the companies.  But they also signed Medicare enrollment paperwork that listed only them, and not Motley, as having any official ownership or managerial roles in the companies. 

The government argued that Motley’s submission of claims to Medicare from the two companies constituted aggravated identity theft on the basis that the companies and their Medicare authorizations were in her relatives’ names.

There was no evidence before the jury, however, that Motley (1) lacked permission or authorization from her mother or nephew to submit claims or operate the companies; (2) was responsible for enrolling the companies (as opposed to her mother or nephew); or (3) could not have enrolled in her own name or needed her relatives’ to submit claims.  Nor was there any evidence illuminating why the companies’ Medicare enrollments were under Motley’s relatives’ names in the first place.

A jury convicted Motley on all counts, including 20 counts of healthcare fraud, one count of money-laundering conspiracy, and—as relevant to the appeal—two counts of aggravated identity theft under 18 U.S.C. § 1028A.

Holding

The Ninth Circuit reversed the aggravated identity theft convictions because the government failed to prove that Motley’s use of her relatives’ names (1) was “critical to the success” of the scheme and (2) was, by itself, fraudulent or deceitful.  The court reached this conclusion based on a lengthy exegesis of caselaw interpreting Section 1028A, including the Supreme Court’s decision in Dubin v. United States, 599 U.S. 110 (2023), and Ninth Circuit decisions both before and after Dubin.  

Dubin held that, for purposes of Section 1028A, to “use” another person’s means of identification “during and in relation to” a predicate offense, a “defendant’s misuse of another person’s means of identification” must be “at the crux of what makes the underlying offense criminal, rather than merely an ancillary feature of a billing method.”  (Unless otherwise indicated, this post omits internal quotation marks, citations, and alterations.)

The Ninth Circuit explained that “Dubin’s crux test” entails two aspects:  (1) the “fraudulent or deceitful aspect of the identity use must be distinct from—and not duplicative of—the fraud in the underlying” crime; and (2) the “means of identification specifically must be a key mover that carries out the fraud,” meaning that “the misuse of identity must be critical to the success of the underlying fraud.” 

Applied to the facts of Motley, the court held that the evidence fell short.  First, “Motley’s use of [her relatives’] names was not itself deceptive toward Medicare.”  Medicare rules required them, as the owners of the companies, to be listed on the enrollment applications and to certify compliance with Medicare’s rules, and the court explained, “[i]t is also not unusual—and certainly not illegal—that Motley ran a company owned by a relative.”  Nor was there evidence that Motley submitted or signed the enrollment forms by signing her relatives’ names.  And although Motley herself submitted the reimbursement claims, those claims listed the names of the companies, not Motley’s relatives.

Second, there was no evidence that Medicare reimbursed the fraudulent claims because the enrollment forms listed Motley’s relatives, as opposed to Motley herself.  “[B]ecause the jury was not presented with any evidence about how Medicare would have reacted had Motley’s name been on the enrollment documents instead, the government did not show that the use of [her relatives’] names was critical to the success.”

Key Takeaways

Motley’s two-step analysis takes McDonald one step further.  As noted in our discussion of McDonald, the Fourth Circuit held that Section 1028A requires that the misuse of another’s identity is a “necessary element” of the predicate offense.  That analysis appears to parallel the second part of Motley’s two-step framework.  Specifically, in Motley, the court explained that, because there was no evidence that Medicare would have rejected the claims had Motley’s name, instead of her relatives’, been listed on the enrollment documents, the government failed to show that use of those names “was critical to the success” of the scheme.  Put another way, Motley could have carried out—and been convicted for—the overbilling scheme regardless of what name was on the enrollment forms.  That sounds a lot like McDonald’s necessity analysis.  (Which makes sense:  if something is not necessary to the success of the scheme, it can hardly be “critical” to its success, either.)

But the first part of Motley’s analysis—that the use of another’s identity was independently fraudulent or deceitful—does not appear in McDonald.  That may be because the facts of McDonald appeared to establish that the defendant had used another’s identity fraudulently and deceitfully.  Nevertheless, Motley introduces an extra element that prosecutors must prove to warrant conviction under Section 1028A.

The Ninth Circuit’s counterfactual framework provides a powerful defense tool.  The Ninth Circuit elaborated on the first step of the “crux test” with a counterfactual inquiry:  If, after stripping away the underlying criminal scheme, the defendant’s use of another’s identity is no longer wrongful, then the fraud was merely “residual” to the underlying crime and falls outside Section 1028A.  This framework provides defendants with an intuitive and potent way to frame challenges to Section 1028A charges. 

Motley continues the trend of narrowly construing Section 1028A following Dubin.  In addition to the Fourth Circuit, the Ninth Circuit also joins the Second, Fifth, and Eleventh Circuits in interpreting Dubin’s “crux” requirement narrowly.  Defendants facing Section 1028A charges now have a wealth of appellate caselaw on which to rely in seeking pretrial dismissal, judgments of acquittal, and favorable jury instructions.

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