United States v. Theiler: No Immediate-Disclosure Right for Unanswered Jury Notes; Non-Allen “Keep Deliberating” Response; Circumstantial Proof of AKS-Conspiracy Knowledge

I. Introduction

Case: United States v. Theiler, No. 24-40779 (5th Cir. July 7, 2026).
Parties: United States (Appellee) v. Matthew John Theiler, Susan L. Hertzberg, David Weldon Kraus, and Thomas “Gray” Hardaway (Appellants).
Core Allegation: A conspiracy to violate the Anti-Kickback Statute (AKS) by using Management Service Organizations (MSOs) as pass-through entities to pay physicians for patient referrals routed through “critical-access” hospitals with unusually high Medicare reimbursement dynamics.

The appeal raised three clusters of issues: (1) whether the evidence was sufficient to prove that key executives/sales leaders knowingly and willfully joined an AKS kickback conspiracy (and whether a sufficient federal-program nexus existed); (2) whether two jury notes and the district court’s response required a new trial; and (3) whether the court erred by refusing a requested “good faith” instruction.

II. Summary of the Opinion

The Fifth Circuit affirmed all challenged convictions. It held:

  • The evidence was sufficient for a rational jury to find that Hertzberg (CEO), Hardaway (sales rep/MSO participant), and Theiler (VP of sales) knew of and voluntarily joined the unlawful objective of paying kickbacks for referrals, based largely on circumstantial proof (authority, healthcare experience, abnormal profits, proximity to wrongdoing, concealment, and financial incentives).
  • The federal-program “nexus” element was satisfied because the government needed to show defendants agreed to remuneration in connection with referrals for patients who could be federally insured, not that defendants knew federally insured patients were actually referred.
  • Hertzberg and Hardaway failed to prove the affirmative defense of withdrawal before the limitations cutoff; “mere cessation” or resignation was insufficient, and continuing to receive benefits undermined withdrawal.
  • The district court did not commit reversible error in handling jury notes: it had no duty to immediately disclose a note it did not answer; and its response to the earlier note was not an Allen charge and was not coercive.
  • The court did not abuse discretion in refusing a standalone “good faith” instruction because the “knowing” and “willful” instructions substantially covered the defense.

III. Analysis

A. Precedents Cited

1. Sufficiency of the evidence framework

  • United States v. Marchetti, 96 F.4th 818 (5th Cir. 2024): Used for the standard of review (“highly deferential” to the verdict) and for affirming that circumstantial evidence—especially authority/experience/profit awareness—can establish knowledge in healthcare-fraud-adjacent prosecutions. Theiler applies Marchetti’s approach to senior leadership (CEO/VP sales) and treats “notice” plus suspicious conduct as enough for a rational inference of knowing participation.
  • Jackson v. Virginia, 443 U.S. 307 (1979), and United States v. Vargas-Ocampo, 747 F.3d 299 (5th Cir. 2014) (en banc): Supply the “any rational trier of fact” test and reinforce that appellate courts do not reweigh evidence. Theiler repeatedly returns to this constraint when rejecting defendants’ alternative, innocence-framed narratives.
  • United States v. Lopez-Urbina, 434 F.3d 750 (5th Cir. 2005), and United States v. Sanders, 952 F.3d 263 (5th Cir. 2020): Cited for deference to jury credibility determinations and that the verdict stands unless “absurd, preposterous, foolish, or fanciful.” This mattered because much of the government’s proof depended on cooperators and “red flag” inference rather than a single “smoking gun” document.
  • United States v. Willett, 751 F.3d 335 (5th Cir. 2014), and United States v. Tooker, 957 F.2d 1209 (5th Cir. 1992): Willett is the opinion’s central “knowledge-by-circumstance” anchor (authority, experience, suspicious activity, profit margins, proximity). Tooker contributes the proposition that concealment behavior is probative of guilty knowledge. Theiler extends this logic to modern healthcare commercialization: unusually high reimbursement, deliberate “no paper trail” messaging, and limiting distribution of financial updates.
  • United States v. Ganji, 880 F.3d 760 (5th Cir. 2018), and United States v. Simpson, 741 F.3d 539 (5th Cir. 2014): Reinforce that conspiracy elements can be inferred from surrounding circumstances but warn against “overly attenuated” inference stacking. Theiler uses this to justify affirmance while acknowledging limits—then explains why these facts are not “mere speculation.”
  • United States v. Bermea, 30 F.3d 1539 (5th Cir. 1994): Used to reject the idea that evidence must exclude every hypothesis of innocence; Theiler uses Bermea to uphold convictions despite defendants’ alternative explanations (e.g., “legitimate marketing”).
  • United States v. Nora, 988 F.3d 834 (5th Cir. 2021), and United States v. Umawa Oke Imo, 739 F.3d 226 (5th Cir. 2014): Nora supports the significance of a close relationship with a fraud’s “chief facilitator”; Imo confirms knowledge can be inferred. Theiler uses these to support the inference that Theiler’s repeated, direct engagement with O’Neal (the “architect”) supported knowing agreement.
  • United States v. Martinez, 921 F.3d 452 (5th Cir. 2019), and United States v. Mauskar, 557 F.3d 219 (5th Cir. 2009): Cited for considering acts that further a scheme as evidence of knowing participation and for the idea that certain losses/harms would not occur without a defendant’s conduct. Theiler uses these to tie executive actions (growth/replication of the model) to conspiratorial participation.
  • United States v. Hesson, 746 F. App’x 324 (5th Cir. 2018) (unpublished), and United States v. Murthil, 679 F. App’x 343 (5th Cir. 2017) (unpublished): Used to reinforce (even if unpublished) that proximity and failure to remediate after concerns can show awareness/complicity, and that leadership-level understanding of healthcare regulations plus “recruiter” sourcing patterns supports guilt.
  • United States v. Read, 710 F.3d 219 (5th Cir. 2012): Used to support that awareness of reimbursement regulations is relevant evidence of conspiratorial intent in healthcare settings.
  • United States v. Sorensen, 134 F.4th 493 (7th Cir. 2025): Though out-of-circuit, it is cited to distinguish lawful MSO activity (“only advertising services”) from the sham MSO model alleged here. Theiler uses it to frame that “MSOs can be lawful,” but the case turns on whether they were being used as kickback conduits.

2. AKS “federal nexus” and intent

  • United States v. Shah, 95 F.4th 328 (5th Cir. 2024), cert. denied, 145 S. Ct. 518 (2025): The pivotal AKS authority for two points: (1) willfulness/specific intent language for AKS conspiracy, and (2) the “federal nexus” requirement—payment “may be made” by a federal health program—does not require actual knowledge that a particular patient was federally insured, only that the referrals could involve federally insured patients. Theiler applies Shah to uphold nexus proof via “critical access” Medicare dynamics and explicit references to Medicare billing streams.

3. Withdrawal and statute of limitations

  • United States v. Killian, 639 F.2d 206 (5th Cir. Unit A Mar. 1981): Sets the Fifth Circuit withdrawal test—affirmative acts to defeat/disavow, communicated to conspirators. Theiler applies it strictly to reject “I resigned” style defenses.
  • United States v. Heard, 709 F.3d 413 (5th Cir. 2013): Supplies the rule that “mere cessation” is insufficient and links withdrawal to limitations accrual. Theiler uses it to establish the January 12, 2017 cutoff date.
  • United States v. Hoffman, 901 F.3d 523 (5th Cir. 2018): “Reduced participation” is not withdrawal; Theiler uses it to undercut partial disengagement arguments.
  • Smith v. United States, 568 U.S. 106 (2023): Cited for the principle that liability endures even if a conspirator becomes entirely inactive after joining. Theiler deploys Smith to frame resignation as legally insufficient absent affirmative disavowal.
  • United States v. Girard, 744 F.2d 1170 (5th Cir. 1984), and United States v. Berger, 224 F.3d 107 (2d Cir. 2000): Support the idea that continuing to receive conspiracy benefits defeats withdrawal. Theiler uses this to emphasize ongoing earnout/financial benefit timelines.

4. Jury notes, Rule 43, and Allen charges

  • United States v. Thomas, 724 F.3d 632 (5th Cir. 2013): Provides plain-error review for forfeited jury-note handling challenges; Theiler cites it while noting the parties disputed the standard.
  • United States v. McClatchy, 249 F.3d 348 (5th Cir. 2001): Supports plain-error review where no objection is lodged to a supplemental instruction.
  • United States v. McDuffie, 542 F.2d 236 (5th Cir. 1976), and United States v. Jordan, 851 F.3d 393 (5th Cir. 2017): Frame harmless-error review principles for jury communications and preserved responses; Theiler distinguishes unanswered notes from undisclosed answered communications.
  • United States v. Miles, 360 F.3d 472 (5th Cir. 2004): Used to justify resolving the claims without fixing a single standard of review where the result is the same under either.
  • United States v. Bieganowski, 313 F.3d 264 (5th Cir. 2002), United States v. Sylvester, 143 F.3d 923 (5th Cir. 1980), and Rogers v. United States, 422 U.S. 35 (1975): Bieganowski and Sylvester articulate Rule 43’s requirement that counsel be informed of jury communications and heard before a supplemental charge is given; Sylvester’s “too little, too late” language addresses post hoc objection opportunities. Theiler uses these to hold: the key right is to be heard before a supplemental instruction—so where the court does not respond to a note, immediate disclosure is not required by the cited line of cases.
  • United States v. Hale, 685 F.3d 522 (5th Cir. 2012), United States v. Acosta, 763 F.2d 671 (5th Cir. 1985), and United States v. Hitt, 473 F.3d 146 (5th Cir. 2006): Reinforce district court “wide latitude” in responding to jury questions and deciding whether to give additional written instructions or Allen charges.
  • United States v. Eghobor, 812 F.3d 352 (5th Cir. 2015), and United States v. Heath, 970 F.2d 1397 (5th Cir. 1992): Describe what an Allen charge is and how it is reviewed (semantic deviation and coercive circumstances). Theiler uses these standards mainly to explain why the court’s “refer back to instructions / continue deliberating” message was not an Allen charge at all.
  • United States v. Bayer, 331 U.S. 532 (1947): Supports the discretion not to repeat instructions where repetition may not clarify and may confuse; Theiler uses it to uphold the decision not to separately respond to the later note.

5. Good-faith instructions

  • United States v. Shah, 95 F.4th 328: Sets the three-part test for entitlement to a requested instruction and emphasizes that “knowing” and “willful” instructions often substantially cover good faith.
  • United States v. Davis, 132 F.3d 1092 (5th Cir. 1998), and United States v. Frame, 236 F. App’x 15 (5th Cir. 2007) (unpublished): Support the proposition that omission of a standalone good-faith instruction is not error when the charge’s scienter instructions require acquittal if the defendant lacked knowing/willful intent due to good faith.

B. Legal Reasoning

1. AKS-conspiracy knowledge and willfulness can be proven through “red flags” plus role-based inference

The court’s reasoning is an application—and in practical effect, a strengthening—of Fifth Circuit circumstantial-proof doctrine in the AKS context. The panel treated the following as mutually reinforcing: (i) high-level authority and healthcare sophistication, (ii) awareness of unusually high reimbursement and explosive growth, (iii) operational proximity to the MSO recruitment pipeline, (iv) concealment or “paper trail” avoidance behaviors, (v) financial incentives (earnouts/bonuses/commission structures), and (vi) failure to remediate after explicit internal warnings.

The opinion’s method is notable: it does not require a confession, an explicit “kickback” email, or proof the defendants understood every legal detail. Instead, it asks whether, given their roles and the magnitude and structure of the business results, a rational jury could infer “specific intent to do something the law forbids.”

2. Federal nexus: “could be federally insured” is enough

Following United States v. Shah, the court reaffirmed that the AKS jurisdictional hook is satisfied if the remuneration relates to referrals for services for which payment may be made by a federal program. The government did not need to prove that a defendant knew a particular referred patient was on Medicare; it was enough that the referral stream could include federally insured patients—supported here by “critical access” Medicare reimbursement discussion and documentary references to Medicare billing categories.

3. Withdrawal requires affirmative disavowal and communication; resignation and continued benefits are fatal

Applying Killian, Heard, Hoffman, and Smith v. United States, the panel treated withdrawal as a demanding affirmative defense. Two themes stand out:

  • Motive and messaging matter: leaving a job for unrelated reasons is not disavowal; defendants must communicate withdrawal in a way reasonably calculated to reach co-conspirators.
  • Money matters: continuing to receive conspiracy-linked financial benefits (e.g., earnouts) undercuts withdrawal, consistent with United States v. Girard and United States v. Berger.

4. Jury notes: the right is to be heard before a supplemental instruction—not immediate notice of every unanswered note

The jury-note portion is the opinion’s clearest “procedural” contribution. Using Rule 43 cases like Bieganowski and Sylvester, the court drew a practical line: defendants have the right to be informed and heard before the court gives a supplemental charge. If the court decides to give no response to a note, the cited precedents do not compel “immediate disclosure,” and disclosure the next day (at the next assembly) was not error.

5. The response was not an Allen charge; declining a full Allen charge was within discretion

The court relied heavily on United States v. Sylvester to resist relabeling early, neutral deliberation guidance as an Allen charge. The message—refer back to the instructions; continue deliberating in good faith; take the time needed—was treated as a non-coercive direction to continue deliberations, not a “dynamite” instruction.

Even addressing the concern that juror #12 invoked a “moral compass” and threatened to “hang this jury,” the panel accepted the district court’s view that the later note added context but not a new question or a true deadlock, and that repeating or varying instructions risked confusion (United States v. Bayer).

6. Good faith: scienter instructions can “cover” the defense

On the refused good-faith instruction, the court followed Shah, Davis, and Frame: when the jury is instructed that the government must prove knowing and willful participation (and willfulness is defined as intent to do what the law forbids), a separate good-faith instruction is typically redundant. The panel also emphasized the practical ability to argue good faith to the jury through closing arguments and the existing charge.

C. Impact

1. Healthcare fraud/AKS prosecutions: executives face increased “role-based inference” risk

The opinion signals that AKS conspiracy liability for senior leadership can rest on (a) recognized industry “red flags” (explosive growth; abnormal reimbursement; non-clinically aligned ordering patterns), plus (b) evidence of “paper trail” management and suppression of compliance escalation. Future prosecutions can be expected to focus on: internal warnings (whistleblowers), executive communications about avoiding emails, and restricted dissemination of financial metrics.

2. Compliance practice: documentation of remedial action becomes evidentiary armor

Theiler implicitly rewards robust compliance processes: independent compliance committees, documented investigations, suspension decisions, and transparent reporting. The opinion treats failure to remediate after warnings as a powerful circumstantial indicator of complicity.

3. Jury-note procedure: narrower claim space for “late-disclosure” arguments where no response is given

The jury-note holding will likely be cited to defeat new-trial requests premised solely on delayed disclosure of a note where the court did not respond and later disclosed it at the next opportunity. Litigants may need to focus instead on whether any instruction was given without an opportunity to be heard, or whether a delayed disclosure caused concrete prejudice.

4. Allen-charge challenges: not every “keep deliberating” direction is an Allen charge

By treating Allen issues as “creatures of nuance,” the opinion reinforces a functional approach: unless the court’s language and context carry coercive pressure or mimic the classic Allen structure, a short direction to continue deliberating will be upheld.

5. Jury instructions: good faith remains tied to scienter

Defendants seeking a good-faith instruction in the Fifth Circuit should expect a high bar when the jury already receives robust “knowing” and “willful” definitions. The practical fight may shift to: (a) tailoring scienter definitions; (b) ensuring the record supports a distinct advice-of-counsel defense (if asserted); and (c) emphasizing closing-argument freedom to present good-faith themes.

IV. Complex Concepts Simplified

  • Anti-Kickback Statute (AKS): A federal crime to knowingly and willfully offer, pay, solicit, or receive something of value to induce referrals of items/services paid for (in whole or part) by federal healthcare programs.
  • “Willfully” in this context: Not merely doing the act on purpose, but doing it with bad purpose—intent to do what the law forbids or to disregard it.
  • MSO (Management Service Organization): Often a legitimate vendor providing administrative/marketing services to medical practices. Here, MSOs were alleged to be “sham” entities used to route payments to physicians based on referral volume.
  • Critical-access hospital: A rural hospital category that can receive cost-based Medicare reimbursements, sometimes making certain billing strategies far more lucrative than standard fixed reimbursements.
  • Federal nexus (“may be made”): The referral need only be for services that could be paid by Medicare/another federal program; the government need not prove defendants knew a specific patient was federally insured.
  • Withdrawal from conspiracy: You do not withdraw by simply stopping. You must take affirmative steps to disavow/defeat the conspiracy and communicate that in a way likely to reach co-conspirators; continuing to receive benefits also undermines withdrawal.
  • Allen charge: A special instruction given to a potentially deadlocked jury urging continued deliberations while cautioning jurors not to surrender honest convictions just to reach unanimity.
  • Plain error vs. harmless error: “Plain error” is a tougher appellate standard applied when no timely objection was made; “harmless error” asks whether an error likely affected the outcome.

V. Conclusion

United States v. Theiler affirms significant AKS conspiracy convictions by emphasizing that knowledge and willfulness can be proven through layered circumstantial evidence—especially where sophisticated healthcare executives profit from, remain close to, and appear to conceal suspicious referral-driven revenue spikes while disregarding internal warnings. Procedurally, the decision clarifies that Rule 43 jury-communication rights are principally about the opportunity to be heard before a supplemental instruction is delivered; delayed disclosure of an unanswered jury note is not, by itself, reversible error. The opinion also reinforces that not every “continue deliberating” message is an Allen charge and that “good faith” is ordinarily subsumed within proper scienter instructions.