Case Explained: United States of America Plaintiff— v. Matthew John Theiler; Susan L. Hertzberg; David Weldon Kraus; Thomas Gray Hardaway Defendants—

Court: United States Court of Appeals for the Fifth Circuit

Filed: 2026-07-07

The fifth-circuit affirmed the convictions of Matthew John Theiler, Susan L. Hertzberg, David Weldon Kraus, and Thomas Gray Hardaway for conspiring to commit illegal remunerations in violation of the Anti-Kickback Statute (AKS) and 18 U.S.C. § 371. The court held that a rational jury could find beyond a reasonable doubt that the defendants knowingly and willfully joined a conspiracy to pay kickbacks to physicians for patient referrals through Management Service Organizations (MSOs), satisfying the requisite federal nexus where payments could be made by federal health care programs. The court applied a de novo standard of review for sufficiency-of-the-evidence challenges, requiring only that any rational trier of fact could find the essential elements of the crime proven beyond a reasonable doubt based on circumstantial evidence. The opinion detailed that the defendants’ knowledge and intent were supported by their positions of authority, experience in healthcare, awareness of suspiciously high profit margins (with reimbursement rates doubling), proximity to fraudulent activities, engagement in concealment efforts, and financial stakes in the scheme. Regarding the affirmative defense of withdrawal, the court applied a preponderance of the evidence standard, finding that Hertzberg’s resignation and Hardaway’s departure were not timely or sufficiently communicated to disavow the conspiracy, nor did they cease receiving benefits within the statute of limitations. On procedural grounds, the court reviewed challenges to the district court’s handling of jury notes for plain error (due to lack of objection) and abuse of discretion regarding jury instructions. The court determined that the district court did not err by failing to immediately disclose a second jury note containing a juror’s intent to “hang the jury,” as no supplemental charge was given in response to it, and any potential error was harmless. Furthermore, the court found the district court’s refusal to give a specific good-faith instruction was not an abuse of discretion because the existing instructions defining “knowingly” and “willfully” adequately covered the defense by requiring proof of specific intent to violate the law. The practical consequence is that the defendants’ convictions stand, and their sentences—ranging from five years’ probation for Hertzberg to prison terms between 12 months and 22 months for the others—are upheld. The case returns to the district court for enforcement of these sentences.

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