In a case that clarifies the government’s burden in bringing evidence under a hearsay exception, the United States Court of Appeals for the Eleventh Circuit recently heard an appeal arising from the United States District Court for the Northern District of Georgia. This case, United States v. Holland, examines the functions of Rule 801(d)(2)(E) of the Federal Rules of Evidence, defining what precisely the government must prove to support the existence of a conspiracy.
Defendants John Holland, William Moore, and Ed Cota were accused of participating in an illegal healthcare kickback scheme in violation of 42 U.S.C. §1320a-7b—The Anti-Kickback Statute (AKS). Cota, along with his wife, operated a number of health clinics. Holland and Moore worked as hospital executives for Tenet Healthcare. The Cotas would refer pregnant women covered by either Medicare or Medicaid to Tenet hospitals. In return, Holland and Moore would pay the Cotas, disguising the payments as contracts for translation services. Cota’s wife pleaded guilty to violating the AKS through her role in the scheme, but the other three defendants—Cota, Holland, and Moore–claimed they lacked the mens rea, or mental state, required to violate the AKS.
In an attempt to establish the defendants’ mens rea, the government intended to introduce out-of-court statements from alleged coconspirators. In response, the defendants moved for a pretrial “paper hearing” to determine whether the government could prove the defendants’ involvement in a conspiracy with the alleged coconspirators. While the government met its burden of showing by evidence that the defendants had worked with the coconspirators towards a common goal, the district court found that the government failed to prove the common goal’s illegality. Specifically, the district court ruled that the government had to show that the defendants and coconspirators had willfully violated the AKS. Applying this rule to the out-of-court statements, the district court found the statements inadmissible because the knowledge of illegality was not established. The government subsequently appealed, bringing the matter to the Eleventh Circuit.
On appeal, the Eleventh Circuit considered whether the out-of-court statements were admissible under Rule 801(d)(2)(E) of the Federal Rules of Evidence. Rule 801 provides the exclusions from hearsay. Hearsay broadly refers to a statement made outside of court, when a party offers evidence to prove the truth asserted in the out-of-court statement. While such evidence is generally inadmissible, Rule 801(d) specifies certain statements that are not hearsay. One of these exceptions, found in 801(d)(2)(E), applies to statements offered against an opposing party that were made by the party’s coconspirator during the conspiracy and in furtherance of its objectives. In order to determine whether the statements were admissible in this circumstance, the Eleventh Circuit addressed the question of whether the government had the burden of proving the existence of an unlawful conspiracy to meet the requirements of 801(d)(2)(E).
To answer this question, the Court looked to the meaning of the word “conspiracy.” Through traditional legal definitions, “conspiracy” can refer to either of two things—an agreement to do something unlawful or working together towards a shared goal, such as a joint venture. The Court chose to adopt the latter, broader definition. By adopting this definition, the Court held that the government did not need to prove the conspiracy’s illegality, and merely had to prove the individuals involved were working towards a common goal. This interpretation reflects common law understandings of the hearsay exception, as well as legislative commentary on the Federal Rules. In accordance with the holding, the Court reversed the previous ruling and remanded the case for further proceedings consistent with its opinion.
United States v. Holland establishes the appropriate approach for determining whether out-of-court statements of coconspirators are admissible under Rule 801. Under the Court’s adopted definition of “conspiracy,” the mens rea requirement does not impose a burden on the government to prove the conspiracy was knowingly unlawful. A conspiracy can be entirely lawful and still meet the burden for the 801(d)(2)(E) exception. This definition encompasses a broader range of coconspirators under the rule, giving the government greater latitude when introducing out-of-court statements.
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