FISCHER v. UNITED STATES

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667 OCTOBER TERM, 1999
Syllabus
FISCHER v. UNITED STATES
certiorari to the united states court of appeals for
the eleventh circuit
No. 99–116. Argued February 22, 2000—Decided May 15, 2000
Petitioner, while president and part owner of Quality Medical Consultants,
Inc. (QMC), negotiated a $1.2 million loan to QMC from West Volusia
Hospital Authority (WVHA), a municipal agency responsible for operat-
ing two Florida hospitals, both of which participate in the federal Medi-
care program. In 1993 WVHA received between $10 and $15 million
in Medicare funds. After a 1994 audit of WVHA raised questions about
the QMC loan, petitioner was indicted for violations of the federal brib-
ery statute, including defrauding an organization which receives benefits
under a federal assistance program, 18 U. S. C. § 666(a)(1)(A), and paying
a kickback to one of its agents, § 666(a)(2). A jury convicted him on all
counts, and the District Court sentenced him to imprisonment, imposed
a term of supervised release, and ordered the payment of restitution.
On appeal petitioner argued that the Government failed to prove
WVHA, as the organization affected by his wrongdoing, received “bene-
fits in excess of $10,000 under a Federal program,” as required by
§ 666(b). In rejecting that argument and affirming the convictions, the
Eleventh Circuit held that funds received by an organization constitute
“benefits” within § 666’s meaning if the source of the funds is a federal
program, like Medicare, which provides aid or assistance to participat-
ing organizations.
Held: Health care providers such as the one defrauded by petitioner
receive “benefits” within the meaning of § 666(b). Pp. 671–682.
(a) Medicare’s nature and purposes provide essential instruction in
resolving this controversy. Medicare is a federally funded medical in-
surance program for the elderly and disabled. The Federal Govern-
ment is the single largest source of funds for hospitals participating
in Medicare. Such providers qualify to participate upon satisfying a
comprehensive series of statutory and regulatory requirements, includ-
ing licensing, quality assurance, staffing, and other standards. Compli-
ance with these standards provides the Government with assurance that
participating providers possess the capacity to fulfill their statutory ob-
ligation of providing “medically necessary” services “of a quality which
meets professionally recognized standards of health care.” 42 U. S. C.
§ 1320c–5(a). Medicare attains its objectives through an elaborate fund-
ing structure designed not only to compensate providers for the reason-

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668 FISCHER v. UNITED STATES
Syllabus
able cost of the services actually rendered to patients, but also to en-
hance health care organizations’ capacity to provide ongoing, quality
services to the community at large. In the normal course Medicare
disbursements occur periodically, often in advance of a provider’s ren-
dering services, in order to protect providers’ liquidity and thereby as-
sist in the ongoing provision of such services. The program, then, es-
tablishes correlating and reinforcing incentives: The Government has an
interest in making available a high level of quality of care for the elderly
and disabled; and providers, because of their financial dependence upon
the program, have incentives to achieve program goals. Pp. 671–675.
(b) Medicare provider payments are “benefits,” as that term is used
in its ordinary sense and as it is intended in § 666(b). The Court rejects
petitioner’s argument that Medicare provides benefits only to the el-
derly and disabled, not to participating health care organizations.
While standard definitions of the term “benefit” and provisions of Medi-
care support petitioner’s assertion that qualifying patients rank as the
program’s primary beneficiaries, the fact that one beneficiary of an as-
sistance program can be identified does not foreclose the existence of
others. Section 666(b)’s language specifying that benefits can be in the
form of “a grant, contract, subsidy, loan, guarantee, insurance, or other
form of Federal assistance,” coupled with § 666(a)’s broad substantive
prohibitions, reveals Congress’ unambiguous intent to ensure the integ-
rity of organizations participating in federal assistance programs. In
removing from the statute’s coverage any “bona fide salary, wages, fees,
or other compensation paid, or expenses paid or reimbursed, in the usual
course of business,” § 666(c) does not exclude the payments here at issue
from the meaning of “benefits” within § 666(b). Medicare payments are
not simply compensation or reimbursement. The payments, in con-
trast, assist the hospital in making available and maintaining a certain
level and quality of medical care in both its own interests and those of
the greater community. The provider itself is the object of substantial
Government regulation, and adequate payment and assistance to the
provider is itself one of Medicare’s objectives. Accordingly, the health
care provider is receiving a benefit in the conventional sense of the term,
unlike the case of a contractor whom the Government does not regulate
or assist for long-term objectives or for purposes beyond performance
of an immediate transaction. Pp. 675–681.
(c) The Court does not suggest that federal funds disbursed under an
assistance program will result in coverage of all recipient fraud under
§ 666(b). Adopting a broad, almost limitless use of the term “benefits”
would upset the proper federal balance. The statutory inquiry should
examine the conditions under which the federal payments are received.
The answer could depend, as it does here, on whether the recipient’s

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Opinion of the Court
own operations are one of the reasons for maintaining the program.
The Government has a legitimate and significant interest in prohibiting
financial fraud or bribery being perpetrated upon Medicare providers:
Such acts threaten the program’s integrity and raise the risk participat-
ing organizations will lack the resources needed to provide the requisite
level and quality of care. Pp. 681–682.
168 F. 3d 1273, affirmed.
Kennedy, J., delivered the opinion of the Court, in which Rehnquist,
C. J., and Stevens, O’Connor, Souter, Ginsburg, and Breyer, JJ.,
joined. Thomas, J., filed a dissenting opinion, in which Scalia, J., joined,
post, p. 682.
Mark L. Horwitz argued the cause for petitioner. With
him on the briefs were Glen J. Ioffredo, Jeffrey T. Green, and
Kristin G. Koehler.
Lisa Schiavo Blatt argued the cause for the United States.
With her on the brief were Solicitor General Waxman, As-
sistant Attorney General Robinson, and Deputy Solicitor
General Dreeben.*
Justice Kennedy delivered the opinion of the Court.
The federal bribery statute prohibits defrauding organiza-
tions which “receiv[e], in any one year period, benefits in
excess of $10,000 under a Federal program.” 18 U. S. C.
§ 666(b). We granted certiorari to determine whether the
statute covers fraud perpetrated on organizations participat-
ing in the Medicare program. Upon consideration of the
role and regulated status of hospitals as health care provid-
ers under the Medicare program, we hold they receive “bene-
fits” within the meaning of the statute. We affirm petition-
er’s convictions.
I
Petitioner Jeffrey Allan Fischer was president and partial
owner of Quality Medical Consultants, Inc. (QMC), a corpora-
*Lisa Kemler filed a brief for the National Association of Criminal
Defense Lawyers as amicus curiae urging reversal.

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tion which performed billing audits for health care organiza-
tions. In 1993 petitioner, on QMC’s behalf, negotiated a $1.2
million loan from West Volusia Hospital Authority (WVHA),
a municipal agency responsible for operating two hospitals
located in West Volusia County, Florida. Both hospitals
participate in the Medicare program, and in 1993 WVHA
received between $10 and $15 million in Medicare funds.
A February 1994 audit of WVHA’s financial affairs raised
questions about the QMC loan. An investigation revealed
QMC used the loan proceeds to repay creditors and to raise
the salaries of its five owner-employees, including petitioner.
It was determined that petitioner had arranged for QMC to
advance at least $100,000 to a private company owned by an
individual who had assisted QMC in securing a letter of
credit in connection with the WVHA loan. QMC, at peti-
tioner’s directive, also committed portions of the loan pro-
ceeds to speculative securities. These investments yielded
losses of almost $400,000. The investigation further uncov-
ered use of the loan proceeds to pay, through an intermediate
transfer, a $10,000 kickback to WVHA’s chief financial officer,
the individual with whom petitioner had negotiated the loan
in the first instance. QMC defaulted on its obligation to
WVHA and filed for bankruptcy.
In 1996 petitioner was indicted by a federal grand jury on
13 counts, including charges of defrauding an organization
which receives benefits under a federal assistance program,
18 U. S. C. § 666(a)(1)(A), and of paying a kickback to one of
its agents, § 666(a)(2). A jury convicted petitioner on all
counts charged, and the District Court sentenced him to 65
months’ imprisonment and a 3-year term of supervised
release. Petitioner, in addition, was ordered to pay $1.2
million in restitution.
On appeal petitioner argued that the Government failed to
prove WVHA, as the organization affected by his wrongdo-
ing, received “benefits in excess of $10,000 under a Federal
program,” as required by 18 U. S. C. § 666(b). Rejecting the

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argument, the United States Court of Appeals for the Elev-
enth Circuit affirmed the convictions. 168 F. 3d 1273 (1999).
It held that funds received by an organization constitute
“benefits” within the meaning of § 666(b) if the source of the
funds is a federal program, like Medicare, which provides aid
or assistance to participating organizations. Id., at 1276–
1277. Entities receiving federal funding under ordinary
commercial contracts, the court stated, fall outside the stat-
ute’s coverage. Ibid. (citing and discussing United States v.
Copeland, 143 F. 3d 1439 (CA11 1998) (holding that federal
funds received under a contract to construct military aircraft
did not constitute “benefits” within the meaning of § 666(b))).
The court added that its construction furthered “the stat-
ute’s purpose of protecting from fraud, theft, and undue
influence by bribery the money distributed to health care
providers, and WVHA in particular, through the federal
Medicare program and other similar federal assistance pro-
grams.” 168 F. 3d, at 1277. It rejected the view that the
Medicare program provides benefits only to its “targeted re-
cipients,” the qualifying patients. Id., at 1278 (disagreeing
with United States v. LaHue, 998 F. Supp. 1182 (Kan. 1998),
aff ’d, 170 F. 3d 1026 (CA10 1999)).
We granted certiorari, 528 U. S. 962 (1999), and we affirm.
II
A
The nature and purposes of the Medicare program give
us essential instruction in resolving the present controversy.
Established in 1965 as part of the Social Security Act, 42
U. S. C. § 1395 et seq. (1994 ed. and Supp. III), Medicare is a
federally funded medical insurance program for the elderly
and disabled. In fiscal 1997 some 38.8 million individuals
were enrolled in the program, and over 6,100 hospitals were
authorized to provide services to them. U. S. Dept. of
Health and Human Services, Health Care Financing Admin-
istration, 1998 Data Compendium 45, 75 (Aug. 1998). Medi-

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care expenditures for hospital services exceeded $123 billion
in 1998, making the Federal Government the single largest
source of funds for participating hospitals. See Cowen
et al., National Health Expenditures, 1998, 21 Health Care
Financing Review 165, 208 (Winter 1999) (Table 11). This
amount constituted 32% of the hospitals’ total receipts.
Ibid.
Providers of health care services, such as the two hospitals
operated by WVHA, qualify to participate in the program
upon satisfying a comprehensive series of statutory and
regulatory requirements, including particular accreditation
standards. Hospitals, for instance, must satisfy licensing
standards, 42 CFR § 482.11 (1999); possess a governing body
to “ensure that there is an effective, hospital-wide quality
assurance program to evaluate the provision of patient care,”
§ 482.21; and employ a “well organized” medical staff account-
able on matters relating to “the quality of the medical care
provided to patients,” § 482.22(b). Medicare’s implementing
regulations also require hospitals, among many other stand-
ards, to maintain and provide 24-hour nursing services,
§ 482.23; complete medical record services, § 482.24; “pharma-
ceutical services that meet the needs of the patients,”
§ 482.25; and organized dietary services staffed with qualified
personnel, § 482.28. The regulations go further, requiring
hospital facilities to “be constructed, arranged, and main-
tained to ensure the safety of the patient, and to provide
facilities for diagnosis and treatment and for special hospi-
tal services appropriate to the needs of the community.”
§ 482.41. Compliance with these standards provides the
Government with assurance that participating providers pos-
sess the capacity to fulfill their statutory obligation of pro-
viding “medically necessary” services “of a quality which
meets professionally recognized standards of health care.”
42 U. S. C. § 1320c–5(a). Peer review organizations monitor
providers’ compliance with these and other obligations.
§ 1320c–3(a); 42 CFR § 466.71 (1999). Sanctions for non-

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compliance include dismissal from the program. 42 U. S. C.
§ 1320c–5(b)(1).
Medicare attains its objectives through an elaborate fund-
ing structure. Participating health care organizations, in
exchange for rendering services, receive federal funds on
a periodic basis. §§ 1395g, 1395l. The amounts received
reflect the “reasonable cost” of services rendered, defined
as “the costs necessary in the efficient delivery of needed
health services to individuals covered [by the program].”
§ 1395x(v)(1)(A). Necessary costs are not limited to the im-
mediate costs of an individual treatment procedure. Instead
they are defined in broader terms: “Necessary and proper
costs are costs that are appropriate and helpful in developing
and maintaining the operation of patient care facilities and
activities.” 42 CFR § 413.9(b)(2) (1999). Allowable costs
include amounts which enhance the organization’s capacity
to provide ongoing, quality services not only to eligible pa-
tients but also to the community at large. By way of exam-
ple, amounts incurred for “certain educational programs for
interns and residents, known as [graduate medical education]
programs, are ‘allowable cost[s]’ for which a hospital (a pro-
vider) may receive reimbursement.” Regions Hospital v.
Shalala, 522 U. S. 448, 452 (1998) (citing 42 CFR § 413.85(a)
(1996)); see also § 413.85(b) (1999); Thomas Jefferson Univ.
v. Shalala, 512 U. S. 504, 507–508 (1994) (describing regula-
tion of education programs). “These programs,” the Medi-
care regulations explain, “contribute to the quality of patient
care within an institution and are necessary to meet the com-
munity’s needs for medical and paramedical personnel. . . .
[M]any communities have not assumed responsibility for fi-
nancing these programs and it is necessary that support be
provided by those purchasing healthcare. Until communi-
ties undertake to bear these costs, the program will partici-
pate appropriately in the support of these activities.” 42
CFR § 413.85(c) (1999). Medicare also permits, indeed en-
courages, these providers to deposit the amounts of reim-

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bursements received for depreciation costs and other cash
into sinking funds called “funded depreciation accounts.”
§ 413.134(e). Investment income earned on these funds does
not operate to reduce a provider’s interest expense,
§ 413.153(b)(2)(iii), creating incentives to maintain modern
medical equipment and facilities.
The Medicare regulations, furthermore, afford certain pro-
vider organizations “special treatment,” intended to ensure
the ongoing availability of medical services for qualifying
patients. See 42 CFR pt. 412G (1999). Providers qualify-
ing as “Medicare-dependent, small rural hospital[s],” for in-
stance, are entitled to additional, “lump sum” payments to
compensate for significant declines in demand for patient
care. § 412.108. The additional funds enable a provider to
“maintai[n] [its] necessary core staff and services” and to sat-
isfy its “fixed (and semi-fixed) costs.” §§ 412.108(d)(3)(A),
(B). So too does the Medicare program authorize “special
treatment” for, among other providers, “sole community hos-
pitals,” “renal transplantation centers,” and “hospitals that
serve a disproportionate share of low-income patients.” See
§§ 412.92, 412.100, 412.106. The subsidies assist providers in
satisfying those financial obligations necessary to continue as
going concerns in accordance with the program’s require-
ments. See, e. g., § 412.92(d)(2).
In the normal course Medicare disbursements occur on a
periodic basis, often in advance of a provider’s rendering
services, 42 U. S. C. § 1395g(a); 42 CFR §§ 413.60, 413.64
(1999). The payment system serves to “protect providers’
liquidity,” Good Samaritan Hospital v. Shalala, 508 U. S.
402, 406 (1993), thereby assisting in the ongoing provision of
services. 42 CFR § 413.5(b)(1) (1999) (requiring reimburse-
ment method to “result in current payment so that institu-
tions will not be disadvantaged, as they sometimes are under
other arrangements, by having to put up money for the pur-
chase of goods and services well before they receive reim-
bursement”); § 413.5(b)(6) (reimbursement system must oper-

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ate under “recognition of the need of hospitals and other
providers to keep pace with growing needs and to make im-
provements”). The program, then, establishes correlating
and reinforcing incentives: The Government has an interest
in making available a high level of quality of care for the
elderly and disabled; and providers, because of their financial
dependence upon the program, have incentives to achieve
program goals. The nature of the program bears on the
question of statutory coverage.
B
Section 666 of Title 18 of the United States Code prohibits
acts of theft and fraud against organizations receiving funds
under federal assistance programs. The statute in relevant
part provides as follows:
“(a) Whoever, if the circumstance described in sub-
section (b) of this section exists—
“(1) being an agent of an organization, or of a State,
local, or Indian tribal government, or any agency
thereof—
“(A) embezzles, steals, obtains by fraud, or otherwise
without authority knowingly converts to the use of any
person other than the rightful owner or intentionally
misapplies, property that—
“(i) is valued at $5,000 or more, and
“(ii) is owned by, or is under the care, custody, or con-
trol of such organization, government, or agency; or
“(B) corruptly solicits or demands for the benefit of
any person, or accepts or agrees to accept, anything of
value from any person, intending to be influenced or
rewarded in connection with any business, transaction,
or series of transactions of such organization, govern-
ment, or agency involving anything of value of $5,000 or
more; or
“(2) corruptly gives, offers, or agrees to give anything
of value to any person, with intent to influence or re-

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ward an agent of an organization or of a State, local
or Indian tribal government, or any agency thereof, in
connection with any business, transaction, or series
of transactions of such organization, government, or
agency involving anything of value of $5,000 or more;
“shall be fined under this title, imprisoned not more than
10 years, or both.
“(b) The circumstance referred to in subsection (a) of
this section is that the organization, government, or
agency receives, in any one year period, benefits in
excess of $10,000 under a Federal program involving
a grant, contract, subsidy, loan, guarantee, insurance,
or other form of Federal assistance.
“(c) This section does not apply to bona fide salary,
wages, fees, or other compensation paid, or expenses
paid or reimbursed, in the usual course of business.”
Liability for the acts prohibited by subsection (a) is predi-
cated upon a showing that the defrauded organization “re-
ceive[d], in any one period, benefits in excess of $10,000
under a Federal program.” § 666(b). Those benefits can be
in the form of “a grant, contract, subsidy, loan, guarantee,
insurance, or other form of Federal assistance.” Ibid. All
agree Medicare is a federal assistance program, see 42 CFR
§ 400.200 (1999), and that WVHA, as the organization de-
frauded by petitioner’s actions, received in excess of $10,000
in payments under the program. The sole point in conten-
tion is whether those payments constituted “benefits” within
the meaning of subsection (b).
Petitioner argues that the Medicare program provides
benefits to the elderly and disabled but not to the health care
organizations. Provider organizations, in petitioner’s view,
do no more than render services in exchange for compensa-
tion. Under petitioner’s submission the Medicare program
envisions a single beneficiary, the qualifying patient. The
Government, in opposition, urges that a determination

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whether an organization receives “benefits” within the
meaning of § 666(b) turns on whether the Federal Govern-
ment was the source of the payment. Funds received under
a federal assistance program, the Government asserts, can
be traced from federal coffers, often through an intermediary
or carrier, to the health care provider. Under its view, the
“federal-program source of the funds” satisfies the benefits
definition. Brief for United States 11.
We reject petitioner’s reading of the statute but without
endorsing the Government’s broader position. We conclude
Medicare payments are “benefits,” as the term is used in its
ordinary sense and as it is intended in the statute. The
noun “benefit” means “something that guards, aids, or pro-
motes well-being: advantage, good”; “useful aid”; “payment,
gift [such as] financial help in time of sickness, old age, or
unemployment”; or “a cash payment or service provided
for under an annuity, pension plan, or insurance policy.”
Webster’s Third New International Dictionary 204 (1971).
These definitions support petitioner’s assertion that qualify-
ing patients receive benefits under the Medicare program.
It is commonplace for individuals to refer to their retirement
or health plans as “benefits.” So it ought not to be disputed
that the elderly and disabled rank as the primary beneficiar-
ies of the Medicare program. See 42 U. S. C. §§ 1395c, 1395j;
42 CFR § 400.202 (1999) (defining “beneficiary” as the “per-
son who is entitled to Medicare benefits”); Shalala v. Guern-
sey Memorial Hospital, 514 U. S. 87, 91 (1995) (“Under the
Medicare reimbursement scheme . . . participating hospitals
furnish services to program beneficiaries and are reimbursed
by the Secretary through fiscal intermediaries”); Good Sa-
maritan Hospital, 508 U. S., at 404 (same).
That one beneficiary of an assistance program can be iden-
tified does not foreclose the existence of others, however. In
this respect petitioner’s construction would give incomplete
meaning to the term “benefits.” Medicare operates with a
purpose and design above and beyond point-of-sale patient

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care, and it follows that the benefits of the program extend
in a broader manner as well. The argument limiting the
term “benefits” to the program’s targeted or primary bene-
ficiaries would exclude, for example, a Medicare intermedi-
ary (such as Blue Cross and Blue Shield), a result both par-
ties disavow. For present purposes it cannot be disputed
the providers themselves derive significant advantage by
satisfying the participation standards imposed by the Gov-
ernment. These advantages constitute benefits within the
meaning of the federal bribery statute, a statute we have
described as “expansive,” “both as to the [conduct] forbidden
and the entities covered.” Salinas v. United States, 522
U. S. 52, 56 (1997).
Subsection (b) identifies several sources as providing bene-
fits under a federal program—“a grant, contract, subsidy,
loan, guarantee, insurance, or other form of Federal assist-
ance.” 18 U. S. C. § 666(b). This language indicates that
Congress viewed many federal assistance programs as pro-
viding benefits to participating organizations. Coupled with
the broad substantive prohibitions of subsection (a), the lan-
guage of subsection (b) reveals Congress’ expansive, unam-
biguous intent to ensure the integrity of organizations par-
ticipating in federal assistance programs.
Subsection (c) of the statute bears on the analysis. The
provision removes from the statute’s coverage any “bona fide
salary, wages, fees, or other compensation paid, or expenses
paid or reimbursed, in the usual course of business.”
§ 666(c). Petitioner argues that the subsection operates to
exclude the payments in question because they are either
“compensation” or “expenses paid or reimbursed,” or some
combination of the two, and that the payments are made in
the “usual course of business.” We disagree.
The subsection provides that the specified sorts of pay-
ments are not ones to which the section applies. One infer-
ence from this formulation is that the described payments
would have been benefits but for the subsection (c) exemp-

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tion. We need not go so far. Even assuming the examples
of subsection (c) bear upon the definition of benefits, statu-
tory examples of nonapplicability do not necessarily give rise
to the inference that absent the enumeration the statute
would otherwise apply. To define all subsection (c) pay-
ments as exempted benefits would go well beyond the ordi-
nary meaning of the word. On the other hand, the statute
is not written to say: “The term ‘benefits’ does not include
bona fide salary, wages, fees, or other compensation paid, or
expenses paid or reimbursed, in the usual course of busi-
ness.” We must construe the term “benefits,” then, in a
manner consistent with Congress’ intent not to reach the
enumerated class of transactions. See S. Rep. No. 98–225,
p. 370 (1984) (“[N]ot every Federal contract or disbursement
of funds would be covered [under § 666]. For example, if a
government agency lawfully purchases more than $10,000 in
equipment from a supplier, it is not the intent of this section
to make a theft of $5,000 or more from the supplier a Fed-
eral crime”).
We do not accept the view that the Medicare payments
here in question are for the limited purposes of compensating
providers or reimbursing them for ordinary course expendi-
tures. The payments are made for significant and substan-
tial reasons in addition to compensation or reimbursement,
so that neither these terms nor the usual course of business
conditions set forth in subsection (c) are met here. The pay-
ments in question have attributes and purposes well beyond
those described in subsection (c). These attributes and pur-
poses are consistent with the definition of “benefit.” While
the payments might have similarities to payments an insurer
would remit to a hospital quite without regard to the Medi-
care program, the Government does not make the payment
unless the hospital complies with its intricate regulatory
scheme. The payments are made not simply to reimburse
for treatment of qualifying patients but to assist the hospital
in making available and maintaining a certain level and qual-

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ity of medical care, all in the interest of both the hospital
and the greater community.
Here, as we have explained, the provider itself is the ob-
ject of substantial Government regulation. Medicare is de-
signed to the end that the Government receives not only re-
ciprocal value from isolated transactions but also long-term
advantages from the existence of a sound and effective
health care system for the elderly and disabled. The Gov-
ernment enacted specific statutes and regulations to secure
its own interests in promoting the well being and advantage
of the health care provider, in addition to the patient who
receives care. The health care provider is receiving a bene-
fit in the conventional sense of the term, unlike the case of a
contractor whom the Government does not regulate or assist
for long-term objectives or for significant purposes beyond
performance of an immediate transaction. Adequate pay-
ment and assistance to the health care provider is itself one
of the objectives of the program. These purposes and ef-
fects suffice to make the payment a benefit within the mean-
ing of the statute.
The structure and operation of the Medicare program
reveal a comprehensive federal assistance enterprise aimed
at ensuring the availability of quality health care for
the broader community. Participating health care organiza-
tions, as our above discussion shows, must satisfy a series
of qualification and accreditation requirements, standards
aimed in part at ensuring the provision of a certain quality
of care. See 42 CFR pt. 482 (1999). By reimbursing partic-
ipating providers for a wide range of costs and expenses,
including medical treatment costs, overhead costs, and edu-
cation costs, Medicare’s reimbursement system furthers this
objective. This scheme is structured to ensure that provid-
ers possess the capacity to render, on an ongoing basis, medi-
cal care to the program’s qualifying patients. The struc-
ture, moreover, proves untenable petitioner’s assertion that
Congress has no interest in the financial stability of pro-

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681 Cite as: 529 U. S. 667 (2000)
Opinion of the Court
viders once services are rendered to patients. Payments
are made in a manner calculated to maintain provider
stability. § 413.5(b); Good Samaritan Hospital, 508 U. S.,
at 406. Incentives are given for long-term improvements,
such as capital costs and education. §§ 413.85, 413.134(e),
413.153(b)(2)(iii). Subsidies, defined as “special treatment,”
are awarded to certain providers. Id., pt. 412G. In short,
provider organizations play a vital role and maintain a high
level of responsibility in carrying out the program’s pur-
poses. Medicare funds, in turn, provide benefits extending
beyond isolated, point-of-sale treatment transactions. The
funds health care organizations receive for participating in
the Medicare program constitute “benefits” within the mean-
ing of 18 U. S. C. § 666(b).
Our discussion should not be taken to suggest that federal
funds disbursed under an assistance program will result in
coverage of all recipient fraud under § 666(b). Any receipt
of federal funds can, at some level of generality, be character-
ized as a benefit. The statute does not employ this broad,
almost limitless use of the term. Doing so would turn al-
most every act of fraud or bribery into a federal offense,
upsetting the proper federal balance. To determine
whether an organization participating in a federal assistance
program receives “benefits,” an examination must be under-
taken of the program’s structure, operation, and purpose.
The inquiry should examine the conditions under which the
organization receives the federal payments. The answer
could depend, as it does here, on whether the recipient’s own
operations are one of the reasons for maintaining the pro-
gram. Health care organizations participating in the Medi-
care program satisfy this standard.
The Government has a legitimate and significant interest
in prohibiting financial fraud or acts of bribery being perpe-
trated upon Medicare providers. Fraudulent acts threaten
the program’s integrity. They raise the risk participating
organizations will lack the resources requisite to provide the

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682 FISCHER v. UNITED STATES
Thomas, J., dissenting
level and quality of care envisioned by the program. Cf. Sa-
linas, 522 U. S., at 61 (stating that acceptance of bribes by
an official of a jail housing federal prisoners pursuant to an
agreement with the Government “was a threat to the integ-
rity and proper operation of the federal program”).
Other cases may present questions requiring further ex-
amination and elaboration of the term “benefits.” Here it
suffices to hold that health care providers such as the one
defrauded by petitioner receive benefits within the meaning
of the statute. The judgment of the Court of Appeals is
affirmed.
It is so ordered.
Justice Thomas, with whom Justice Scalia joins,
dissenting.
In my view, the only persons who receive “benefits” under
Medicare are the individual elderly and disabled Medicare
patients, not the medical providers who serve them. Pay-
ments made by the Federal Government to a Medicare
health care provider to reimburse the provider for the costs
of services rendered, rather than to provide financial aid to
the hospital, are not “benefits.” I respectfully dissent.
I
The jurisdictional provision of 18 U. S. C. § 666(b) requires
that an “organization, government, or agency receiv[e], in
any one year period, benefits in excess of $10,000 under a
Federal program involving a grant, contract, subsidy, loan,
guarantee, insurance, or other form of Federal assistance.”
As the Court notes, an organization is not a beneficiary of
a federal program merely because the organization receives
federal funds. Ante, at 677, 681. Rather, as the Court ad-
mits, a “benefit” is something that “guards, aids, or promotes
well-being”; “useful aid”; or a “payment, gift [as] finan-
cial help in time of sickness, old age, or unemployment.”
Webster’s Third New International Dictionary 204 (1971).

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683 Cite as: 529 U. S. 667 (2000)
Thomas, J., dissenting
Therefore, the Court acknowledges, an organization “re-
ceives . . . benefits” within the meaning of § 666(b) only if
the federal funds are designed to guard, aid, or promote the
well-being of the organization, to provide useful aid to the
organization, or to give the organization financial help in
time of trouble. In my view, payments made by the Federal
Government to a Medicare health care provider as part of a
market transaction are not “benefits.” 1
The statutory and regulatory scheme governing Medicare
reimbursements leaves no doubt that hospitals do not receive
“benefits” from the Federal Government within this meaning
of the term, but merely receive payments for costs pursuant
to a market transaction. Although the Medicare reimburse-
ment scheme is quite complex, it suffices to point out a few
critical components.2
Under the “reasonable cost” reimbursement provisions re-
lied on by the Court, ante, at 673–675, the Federal Govern-
ment reimburses providers for “the cost actually incurred,
excluding therefrom any part of incurred cost found to be
unnecessary in the efficient delivery of needed health serv-
1 Even if I thought that, under a reading of § 666(b) standing alone, a
market exchange of payment for services might amount to “benefits,”
§ 666(c) would eliminate that doubt. Section 666(c) makes clear that “bona
fide . . . expenses paid or reimbursed, in the usual course of business,” are
not covered by the statute. As discussed below, Medicare payments to
health care providers are precisely this type of payment.
2 In 1993, the year relevant to the instant case, Medicare consisted of
two separate programs, Parts A and B. Part A provides insurance for
certain elderly or disabled persons to cover the costs of inpatient hospital
care, nursing facility care, home health services, and hospice care. See
generally 42 U. S. C. §§ 1395c to 1395i–4. Part B is a voluntary program
that provides supplemental benefits to elderly or disabled Medicare partic-
ipants to cover the costs of, among other things, physician services, labora-
tory and diagnostic tests, ambulance services, and prescription drugs.
See generally §§ 1395j to 1395w–4. The Government did not present evi-
dence at petitioner’s trial regarding which provisions of Medicare ac-
counted for the payments made to the West Volusia Hospital Authority
in 1993.

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684 FISCHER v. UNITED STATES
Thomas, J., dissenting
ices.” 42 U. S. C. § 1395x(v)(1)(A). The Social Security Act
that created Medicare instructed the Secretary of Health and
Human Services to promulgate regulations establishing the
methods of determining “reasonable costs” and specifically
directed the Secretary to consider, among other things, reim-
bursement methods used by private insurers. Ibid. See
also Shalala v. Guernsey Memorial Hospital, 514 U. S. 87,
91–92 (1995).
Under these regulations, the Federal Government reim-
burses medical providers based upon the lower of the provid-
er’s reasonable cost of furnishing these services to benefici-
aries or the provider’s customary charges for the services.
42 CFR § 413.1(b) (1999). The regulations are designed
to provide reimbursement for the actual cost of providing
care to elderly and disabled Medicare beneficiaries. See
§ 413.5(a) (“Thus, the application of this approach, with ap-
propriate accounting support, will result in meeting actual
costs of services to beneficiaries”). The regulations make
clear that the Federal Government will reimburse hospitals
only for the costs of providing medical care to Medicare
patients, as opposed to nonbeneficiary patients. § 413.80(d)
(“Under Medicare . . . costs of services provided for other
than beneficiaries are not to be borne by the Medicare pro-
gram”); § 413.9(a) (“All payments to providers of services
must be based on the reasonable cost of services covered
under Medicare and related to the care of beneficiaries”);
§ 413.9(c)(3) (“The determination of reasonable cost of serv-
ices must be based on cost related to the care of Medicare
beneficiaries”).
Although these reimbursement provisions permit hospi-
tals to recover capital costs, such as the cost of maintaining
building facilities, § 413.9(c), the allowable reimbursement for
these expenditures is only the amount reasonably attribut-
able to Medicare patients as opposed to general maintenance
of the facilities. See § 413.9(b) (“The objective is that under
the methods of determining costs, the costs with respect to

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685 Cite as: 529 U. S. 667 (2000)
Thomas, J., dissenting
individuals covered by the program will not be borne by indi-
viduals not so covered, and the costs with respect to individ-
uals not so covered will not be borne by the program”).
The “prospective payment system” adopted by Congress
in 1983 to increase efficiency and reduce costs operates some-
what differently from the “reasonable cost” provisions but
is also designed to reimburse hospitals for the cost of provid-
ing care to Medicare beneficiaries. 42 U. S. C. § 1395ww;
42 CFR pt. 412 (1999). Under this system, the Medicare
program pays hospitals a fixed price for each case based on
the patient’s diagnosis related grouping (DRG), which is
assigned based on the patient’s diagnosis, age, and sex,
among other things. 42 U. S. C. § 1395ww(e); 24 CFR
§ 412.60 (1999). The DRG figure represents the average
cost of treating patients within the DRG. 42 U. S. C.
§ 1395ww(d)(2); 49 Fed. Reg. 251 (1984). Significantly, be-
cause hospitals are paid fixed amounts based on the DRG,
the hospital, like any other private contractor, bears the risk
of higher costs. See Kinney, Making Hard Choices under
the Medicare Prospective Payment System: One Administra-
tive Model for Allocating Medical Resources under a Govern-
ment Health Insurance Program, 19 Ind. L. Rev. 1151, 1151–
1152 (1986).
Thus, the statute and regulations make clear that medical
providers are entitled only to reimbursement for the actual
or estimated cost of services rendered to Medicare patients
and that individual elderly and disabled patients—not hospi-
tals—are the beneficiaries of the Medicare program. In-
deed, the Social Security Act explicitly says so. See 42
U. S. C. § 1395a(b)(5) (1994 ed., Supp. III) (“The term ‘medi-
care beneficiary’ means an individual who is entitled to
benefits” (emphasis added)). The Act repeatedly refers
to Medicare “benefits” as assistance provided to individual
participants, rather than to medical providers. See, e. g.,
§ 1395a (“Any individual entitled to insurance benefits under
this subchapter”); § 1395b–2 (“Such notice shall be mailed an-

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686 FISCHER v. UNITED STATES
Thomas, J., dissenting
nually to individuals entitled to benefits under part A or part
B of this subchapter and when an individual applies for bene-
fits under part A of this subchapter or enrolls under part B
of this subchapter”); § 1395b–4(a) (“health insurance cover-
age to individuals who are eligible to receive benefits under
this subchapter”); § 1395b–4(b)(2)(A)(i) (“information that
may assist individuals in obtaining benefits”). In contrast,
the Act commonly refers to “payments” to providers of medi-
cal services. See, e. g., § 1395g(a) (“no such payments shall
be made to any provider unless it has furnished such infor-
mation as the Secretary may request”); § 1395f(a) (“payment
for services furnished an individual may be made only to
providers of services”); § 1395n(a) (1994 ed. and Supp. III)
(“payment for services . . . furnished an individual may be
made only to providers of services which are eligible”).
This terminology, and the Medicare regulations defining al-
lowable costs, reflect the fact that Medicare is a program for
providing “financial help” to individual elderly and disabled
patients rather than to the health care providers who treat
them. Medicare’s provisions for reimbursing providers’
costs do nothing more than establish a market exchange of
payment for services, and so cannot be said to provide “bene-
fits” within the meaning of 18 U. S. C. § 666(b).
II
Although the statutory provisions and regulations cited
above demonstrate that Medicare operates as a reimburse-
ment scheme with respect to health care providers, and not
as a means of providing them “useful aid” or “financial help,”
the Court finds in the statute and regulations evidence that
health care providers are, along with the individual elderly
and disabled patients, also target beneficiaries of the pro-
gram. I think that the Court’s reasoning is both unpersua-
sive and boundless; any funds flowing from a federal assist-
ance program could be deemed “benefits” under the Court’s
rationale, notwithstanding the Court’s concluding disclaimer

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687 Cite as: 529 U. S. 667 (2000)
Thomas, J., dissenting
of such a result. Thus, although the Court purports to
reject the Government’s argument that “benefits” means
“funds that originate in a federal assistance program,” the
Court, in practice, adopts it.
A
First, the Court describes Medicare’s elaborate funding
structure and notes that Medicare’s reasonable cost recovery
system allows recovery of certain capital costs and the costs
of education and training. Ante, at 673–674. These provi-
sions of Medicare do not establish that hospitals receive
“benefits.” To the contrary, the capital costs recoverable
under those provisions of Medicare are the costs tied to the
treatment of Medicare patients. See supra, at 684–685. In
this sense, the cost provisions of Medicare expressly defeat
any suggestion that they are meant to provide a “benefit” to
the hospital. These provisions are not designed to provide
financial assistance to the hospital; they are designed to en-
sure that Medicare beneficiaries receive quality medical care.
And again, the Medicare program picks up only the portion
of the costs attributable to the care of Medicare beneficiaries.
42 CFR §§ 413.50, 413.85 (1999). In fact, the Court does not
grapple with the evidence that Medicare systematically
under-compensates health care providers, evidence that
would further undermine the notion that hospitals are re-
ceiving some form of financial assistance from the program.
See Utz, Federalism in Health Care: Costs and Benefits, 28
Conn. L. Rev. 127, 138–139 (1995).
Second, the Court relies on the numerous obligations im-
posed on health care providers participating in Medicare.
Ante, at 672–675. The Court notes that health care provid-
ers must satisfy licensing standards, provide a laundry list
of particular health care services, and ensure an effective
quality-assurance program. I assume, however, that the
same could be said of most Government contractors. The
defense contractor who agrees to build the military’s equip-

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688 FISCHER v. UNITED STATES
Thomas, J., dissenting
ment is, no doubt, subject to an extensive list of statutory
and regulatory requirements, not because the Government
intends to provide “benefits” to the contractor, but because
the Federal Government intends to place controls on the ex-
penditure of federal dollars. See United States v. Copeland,
143 F. 3d 1439, 1442 (CA11 1998) (discussing regulatory bur-
dens on defense contractors). Similarly, private insurers no
doubt impose various requirements on those who receive re-
imbursements from them. In requiring hospitals to meet
certain standards, the Federal Government is no different
from these private insurers, except that the Federal Govern-
ment exercises vastly greater market power. In other
words, the imposition on health care providers of an intricate
regulatory scheme is irrelevant to the question whether
funds paid pursuant to that scheme are benefits.
Third, the Court contends that some health care providers
receive “special treatment” in the form of lump sum pay-
ments designed to ensure the providers’ ability to satisfy
financial obligations. Ante, at 674. This feature of Medi-
care is also insufficient to show that any “benefits” were re-
ceived by West Volusia Hospital Authority. These payments,
which are part of the prospective payment system, see
supra, at 685, are based on estimated costs of providing serv-
ices to Medicare beneficiaries. See, e. g., 42 CFR § 412.108
(1999). Like the standard reimbursement schemes outlined
above, this payment system does not subsidize the hospital,
it pays the hospital prospectively for performing a service.
Finally, the Court concludes, based on its observations of
Medicare, that “Medicare operates with a purpose and design
above and beyond point-of-sale patient care,” namely, “ensur-
ing the availability of quality health care for the broader
community.” Ante, at 677, 680. According to the Court,
Medicare guarantees that “providers possess the capacity to
render, on an ongoing basis, medical care to the program’s
qualifying patients.” Ante, at 680. In other words, Medi-
care exists to guarantee patients’ access to quality medical

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689 Cite as: 529 U. S. 667 (2000)
Thomas, J., dissenting
care. Quality medical care is available only if medical pro-
viders remain financially viable. Medicare payments create
demand for medical services and, therefore, provide “bene-
fits” to health care providers. This syllogism, however,
amounts to nothing more than the self-evident point that
Medicare aims to ensure that the beneficiaries of the pro-
gram—patients—are able to receive the program’s intended
benefits. It does not establish that Medicare exists to put
hospitals on the dole.
In short, none of the components of Medicare cited by
the Court establishes that benefits flow to hospitals. It
is significant that, although the Court repeatedly invokes,
mantra-like, its conclusion that Medicare exists for a purpose
above and beyond reimbursing hospitals for treating Medi-
care patients, see, e. g., ante, at 677–678, 679, 680, 681, when
the Court comes around to actually identifying this purpose,
it can only state: “The structure and operation of the Medi-
care program reveal a comprehensive federal assistance en-
terprise aimed at ensuring the availability of quality health
care for the broader community.” Ante, at 680. The Court
cannot bring itself to say, as it must, that Medicare exists for
the hospital.3
3 And even if I were to accept that some provisions of Medicare—the
special treatment provisions, for example—provide a benefit to health care
providers, there is no evidence in the record that West Volusia Hospital
Authority received any such payments. Without such evidence, the
Court’s reliance on special provisions to uphold petitioner’s conviction is
improper. Title 18 U. S. C. § 666(b) is, after all, a jurisdictional provision
that allows federal prosecution only if the specific organization at issue
received more than $10,000 in “benefits.” The Court treats the provision
as window dressing. It is not necessary, under the Court’s view, to show
that this organization received benefits. It is sufficient to show that some
hospitals receive them.
This approach is particularly inappropriate because § 666(b), or some
similar jurisdictional provision, is constitutionally required. Section 666
was adopted pursuant to Congress’ spending power, Art. I, § 8, cl. 1. We
have held that the spending power requires, at least, that the exercise of
federal power be related “to the federal interest in particular national

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690 FISCHER v. UNITED STATES
Thomas, J., dissenting
B
Although the Court disclaims the Government’s argument
that “benefits” means only funds provided under a federal
assistance program, the Court, in practice, adopts it. The
Court’s expansive rationale could be applied to any federal
assistance program that provides funds to any organization.
This result is inconsistent with the plain meaning of the stat-
ute. If Congress had meant to apply § 666 to any organiza-
tion that receives “funds” totaling more than $10,000 per
annum, it would have said so. Cf. 18 U. S. C. § 665 (“Who-
ever, being . . . connected in any capacity with any agency
or organization receiving financial assistance or any funds
under [a certain federal program] knowingly enrolls an ineli-
gible participant, embezzles, willfully misapplies, steals, or
obtains by fraud any of the moneys, funds, assets, or prop-
erty which are the subject of a financial assistance agree-
ment or contract pursuant to such Act shall be [punished]”).
Congress, for that matter, could have omitted the word “ben-
efits” from the statute and provided simply that any organi-
zation that “receives, in any one year period, in excess of
$10,000 under a Federal program involving a . . . form of
federal assistance” is covered by the statute. That Con-
gress did not do so suggests that the word “benefits” has a
projects or programs.” South Dakota v. Dole, 483 U. S. 203, 207 (1987)
(internal quotation marks omitted). See id., at 213 (O’Connor, J., dis-
senting). Arguably, if Congress attempted to criminalize acts of theft or
bribery based solely on the fact that—in circumstances unrelated to the
theft or bribery—the victim organization received federal funds as pay-
ment for a market transaction, this constitutional requirement would not
be satisfied. Without a jurisdictional provision that would ensure that in
each case the exercise of federal power is related to the federal interest
in a federal program, § 666 would criminalize routine acts of fraud or brib-
ery, which, as the Court admits, would “upse[t] the proper federal bal-
ance.” Ante, at 681. Cf. United States v. Lopez, 514 U. S. 549, 561 (1995)
(“[Section] 922(q) contains no jurisdictional element which would ensure,
through case-by-case inquiry, that the firearm possession in question af-
fects interstate commerce”).

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Thomas, J., dissenting
meaning separate and apart from the words “under a Federal
program involving a . . . form of federal assistance.” I am
doubtful that the Court’s interpretation gives any meaning
at all to the word “benefits” in § 666(b) because, under the
Court’s rationale, any organization that receives $10,000
under a federal program involving federal assistance re-
ceives “benefits” in such an amount.
This expansive construction of § 666(b) is, at the very least,
inconsistent with the rule of lenity—which the Court does
not discuss. This principle requires that, to the extent that
there is any ambiguity in the term “benefits,” we should re-
solve that ambiguity in favor of the defendant. See United
States v. Bass, 404 U. S. 336, 347 (1971) (“In various ways
over the years, we have stated that when choice has to be
made between two readings of what conduct Congress has
made a crime, it is appropriate, before we choose the harsher
alternative, to require that Congress should have spoken in
language that is clear and definite” (internal quotation
marks omitted)).
C
I doubt that there is any federal assistance program that
does not provide “benefits” to organizations under the
Court’s expansive rationale, but will illustrate my point with
just one example employed by two lower courts. See
United States v. Wyncoop, 11 F. 3d 119, 123 (CA9 1993);
United States v. LaHue, 998 F. Supp. 1182, 1187 (Kan. 1998),
aff ’d, 170 F. 3d 1026 (CA10 1999). Many grocery stores ac-
cept more than $10,000 per annum in food stamps distributed
to individual beneficiaries as part of the Federal Food Stamp
and Food Distribution Program. Like Medicare providers,
stores participating in the Food Stamp Program are required
to satisfy a comprehensive series of statutory and regulatory
requirements. See 7 CFR pt. 278 (1999). For example,
stores are qualified to participate only if they sell an ade-
quate percentage of staple foods such as meat, cereal, and
dairy products. § 278.1(b)(1). Stores must document an

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692 FISCHER v. UNITED STATES
Thomas, J., dissenting
ability to attract food stamp business and demonstrate the
business integrity and reputation of the store owners
and managers. §§ 278.1(b)(2)–(3). Like Medicare, the Food
Stamp Program monitors the providers’ compliance with the
program’s requirements. See § 278.1(n). Like Medicare,
the Food Stamp Program sanctions noncompliance with dis-
missal from the program. § 278.1(l). And, the Food Stamp
Program is like Medicare in that it can be described as hav-
ing “a purpose and design above and beyond point-of-sale” of
food. Ante, at 677. Undoubtedly, the Food Stamp Program
helps to address the “grocery gap,” that is, the lack of avail-
ability of reasonably priced nutritional foods in some low-
income and rural areas. See Note, Food Stamp Trafficking:
Why Small Groceries Need Judicial Protection from the De-
partment of Agriculture (And from Their Own Employees),
96 Mich. L. Rev. 2156, 2176–2177 (1998); Department of Agri-
culture, Office of Analysis & Evaluation, Food Retailers in
the Food Stamp Program: Characteristics and Service to
Program Participants 15 (Feb. 1997) (Table 6). There is
ample evidence on the face of the statute and regulations
that Congress and the agency had in mind the need to ensure
that low-income communities have access to grocery stores.
See 7 U. S. C. § 2021(a) (1994 ed., Supp. IV) (requiring the
Secretary to consider hardship to the community in making
disqualification determinations); 7 CFR § 278.1(b)(1)(ii)(C)
(1999) (listing availability of food stores in the community as
a factor relevant to a firm’s application to participate in the
program). It could be said, therefore, that the grocery
store’s “own operations are one of the reasons for maintain-
ing the program.” Ante, at 681.
To my mind, the reason that a corner grocery does not
receive “benefits” is simply that it merely receives payment
from the Government in a market transaction. I fail to see,
however, how the Court could reach the same conclusion that
I would. Although the Court assures us that its holding
today is narrow and factbound, depending on the “structure,

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Thomas, J., dissenting
operation, and purpose” of Medicare, ibid., the consequences
of the Court’s reasoning are far reaching. In fact, the Court
candidly acknowledges that its interpretation is expansive
when it reads 18 U. S. C. § 666(b) to suggest that “Congress
viewed many federal assistance programs as providing bene-
fits to participating organizations.” Ante, at 678 (emphasis
added). In contrast, I think that the plain language of
§ 666(b) reflects a congressional intent to reach only those
organizations that are themselves the beneficiaries of “useful
aid” or “financial help in time of sickness, old age, or unem-
ployment,” rather than organizations that merely receive
funds as part of a market transaction for goods or services.
* * *
For the foregoing reasons, I respectfully dissent.