Week of July 22, 2018 through July 27, 2018
Children’s Hospital v. Alex Azar, II (Wynn 7/23/2018): The Fourth Circuit held that a Medicaid policy set forth in a Frequently Asked Questions (“FAQ”) document violated the Administrative Procedural Act (“APA”), because it was a “legislative rule” promulgated without the proper notice-and-comment rulemaking procedure. Thus, the Fourth Circuit affirmed the district court’s judgment enjoining Alex Azar, in his official capacity as Secretary of the U.S. Department of Health & Human Services, from enforcing a Medicaid policy against Children’s Hospital of the King’s Daughters, Inc., a disproportionate share hospital. Because the Court held the promulgation of the FAQ policy failed to comply with the procedural requirements set forth in the APA, the Court did not reach the substantive question of whether the policy contradicted the plain and unambiguous language of the governing statute. Full Opinion.
Orus Berkley v. Mountain Valley Pipeline, LLC (Wynn 7/25/2018): The Fourth Circuit held that landowners along the path of a proposed natural gas pipeline did not have subject matter jurisdiction to challenge the constitutionality of various provisions of the Natural Gas Act, 15 U.S.C. § 717 et seq., on the grounds that their claims must instead be brought through the agency review process laid out in the Natural Gas Act. The Court, therefore, affirmed the district court’s dismissal of the plaintiffs’ action without reaching the merits of their challenges. Full Opinion.
U.S. v. Lorene Chittenden (Gregory 7/25/2018): The Fourth Circuit, on remand from the Supreme Court, reconsidered its decision in United States v. Chittenden, 848 F.3d 188 (4th Cir. 2017) and held, in light of the Supreme Court’s decision in Honeycutt v. United States, 137 S. Ct. 1626 (2017), that 18 U.S.C. § 982(a)(2) precludes joint and several forfeiture liability for the crimes of bank and mail fraud. Thus, the Fourth Circuit vacated the district court’s forfeiture orders, but reaffirmed all other aspects of the district court’s judgment. Full Opinion.
T.B., Jr. v. Prince George’s County (Wilkinson 7/26/2018): The Fourth Circuit held that a school district, although it did commit a procedural violation of the Individuals with Disabilities Education Act (IDEA), did not actually deprive a former student of a free appropriate public education. The Fourth Circuit, therefore, affirmed the district court’s grant of summary judgment to the defendant school district, Prince George’s County Public Schools. Chief Judge Gregory wrote an opinion concurring in the judgment only. Full Opinion.
Kenneth L. Hunter v. Town of Mocksville, NC (Wynn 7/26/2018): The Fourth Circuit held that the town of Mocksville’s insurance policy covered more than $1 million of the aggregate damages awarded against it to former city police officers to the extent that the town had purchased liability insurance. Further, the Court found that the police officer plaintiffs could bring § 1983 actions against the town based on alleged First Amendment violations, because the Town Manager and Chief Officer constituted final policymakers for the town. Accordingly, the Fourth Circuit reversed the district court’s conclusion that the town’s insurance policy covered only $1 million of the awarded damages, reversed the district court’s dismissal of the plaintiffs’ First Amendment claims, and affirmed the district court’s dismissal of the plaintiffs’ remaining claims. Full Opinion.
U.S. v. Dominic Demarcus Steele (Gregory 7/27/2018): The Fourth Circuit held that restitution damages in a postal theft action were not sufficiently supported by appropriate fair market value data nor by evidence of the victim’s loss. Therefore, the Fourth Circuit vacated the restitution order and remanded the case to the district court for further factual findings consistent with its opinion. Full Opinion.
Sierra Club, Inc. v. U.S. Forest Service (Thacker 7/27/2018): The Fourth Circuit held that the agency decisions of the Bureau of Land Management and United States Forest Service that would allow for a right of way for a pipeline through Jefferson National Forrest failed to adequately comply with the National Environmental Policy Act and the National Forest Management Act, and violated the Mineral Leasing Act. The Court, therefore, granted the plaintiffs’ petitions challenging the agency decisions and remanded the issues back to the respective agencies for further proceedings consistent with its opinions. Full Opinion.
U.S. v. Lorene Chittenden, No. 14-4768
Decided on Remand: July 25, 2018
The Fourth Circuit, on remand from the Supreme Court and in light of the Supreme Court’s decision in Honeycutt v. United States, 137 S. Ct. 1626 (2017), held that 18 U.S.C. § 982(a)(2) precludes joint and several forfeiture liability for the crimes of bank and mail fraud. Thus, the Fourth Circuit vacated the district court’s forfeiture orders that ordered the defendant to pay over $1 million to cover proceeds that her co-conspirators had received and dissipated, remanded the case for a reassessment an appropriate forfeiture amount, and reaffirmed all other aspects of the district court’s judgment.
Defendant Lorene Chittenden was indicted in 2013 for originating and submitting fraudulent mortgage loan applications. The evidence showed a scheme by which Chittenden worked in concert with other realtors to obtain hundreds of thousands of dollars in loan commissions by falsely inflating the incomes of unknowing, first-time homebuyers, thereby garnering higher loan commissions. After a seven-day trial, a jury convicted Chittenden of one count of conspiracy to commit bank and mail fraud, under 18 U.S.C. § 1349, and ten counts of bank fraud, under 18 U.S.C. § 1344. Although Chittenden only personally received $231,000 in fraudulent loan commissions, the district court ordered a forfeiture of $1,513,378.82.
The Fourth Circuit, in United States v. Chittenden, 848 F.3d 188 (4th Cir. 2017), initially affirmed Chittenden’s conviction and sentence. Subsequent to that decision, the Supreme Court decided Honeycutt v. United States, 137 S. Ct. 1626 (2017), where the Court found that 21 U.S.C. § 853 (a)(1), a provision of the Controlled Substances Act that mandates forfeiture for certain drug crimes, precludes co-conspirator liability, because the statute “defines forfeitable property solely in terms of personal possession or use.” Honeycutt, 137 S. Ct. at 1632. The Supreme Court thus remanded the instant action for reconsideration based on its decision in Honeycutt.
The Supreme Court decided Honeycutt under 21 U.S.C. § 853 (a)(1); Chittenden’s forfeiture sentence was determined under 18 U.S.C. § 982(a)(2), a general criminal forfeiture statute that mandates forfeiture for a broader range of crimes, including bank and mail fraud. Thus, the Fourth Circuit’s task was to determine whether Honeycutt’s logic regarding the former statute could be fairly applied to the latter statute. Because the relevant text of 18 U.S.C. § 982(a)(2) mirrors that of 21 U.S.C. § 853(a)(1), the Fourth Circuit found that Honeycutt’s logic indeed applies with equal force to Chittenden’s forfeiture sentence under 18 U.S.C. § 982(a)(2).
Therefore, in light of the holding and reasoning of Honeycutt, the Fourth Circuit held that forfeiture under 18 U.S.C. § 982(a)(2) is limited to property the defendant acquired as a result of the crime, and that the statute does not permit courts to hold a defendant liable for proceeds that only co-conspirators acquired.
Thus, the Court vacated the district court’s forfeiture orders and remanded the action for reassessment of the appropriate forfeiture amount per its reconsidered opinion.