Expanded Psychology Board Disciplinary Authority

On June 23, 2016 the General assembly approved act 2016–53. This is a new provision in the the Psychology Board Act.  It became effective August 23, 2016.  This an amendment to the Psychology Board’s authority in disciplining it’s licensees. The specific section in bold states:

(b) When the board finds that the license or application for license of any person may be refused, revoked, restricted or suspended under the terms of subsection (a), the board may:

(1) Deny the application for a license.

(2) Administer a public reprimand.

(3) Revoke, suspend, limit or otherwise restrict a license as determined by the board.

(4) Require a licensee to submit to the care, counseling or treatment of a physician or a psychologist designated by the board.

(5) Suspend enforcement of its findings thereof and place a licensee on probation with the right to vacate the probationary order for noncompliance.

(6) Restore a suspended license to practice psychology and impose any disciplinary or corrective measure which it might originally have imposed.

(7) Take other action as the board in the board’s discretion considers proper, including precluding a suspended licensee from engaging in counseling or any other form of mental health practice.

The import of the new (b)(7) provision cannot be under stated. The legislature has given the Board authority to take “other action” within the “Board’s discretion it considers proper”. This is just about anything.  The case law discussing licensing boards authority to discipline their licensees is clear.

Appellate review of a discretionary Board action is limited to determining whether constitutional rights have been violated, an error of law committed, or necessary findings of fact are supported by substantial evidence. 2 Pa.C.S. § 704; Cassella v. Pennsylvania Board of Medicine, Bureau of Professions and Occupations, 119 Pa. Commonwealth Ct. 394, 547 A.2d 506 (1988); DePanfilis v. State Board of Pharmacy, 121 Pa. Commonwealth Ct. 526, 551 A.2d 344 (1988). The State Board of Nursing is the ultimate fact finder and may accept or reject the testimony of any witness in whole or in part.

The proper review of an agency’s action, assuming that it is not defective under the self-explanatory requirements of § 704 of the Administrative Agency Law, 2 Pa. Cons. Stat. § 704, is not whether its order was reasonable, but whether it was made in accordance with law, i.e., whether it was made in bad faith, and whether it was fraudulent or capricious. A reviewing court may interfere in an agency decision only when there has been a manifest and flagrant abuse of discretion or a purely arbitrary execution of the agency’s duties or functions. Slawek v. Commonwealth, State Bd. of Med. Educ. & Licensure, 526 Pa. 316, 318, 586 A.2d 362, 363 (1991).

Where a full and complete record is made of the proceedings before the State Board of Nursing, a reviewing court must affirm the adjudication unless it is in violation of the constitutional rights of the appellant or not in accordance with the law, the procedural provisions of the local agency law are violated, or a finding of fact of the State Board of Nursing necessary to support its adjudication is not supported by substantial evidence. Section 754 of the Administrative Agency Law, 2 Pa. C.S. § 754. The emphasis here is that is a full and complete record is a necessity.

Substantial evidence means that the evidence required to support the finding of an administrative agency must be “such relevant evidence as a reasonable mind might accept as adequate to support the conclusion.”  Civil Service Com. V. Poles, 132 Pa. Commw. 593, 573 A.2d 1169, 1172 (1990); Gallagher v. Philadelphia State Board of Pharmacy, 16 Pa. Commw. 279, 330 A.2d 287, 289 (Pa. Commw. Ct. 1974).

It is imperative that counsel is present at any hearing to insure the trial evidence objections are properly set forth int he record.  In many cases, Board discretionary action can only be limited by insuring the evidence at the hearing is minimized against the licensee.  Or on Appeal, reviewing the record, to insure the Board decision is made in accordance with the facts presented at the hearing. Any decision based on facts outside of the record is not proper. Please call to discuss you psychology license disciplinary issues.

 

 

IP Addresses and an Expectation of Privacy — NIT and Government Malware

My criminal practice recently focused on a significant case involving IP addresses and privacy rights. The case involves government use of online surreptitious surveillance methods, an NIT, in a criminal investigation to determine a potential defendant’s Internet Protocol (“IP”) address, and thus home address, to subsequently serve criminal subpoenas and search warrants on that home address. The government maintains in these types of investigations potential criminal defendants have no expectation of privacy in their IP address. However, various criminal statutes, regulatory provisions, and sentencing guidelines reflect Congress’ intent to provide a national reasonable expectation of privacy rights in “IP” addresses and thus location data. This blog shall identify several federal statutes that establish Congressional privacy rights in IP or location address data.

In one criminal statute, Congress makes it illegal under 18 U.S.C. § 1030(5) to “knowingly cause[s] the transmission of a program, information, code, or command, and as a result of such conduct, intentionally causes damage without authorization, to a protected computer.” Subsection 1030(f) “does not prohibit any lawfully authorized investigative, protective, or intelligence activity of a law enforcement agency of the United States, a State, or a political subdivision of a State, or of an intelligence agency of the United States.” Congress’ requirement of a warrant in subsection (f), “prior authorization” through a judicially approved legal procedure and probable cause, indicates the privacy and constitutional rights that are applicable to these searches, when the take place in searching a defendant’s home pre-arrest.

In these cases, the Government maintains defendants do not have a reasonable expectation of privacy in their IP location data. They are wrong. The government thinks it is OK to hack private individual’s computers through a code or command sent to that computer. Courts have held these types of investigations are searches, requiring an authorized warrant, and thus judicial oversight. Required judicial oversight is Congressional recognition of privacy rights in location data.

This position is supported by a recent national criminal case. In 2013 various Chinese state co-conspirators were indicted for violating 18 U.S.C. §§ 1028 and 1030, et seq. At paragraphs 15, 18, and 43 of the indictment, the Government alleges these officials engaged in acts constituting violations of 18 U.S.C. § 1028(a)(1), 18 U.S.C. §§ 1028A(b), 1028A(c)(4), and 2. The blatant and outrageous criminal conduct at paragraphs 52-53 includes illegally taking personal identification information of another, without authorization. The Government equates stealing personal IP address and location data with violations of the United States Code.

The United States Sentencing Guidelines include a specific guideline provision devoted to theft of personal privacy data. For sentencing purposes, confidential information under 18 U.S.C. § 1039(h)(1)(A) includes personal location data. U.S.S.G. §2H3.1 addresses the manner in which federal courts are to assess offense levels and sentencing enhancements for violations of 18 U.S.C. § 1039.

In the context of active location data provided through cellular telephone surveillance capabilities, there has been extensive litigation over the definition of Other Information that is generated when utilizing a cellular telephone. Congress defines Other Information as historical and real time “cell site location information” (“CSLI”), which discloses location data of persons utilizing cellular telephones. In In re Application, 620 F.3d 304 (3d Cir. 2010), the Third Circuit addresses probable cause requirements in warrants seeking this information based upon the privacy issues attached thereto. See (http://www.phila-criminal-lawyer.com/Publications/005061214-Hark.pdf).

In 1997 Congress passed amendments to the Communications Act of 1934. Congress, and the FCC, through enabling regulations, passed numerous rules identifying and then delineating the exact nature of customers’ privacy rights to their personal information and telecommunication companies’ duty of protecting such from commercial exploitation. 47 U.S.C. § 222 was added to the Communications Act by the Telecommunications Act of 1996. Section 222 of the Act establishes a duty of every telecommunications carrier to protect the confidentiality of customer proprietary network information (” CPNI”). CPNI is “information that relates to the quantity, technical configuration, type, destination, location, and amount of use of a telecommunications service subscribed to by any customer of a telecommunications carrier, and that is made available to the carrier by the customer solely by virtue of the carrier-customer relationship.” 47 U.S.C. § 501 makes it a crime to knowingly and intentionally violate (disclose this information) the Act.

The Privacy Act of 1974 addresses privacy of federal employees’ personal information. “No agency shall disclose any record which is contained in a system of records by any means of communication to any person, or to another agency, except pursuant to a written request by, or with the prior written consent of, the individual to whom the record pertains [subject to 12 exceptions].” 5 U.S.C. § 552 a(b). 32 CFR 505.7 – relating to Freedom of Information Act disclosures of Federal Employees personal information states at subsection (e) (1) states “The release of home addresses and home telephone numbers normally is prohibited.”

Release of personal location information is normally considered a clearly “unwarranted invasion” of personal privacy and is exempt from mandatory release under the FOIA. 32 CFR § 505.7(d)(1)(vi) identifies home addresses as personal information not to be release without prior consent of the individual. There is an entire Department of Justice Overview of this Act on its website. The DOJ has its own Chief Privacy and Civil Liberties Officer enforcing provisions of the Privacy Act on Federal employees and agencies. https://www.justice.gov/opcl/overview-privacy-act-1974-2015-edition.

Congress has established privacy obligations on the private sector through legislation affecting the financial services, health care, government, and Internet sectors. Federal regulations issued to carry out federal privacy laws impose obligations on covered entities to implement information security programs to protect unauthorized dissemination of private individual’s personal information. Protected personal information (“PPI”) in each service field typically includes name, address (location) date of birth, and social security numbers of the persons affected. A short list of CFR sections addressing PPI includes 32 CFR 701.115, 32 CFR 505.7, and 36 CFR 902.56.

In light of numerous federal statutes criminalizing any disclosure of personal privacy information (address location data) of both private and government employees, every defendant or target has a reasonable expectation of privacy in their location data, to which a legal and proper warrant is required for the Government to discover such information.

Please call me to discuss your case.

Network Investigative Techniques, Federal Criminal Search Tools, and Your 4Th Amendment Rights

My involvement for twenty five years in federal criminal matters has resulted in me handing many different Motions to Suppress. Recently, in the context of Federal internet criminal investigations, I have gained extensive experience fighting the new federal investigative techniques, (“NIT”) that reveal personal identity and location data.

Once such case involves the Government’s use of an NIT or Network Investigative Technique. The NIT is a malware program placed on a computer server that launches itself into each computer accessing that server to engage in alleged criminal activity.  The accessing computers utilize the TOR network for anonymity purposes.  Upon accessing specific areas of the server, the malware on the server then sends to the activating computer (in another state typically inside a person’s home) a code instruction to search, secure, and transmit back to the server the user’s IP address. Thereafter, search warrants secure the personal identification and location information of the accessing computer owner.

I have filed motions to suppress this search technique.  The Government bears the burden of showing, under the Fourth Amendment, the reasonableness of each individual act constituting a search or seizure. The burden of proof is by a preponderance of the evidence. The court is presented with the choice of two tracks of analysis. Does the court choose to evaluate these defendants’ constitutional rights affected by the NIT Warrant under the:
1) Reasonable expectation of privacy test set forth in United States v. Katz, 389 U.S. 347 (1967); or
2) The property-based Fourth Amendment test set forth in United States v. Jones, 565 U.S. ___, 132 S. Ct. 945 (2012). There, the court exclusively applied the property-based approach to determine whether a search occurs when the Government physically occupies private property of another for the purposes obtaining information. This approach keeps easy cases easy.

1. PROPERTY-BASED FOURTH AMENDMENT PROTECTIONS

The court must choose the property-based search analysis set forth in Jones.  Jones holds that surveillance on a person through electronic means without a warrant constitutes a trespass and may be an unconstitutional invasion of privacy. 132 S.Ct. at 953–54. Even though Jones involved warrantless global positioning system (“GPS”) searching, the analysis applies because the NIT warrant is illegal. Jones makes clear the constitutional nature of computer searches, especially in the privacy of one’s home.

Florida v. Jardines, 569 U.S. 1 (2013), follows Jones’ property – based Fourth Amendment jurisprudence.  The Jardines court held that a warrantless dog sniffing through the front door of Jardines’ home constitutes an unconstitutional search of a constitutionally protected area.  In Jardines, as here, “the officers learn what they learned only by physically intruding on Jardines’ property to gather evidence.”  This search activity is enough to establish that a search occurred. These cases stand for the proposition that the “Fourth Amendment, at its very core, stands for the right of a man to retreat into his home and there be free from unreasonable Government intrusion.” Jardines, supra.

There is no evaluation or discussion of an expectation of privacy under the property-based Fourth Amendment jurisprudence after Jones.  Jardines, 569 U.S. at *9.  The court recognizes a simplistic procedure.  If the Government goes on the property of another, (trespassing or not) it needs a warrant due to Fourth Amendment’s constitutional property rights. These NIT cases, the Government understood this legal necessity and secured the NIT warrant. However, the NIT warrant was illegal.

1. The Constitutional Character of the NIT Search is Per Se Prejudicial
   

In today’s society, disclosing an Internet Protocol (“IP”) address is, in essence, disclosing protected location privacy. Similar to Jones‘ GPS coordinates in tracking devices or cellular telephones, location data reveals a great deal about a person.  As such, cases discussing governmental activity and search techniques that reveal a defendant/target’s location are relevant to the court’s analysis of prejudice and the constitutional level of protections in these motions to suppress.

United States v. Maynard, 615 F.3d 544, 562 (D. C. Cir. 2010), affirmed, United States v. Jones, supra, stands for this proposition. Analogizing IP address location data to cellular telephones, Justice Alito writes that “society’s expectations have been that police agency and others will not secretly monitor and catalog every single movement of an individual’s car for a very long period of time.” Jones at 945.

Thereafter, in Riley v. California, ___ U.S. ___, 134 S. Ct. 2473 (2014), the Supreme Court following Jones, specifically references location privacy as a reason to limit police searches of cellular telephones incident to arrest.  The Riley Court determines that due to the wealth of information electronic devices “contain and all they may reveal, they hold for many Americans the privacies of life.” Riley at 2494–95.

Riley even states, “The fact that an arrestee has diminished privacy interests does not mean that the Fourth Amendment falls out of the picture entirely. Not every search “is acceptable solely because a person is in custody.” Maryland v. King, 569 U. S. ___, ___ (2013) (slip op., at 26). To the contrary, when “privacy-related concerns are weighty enough” a “search may require a warrant, notwithstanding the diminished expectations of privacy of the arrestee.” Ibid. One such example, of course, is Chimel. Chimel refused to “characteriz[e] the invasion of privacy that results from a top-to-bottom search of a man’s house as ‘minor.’” 395 U. S., at 766–767, n. 12. Because a search of the arrestee’s entire house was a substantial invasion beyond the arrest itself, the Court concluded that a warrant was required.” Riley, supra.  Cellular telephones and home computers are simultaneously offices and personal diaries containing the most intimate details of our lives. United States v. Cotterman, 709 F. 3d. 952, 964 (9^th Cir.. 2013).  Several circuits recognize these facts, uniformly requiring a warrant prior to searching a computer. United States v. Paton, 573F.3-D 859 (9th Cir. 2009); United States v. Andrus, 483 F.3d 711, 718 (10th Cir. 2007).

The Eastern District of Pennsylvania addresses surveillance issues of GPS warrants in United States v. Ortiz, 878 F. Supp. 2d. 515 (E.D.Pa. 2012). In the Court’s discussion of location data and the privacy issues, it concludes that the Government’s warrantless surveillance technique “produces location data while inside the garage of a home or other Fourth Amendment protected place”, potentially yielding information that the Supreme Court specifically found in United States v. Karo, 468 U.S. 705 (1984), is protected by the Fourth Amendment.

An unreasonable search within the meaning of the Fourth Amendment occurs where, without a warrant, the Government surreptitiously employs an electronic device to obtain information it could not have obtained by observation from outside the curtilage of the house. The beeper tells the agent that a particular article is actually    located at a specific time in the private residence and is in the possession of the person or persons whose residence is being watched.  Even if visual surveillance has revealed that the article to which the beeper is attached  has entered the house, the later monitoring not only verifies the officers about observations but also establishes that the article remains on the premises. United States v. Karo 468 US at 715.

Ortiz at ___.

Review of these controlling Supreme Court cases and their emphasis on the data produced through cutting edge surveillance techniques (including an NIT) on electronic mediums (cellular telephones and home computers) render’s applicable the Fourth Amendment privacy protections afforded to Jones, Jardines, and Riley.

1. Expectation of Privacy in an IP address

An expectation of privacy in location data that IP addresses reveal is both objectively and subjectively reasonable based upon people using the TOR network and how the Government secures those person’s IP address.  The Government typically argues that because these defendants may have initially disseminated their IP address through an internet service provider (“ISP”), they have no expectation of privacy in an IP address.  This is factually wrong.

1. Third Party Doctrine

The case of Smith v. Maryland, 442 U.S. 735 (1979), addresses warrantless access to information possessed by a third-party. This is the third-party doctrine set forth in United States v. Jones, 132 S. Ct. at 957.  Third party dissemination and reduced expectation of privacy has no applicability here because of the NIT’s mechanism of search and how Government secures that defendant’s IP address from his computer, not a third-party ISP. The court requires factual testimony on this issue.

United States v. Stanley, 753 F.3d 114 (3d. Cir. 2014), specifically addresses the no expectation of privacy of IP addresses when a defendant uses his neighbor’s wireless router without permission. The Government found Stanley’s computer’s wireless signal piggy backing illegally on his neighbor’s unsecured wireless router. Such unauthorized use of the neighbor’s IP address through which a third-party provider secures individual media access control (“MAC”) addresses of moochers of other people’s wireless routers. The Court found this fact alone reveals that Stanley had no expectation of privacy in his IP or MAC address. Stanley‘s finding that there is not an expectation of privacy in an IP address is not binding here as such is not the basis of the Government’s investigation in this case.

These defendants’ IP addresses are not disclosed anywhere throughout the use of the TOR or his third party ISP.  Declaration, Special Agent Daniel Alfin, document no. 74-1, filed June 1, 2016, U.S. v. Matish, 4:16-cr-00016, attached hereto at Exhibit 3.  This declaration makes clear that the NIT did not secure any other defendant’s, IP address from a third-party ISP or through the TOR network. Rather, the NIT searched for and secured the accessor’s IP address SOLELY from their own computer programming.

The NIT transferred directly to the Government from that defendant’s computer, his IP address not through the ISP.  The Government must acknowledge this fact in response to court’s inquiry of how the NIT worked in Matish. The Government bluntly concedes that but for the IP address, it could not locate these defendants.  These IP address would have been unknown.  The accessing defendants’ personal location data is collected from the accessing computer. See Exhibit 3, Alfins’ declaration, ¶¶ 22 and 25; Exhibit 2, Alfin’s May 19, 2016 Testimony, page 13-17, 21–26.  Alfin makes clear this factual point.

Once put to the test in a Motion to Compel Discovery, Alfin’s testimony is in stark contrast to the NIT Affiant Special Agent Douglas Macfarlane’s affidavit stating that the NIT instructions “are designed to cause the user’s ‘activating’ computer to transmit certain information to a computer controlled by or known to the government,” including the “activating” computer’s actual IP address. See Affidavit in Support of Application for Search Warrant, at ¶ 33.   The NIT would deploy “each time that any user or administrator log[ged] into Playpen by entering a username and password.” (Id., Ex. 1 ¶ 36.) The FBI could then link a username and its corresponding activity on the site with an IP address. (Id., Ex. 1 ¶ 37.)  This is factually wrong when compared to Alfin’s declaration and testimony regarding how the NIT worked its search functions performed when an accessing computer logged onto the Playpen Website.

The Government was less than candid with the tribunal by not advising it that the NIT would send a computer search and seizure program to the user’s home computer and then send back to the FBI computer an IP address.  The FBI was not linking a username and corresponding activity to an IP address. Further, the record is unclear if the Government told  the Magistrate that it was concurrently filing a Title III warrant.  This would have disclosed both its strategic use of a magistrate to issue the NIT Warrant and its seizure gathering mechanism of electronic information for which it required Article III judicial authorization.

The NIT that accessed these defendants’ computers operates in the computer memory locations, retrieved information, and then leaves the computer. The same situation is presented when the Government comes into your house, searches your house, and then leaves. The Government is required to advise you of the search (giving you the search warrant) and then leaves you an inventory of items seized. None of that was done in this occasion.  Jones, Riley, Jardines affirm this constitutional requirement to which Rule 41(B) codifies into a procedure implementing the Fourth Amendment’s warrant provision.

As such, the question is not whether there’s a reasonable expectation of privacy in an Internet IP address (as Werdene concluded there was not), but does a person have a reasonable expectation of privacy in the area where the search (his home) occurred and in the information seized (his location).   Rakas v. Illinois, 439 U.S. 128 (1978). Darby and Matish conclude yes.  This court must choose the property-based Fourth Amendment analysis and afford these deendants the constitutional protections because the NIT searches a home-based computer.

Call me to discuss your NIT, Playpen based federal government internet criminal matter.

Client Represention Begins with Hearing Preparation

Throughout the course of every licensing case many issues arise. The primary focus of addressing important legal issues in court is through having appropriate and credible evidence before trial. Presenting the best evidence in a hearing, upon which an appellate court may review the discretionary conduct of the licensing board, is paramount to effective representation of every client.

Due Process requires every hearing officer to give great latitude to each licensee/respondents’ counsel in the choice, character, and quantity of evidence presented. I begin accumulating trial evidence immediately upon being hired. Thereafter, I routinely contact clients several months before a hearing for additional references, job evaluations, and confirm witness availability and travel plans to court.

Much of my trial organization takes place before and after client meetings through constant email contact. Sufficient lead time is provided to every client whose hearing is going to take place. Every document request to a client is based upon individual case facts, evidence issues, and trial strategy. Each piece of evidence becomes a small piece of the larger picture that I want to present in court.

Once witnesses are confirmed, case theory, client meetings and hearing preparation begins with earnest. Job evaluation, work related emails, and criminal discovery documents flesh out case theory and provide background evidence for the hearing officer’s decision. Meeting with clients and family provides insight into the character of every licensee. Grown children, spouses, co-employees, and supervisors provide unique character references.

Disciplinary actions are typically based upon criminal convictions, employment conduct, professional competence claims, or impairment issues. Each requires different preparation. Through the years I have developed extensive emails seeking appropriate documents for every type of trial. Attention to detail by both counsel and the client is paramount to effective representation.

All trial preparation leads to a cohesive presentation in court. The trial picture presented allows hearing officers to render a balanced decision based upon admissible facts. A thorough record and fact-based credibility decision eliminates much discretion from the licensing board reviewing the trial court decision. Please call me to discuss your disciplinary action.

Pennsylvania’s Professional License Disciplinary Enforcement Environment

These are tough times.  I am receiving more calls then ever.  The issues range from PHMP and PNAP case worker treatment, prosecution enforcement actions, to delays in decisions on cases.  More than ever, experienced counsel is necessary to help navigate the treacherous waters of Pennsylvania’s over reaching, over bearing, and heightened enforcement environment.

The first set of calls I receive focus on the lack of information PHMP case workers provide when discussing the proposed monitoring agreements.  These case workers are not attorneys.  They are also not your friends.  They do not care about you.

They do not have authority or time to explain the intricacies or legal ramifications of signing the PHMP/PNAP/SARPH contract.  More importantly, again, they do not care.  The new file that has just been dropped on their desk has your name on it.  All they want to do is be done with it.  They are overworked, underpaid, and have too much legal power and responsibility over too many people to do their job fairly, correctly, or with any sense of compassion.

Their goal is to get you to sign the contract, trick you into agreeing to terms of an enforcement process of which they know you probably will not be able to perform, get you to violate the terms, and then close your file so it can be referred back to the prosecutor to file revocation proceedings.   These case workers are merely cogs in a  wheel enforcing regulatory compliance on all program participants.  They have no authority to change the terms and conditions of the program.  They don’t care how much it costs, that you can not afford it, can’t work in the beginning, have kids, have a family, have a life.  DO NOT SIGN ANYTHING UNTIL WE TALK.

The second set of calls regards attorneys who do not know the collateral consequences of criminal matters on the professional’s license and the impairment issues.  DUI charges are the typical example.  Under the new regulations, nurses must report criminal charges within 30 days of the arrest.  Under the DUI ARD process, the applicant must go to a CRN evaluation and may try to get in patient treatment to avoid jail if they are not ARD eligible.

This process conflicts with the new enforcement mechanism in every case of compelling nurses to go to Mental and Physical evaluations (see my other blogs in the archives) with the DUI pending.  Part of the Mental and Physical evaluation process is providing all mental and medical treatment records.  The newly created medical record with diagnosis and treatment recommendations, you just created by going to the in-patient program to avoid jail, from non-experts now must be provided to the Board’s expert.

Going to treatment to save jail time impacts the professional license.  Talking too much at the CRN evaluation impacts your processional license.  Hiring the wrong attorney to handle your DUI to save money on that part of the case will impact your processional license.  Too many times I have to clean up the mess made by good intending but uninformed attorneys.

DO NOT HIRE THE WRONG ATTORNEY FOR YOUR DUI OR MENTAL AND PHYSICAL EVALUATION.  IF THEY CAN NOT ANSWER PHMP OR PNAP QUESTIONS — MEANING THEY DO NOT MAKE YOU FEEL CONFIDENT OF HOW TO HANDLE THE LICENSING ISSUES — CALL ME.

Lastly, questions regarding when will a decision be handed down, what to do next, and what does the decision in my case mean — have been cropping up.  Hearing officers are over whelmed. Enforcement actions are filed involving every licensing board for any professional with criminal charges, employment related investigations, and course of care cases.  Hearings are pushed out 30, 60, 90 days.  After a hearing, briefs should be submitted in almost every case, delaying formal decisions for months.  Once a proposed adjudication and order is filed, the board reviews the decision and must accept that decision.  This takes many more months.

Then implementation of the decision takes place.  Importantly, all the while, licensees are still practicing. These delays are not good but at a minimum, the licensee is still practicing and making money.

This process is harder on the applicants without a license or the individual whose lost their license and has filed for reinstatement.  The documents were request to be accumulated during this time are huge in securing timely reinstatement of any license.

However, the Boards can and do only go so fast.  That is why fighting the case from the outset to insure no license suspension or revocation, or not going into the program and fighting the case with a license is better than losing your license with either no attorney or the wrong attorney and being at any Board’s mercy of when they will reinstate your license.  CALL ME TO PROPERLY HANDLE YOUR LICENSE DISCIPLINARY ACTION.

Major US Supreme Court DUI Decision and Pennsylvania Licensees

On June 23 the United States Supreme Court decided  BIRCHFIELD v. NORTH DAKOTA, three consolidated cases addressing important substantive and procedural legal issues regarding driving under the influence (“DUI”) cases.  In each case, the North Dakota motorist, lawfully arrested or under investigation for drunk driving, was convicted of a separate crime or otherwise received an enhanced criminal penalty for refusing to submit to a warrantless blood test measuring the alcohol in their bloodstream.

All three state court cases results depended upon the proposition that criminal laws ordi­narily may not compel a motorist to give evidence against themselves in the form a blood sample or breath test unless a warrant authorizing such testing is issued by a magistrate.  The specific issue considered was how the search-incident-to-arrest doctrine applies to breath and blood tests incident to DUI arrests. The court ruled while compelled evidence from breath tests are constitutional based upon the limited inconvenience and invasion of privacy to the motorist, compelled blood tests are unconstitutional for those same reasons.

In Pennsylvania, 75 Pa C.S.A. § 1547 of the motor vehicle laws addresses motorists’ civil license suspension consequences for refusing to submit to a DUI investigation breath or blood test. Depending on how many refusals the operator of the car has previously engaged, a driver’s license suspension based upon a breath or blood test refusal starts at one year and may escalate. The court ruled that these civil collateral consequence license suspension for refusing the test remains constitutional. “Our prior opinions have referred approvingly to the gen­eral concept of implied-consent laws that impose civil penalties and evidentiary consequences on motorists who refuse to comply.”The Birchfield case did not question the constitutionality of those civil collateral consequence refusal laws, and the Supreme Court limited its ruling stating that “nothing should be read to cast doubt on them.”

In 2015 the Supreme Court ruled that the natural dissipation of alcohol from the bloodstream does not always constitute an exigency justifying the warrantless taking of a blood sample. That was the holding of Missouri v. McNeely, 569 U. S. ___, where the State of Mis­souri was seeking a per se rule that “whenever an officer has probable cause to believe an individual has been driving under the influence of alcohol, exigent circum­stances will necessarily exist because BAC evidence is inherently evanescent.”  This case set the stage for Birchfield, where the individual defendant’s objected to being criminally penalized for not submitting to the warrantless blood draw or were criminally penalized when the warrantless blood draw produced evidence that was used against them in trial.

Pennsylvania’s DUI statute, 75 Pa.C.S.A.§3802D, provides for enhanced criminal penalties for refusing to submit to a breath or blood test stemming from a DUI investigation. DUI offenders with multiple prior DUI convictions faced enhanced license suspensions and jail sentences based upon the same refusal. In Birchfield, after reviewing all of the prior case law regarding car stops, privacy concerns, and search incident to arrest case law, the court held that motorists cannot be deemed to have consented to submit to a blood test on pain of committing a criminal offense.  Motorists can not be compelled criminally to give evidence against themselves without a warrant signed by an independent magistrate.

The court has finally drawn a constitutional line in the sand limiting the extent to which a state may utilize driving-on-our-roads informed consent laws to compel motorists to give evidence against themselves so the state may investigate and prosecute them for criminal conduct. In Pennsylvania, this will mean enhanced criminal penalties associated with refusing a blood test, not breathalyzer, in any criminal DUI prosecution may no longer be constitutionally permissible.  Please call to discuss your DUI charge, your medical or professional license issue and potential discipline on your license from stemming from your first or subsequent DUI.

Expert Reports, Testimony, and Stipulations — Make Sure Their Expert Comes to Court

The Pennsylvania Rules of Evidence, promulgated rules and case law interpreting those rules, apply to administrative proceedings. An experienced trial attorney should utilize civil and criminal trial evidentiary rulings discussing the rules to their client’s advantage in licensing disciplinary hearings.

The importance of understanding these rules and keeping up to date with the case law cannot be overstated. Inadmissible evidence not objected to becomes part of the record while properly objected to inadmissible evidence is stricken and unavailable for the Board or hearing officer to rely in rendering its decision. This means that any Pennsylvania trial court evidentiary decision should be researched for their applicability in licensing cases.

On March 15, 2016 the Superior Court of Pennsylvania rendered an important evidentiary decision regarding medical records and expert testimony. In that criminal case, the Commonwealth sought to introduce into evidence an emergency room medical record which contained a medical evaluation, diagnosis, and medical conclusion of an injury. The Commonwealth did not ask the doctor to testify, claiming the medical record was not testimonial, admissible as a business record, and therefore the defendant’s sixth amendment right to confrontation did not apply. Commonwealth claimed the medical record/report is a business record, which is an exception to the hearsay rules. Superior Court reviewed the Rules of Evidence and the case law, rejecting the Commonwealth’s position.

Understanding why this ruling is important for your license case is necessary to hiring the right attorney to handle your licensing case. Medical facts (size, shape and where is an injury) contained in medical report are admissible under hearsay rules.

However, a medical opinion or diagnosis (the specific type and cause of an injury – addictions or impairments) are not. The declarant of the medical conclusion, the doctor rending the expert opinion, must testify. Pennsylvania Rule of Evidence 803.1 provides: The following statements are not excluded by the rule against hearsay if the declarant testifies and is subject to cross-examination about the prior statement:

(3) Recorded Recollection of Declarant-Witness. A memorandum or record made or adopted by a declarant-witness that:

(A) is on a matter the declarant-witness once knew about but now cannot recall well enough to testify fully and accurately;

(B) was made or adopted by the declarant-witness when the matter was fresh in his or her memory; and

(C) the declarant-witness testifies [sic] accurately reflects his or her knowledge at the time when made.

If admitted, the memorandum or record may be read into evidence and received as an exhibit, but may be shown to the jury only in exceptional circumstances or when offered by an adverse party.

In every impairment case – not just criminal cases – if the Commonwealth seeks to introduce an expert’s report regarding his/her opinion of medical condition, addiction, impairment, and affect on a licensee’s ability to practice, the doctor must come to court. Licensees should never stipulate to the expert report. The expert should be compelled to testify.

This is hugely important in many parts of the licensee disciplinary process. First, never stipulate to any impairment. Signing the PHMP contract admitting you suffer from an addiction or impairment eliminates the legal necessity of the Commonwealth having a licensee evaluated and then calling the expert to testify at a hearing. Secondly, never go to the evaluation of a PHMP approved expert without counsel. You need to be prepared for that evaluation. My prior blogs address these issues.

If the expert concludes the licensee is impaired, hire counsel to fight that conclusion and make sure the expert comes to court. Again, counsel is important here. Make sure you have the expert report before the hearing and that the expert testifies at the hearing. Do not stipulate that his report is admissible and he/she does not have to testify. This is where the Commonwealth v Davis decision is important. The expert must be available and subject to cross examination.

Experienced counsel will know of what issues to cross examine the expert to eliminate certain factual and medical basis for their medical conclusion. It is only during cross examination that the expert’s conclusions will be tested. Thereafter, when briefing the case after the hearing, the record will reflect the doctor’s admissions of what facts are not present in the record to support his decision. When a licensee stipulates to a doctor’s report, such testing and examining the expert’s opinion does not take place.

Three of my recent impairment trials have resulted in significant cross examination and admissions from the Commonwealth’s expert. These admissions eliminate the factual basis for that expert’s medical conclusions. If I stipulated to his report, I would have not secured this type of evidence for my clients. If the expert did not testify, and his report constituted the only evidence upon which the Board could rely to rendering a decision, my clients would not have a chance of winning their impairment case.

Because the expert was subject to the great test of cross examination, as Davis states is required, my clients can win their cases. In each case cross examination revealed omissions of fact and evidence upon which the expert should have but did not consider in rendering his conclusion. Cross examination also revealed the absence of a current medical basis for the expert opinion. Compelling the expert to affirm a licensee’s ability to safely practice, regardless of a medical condition, immediately reveals to a licensee board the weakness in any expert report stating the contrary.

Here is where cross examination is really important. 63 P.S. § 224(a) provides the standard to which the court must subject the expert’s testimony. The provision states: (a) The Board may refuse, suspend or revoke any license in any case where the Board shall find that— (2) The licensee is unable to practice professional nursing with reasonable skill and safety to patients by reason of mental or physical illness or condition or physiological or psychological dependence upon alcohol, hallucinogenic or narcotic drugs or other drugs which tend to impair judgment or coordination,

The typical expert report simply states such. However, on cross examination, factual concessions reveal how weak the expert opinions typically are. Forcing the Commonwealth at a licensing heating to have the correct witness who can testify and provide admissible and sufficient evidence is paramount. Stipulating to reports and evidence loses your case and your license.

Call me to discuss how to fight your case, properly apply the rules of evidence, make sure your professional licenses is not subject to any discipline.

Participate In Your Professional License Defense

Occasionally my daily review of Commonwealth Court decisions discussing professional licensing board cases reveal remarkable decisions. This happened again this week. I came across a decision discussing a professional who chose to represent himself. Unfortunately, the individual had no comprehension the legal mess he was creating for himself by not employing an attorney.

Stubbornness and disgust towards the regulatory process of a licensing disciplinary action creates a blindness in unrepresented parties. These professionals almost always fail in their both legal obligations to comply with the professional licensing board procedures and hearing regulations while representing of themselves at these hearing. This weeks case is another example of this unfortunate circumstance.

Dr. Mohammed Ali Hammad received notice of an investigation and a request to inspect his medical office. The notice required Dr. Hammad to allow a Veterinarian Board professional conduct investigator to visit his office to conduct a visual inspection of medical records and office administration. Dr. Hammad refused unless he was given a copy of the formal complaint and the name of the patient who initiated the investigation. This is not permitted. All complaints are confidential in the investigatory stage. While the investigator may read the complaint, a formal copy of the complaint and the name of the complainant is not disclosed.

Each licensing scheme has similar investigatory authority requiring licensees to allow, without subpoena or formal court process, an inspection and copying of medical or other business records. Each professional board’s regulations have long established their authority to conduct investigations of their licensees through a board investigator. The investigator closed the file and notified the legal prosecution department of Dr. Hammad’s refusal to allow the office investigation consistent with the Veterinary Board rules and procedures.

The failure to comply with the basic investigation requests creates a separate cause for discipline distinct from the underlying basis of the investigation. Dr. Hammad’s refusal to allow the inspection or produce medical records escalated the cause of his eventual discipline. This case discusses the discipline against Dr. Hammad’s solely for this stupid refusal to comply with the investigation.

In a prior 2013 disciplinary petition for some insignificant issue Dr. Hammad did file an answer to the case, object to the delegation of the case to a hearing examiner, and request a formal board hearing. However, Dr. Hammad did not appear at the prior board hearing. The state proceeded with that prior discipline case without him. There the hearing examiner proposed order and adjudication found Dr. Hammad violated Veterinary Board rules. That proposed adjudication immediately suspended Dr. Hammad’s Veterinary license. The board excepted the proposed adjudication, entered a final order, to which Dr. Hammond did not appeal.

Dr. Hammond nonetheless continued to practice veterinary medicine. This case then arose when an investigatory contacted him to conduct an office visit. Here, he was specifically cited for not allowing the inspection and for failing to honor the prior Veterinary Board order. Having failed to go to the hearing again, the discipline this time was not suspending, but revoking Dr. Hammad’s license to practice veterinary medicine and ordering him to pay a $20,000 civil penalty. This time the doctor appealed to the Commonwealth Court.

The appeals court had no patience for the doctor’s argument. Claims of due process violation’s fell on deaf years. The court cites long-standing procedures that notice of hearing prior to imposition of sanctions is the sole procedural due process required. Finding that Dr. Hammad received notice and “failed to appear to engage in the process he was due does not amount to an error in the process or to a violation of his rights. ”

Dr. Hammad’s objections to Veterinary Board process and authority to discipline are also summarily swept aside. Suggesting the Board did not have authority to fine him for wasting it’s time and investigatory expenses are quickly dispensed. The board did have pity on him and reduce the civil fine from $20,000 to $15,000. Nonetheless the appeals court strenuously affirms each and every licensing board’s authority to investigate, seek licensee compliance, and enforce their rules of discipline on their licensees.

This case is another example of how important it is to have an attorney at the inception of every single professional license investigation or disciplinary matter. Timely responding to petitions and requests for hearings are not enough. Licensees do not know the administrative rules and procedural safeguards to ensure protection of their professional license and therefore their livelihood. Difficult financial times do not give rise to wholesale abandonment of one’s license. Giving up should never be the ultimate decision in any case.

Interstate Medical Licensure Compact Act — Pennsylvania’s Ill Drafted Version

Today our country’s geographically diverse population seeks competent medical care in their small outlying communities. This is prompting hospital administrators to investigate different ways to reach all of their potential constituents. The Affordable Care Act, by providing tax incentives and tax credits, is incentivizes businesses to create different modes of delivery of medical treatment to satiate the medical demands of communities where current medical care is sparse.

Increases in demand for medical care is coinciding with the 21st century’s growth in internet based communication capabilities and electronic medical record storage possibilities. This perfect equilibrium of expanding medical demands and new medical delivery capabilities is prompting many states to consider allowing out of state medical practitioners to receive expedited licensure through a national compact process.

The formal name of the law is the Interstate Medical Licensure Compact Act (the “Act”). With a stated purpose of strengthening avenues to health care through recent advances in the delivery of health care services, member states of the Act seek to develop a comprehensive process for expanding physician licensure from their one primary state to all states that participate in the Act. The Act seeks to adopt a prevailing standard for licensure that will allow medical boards of a participating state to retain jurisdiction to impose license discipline while promoting patient safety and expanding treatment options.

Pennsylvania has not yet enacted the Act. The Act has been introduced in the Pennsylvania General Assembly as House Bill 1619 of 2015. A similar bill has not been presented in the Pennsylvania Senate. The initial bill has been referred to the House Committee on Health as of October 14, 2015.

House Bill 1619 of 2015 requires the applying physician to designate a member state “as a state of principal license” for the purposes of registering for an expedited license. A state qualifies as a principle state if the physician possesses a full and unrestricted license to practice medicine in that state, is the location of the physician’s primary residence, and at least 25% of the physician’s medical practice is in that state.

A physician seeking multiple jurisdiction expedited licenses through the Act initially applies to their principle state medical board for “eligibility” of an expedited license. The principle state issues a letter of qualification verifying or denying eligibility, with a minor appeal process if there is a denial. Preconditions of principle state eligibility include standard competency and educational qualifications, a satisfactory criminal background check, and determination of suitability in accordance with 5 C.F.R. § 731.202.

Eligibility determinations are then delivered to an Interstate Licensure Commission, which will establish the registration process for licensure is member jurisdictions. The physician identifies in which states she is seeking licensure under the Act. Thereafter a member board shall issue the expedited license to the physician to practice medicine in the issuing state(s) upon payment of designated issuing state’s fees and costs. The practice of medicine in any issuing state will be consistent with the Medical Practices Act and laws and regulations of the both the principle state and member states.

An important part of the Act is the joint investigation and disciplinary process. House Bill 1619-2015 current form allows member boards of each state to participate in joint investigations by other member boards. Subpoenas issued by one member state shall be enforceable in another member state. Member boards may share investigative, litigation, or compliance materials in furtherance of any joint or individual investigation initiated under the Act. Any member state is authorized to investigate actual or alleged violations of statutes authorizing the practice of medicine in any other member state in which the physician holds a license to practice medicine. This sounds like a free for all, pile it on, rugby game.

Any disciplinary action taken by the physician’s principle licensing board (their home state) shall, under House Bill 1619 of 2015, be deemed unprofessional conduct subject to discipline by other member boards in addition to any violation of the Medical Practices Act or regulations of the principle state. Revocation, suspension, or surrender of a license in lieu of discipline or suspension shall cause the physician’s license to suffer similar status by each and every member board to which that physician is licensed.

Conversely, however, any reinstatement of the physician’s license by his principal state medical board shall not affect the encumbered status of that physician’s license in other member states unless and until each member state takes individual action to reinstate my license. This provision allows each member board to conduct the practice of their medical board license disciplinary action independent of the Act. This process is different the current due process rules that require each state’s discipline of a multiple state licensed professional to be independent of, and not link to, any prior state’s discipline.

Any discipline action taken by the physician by a member board, not the principal license board, may be used by other member boards as a conclusive disciplinary action warranting imposition of the same or less or sanction or a separate disciplinary action by other member boards. As well, any license investigation by a member board that becomes the subject revocation, surrender or relinquishment in lieu of discipline shall cause the physician’s license to suffer the same consequences without any further action in each other member board without the subject to any disciplinary investigation. The physician truly becomes hostage to the initiating state’s disciplinary process and must fight it to the death so as to avoid any automatic domino effect.

The Act seeks to balance the states’ citizens’ need for medical care, a nation’s policy interest in granting access to high quality medical care to all citizens, and a physician’s ability to provide competent medical service regardless of artificial state borders against patient safety and criminally active doctors. The primary concern of the Act is who will become the disciplinary supervisor of doctors practicing throughout the country under the Act. While this is a serious and weighty issue, the Act in its current form fails to safeguard the medical license of Pennsylvania’s many doctors who will choose it as their primary state of licensure.

Pennsylvania’s medical schools have produced thousands of doctors over the years. Many secure initial graduate school training licenses and stay in the Commonwealth after residency to care for Pennsylvania’s residents. Many choose Pennsylvania as a home. The Act as drafted in House 1619 of 2015 will discourage this.

Physicians who seek to practice medicine in multiple states through the Act will sacrifice a significant degree of due process if any disciplinary investigation is commenced or levied against them. While there is significant financial interest to provide internet-based face time oriented medical practice across state borders without driving distances, to save lives, the inevitable due process concerns are significant. Exploding populations are overrunning medical investigatory boards with rampant anonymous complaints that will warrant investigation.

Every day baseless complaints of Medicare Medicaid insurance fraud, pill mills, sexual assaults, or drug theft and diversion are generated from specious reporters who are either aggrieved patients, angry disgruntled business partners, jealous or angry co-employees, or scorned lovers. House Bill 1619 of 2015 exposes Pennsylvania’s principle-based medical practitioners to unilateral concurrent disciplinary process of member states without the ability to respond, investigate, or even defend oneself in a court of law. Member state’s unilateral actions will automatically trickle back to the physician’s primary licensure state, causing potentially automatic disciplinary action there. The Act as written is not in the interest of Pennsylvania medical community.

Federal Sentencing Issues: Calculation of Loss — Great Decision

On September 30, 2015, the Third Circuit decided United States v. Nagle, 2015 U.S. App. LEXIS 17187. Joseph Nagle and Ernest Fink appealed the District Court’s calculation of loss from which their lengthy prison sentences were derived. For federal sentencing fanatics, of which I am one, Nagle is momentous for reversing the District Court’s USSG actual loss sentencing enhancement.

In the 1950’s Nagle’s family formed Schuylkill Products, Inc. (“SPI”), a Pennsylvania manufacturer of concrete beams utilized in highway and mass transit construction projects. In 2004 Joseph Nagle inherited a 50.1% interest in SPI, becoming CEO. In 1993 CDS Engineers, Inc., was formed. Fink owned 49.9% and was Vice President and general manager. After 2004 SPI became a wholly-owned subsidiary of SPI, installing SPI’s manufactured concrete beams.

Federal regulations require states utilizing federal highway funds to establish and meet goals of participation for qualified disadvantaged business enterprises (“DBEs”). The DBE must be certified and perform a commercially useful function in the project. The DBE cannot be a fabricated front for an otherwise non-certified DBE. Neither SPI nor CDS were certified DBEs. Marikina Engineers and Construction Corp (“Marikina”) was a Connecticut based certified DBE subcontractor.

SPI and CDS paid Marikina a fixed fee for DBE participation in SEPTA and PennDOT contracts but kept the contracts’ profits. Nagle, through CDS, prepared and submitted project applications utilizing Marikina’s email and stationary. SPI accessed electronic PennDOT contract management systems through Marikina’s login passwords. SPI employees carried Marikina’s business cards and cellular telephones. During the conspiracy, Marikina received $54 million in SEPTA DBE contracts and over $119 million in PennDOT contracts.

Nagle and Fink were charged with and convicted of orchestrating a scheme between 1993-2008 of utilizing Marikina to bid for PennDOT and SEPTA DBE construction projects which SPI and CDS would perform but were otherwise not entitled as a non-DBE. Prior to Nagle’s trial, Fink and three of Marikina’s principles plead guilty.

As a fraud case, the sentencing court first looks at United States Sentencing Guideline (“USSG”) § 2B1.1 for the offense level associated with a specific amount of fraud. Subsection (b) lists adjustments based upon the amount of loss. As the loss increases, offense levels unscientifically increase. (A loss between $70,000 and $119,999 adds eight to the offense level. A loss over $1 million but less than $2.5 million increases 18 offense levels. Losses between $50 and $100 million allow for a 24 level increase.)

On June 30, 2010 the District Court concluded that USSG § 2B1.1(b) required Fink’s loss to equal the contracts’ face value, $135.8 million. This occurred in Nagle’s co-defendant’s case. United States v. Campbell, 2010 U.S. Dist. LEXIS 65770 (M.D. Pa., June 30, 2010). The Court employed USSG § 2B1.1, cmt.n.3(F)(ii) as the case was associated with fraudulent receipt of government benefits.

Note 3(F)(ii) reads “in a case involving government benefits (grants, loans, entitlement program payments), the loss shall be considered to be not less than the value of the benefits obtained by the unintended recipient.” The court held that § 2B1.1 cmt.n.3(A) defines actual loss as the reasonably foreseeable pecuniary harm that resulted from the offense. The court determined Note 3(A) applicable because Marikina, SPI, and CDS defendants were unintended recipients of DBE funds not entitled to a credit for services rendered and they had not refunded the contract price to allow for an eligible DBE to perform the work.

After his conviction, Nagle’s presentence report relied on the Court’s June 2010 opinion to value his § 2B1.1(b) cmt.n.3(A) loss at $54 million. This increased by 24 Nagle’s offense level calculus. Nagle’s objections, similar to Fink’s which were held under advisement until after Nagle’s trial, argued the loss is offset by the value of services rendered based upon § 2B1.1 cmt.n.3(A), United States v. White, 2012 WL 4513489 (SDNY Oct 2, 2012), and its interpretation of U.S.S.G. §2B1.1(1)(h). There the court offset the loss with the value of services provided, resulting in a 14, not 24, offense level increase. The District Court reviewed § 2B1.1(b) and (h) and rejected White.

Nagle’s cumulative offense level was 40. When combined with a Zone I criminal history his jail range was 292-365 months. Nagle received eighty four (84) months in prison. No restitution was ordered. The court concluded the Government received what it paid for in the contracts. United States v. Nagle, 2014 U.S. District Lexis 63033 (M.d.Pa. May 2014).

In reversing the District Court’s loss calculation of $54 million against Nagle, the appeals court focuses on the concepts of fraud and theft, not the USSG. In theft cases, a victim’s loss is equal to the value of the theft for which nothing is received in return. Here, a loss calculation is truly a gage of the injury inflicted.

In fraud cases, however, value passes in each direction of the transaction. Real estate secured through fraud still possesses value which can be sold to mitigate a victim’s losses. The court recognizes this analysis is an accepted ‘value of loss’ mitigation tool in mortgage fraud jurisprudence. Since 1999 the Third Circuit has also applied net loss to federal procurement fraud cases; the value of components provided reduces the § 2B1.1(b) actual loss value calculation. In adopting this reasoning to DBE fraud cases, the appeals court daftly reasserts District Courts’ authority to determine loss outside the constraints of the non-scientifically derived, and now discretionary, sentencing guidelines.

The court did comply with its obligatory responsibility of evaluating USSG definitions. After a lengthy analysis of the parties’ positions, the court rejects the government’s and Congress’ one size fits all (you stole therefore you disgorge) windfall argument. The court turned to § 2B1.1 cmt.n.3(E)(i) to buttress its fraud based conclusion that credit must be given for services and goods provided. The Court also rejects the government’s argument that solely because SPI and CDS were not the intended beneficiaries of the DBE program they could not render a valuable service.

The court’s fraud analysis compels its ruling that in DBE cases value of loss is reached only after subtracting the fair market value of labor and materials rendered and of transporting and storing the materials. This is momentous. In DBE fraud prosecutions, the government must now conduct pre-indictment contract profit analysis. Profit size and distribution, shareholders versus private corporate owners, could become a major factor in the decision to criminally charge corporate officers in DBE and other government fraud cases.

For several years district courts have enjoyed renewed latitude in sentencing defendants. Noteworthy judicial objections to specious mandatory minimum sentences and unscientific USSG offense level enhancements appear in opinions and newspapers monthly. Nagle follows this trend by limiting the Guideline’s and Congressional intent to punish through vastly overvaluing a monetary benefit to individual corporate officer defendants based solely upon the gross value of the government contract. In Nagle the Third Circuit gives district courts more sentencing authority by eliminating mandatory judicial compliance with USSG policy of exorbitant sentences enhancements randomly assigned from monetary value that lack any relation to an appropriate sentence.

Offense level calculations typically determine the high water mark of a defendant’s potential sentence. Nagle is noteworthy because it limits Guideline escalation of offense levels through arbitrary enhancements which raise suggested time of incarceration. This restriction, in turn, reinforces district courts’ sentencing discretion to vary or depart downward because that analysis will now simply start at a lower offense level. Nagle invigorates the argument that speciously derived and arbitrary USSG enhancements pursuant to the § 2B1.1(b) monetary loss figures will no longer dictate district courts’ sentences.

Nagle furthers the Supreme Court’s goal of bringing equity and sensibility to sentencing decisions. The gross cost of government contracts, for which services and goods are properly rendered, is now appropriately excluded as a basis for sentencing enhancements. To the extent the government, and thus the country’s citizens, receive the ultimate intended benefit of the federal transportation highway program (properly designed and built roads, bridges, and mass transit) the government is not entitled to a windfall and not pay for the services. Only illegally secured profits will factor into a sentencing scheme.