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Media Alerts - United States of America v. Robert Menendez - Third Circuit
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August 2, 2016
  United States of America v. Robert Menendez - Third Circuit
Headline: District Court did nor err in refusing to dismiss Senator Menendez's indictment under the Speech or Debate Clause

Area of Law: Constitutional Law

Issue(s) Presented: Did the District Court err in refusing to dismiss Senator Menendez's indictment for soliciting and accepting gifts from Dr. Melgen and in exchange using the power of his office to influence enforcement actions against Dr. Melgen and to encourage the State Department and Customs and Border Patrol to intervene on his behalf in a contract dispute with the Dominican Republic?

Brief Summary:

In 2015, a federal grand jury indicted United States Senator Robert Menendez of New Jersey for soliciting and accepting numerous gifts from his friend Dr. Salomon Melgen. The indictment alleged than in exchange for the gifts, Senator Menendez used the power of his office to influence an enforcement action by the Centers for Medicare and Medicaid Services and to encourage the State Department and the U.S. Customs and Border Patrol to intervene on Dr. Melgen's behalf in a multi million contract dispute with the Dominican Republic. The Third Circuit affirmed the denial of his motion to dismiss the indictment. It held that the ruling that his efforts to intervene on behalf of Dr. Melgen were not legislative acts protected by the Speech and Debate clause, was not clearly erroneous. The Court also rejected Menendez's argument that the charges under the Federal Ethics Act violated the separation of powers doctrine.

Extended Summary:

The twenty-two count Indictment of Senator Menendez alleged that in 2009, the Centers for Medicare and Medicaid Services (CMS) suspected that Dr. Melgen, a Florida-based ophthalmologist, had overbilled Medicare for $8.9 million from 2007 to 2008 by engaging in a prohibited practice known as "multi-dosing." Medicare policy required that each patient who was taking the drug Lucentis be treated using a separate vial of the drug. However, Dr. Melgen routinely used the solution from a single vial to treat multiple patients. As he was reimbursed as if he used a separate vial for each patient, CMS believed Dr. Melgen was paid for more vials of the drug than he actually used.

The indictment avers that, before CMS began formal proceedings against Dr. Melgen, Senator Menendez instructed his Legislative Assistant to call the doctor about "a Medicare problem we need to help him with." Both Menendez's Legislative Assistant as well as his Deputy Chief of Staff called Dr. Melgen twice regarding the matter. Once CMS formally notified Dr. Melgen that it may seek reimbursement for the overbilled drugs, the Deputy Chief of Staff emailed the Legislative Assistant advising, "I think we have to weigh in on Dr. Melgen's behalf... to say they can't make him pay retroactively." Senator Menendez's staff continued to work with Dr. Melgen's lobbyist on the CMS dispute and arranged for the Senator to speak with the then-acting Principal Deputy Administrator and Director of CMS. The conversation did not resolve Dr. Melgen's dispute and the senator directed his Chief of Staff to "determine who has the best juice at CMS and the United States Department of Health and Human Services (HHS)."

In 2012, Senator Menendez discussed multi-dosing with Marilyn Tavenner, the then-acting Administrator of CMS. Evidence in the record suggests they met to discuss her nomination to become the permanent administrator of CMS. To prepare for the meeting, the Senator met with Dr. Melgen's lobbyist and during the meeting he pressed Ms. Tavenner about multi-dosing and advocated on behalf of the position favorable to Dr. Melgen. However, there is no evidence that there was mention of Dr. Melgen or his case during this meeting. A follow-up call between the Senator and Tavenner took place a few weeks later. Before the phone call, Dr. Melgen's lobbyist prepared a memorandum titled "Talking Points: CMS Policy," which was incorporated into a separate memorandum prepared for the Senator. The memorandum stated that the subject of the call was to discuss the issue of Medicare reimbursement when a physician multi-doses from a single dose vial, but also made several specific references to Dr. Melgen's case such as "we're talking about payments made in 2007-2008." However, there is no evidence that Senator Menendez mentioned Dr. Melgen by name to Ms. Tavenner. During the call, Ms. Tavenner stated that CMS would not alter its position on multi-dosing and Senator Menendez then threatened to raise the issue of multi-dosing directly with Kathleen Sebelius, the then-Secretary of HHS who oversaw CMS.

A week later, a meeting took place among Senators Reid and Menendez and Secretary Sebelius. The Senator met with Dr. Melgen's lobbyist before the meeting and received a summary of the latest developments in Dr. Melgen's case. During the meeting, Senator Menendez advocated on behalf of Dr. Melgen's position on the dispute, focusing on his specific case and asserting unfair treatment of it. An administrator who accompanied Secretary Sebelius to this meeting told the FBI he did not recall anyone mentioning Dr. Melgen by name, but said it was clear to him that the Senators were talking about Dr. Melgen as his case was an isolated issue as opposed to a general problem. Secretary Sebelius told Senator Menendez that because Dr. Melgen's case was in the administrative appeals process, she had no power to influence it.

In February 2012, Dr. Melgen obtained ownership of a contract held by a company in the Dominican Republic named ICSSI. The contract gave ICSSI the exclusive right to install and operate X-ray imaging equipment in Dominican ports for up to 20 years and required all shipping containers to be X-rayed at a tariff of up to $90 per container. ICSSI and the Dominican Republic disputed the validity of the contract and began to litigate this issue. A former Menendez staffer who worked for Dr. Melgen requested a phone call with Assistant Secretary of State William Brownfield to discuss the matter. A State Department official reported to the Assistant Secretary that the former staffer had "dropped the name of Sen. Menendez pretty squarely as having an interest in the case." The staffer later met with the Assistant Secretary and referenced New Jersey connections to the dispute. Senator Menendez also met with Assistant Secretary Brownfield about U.S. policy relating to Dominican port security. At the meeting, the Senator advocated for Dr. Melgen's interest in his foreign contract dispute, expressed dissatisfaction with the State Department's lack of initiative in the case and threatened to call a hearing if there was no solution.

In addition, the indictment alleged that under the Ethics Act, Senators are required to file with the Secretary of the United States' Senate, an annual financial disclosure form reporting income, gifts, and financial interests from the prior calendar year. Senator Menendez did not report gifts, which Dr. Melgen and his companies gave him, including private, chartered, and first-class commercial flights, a car service, and hotel stays in Paris and Punta Cana. The Indictment also claims that the Senator engaged in conduct "in the district of New Jersey and elsewhere" to falsify, conceal, and cover up those allegedly reportable gifts."

A federal grand jury charged Senator Menendez and Dr. Melgen in April 2015. The 22-count indictment charged that from 2006 to 2013 Menendez solicited and accepted numerous gifts from Melgen, and in exchange used the power of his office to influence the enforcement action against Dr. Melgen by CMS and to encourage the State Department and Customs to intervene on Melgen's behalf in the contract dispute with the Dominican Republic. The Senator moved to dismiss the indictment on several grounds, including the Speech or Debate privilege and with respect to count 22 alleging reporting violations under the Ethics Act, the separation of powers among the Branches of Government. The District Court denied the motions to dismiss and the case was then appealed to the Third Circuit, which affirmed.

The Third Circuit rejected Menendez's argument that his actions were protected by the Speech or Debate Clause, holding that the Clause protects legislative acts, and finding that the District Court's determination, that the facts alleged were not legislative, was not clearly erroneous. Although the Clause protects senators from criminal or civil liability based on their legislative acts and creates a privilege against the use of "evidence of a legislative act" in a prosecution or before a grand jury, it does not make them immune from criminal responsibility.

The Court stated that informal efforts to influence the Executive Branch were ambiguously legislative in nature. Senator Menendez's acts were not privileged under the Clause as the acts alleged were essentially lobbying on behalf of a particular party and outside of the constitutional safe harbor. The Court considered the preparations for the challenged acts as evidence that Dr. Melgen was the primary focus of the communications, as the Senator received preparatory memorandums from Melgen's lobbyist. The Court also took into account evidence suggesting that Dr. Melgen and his lobbyist were particularly interested in following up with Senator Menendez in all of the challenged acts.

Although Senator Menendez alleged that the acts were concerned with broader issues of policy and therefore constitutionally protected, the Court held that existence of evidence that supports an alternative finding does not mean that the District Court's findings were clearly erroneous. Here, the District Court's account of the evidence was plausible, as there was sufficient evidence that the focal point of Menendez's meetings with officials was Dr. Melgen and their predominant purpose was to pursue a political resolution to his dispute. That Senator Menendez framed those meetings using the language of policy does not entitle them unvaryingly to Speech or Debate protection. As a result, the Third Circuit affirmed the District Court's conclusion that the Speech or Debate Clause does not protect any of the challenged acts.

The Court also rejected Menendez's argument that Count 22 of his indictment violated the separation of powers. Menendez argued that the Ethics Act is unconstitutional as applied to the Senate because the Constitution's Rulemaking Clause commits the power to set and enforce ethical standards for Senators to the Senate alone. As a result, the executive branch may not punish any conduct regulated by the Ethics Act, because the Senate had incorporated it into Senate Rule 34. The Court held that Rule 34 allows the Senate to punish Ethics Act violations; it does not undermine the Executive Branch's authority to prosecute a Senator for those violations. Menendez also alleged that Count 22 was incapable of being decided by a court because it required the Judicial Branch to resolve ambiguities in the Senate Rules. However, the Court rejected said argument stating that Senator Menendez had not identified any particular Senate Rule that would necessarily be interpreted in the course of his prosecution, let alone one that is so vague as to be non-justiciable. Menendez also argued that his Ethics Act disclosures are protected legislative acts under the Speech or Debate Clause. The Third Circuit ruled that Ethics Act filings are not legislative acts protected by the Speech or Debate Clause as they are not "an integral part of the deliberate and communicative processes by which members participate in committee and Senate proceedings."

The Court also rejected Menendez's challenge to venue for Count 22, finding he had failed to pursue the argument in his brief and there was no abuse of discretion in rejecting the challenge below.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153459p.pdf

Panel: Ambro, Jordan and Scirica, Circuit Judges

Argument Date: February 29, 2016

Date of Issued Opinion: July 29, 2016

Docket Number: No. 15-3459

Decided: Affirmed

Case Alert Author: Cynthia C. Pereira

Counsel: Raymond M. Brown, Scott W. Coyle, Abbe David Lowell, Christopher D. Man, Jenny R. Kramer, Stephen M. Ryan, Counsel for Appellant; Joseph P. Cooney, Peter M. Koski, Monique Abrishami, Amanda R. Vaughn, Counsel for Appellee

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/02/2016 11:42 AM     3rd Circuit  

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