United States v. Clay: Limiting Healthcare-Fraud Restitution to Actual Loss and Enforcing MVRA Apportionment

I. Introduction

In United States v. Kevin Clay, Nos. 23‑3923/24‑3038 (6th Cir. Dec. 19, 2025), the Sixth Circuit affirmed healthcare-fraud and tax-related convictions arising from a lucrative compounded-cream scheme, but significantly curtailed the district court’s restitution orders and remanded for further sentencing proceedings.

The opinion is important for at least three reasons:

1. It holds that under the Mandatory Victims Restitution Act (MVRA), restitution for healthcare fraud cannot include medically necessary claims that the insurer would have paid even absent the fraud.
2. It enforces the apportionment requirements of 18 U.S.C. § 3664(h), rejecting a district court’s attempt to make one defendant pay 90% of restitution merely because a co-defendant’s plea agreement capped his share at 10%.
3. It bars restitution based on acquitted tax conduct where that conduct is not part of the “scheme, conspiracy, or pattern” described in the indictment for the offense of conviction.

More broadly, the decision tightens the link between restitution and victims’ actual losses, limits the effect of plea bargains on co-defendants’ obligations, and clarifies the interaction between invited error, plain error, and evolving interpretations of the healthcare fraud statute, 18 U.S.C. § 1347.

II. Background and Facts

A. The Theramedical Compounded-Cream Scheme

Kevin Clay and his long-time friend, Matthew Maluchnik, were pharmaceutical salesmen who recognized the profit potential of compounded pain and scar creams—custom-made products for which certain insurers were willing to reimburse large sums. Unlike legitimate pharmaceutical sales operations, they built a company—Theramedical, LLC—that marketed directly to patients instead of physicians.

Key features of the scheme:

• Kickback structure with Central Rx Pharmacy. Clay and Maluchnik reached an agreement with Central Rx Pharmacy (owned by Lemma Gettachew). Central Rx would bill insurers for compounded creams and pay Theramedical 30% of the insurance reimbursements.
• “Sales reps” who were actually patients. Theramedical recruited “pharmaceutical representatives,” often employees at a local Jeep plant whose health plan covered compounded creams. In reality, these “reps” were paid commissions for getting prescriptions for themselves and family members.
• Steering to a willing prescriber. Theramedical directed recruits to Dr. Suzette Huenefeld, who prescribed the creams liberally—sometimes for entire families, including children who never used the products.
• Extraordinary reimbursement levels. A single prescription could cost up to $15,000 per month, generating roughly $4,500 for Theramedical and a commission for the patient. Over six months, Central Rx received $7.7 million in reimbursements tied to Jeep employees; Theramedical’s monthly take sometimes exceeded $1 million.

Fiat Chrysler (Jeep’s parent) was self-insured; BlueCross BlueShield of Michigan processed claims and billed Fiat Chrysler, which bore the actual financial loss.

B. The Clay Foundation and Tax Conduct

To reduce his tax burden from Theramedical profits, Clay created the Clay Foundation, nominally a scholarship-granting public charity. A public charity designation (as opposed to a private foundation) confers greater tax benefits, such as higher charitable deduction limits. Clay donated $400,000 in 2014 and claimed roughly $140,000 in tax savings—savings that would have been about $35,000 less if the entity were properly treated as a private foundation.

However, Clay treated the Foundation’s accounts as personal funds:

• He used Foundation assets to buy $40,000 in silver and gold bars, titled in his own name and stored in his bedroom.
• He used Foundation funds to make private gifts unrelated to charitable purposes.
• He failed to file required tax returns for the Foundation, eventually causing revocation of its nonprofit status.

C. Indictment, Trial, and Sentencing

A grand jury indicted Clay on four counts:

1. Conspiracy to commit healthcare fraud (18 U.S.C. § 1349).
2. Healthcare fraud (18 U.S.C. §§ 1347 & 2).
3. False statement to the IRS (taxable income for 2014) (26 U.S.C. § 7206(1)).
4. False statement to the IRS (classifying the Clay Foundation as a public charity) (26 U.S.C. § 7206(1)).

Co-defendants (Maluchnik, Peace, and Huenefeld) pled guilty to healthcare fraud (and, in Maluchnik’s case, tax offenses). Clay went to trial and the jury:

• Convicted him on counts 1 (conspiracy), 2 (healthcare fraud), and 4 (false statement about the Foundation’s status).
• Acquitted him on count 3 (false statement regarding his 2014 taxable income).

The district court imposed:

• 51 months’ imprisonment on counts 1 and 2 (concurrent).
• 30 months’ imprisonment on count 4 (concurrent).
• Restitution: $6,443,815.00 to Fiat Chrysler and $403,481.46 to the IRS.

Clay appealed his convictions, sentencing enhancements, and the restitution orders.

III. Summary of the Sixth Circuit’s Decision

The Sixth Circuit’s per curiam opinion:

• Affirmed Clay’s convictions for conspiracy to commit healthcare fraud, healthcare fraud, and making a false statement regarding the Clay Foundation.
• Rejected his challenges to jury instructions (mens rea and omissions) and to the admission of the case agent’s lay testimony, under plain-error review.
• Vacated the restitution order to Fiat Chrysler because:
  • It improperly included medically necessary prescriptions that would have been paid even in the absence of fraud; and
  • The district court misapplied 18 U.S.C. § 3664(h) by apportioning 90% of restitution to Clay solely because of a co-defendant’s plea agreement.
• Vacated the $403,481.46 restitution to the IRS because:
  • The government failed to substantiate the amount beyond the IRS’s unadorned figures; and
  • A substantial portion ($266,466) was tied to acquitted conduct (count 3) that was not part of the healthcare-fraud “scheme or conspiracy” charged in counts 1 and 2.
• Remanded for:
  • Recalculation of restitution to Fiat Chrysler consistent with the MVRA and § 3664(h);
  • Recalculation and substantiation of any restitution to the IRS consistent with the VWPA/MVRA; and
  • Clarification or reconsideration of the four-level “leader/organizer” sentencing enhancement under U.S.S.G. § 3B1.1(a).

IV. Detailed Analysis

A. Mens Rea and Jury Instructions for Healthcare Fraud

1. The challenged instruction

Clay was convicted under 18 U.S.C. § 1347, which criminalizes “knowingly and willfully” executing a scheme to defraud a health care benefit program. The jury was instructed that:

“An act is done ‘knowingly and willfully’ if it is done voluntarily and intentionally, and not because of mistake or some other innocent reason.”

While Clay’s appeal was pending, the Sixth Circuit decided United States v. Singh, 147 F.4th 652 (6th Cir. 2025), holding that under § 1347:

• “Knowingly” means knowledge of the facts that constitute the offense; and
• “Willfully” requires proof that the defendant knew his conduct was unlawful (though not necessarily the precise statute violated), see 18 U.S.C. § 1347(b).

The instruction given in Clay’s case failed to convey that “willfully” requires knowledge of unlawfulness.

2. Plain error and invited error

Crucially, Clay had stipulated to this instruction at trial, triggering the invited-error doctrine (see United States v. Sharpe, 996 F.2d 125 (6th Cir. 1993); United States v. Barrow, 118 F.3d 482 (6th Cir. 1997)). Under the approach in United States v. Montgomery, 998 F.3d 693 (6th Cir. 2021), the court nonetheless considered the claim under the demanding plain-error standard of United States v. Olano, 507 U.S. 725 (1993):

1. Error;
2. That is “plain” under current law (per Henderson v. United States, 568 U.S. 266 (2013));
3. Affecting substantial rights (reasonable probability of a different outcome, see United States v. Marcus, 560 U.S. 258 (2010)); and
4. Seriously affecting the fairness, integrity, or public reputation of judicial proceedings.

The court assumed there was a (now) “plain” instructional error under Singh and treated the third prong as a “close question.” It focused its analysis on the fourth prong and the invited-error overlay.

3. The court’s reasoning

The panel reviewed the jury instructions “as a whole,” noting that the jurors had to find:

• A “scheme to defraud a health care benefit program in connection with the payment for health care benefits,”
• That the scheme involved material misrepresentation or concealment, and
• That Clay had an “intent to defraud,” defined as intent to “deceive or cheat” to cause financial loss or gain.

The “object” of the intended deceit was clearly Fiat Chrysler’s health plan. The question was whether a properly instructed jury might have found Clay lacked knowledge that the scheme was illegal. Clay argued that he relied on his experience at Pfizer, where commissions and patient rebates existed, worked with a licensed pharmacist, and was not involved in claim processing.

The government, however, introduced evidence strongly suggesting Clay’s awareness of illegality:

• He and Maluchnik themselves obtained medically unnecessary prescriptions after pro forma exams to “test” how much and how quickly the scheme would pay out.
• They recruited “sales associates” under fictitious names and explicitly told them they would be paid for their own prescriptions.
• They steered all business to a particular doctor and one willing pharmacy, while other pharmacies refused participation because paying patients for their own prescriptions was “not comfortable” and outside normal practice.

Given both the evidentiary record and the fact that Clay had invited the error, the court concluded this was not the “rare and egregious” case warranting relief under the fourth Olano prong. It cited United States v. Mendoza‑Velasquez, 847 F.3d 209 (5th Cir. 2017), and similar authorities that describe fourth-prong reversals as reserved for errors that “shock the conscience” or strongly impugn the system’s integrity.

4. Precedential significance

The opinion does not alter Singh’s substantive mens rea standard for § 1347. Its contribution is procedural:

• It underscores that invited error weighs heavily against relief even under plain-error review, particularly at the fourth prong.
• It signals that where there is substantial evidence of an appreciation of wrongdoing, courts are unlikely to find a “grave miscarriage of justice” from misdescribing willfulness, especially when the defense itself endorsed the wording.

This is a cautionary note to defense counsel: stipulating to jury instructions that later prove legally deficient can effectively insulate the verdict from reversal absent extraordinary circumstances.

B. Omissions, Concealment, and Duty to Disclose Under § 1347

1. The omission-related instruction

Section 1347 punishes obtaining the money or property of a health care benefit program “by means of false or fraudulent pretenses, representations, or promises.” The jury was instructed that:

• “False or fraudulent pretenses, representations, or promises” include “the knowing concealment of material facts,” and
• The jury could convict Clay if he “deliberately ignored a high probability that the reimbursed claims for compounding creams were obtained by false or fraudulent … omissions.”

Clay argued on appeal that this invited conviction for fraudulent omissions even though he had no legal duty to disclose the omitted information to the insurer.

2. The role of Bertram and Montgomery

The court declined to find plain error, relying on its own ambiguous precedent:

• United States v. Bertram, 900 F.3d 743 (6th Cir. 2018), upheld § 1347 convictions based in part on the “knowing concealment of material facts,” holding that omissions can be a scheme to defraud even if claim forms do not specifically ask for the omitted data (there, the grossly delayed timing of urinalysis tests).
• United States v. Montgomery, 2022 WL 2284387 (6th Cir. June 23, 2022) read Bertram as allowing convictions based on concealment “in the absence of a positive legal duty to disclose,” echoing the Fourth Circuit’s view in United States v. Colton, 231 F.3d 890 (4th Cir. 2000).

The panel noted that Bertram could alternatively be read as recognizing an implied duty to disclose, given industry norms and insurers’ expectations. But because Montgomery had already interpreted Bertram in a duty-free manner, the law in the circuit was at best unsettled. Under Al‑Maliki, 787 F.3d 784 (6th Cir. 2015), a lack of clear binding precedent forecloses a finding of “obvious or clear” error.

3. Takeaway

The court neither endorses nor rejects a freestanding “no-duty” theory of fraud under § 1347. Rather, it holds that any error in charging the jury on fraudulent omissions was not “plain” given the state of circuit law. For future litigants, this:

• Preserves room to argue that some omissions-based fraud theories require an actual or implied duty to disclose; but
• Makes it clear that, for now, defendants cannot obtain reversal on plain-error review by simply asserting that omissions, without more, are never enough under § 1347.

C. Admission of Agent Marciniak’s Lay Testimony

1. The challenge and standard

FBI Agent Marciniak, the case agent, testified extensively as a lay witness. Clay did not object at trial to the portions he later challenged. On appeal, he argued that certain statements:

• Lacked a proper foundation or helpfulness under Fed. R. Evid. 701;
• Were irrelevant, unfairly prejudicial, or improper character evidence (Rules 401, 403, 404); and
• Included hearsay (Rule 802).

Because no contemporaneous objections were made, the panel asked only whether the district court was “derelict” in failing sua sponte to strike the testimony or give curative instructions—an extremely demanding standard (see United States v. Ramamoorthy, 949 F.3d 955 (6th Cir. 2020); United States v. Stokes, 834 F. App’x 213 (6th Cir. 2020)).

2. Overlapping, cumulative, and minorly prejudicial testimony

The panel carefully matched the challenged snippets against the full trial record and found:

• Statements describing Clay and Maluchnik as “wannabe successful business owners” who ran multiple “schemes” to “accumulate wealth” added little beyond unchallenged testimony that they:
  • Had an “entrepreneurial spirit,”
  • Owned numerous businesses (catering, music production, real estate), and
  • Were actively seeking “lucrative” new ventures as others dried up.
• Comments about Clay and Maluchnik being “always together,” and even rumors that they might have been “lovers,” were cumulative of detailed testimony about their close friendship, co-ownership of entities, proximity of residences, daily routines, and shared finances. The “lovers” remark was improper but isolated and, given the overwhelming evidence of closeness, had no demonstrated effect on the verdict.
• Derogatory descriptions of Dr. Huenefeld’s small practice and drinking problem were cumulative of co-defendant Maluchnik’s own unchallenged descriptions, including that she showed up drunk to dinners and ran a messy, unconventional practice.

The Sixth Circuit stressed that even if some statements were “improper and inadmissible,” district courts do not commit plain error by refraining from sua sponte interventions; doing so can backfire by highlighting unfavorable evidence that the defense strategically chose not to contest (see United States v. Byers, 649 F.3d 197 (4th Cir. 2011); United States v. Copeland, 51 F.3d 611 (6th Cir. 1995)).

3. Effect on substantial rights

Applying Young, 470 U.S. 1 (1985), and Marcus, 560 U.S. 258 (2010), the court held that, in light of the cumulative nature of the challenged remarks and the “wealth of more incriminating evidence,” Clay failed to show a reasonable probability that the outcome would have differed absent these comments. His substantial rights were therefore unaffected.

D. Restitution to Fiat Chrysler: Actual Loss and Medically Necessary Claims

1. The restitution framework under the MVRA

Restitution to Fiat Chrysler was imposed under the Mandatory Victims Restitution Act, 18 U.S.C. § 3663A, which requires full restitution for certain offenses, including property crimes and frauds, where the offense “results in damage to or loss or destruction of property.” Section 3663A(b)(1) directs courts to order the defendant to pay “the value of the property” lost, less the value of any returned property. Section 3664(f)(1)(A) requires restitution “in the full amount of each victim’s losses.”

The panel emphasized that these provisions:

• Reflect a compensatory purpose—restoring the victim to the status quo ante, not imposing a punitive gain (citing Hughey v. United States, 495 U.S. 411 (1990)); and
• Limit restitution to the victim’s actual loss—a theme repeatedly reinforced in Sixth Circuit caselaw (Fike, 140 F.4th 351 (6th Cir. 2025); White, 492 F.3d 380 (6th Cir. 2007); Boring, 557 F.3d 707 (6th Cir. 2009)).

2. Medically necessary prescriptions: no “loss” to the victim

At sentencing, the district court had found that some compounded creams were medically necessary and that “there can be a legitimate use of creams … for patients with legitimate pain.” Logically, Fiat Chrysler would have paid for those legitimate claims even in the absence of the fraudulent scheme.

Nonetheless, when calculating restitution, the court refused to exclude medically necessary prescriptions, concluding that claims “procured by kickbacks, whether they are medically necessary or not[,] are subject to restitution.”

The Sixth Circuit held this was legal error:

• Restitution is tied to the victim’s pecuniary harm caused by the offense. If Fiat Chrysler was legally obligated to cover medically necessary treatment, paying those claims is not a loss “resulting from” the fraud—it is simply the cost of providing the benefit promised under the plan.
• Including such claims would give Fiat Chrysler a windfall (payment for care it was contractually bound to provide), contrary to restitution’s compensatory function (echoing the Eleventh Circuit in Bane, 720 F.3d 818 (11th Cir. 2013)).

The panel bolstered this reasoning by analogy to Guidelines loss-calculation cases:

• United States v. Mehmood, 742 F. App’x 928 (6th Cir. 2018), held that in healthcare fraud, the entire amount billed is prima facie evidence of intended loss, but the value of legitimate claims must be offset against aggregate billings when established.
• Other Sixth Circuit cases have similarly excluded legitimately billed claims from loss calculations (Montgomery (2022); Bryant, 849 F. App’x 565 (6th Cir. 2021)).

While Guidelines “loss” and MVRA “loss” need not always match (see Agrawal, 97 F.4th 421 (6th Cir. 2024)), the panel saw no basis in the MVRA’s text to treat medically necessary claims as “loss” when they do not reflect reasonably foreseeable pecuniary harm from the fraud.

3. Result: vacatur and remand

The court vacated the Fiat Chrysler restitution order and directed the district court on remand to:

• Delineate between legitimate and illegitimate prescriptions; and
• Order restitution only for the net loss caused by the fraud (i.e., excluding medically necessary claims that the plan would have paid anyway).

This portion of the opinion establishes a clear precedent: healthcare-fraud restitution under the MVRA must exclude the value of medically necessary services or products that the insurer would have been obligated to cover irrespective of the fraud.

E. Apportionment of Restitution Under 18 U.S.C. § 3664(h)

1. The district court’s approach

The PSR initially calculated Fiat Chrysler’s loss at $7,159,795. Although the sentencing court revised its loss figure for guidelines purposes based on some legitimate prescriptions, it ultimately ordered Clay to pay $6,443,815—90% of total restitution—because:

• Co-defendant Maluchnik’s plea agreement obligated him to pay 10% of the restitution amount; and
• Someone had to make up the remaining 90%, so the court assigned that portion to Clay.

The court purported to act under § 3664(h), which governs restitution in cases involving multiple defendants.

2. Statutory requirements of § 3664(h)

Section 3664(h) gives district courts a binary choice when multiple defendants “contributed to the loss of a victim”:

1. Make each defendant liable for the full amount of restitution (joint and several liability); or
2. Apportion liability among the defendants “to reflect the level of contribution to the victim’s loss and economic circumstances of each defendant.”

The Sixth Circuit has recognized this structure in cases like Bailey, 973 F.3d 548 (6th Cir. 2020), and Bogart, 576 F.3d 565 (6th Cir. 2009). If a court chooses apportionment rather than joint and several liability, it must consider:

• Each defendant’s relative contribution to the victim’s loss; and
• Each defendant’s economic circumstances.

3. The Sixth Circuit’s holding

The panel held the district court violated § 3664(h):

• The court’s sole articulated reason for assigning 90% to Clay was the plea agreement with co-defendant Maluchnik.
• It made no findings about:
  • Clay’s contribution relative to that of Maluchnik, Peace, and Huenefeld; or
  • The comparative economic circumstances of the defendants.

The government argued that § 3664(f)(1)(A)’s command to order full restitution to the victim, and this court’s decision in United States v. Williams, 612 F.3d 500 (6th Cir. 2010), required the district court to fill in whatever amount was not covered by other defendants’ plea agreements. The panel rejected this:

• Williams held only that equitable doctrines like estoppel cannot override the MVRA’s statutory requirement to fully compensate victims; it did not authorize sidestepping the apportionment criteria in § 3664(h).
• The MVRA “applies regardless of any plea agreement”; courts cannot let negotiated plea caps for one defendant dictate another’s restitution share when the court purports to apportion.

The court further rejected the government’s suggestion that any error was harmless because the district court could have made Clay jointly and severally liable for the full amount:

• Had the court done so, Clay would have contribution rights against co-defendants for amounts exceeding his actual responsibility (see Yalincak, 30 F.4th 115 (2d Cir. 2022); Borino, 123 F.4th 233 (5th Cir. 2024)).
• By imposing a 90% share through apportionment, the court effectively stripped Clay of those contribution rights without the statutorily required comparative-fault analysis.

The panel also noted that while “hybrid” restitution orders (assigning full liability to the most culpable defendant and limited liability to minor participants) can be appropriate, they must still comply with § 3664(h). On this record, a hybrid order singling out Clay as fully liable—while holding equally or more involved co-defendants minimally liable or not at all—would not comport with the statutory directive.

4. Practical and precedential import

This portion of the opinion sends two clear messages:

• Plea bargains cannot circumvent § 3664(h). A defendant’s negotiated restitution cap does not justify inflating a co-defendant’s share without consideration of relative culpability and financial circumstances.
• District courts must articulate an apportionment rationale. If a court chooses apportionment rather than joint and several liability, it must build a record showing how each defendant’s share reflects his contribution to the loss and financial situation.

Going forward, prosecutors and courts in the Sixth Circuit will need to be more deliberate about restitution structures in multi-defendant fraud cases, especially when plea agreements allocate fixed percentages or amounts.

F. Restitution to the IRS: Proof and Acquitted Conduct

1. Failure of proof as to amount

The district court ordered Clay to pay $403,481.46 in restitution to the IRS as a condition of supervised release, under 18 U.S.C. §§ 3563(b)(2), 3583(d), subject to the VWPA (18 U.S.C. § 3663) framework.

Clay objected in his sentencing memorandum and restitution brief, arguing that:

• Trial testimony supported, at most, a $35,000 tax loss; and
• The PSR merely recited an IRS figure without explaining its derivation.

Because Clay put the amount in dispute, the government bore the burden to establish the loss by a preponderance of the evidence, using information with “sufficient indicia of reliability” (see Sawyer, 825 F.3d 287 (6th Cir. 2016); Fike, 140 F.4th 351 (6th Cir. 2025)).

The Sixth Circuit held that burden was not met:

• The PSR said only that the number came from the IRS; the government’s briefing merely “believe[d]” the figure was correct.
• No supporting schedules, methodologies, or testimony explained how the IRS arrived at $403,481.46.

Citing cases such as United States v. Waknine, 543 F.3d 546 (9th Cir. 2008), and United States v. Menza, 137 F.3d 533 (7th Cir. 1998), the court held that a victim’s unexplained summary assertion of loss is insufficient. The district court therefore abused its discretion in adopting the IRS figure.

2. Use of acquitted conduct not part of the same scheme

Clay also argued that $266,466 of the IRS restitution was based on conduct underlying count 3, the false-return charge on which the jury had acquitted him.

Under 18 U.S.C. § 3663(a)(2), a “victim” is any person “directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern” of criminal activity underlying the offense of conviction. Where the charged offense includes such a scheme or conspiracy element, courts may, under Jones, 641 F.3d 706 (6th Cir. 2011), consider acquitted conduct for restitution only if it is part of that same scheme or pattern, as defined by the indictment when the defendant goes to trial.

Reviewing the indictment:

• Count 1 (conspiracy) alleged a scheme to defraud “healthcare insurance companies” by obtaining reimbursement for medically unnecessary compounded medications and failing to disclose that “patients” were being paid for their own prescriptions.
• Count 2 (substantive healthcare fraud) alleged execution of that “above-described scheme and artifice to defraud a health care benefit program.”
• Count 3 (false return) simply alleged a false statement of taxable income; it did not incorporate the healthcare-fraud scheme, reference healthcare companies, or tie itself to counts 1 or 2.

The panel concluded:

• The scheme and conspiracy for which Clay was convicted were healthcare fraud directed at insurers/benefit programs (here, effectively Fiat Chrysler’s plan), not tax fraud against the IRS.
• The IRS was not a “victim” of that healthcare-fraud scheme within the meaning of § 3663(a)(2).
• Clay’s tax misconduct underlying the acquitted count was not “part of the precise scheme” forming an element of counts 1 and 2, and therefore could not be used as a basis for restitution in this case (see Jones; Kones, 77 F.3d 66 (3d Cir. 1996)).

Accordingly, even if the government could substantiate some IRS loss tied to the convicted count 4 (false classification of the Foundation), any portion deriving from the acquitted count 3 or from conduct outside the charged scheme is improper.

3. Implications

This aspect of Clay reinforces two principles:

• Restitution must be grounded in evidence. Courts may not simply accept government or victim assertions of loss without supporting detail, especially when the defendant disputes the amount and points to contrary proof in the record.
• The “scheme or conspiracy” boundary matters. When a defendant is tried (rather than pleading), the indictment defines the scope of the scheme or conspiracy for restitution purposes. Victims of separate, uncharged, or acquitted schemes cannot be shoehorned into restitution via broad notions of “unlawful enrichment.”

G. Leadership Enhancement Under U.S.S.G. § 3B1.1(a)

1. The enhancement and the record

Clay received a four-level enhancement under U.S.S.G. § 3B1.1(a) as an “organizer or leader” of criminal activity involving five or more participants or that was otherwise extensive. To qualify as a leader, a defendant must have exercised control over at least one “participant” (a criminally responsible person, whether convicted or not).

Clay challenged the enhancement in his sentencing memorandum but did not reassert the challenge in the colloquy. The district court:

• Adopted the PSR’s guideline range and indicated it had discussed some objections off the record; and
• Later asked the government to justify the leadership enhancement, heard an explanation, but offered no specific findings in response.

It remained unclear whether the court was relying on the PSR’s factual assertions, the government’s oral argument, or some unstated reasoning.

2. Remand for clarification

The Sixth Circuit declined to resolve whether deferential or de novo review applied (an issue turning on how fully the objection had been preserved). Instead, in light of the existing remand for restitution and the lack of clear factual findings, it:

• Remanded for the district court to reconsider or explain the factual basis for the leadership enhancement; and
• Declined Clay’s invitation to vacate the enhancement outright, reserving to the district court the first-instance assessment of whether the record supports § 3B1.1(a).

This underscores the importance of creating a transparent record for appellate review when significant enhancements are applied—particularly role adjustments that can drive guideline ranges substantially upward.

V. Simplified Explanations of Key Legal Concepts

• Healthcare Fraud (§ 1347). A federal crime involving schemes to cheat health insurers or benefit programs—often by billing for unnecessary services, falsifying diagnoses, or concealing critical facts—in connection with payment for health benefits.
• “Knowingly and willfully.” After Singh, this means:
  • You know what you are doing factually (knowingly); and
  • You know that what you are doing is illegal (willfully), even if you don’t know the exact statute number.
• Invited error. If a party affirmatively agrees to, or proposes, a course that proves erroneous (e.g., a flawed jury instruction), that party normally cannot complain about it on appeal. Courts may still correct truly egregious errors under plain-error review, but this is rare.
• Plain error review. A limited appellate review for unpreserved errors, requiring:
  1. Legal error;
  2. That is “plain” under current law;
  3. That likely affected the result; and
  4. That seriously harms the fairness, integrity, or public reputation of the justice system.
• MVRA Restitution vs. Sentencing “Loss.”
  • MVRA restitution aims to put the victim back where they would have been financially but for the crime—no more, no less.
  • Sentencing “loss” under the Guidelines often informs how severe a sentence should be. In fraud, loss is typically the reasonably foreseeable harm the defendant intended or caused.
  • They often overlap but may differ in specific cases; Clay treats medically necessary claims as neither restitution “loss” nor sentencing “actual loss.”
• Medically necessary vs. fraudulent claims.
  • Medically necessary: Treatments or prescriptions that are appropriate and necessary for the patient’s health, which an insurer is contractually obligated to cover.
  • Fraudulent: Claims driven by kickbacks, unnecessary treatments, misrepresentations, or concealments.
  • Clay holds that restitution should only cover the latter—net of any services that would have been provided anyway.
• Apportionment (§ 3664(h)). When multiple defendants cause a single victim’s loss, a court can:
  • Make each liable for the full amount (joint and several); or
  • Divide the bill among them based on who contributed how much and who can pay what.
  In Clay, the court did the second but failed to justify the split based on these factors.
• “Hybrid” restitution orders. Orders that combine joint-and-several liability for the most culpable defendant(s) with limited liability for others, common in hierarchical schemes. Even these must respect § 3664(h)’s requirement to reflect relative contributions and financial circumstances.
• Acquitted conduct and restitution. A defendant can sometimes be ordered to pay restitution for conduct the jury acquitted him of—but only if that conduct is part of the same scheme or conspiracy that forms an element of the offense of conviction (and the loss is proven by a preponderance of the evidence). Clay holds that the IRS was not a victim of the healthcare-fraud scheme described in the indictment, so acquitted tax conduct could not support restitution.
• Leader/organizer enhancement (§ 3B1.1(a)). A guidelines enhancement for a defendant who organizes or leads criminal activity involving 5+ participants or that is otherwise extensive. It requires proof that the defendant exercised control or authority over at least one other criminally responsible person.

VI. Broader Impact and Future Implications

A. For Healthcare-Fraud Prosecutions and Restitution

United States v. Clay is likely to be cited as the leading Sixth Circuit authority on the treatment of legitimate medical services in healthcare-fraud restitution:

• Prosecutors will need to distinguish clearly between medically necessary and unnecessary treatments when seeking restitution, and to present evidence supporting that distinction.
• Defense counsel have a solid basis to insist on offsets for medically necessary services and to resist restitution calculations that simply total all claims associated with the scheme.
• District courts must ensure that actual loss—not gross billings—is the benchmark, both in sentencing and in restitution, unless specific statutory language dictates otherwise.

B. For Multi-Defendant Fraud Cases and Plea Negotiations

The decision reshapes how plea agreements and restitution interact:

• Plea agreements setting fixed restitution shares (e.g., “defendant agrees to pay 10%”) cannot drive court-ordered apportionment for non-pleading co-defendants under § 3664(h).
• Courts that choose apportionment over joint and several liability must:
  • Make findings about each defendant’s relative role and financial situation; and
  • Be prepared to justify differences in allocated shares on the record.
• Defense counsel can use Clay to argue against being made a “deep pocket of last resort” simply because co-defendants negotiated favorable caps.

C. For Restitution to Governmental Victims (e.g., IRS)

Government agencies, including the IRS, are put on notice that:

• They must submit detailed, substantiated loss calculations, not bare assertions, if they seek restitution.
• Where their loss arises from a different criminal episode (e.g., tax evasion) than the scheme of conviction (e.g., healthcare fraud), they may need a separate conviction, plea agreement, or explicit scheme linkage in the indictment to qualify as “victims” for restitution purposes.

D. For Jury Instructions and Plain-Error Review

Post-Singh, many existing pattern instructions on “willfulness” under § 1347 may be vulnerable. Clay signals:

• Appellate courts may recognize such instructions as erroneous under current law; but
• Relief will be rare if defendants stipulated to the instructions and the evidentiary record supports an inference that defendants knew their conduct was unlawful.

Trial counsel should therefore:

• Insist on instructions that reflect the Singh standard for “willfully”; and
• Preserve objections to any lower standard to avoid the combined obstacles of invited and plain error.

VII. Conclusion

United States v. Clay is a comprehensive opinion that leaves Clay’s core convictions intact but substantially reshapes the financial consequences of his crimes. On the criminal-law side, it underscores that invited instructional errors are difficult to unwind on appeal and that omissions-based healthcare fraud remains viable at least in the absence of clear precedent to the contrary. On the sentencing and restitution side, however, it is a significant precedential development.

The Sixth Circuit squarely holds that:

• Restitution under the MVRA must reflect actual loss and cannot include medically necessary claims the insurer would have paid regardless of the fraud.
• When a court opts to apportion restitution under § 3664(h), it must tie each defendant’s share to his contribution to the loss and economic circumstances, rather than treating plea-bargain percentages as dispositive.
• Government victims, including the IRS, must substantiate loss amounts with more than conclusory figures, and restitution to such victims must fall within the “scheme, conspiracy, or pattern” of the convicted offense as charged in the indictment.

These rulings collectively reinforce the principle that restitution is compensatory, not punitive; that it must be grounded in evidence and statutory limits; and that courts must preserve the structural fairness of multi-defendant financial liability. Clay thus stands as an important guidepost for future healthcare-fraud prosecutions, restitution litigation, and sentencing practice within the Sixth Circuit and potentially beyond.