SCOTUS Narrows Reach of Identity Fraud Statute

In Durbin v. United States, 599 U.S. ____ (2023), the U.S. Supreme Court narrowed the scope of a federal aggravated identity theft statute. The justices unanimously held that a defendant “uses” another person’s means of identification “in relation to” a predicate offense when the use is at the crux of what makes the conduct criminal.

Facts of the Case

Petitioner David Dubin was convicted of healthcare fraud under 18 U.S.C. §1347 after he overbilled Medicaid for psychological testing performed by the company he helped manage. The issue before the Court was whether, in defrauding Medicaid, he also committed “[a]ggravated identity theft” under 18 U.S.C. §1028A(a)(1).

Section 1028A(a)(1) applies when a defendant, “during and in relation to any [predicate offense, such as healthcare fraud], knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person.” The Government maintained that §1028A(a)(1) was automatically satisfied because Dubin’s fraudulent Medicaid billing included the patient’s Medicaid reimbursement number—a “means of identification.” Meanwhile, Dubin argued that the use of a means of identification must have “a genuine nexus” to the predicate offense.

Bound by Fifth Circuit precedent, the District Court allowed Dubin’s conviction for aggravated identity theft to stand, even though, in the District Court’s view, the crux of the case was fraudulent billing, not identity theft. The Fifth Circuit sitting en banc affirmed in a fractured decision, with five concurring judges acknowledging that under the Government’s reading of §1028A(a)(1), “the elements of [the] offense are not captured or even fairly described by the words ‘identity theft.’”

Supreme Court’s Decision

The Supreme Court sided with Durbin. It held that under §1028A(a)(1), a defendant “uses” another person’s means of identification “in relation to” a predicate offense when the use is at the crux of what makes the conduct criminal. Because the crux of Durbin’s overbilling was inflating the value of services actually provided, and the patient’s means of identification was an ancillary part of the Medicaid billing process, the statute was not violated.

“The crux of the healthcare fraud was a misrepresentation about the qualifications of petitioner’s employee,” Justice Sonia Sotomayor wrote. “The patient’s name was an ancillary feature of the billing method employed.”

In reaching its decision, the Court emphasized that terms “uses” and “in relation to” have been singled out by this Court as being particularly sensitive to context. It went on to find that Section 1028A(a)(1)’s title and terms both point toward reading the provision to capture the ordinary understanding of identity theft, where misuse of a means of identification is at the crux of the criminality.

The Supreme Court also concluded that Section 1028A(a)(1)’s language “points in the same direction as its title.” According to the Court, Congress used a trio of verbs that reflect an ordinary understanding of identity theft.

In further support of its decision, the Court noted that it has “traditionally exercised restraint in assessing the reach of a federal criminal statute,” and “prudently avoided reading incongruous breadth into opaque language in criminal statutes.” As Justice Sotomayor explained:

The Government’s reading would sweep in the hour-inflating lawyer, the steak-switching waiter, the building contractor who tacks an extra $10 onto the price of the paint he purchased. So long as they used various common billing methods, they would all be subject to a mandatory two years in federal prison. To say that such a result is implausible would be an understatement. Because everyday overbilling cases would account for the majority of vi- olations in practice, the Government’s reading places at the core of the statute its most improbable applications.

Justice Neil Gorsuch authored a concurrence similarly arguing that the government’s interpretation of the law would have made “every bill splitter who has overcharged a friend using a mobile-payment service like Venmo,” and “every contractor who has rounded up his billed time by even a few minutes,” and “every college hopeful who has overstated his involvement in the high school glee club” an aggravated identity thief.

“All of those individuals, the United States says, engage in conduct that can invite a mandatory 2-year stint in federal prison,” he said. “The Court today rightly rejects that unserious position.”