United States v. Adebola Adefunke Adebimpe

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 14-10303

Plaintiff-Appellee,

D.C. No.

v. 4:12-cr-00054-

JSW-2

ADEBOLA ADEFUNKE ADEBIMPE,

Defendant-Appellant.

UNITED STATES OF AMERICA, No. 14-10324

Plaintiff-Appellee,

D.C. No.

v. 4:12-cr-00054-

JSW-1

PATRICK ADEBOWALE SOGBEIN,

Defendant-Appellant.

UNITED STATES OF AMERICA, No. 14-10325

Plaintiff-Appellee,

D.C. No.

v. 4:12-cr-00054-

JSW-4

EDUARDO ABAD,

Defendant-Appellant. OPINION

2 UNITED STATES V. ADEBIMPE

Appeal from the United States District Court

for the Northern District of California

Jeffrey S. White, District Judge, Presiding

Argued and Submitted

October 20, 2015—San Francisco, California

Filed April 28, 2016

Before: Richard A. Paez, Mary H. Murguia,

and Andrew D. Hurwitz, Circuit Judges.

Opinion by Judge Murguia;

Dissent by Judge Paez

SUMMARY*

Criminal Law

The panel affirmed the district court’s application of a

sentence enhancement pursuant to U.S.S.G. § 3B1.3 for abuse

of a position of trust, in a case in which Patrick Sogbein ran

a conspiracy to defraud Medicare by providing power

wheelchairs to people who did not need them, and his wife,

Adebola Adebimpe, participated in the conspiracy by

supplying many of the wheelchairs through a medical

equipment company that she owned.

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

UNITED STATES V. ADEBIMPE 3

The panel held that medical equipment suppliers can have

the requisite “professional or managerial discretion” for the

abuse-of-trust enhancement to apply, if they are responsible

for determining the need for the equipment they provide and

personally certify the validity of their claims to Medicare.

The panel addressed the defendants’ other challenges, and

those of a co-defendant, in a separate memorandum

disposition.

Dissenting, Judge Paez wrote that durable medical

equipment suppliers do not exercise substantial professional

or managerial discretion within Medicare’s reimbursement

scheme because Medicare’s rules and regulations confine

them to a ministerial role and leave all critical determinations

of medical need to the beneficiary’s physician.

COUNSEL

Mark D. Eibert (argued), Half Moon Bay, California, for

Defendant-Appellant Adebola Adebimpe.

Amitai Schwartz (argued), Law Offices of Amitai Schwartz,

Emeryville, California, for Defendant-Appellant Patrick

Sogbein.

Christopher J. Cannon (argued) and Matthew A. Laws,

Sugarman & Cannon, San Francisco, California, for

Defendant-Appellant Eduardo Abad.

4 UNITED STATES V. ADEBIMPE

Meredith B. Osborn (argued) and Owen P. Martikan,

Assistant United States Attorneys; Melinda Haag, United

States Attorney, United States Attorney’s Office, San

Francisco, California, for Plaintiff-Appellee.

OPINION

MURGUIA, Circuit Judge:

Patrick Sogbein ran a conspiracy to defraud Medicare by

providing power wheelchairs to people who did not need

them. Sogbein’s wife, Adebola Adebimpe, participated in the

conspiracy by supplying many of the wheelchairs through a

medical equipment company that she owned. Sogbein and

Adebimpe challenge the district court’s application of a two-

level upward adjustment under section 3B1.3 of the

Sentencing Guidelines, after finding the defendants abused a

position of trust with respect to Medicare. We hold that

medical equipment suppliers can have the requisite

“professional or managerial discretion” for the abuse-of-trust

adjustment to apply, if they are responsible for determining

the need for the equipment they provide and personally

certify the validity of their claims to Medicare. See U.S.

Sentencing Guidelines Manual § 3B1.3 cmt. n.1 (U.S.

Sentencing Comm’n 2014). We affirm the district court’s

application of the abuse-of-trust enhancement in this case.1

1

We address the defendants’ other challenges to their convictions and

sentences, and those of co-defendant Eduardo Abad, in a separate

memorandum disposition.

UNITED STATES V. ADEBIMPE 5

I

Patrick Sogbein owned Debs Medical Distributor

(“Debs”), a medical equipment supply company. In order to

enroll Debs in Medicare’s reimbursement program, Sogbein

certified that he knew Medicare’s standards, that he would

follow the relevant laws and regulations, and that he would

not submit fraudulent claims. Sogbein spent a significant

amount of time learning Medicare’s rules, from attending

conferences and training sessions as well as studying the rules

on his own time. Sogbein also obtained a state license to

operate a Home Medical Device Retail Facility in California.

Since 1995, Sogbein has been married to Adebola

Adebimpe. Adebimpe also owned a medical equipment

supply company, called Dignity Medical Equipment

(“Dignity”). In order to enroll Dignity in Medicare’s

reimbursement program, Adebimpe was also required to

certify that Dignity would only submit valid claims.

In 2006, Sogbein and Dr. Edna Calaustro entered into a

conspiracy to defraud Medicare by submitting claims for

fraudulent power-wheelchair prescriptions. Dr. Calaustro

agreed to prescribe power wheelchairs for Medicare-eligible

individuals in San Francisco’s Tenderloin neighborhood

without performing the medical examinations required to

determine whether they needed the wheelchairs. Dr.

Calaustro sent the prescriptions to Sogbein, who paid Dr.

Calaustro $100 for each prescription. Debs delivered the

wheelchairs, and then submitted claims to Medicare through

an intermediary, Noridian Healthcare Solutions, L.L.C.

(“Noridian”). Sogbein received approximately $3000 from

Medicare for each wheelchair, which cost him about $800.

All told, Sogbein billed Medicare more than $2.8 million, and

6 UNITED STATES V. ADEBIMPE

received over $1.5 million from Medicare, before the

conspiracy stopped in 2011.

In 2010, Debs’ billing practices came under scrutiny from

Medicare. Sogbein subsequently sent Dr. Calaustro’s

wheelchair prescriptions to Adebimpe’s company Dignity.

Dignity billed Medicare approximately $1.5 million for

wheelchairs prescribed by Dr. Calaustro.

Sogbein and Adebimpe were charged in an indictment in

2012 with one count of conspiracy to commit health care

fraud under 18 U.S.C. § 1349, and ten counts of health care

fraud and aiding and abetting at various dates within the span

of the conspiracy under §§ 1347 and 2. A superseding

indictment in 2013 added one count against Sogbein for

conspiracy to pay and receive kickbacks from a federal health

program under §§ 371 and 2.

The case went to trial in October 2013. Jody Whitten, a

representative from Noridian, testified as an expert witness

about the process of prescribing and submitting claims for

power wheelchairs. Whitten testified that, in order to qualify

for a particular treatment under Medicare, a patient must meet

Medicare’s eligibility criteria for the treatment, called “local

coverage determinations,” or “LCDs.” Among other things,

the local coverage determinations for the power wheelchairs

at issue in this case required that the patient actually have a

mobility-related medical issue, and that the patient’s

residence have doorways and rooms that are large enough for

the wheelchairs to pass through. The local coverage

determinations thus required that medical equipment

suppliers perform home assessments.

UNITED STATES V. ADEBIMPE 7

Ordinarily, the process of prescribing a power wheelchair

starts when a physician determines that a patient needs a

mobility device and sends an “order” to a medical equipment

supplier. Whitten explained that the medical equipment

supplier then “will assess that patient, and determine what is

the best type of mobility . . . equipment that beneficiary

needs.” After a medical equipment supplier has assessed the

patient, the supplier recommends particular equipment in a

“Detailed Product Description” document, which is sent back

to the physician. If the physician agrees with the supplier’s

recommendation, she will sign the Detailed Product

Description and return it to the supplier. Then the supplier

will “need to do a complete assessment of the beneficiary’s

home, either before or at the time of delivery, to make sure

that that chair is going to be able to complete those activities

within that beneficiary’s home.”

Whitten stated that medical equipment suppliers have a

responsibility to determine the medical necessity of power

wheelchairs, because

[t]he supplier has to know whether the

beneficiary meets the coverage criteria in

order to bill it appropriately. So they have to

verify and collect medical records, verify all

of the orders and the Detailed Product

Descriptions are received in a timely manner,

and verify that the home provides enough

room.

Equipment suppliers have these responsibilities “[b]ecause

they’re the ones that are going to get reimbursed” for the

equipment.

8 UNITED STATES V. ADEBIMPE

After a wheelchair has been delivered, the supplier

submits a claim to Medicare. In Medicare’s claim

submission system, suppliers select “modifiers” on the claim

to communicate information to Medicare, such as the type of

equipment provided or whether the equipment was rented or

sold. Suppliers select the “KX modifier” to inform Medicare

that the beneficiary meets all of the medical and home

environment requirements for the equipment.

Medical equipment suppliers ordinarily submit claims to

Medicare without supporting paperwork, such as the doctor’s

prescription or the supplier’s home assessment. Rather than

scrutinize the documentation for every claim, Medicare

performs random audits. Whitten described this process as an

“honor system,” explaining that Medicare

tr[ies] to streamline claim processing as much

as possible, because . . . there’s thousands and

thousands of claims a day that come into our

system. So that’s where the KX modifier

comes into play. If the KX modifier’s on the

claim, that tells us that the supplier has all of

those documents, and that they should be paid

appropriately.

With the KX modifier, “that claim can go straight through the

system, and process, and pay.” The medical equipment

supplier, not the doctor, decides whether to put the KX

modifier on the claim.

Dr. John Fullerton also testified for the government as a

Medicare expert. Dr. Fullerton explained that equipment

suppliers perform home assessments, and that the “main goal

[of the home assessment] is establishing that that home

UNITED STATES V. ADEBIMPE 9

environment is safe for the patient to use that assistive device,

and . . . has the ability to allow that assistive device to help

the patient with their medically related Activities of Daily

Living sufficiently.” Both the physician and the equipment

supplier have responsibility to ensure the patient receives the

appropriate equipment; each of them “needs to be able to

demonstrate a sufficient packet of information, including the

medical information, to support the prescription and the

procurement and the delivery of a power wheelchair.” Dr.

Fullerton emphasized that medical equipment suppliers

“absolutely” have the authority to disagree with a physician’s

prescription, because under this particular framework,

“there’s an independent responsibility for each side to get it

right.”

Dr. Fullerton also testified that, after reviewing over 400

files of documents prepared by Dr. Calaustro, Debs, and

Dignity for power wheelchair claims, none of the documents

indicated that adequate home assessments had been

performed. In Dr. Fullerton’s opinion, the medical

documentation provided by Dr. Calaustro was “woefully

inadequate” to support orders for power wheelchairs. Dr.

Fullerton stated that, if a medical equipment supplier received

documentation as sparse as that provided by Dr. Calaustro,

the supplier should not deliver a wheelchair, but rather obtain

additional documentation from the physician.

Dr. Calaustro and Mele Saavedra, another of the co-

conspirators, cooperated with the government and testified at

trial. Dr. Calaustro testified that she asked Sogbein if she

should prescribe less expensive treatments for the wheelchair

recipients, such as canes or walkers. Sogbein told Dr.

Calaustro that she should only prescribe wheelchairs, because

Medicare would not pay for canes or walkers. Saavedra, who

10 UNITED STATES V. ADEBIMPE

received $50 each time she recruited a Medicare-eligible

individual to receive a wheelchair, testified that Sogbein

would only pay her if she referred patients who wanted power

wheelchairs—not walkers, manual wheelchairs, or scooters—

because Medicare paid Sogbein less for those other devices.

Several people who received power wheelchairs through

the conspiracy testified at trial that they did not need or use

them. The recipients testified that nobody had assessed their

homes to determine whether their homes could accommodate

the wheelchairs. One individual testified that his bathroom

was not big enough to accommodate the wheelchair he

received.

After a month-long trial, the jury convicted Sogbein and

Adebimpe on all counts. The district court sentenced Sogbein

to a term of incarceration of 144 months, which was 23

months above his Guidelines range of 97 to 121 months. The

court sentenced Adebimpe to 51 months of incarceration,

which was the low end of her Guidelines range of 51 to 63

months. In calculating the Guidelines ranges, the district

court applied a two-level enhancement to both defendants for

their abuse of a position of trust under Sentencing Guidelines

section 3B1.3.2 The court reasoned that Sogbein and

Adebimpe “are owners of Debs and Dignity respectively, and

thus occupied positions involving substantial managerial

[authority] and in a trust position, vis-a-vis the Medicare

program.” Reviewing trial testimony and exhibits, the district

court found that “Medicare operates on an honor system,” and

2

“If the defendant abused a position of public or private trust, or used

a special skill, in a manner that significantly facilitated the commission or

concealment of the offense, increase by 2 levels.” U.S. Sentencing

Guidelines Manual § 3B1.3.

UNITED STATES V. ADEBIMPE 11

that Sogbein and Adebimpe “understood their obligations to

this by virtue of the certifications that they signed.”

II

“We review a district court’s application of an abuse-of-

trust enhancement under a two-step analysis.” United States

v. Aubrey, 800 F.3d 1115, 1134 (9th Cir. 2015). First, we

review the legal question whether a defendant occupied a

position of trust as defined by the Guidelines de novo. Id.

“Then, if we decide that the defendant held a position of trust,

we review for clear error the district court’s decision whether

the defendant’s abuse of his position significantly facilitated

the offense.” Id. (internal quotation marks and alterations

omitted).

III

A

Under section 3B1.3 of the Sentencing Guidelines, a

district court may apply a two-level upward adjustment “[i]f

the defendant abused a position of public or private trust . . .

in a manner that significantly facilitated the commission or

concealment of the offense.” “‘Public or private trust’ refers

to a position of public or private trust characterized by

professional or managerial discretion (i.e., substantial

discretionary judgment that is ordinarily given considerable

deference).” U.S. Sentencing Guidelines Manual § 3B1.3

cmt. n.1. The Guidelines give the following examples where

the adjustment applies: “embezzlement of a client’s funds by

an attorney serving as a guardian, a bank executive’s

fraudulent loan scheme, or the criminal sexual abuse of a

patient by a physician under the guise of an examination.” Id.

12 UNITED STATES V. ADEBIMPE

The Guidelines provide, however, that “[t]his adjustment

does not apply in the case of an embezzlement or theft by an

ordinary bank teller or hotel clerk because such positions are

not characterized by the above-described factors.” Id.

Although we have not previously had the occasion to

consider the application of the abuse-of-trust enhancement to

a Medicare equipment supplier, we do not write today on a

clean slate. In United States v. Laurienti, we affirmed the

enhancement for a stock broker who sold securities to clients

at an inflated price. 731 F.3d 967, 970 (9th Cir. 2013). We

explained that “the presence or lack of ‘professional or

managerial discretion’ represents the decisive factor in

deciding whether a defendant occupied a position of trust,”

and that “[a] defendant has this discretion when, because of

his or her special knowledge, expertise, or managerial

authority, [he or she] is trusted to exercise substantial

discretionary judgment that is ordinarily given considerable

deference.” Id. at 973 (second alteration in original) (internal

quotation marks omitted). We held that, as a stock broker,

Laurienti had sufficient professional discretion for the

enhancement to apply, because his clients relied on his

recommendations to purchase particular securities. Id. at 974.

In Aubrey, we applied Laurienti and affirmed the

application of the enhancement for a construction contractor

who misappropriated funds from the U.S. Department of

Housing and Urban Development. 800 F.3d at 1134. The

funds were intended for the construction of affordable

housing units in the Navajo Nation, and were distributed

through the Fort Defiance Housing Commission (“FDHC”),

a non-profit organization with a fiduciary duty to manage the

funds. Id. at 1119–20. The FDHC had entered into a series

of development and consulting agreements with Aubrey, the

UNITED STATES V. ADEBIMPE 13

contractor, which resulted in Aubrey having practical control

over the FDHC’s finances. Id. at 1120. Reviewing Aubrey’s

challenge to the abuse-of-trust enhancement, we rejected his

argument that he only had managerial authority with respect

to his construction company, because “[t]rial evidence

supported the conclusion that FDHC delegated financial

management of the . . . project to Aubrey’s company, that his

company then stepped into the shoes of FDHC, and that

Aubrey had ‘the real authority’ at FDHC, because he

‘handle[d] all of the finances.’” Id. at 1134.

In United States v. Rutgard, we upheld the application of

an abuse-of-trust enhancement to the sentence of an

ophthalmologist convicted of Medicare fraud for submitting

claims for eye examinations and surgeries that were not

medically necessary. 116 F.3d 1270, 1293 (9th Cir. 1997).

In doing so, we reasoned that “the government as insurer

depends upon the honesty of the doctor and is easily taken

advantage of if the doctor is not honest.” Id. at 1293.

On the other hand, the enhancement is inappropriate

where the defendant does not possess the kind of professional

discretion on which victims would reasonably rely. For

example, in United States v. Contreras, we rejected the

abuse-of-trust enhancement as applied to a prison cook

convicted of smuggling drugs into the prison. 581 F.3d 1163,

1168 (9th Cir. 2009), opinion adopted in part, vacated in part

on other grounds, 593 F.3d 1135, 1136 (9th Cir. 2010) (en

banc). Even though her position as a cook allowed her to

commit a difficult-to-detect crime, the cook “held no

significant position of authority at [the prison] and exercised

no ‘professional or managerial discretion.’” Id. at 1168.

14 UNITED STATES V. ADEBIMPE

Other circuits have addressed whether the owners of

health care companies occupy positions of trust with respect

to Medicare. The Fifth Circuit has repeatedly affirmed the

application of the enhancement to owners of medical

equipment supply companies convicted of health care fraud.

United States v. Willett, 751 F.3d 335, 344–45 (5th Cir.

2014); United States v. Miller, 607 F.3d 144, 150 (5th Cir.

2010). In Willett, the defendant defrauded Medicare by

“upcoding,” or seeking reimbursements for more money than

he was entitled to for the equipment provided. 751 F.3d at

338. The Probation Office recommended applying the abuse-

of-trust enhancement “based on Willett’s position as a co-

owner of a [medical equipment] distributor and his

responsibility to submit legitimate and genuine claims to

Medicare.” Id. at 344. “Willett acknowledged that he

probably occupied a position of trust,” but challenged the

district court’s factual finding that his abuse of his position

substantially facilitated the offense. Id. The Fifth Circuit

upheld the application of the enhancement, reaffirming a

prior holding that “a [medical equipment] provider occupies

a position of trust because, in order to provide

reimbursements, Medicare relies on the honesty and

forthrightness of [medical equipment] providers in their claim

submissions.” Id. at 344–45 (citing Miller, 607 F.3d at 150).

However, the Eleventh Circuit has rejected the application

of the enhancement for the owner of a health care company

that submitted claims for non-allowable expenses to Medicare

via an intermediary, Aetna. United States v. Garrison,

133 F.3d 831, 841–43 (11th Cir. 1998). The defendant,

Garrison, was the owner and chief executive of a health care

company that provided in-home nursing services. Id. at

833–34. Garrison’s company would submit cost reports to

Aetna, which reviewed the reports on behalf of Medicare. Id.

UNITED STATES V. ADEBIMPE 15

at 834. Medicare would then reimburse the company for the

services it provided that were covered by Medicare. Id.

However, Garrison instructed her employees to submit cost

reports that included expenses that were not reimbursable,

such as political contributions and personal vacations. Id. at

834–35. Garrison ultimately pled guilty to submitting

fraudulent cost reports for Medicare reimbursement.3 Id. at

835.

The district court applied the abuse-of-trust enhancement

to Garrison. Id. at 837. The Eleventh Circuit reversed. Id. at

841–42. The Eleventh Circuit distinguished “arm’s-length

business relationships,” where the enhancement is not

available, from cases where “the defendant has abused

discretionary authority entrusted to the defendant by the

victim,” and where the enhancement properly applies. Id. at

839 (citation omitted). The Eleventh Circuit held that the

relationship between Garrison and Medicare lacked the

sufficient element of “trust,” for two reasons. First, Aetna

was a “fiscal intermediary whose specific responsibility was

to review and to approve requests for Medicare

reimbursement before submitting those claims to Medicare

for payment.” Id. at 841. Second, as a high-level executive,

Garrison was removed from the process of preparing and

submitting the cost reports. Id. “Garrison lacked the

discretion and ability to conceal the false cost reports

submitted for Medicare reimbursement and relied on others

to accomplish this deception,” for example by retaining

3

Like Sogbein, Garrison was charged with conspiracy to defraud the

United States under 18 U.S.C. § 371. 133 F.3d at 835 n.8. However,

unlike Sogbein, Garrison was charged with making false statements under

§ 1001, rather than health care fraud under § 1347. Id.

16 UNITED STATES V. ADEBIMPE

financial and legal experts who could hide the improper costs.

Id. at 841 & n.19.

B

In the case before us, the district court correctly

determined that, as medical equipment suppliers, Sogbein and

Adebimpe were in positions of trust with respect to Medicare.

Medicare entrusted the defendants with “substantial

discretionary judgment” in selecting the proper equipment,

and gave them “considerable deference” in submitting claims

that accurately reflected patients’ medical needs through an

automated reimbursement system. See U.S. Sentencing

Guidelines Manual § 3B1.3 cmt. n.1.

The testimony of Noridian representative Jody Whitten

and Medicare expert Dr. John Fullerton established that

medical equipment suppliers have professional obligations

separate from those of a physician. Both witnesses testified

that equipment suppliers must determine that a particular

piece of equipment is medically appropriate for a beneficiary

and that the beneficiary’s home is compatible with the

equipment. Although the physician ultimately approves the

equipment, the supplier must still be able to justify the

medical necessity for the equipment, or risk repaying

Medicare in the event of an audit. Dr. Fullerton testified that

equipment suppliers “absolutely” have authority to disagree

with a physician’s prescription, and that a supplier who

receives inadequate documentation from a physician should

contact the physician, rather than deliver the requested

equipment.

Other witnesses’ testimony established that, within this

conspiracy, Sogbein had the discretion to direct the provision

UNITED STATES V. ADEBIMPE 17

of particular equipment without regard for medical need. Dr.

Calaustro, the physician who prescribed the power

wheelchairs, testified that Sogbein instructed her to write

prescriptions for power wheelchairs instead of canes or

walkers, because Medicare would not pay him for canes or

walkers. Similarly, Mele Saavedra, one of Sogbein’s

recruiters, testified that Sogbein instructed her to find people

who would accept power wheelchairs, and not canes, walkers,

or manual wheelchairs, because Medicare would pay him less

for those. Sogbein was not merely processing prescriptions

written by Dr. Calaustro; rather, he was affirmatively

instructing his co-conspirators to help him deliver a specific,

high-cost piece of equipment he selected.

Medicare’s electronic claims submission system relies on

the supplier’s obligation to provide medically appropriate

equipment. Whitten testified that Medicare operates on an

honor system because of the thousands of claims it receives

every day. To enroll in this honor system, a medical

equipment supplier must certify that it will not submit

fraudulent claims. Claims for reimbursement are processed

automatically if a supplier selects the KX modifier on the

claim form, indicating that the supplier has determined that

the beneficiary meets the requirements for the equipment.

In this case, the automatic nature of the claims submission

process, and the limited review performed by the

intermediary, Noridian, demonstrate that Sogbein and

Adebimpe had primary responsibility for ensuring the validity

of the claims they submitted. Noridian automatically

processed claims for payment unless required codes were

missing, such as the KX modifier. As with the construction

contractor in Aubrey, the mere presence of an intermediary

here does not destroy the defendants’ position of trust with

18 UNITED STATES V. ADEBIMPE

respect to Medicare, because Medicare trusted Sogbein and

Adebimpe to ensure the validity of the claims they submitted.

See Aubrey, 800 F.3d at 1134.

In Rutgard, we explained that “the government as insurer

depends upon the honesty of the doctor and is easily taken

advantage of if the doctor is not honest.” 116 F.3d at 1293.

The same reasoning applies here. The testimony established

that Sogbein and Adebimpe occupied a position of trust with

respect to Medicare because they had independent obligations

to determine that the equipment was appropriate, and they—

not Dr. Calaustro—submitted claims to Medicare that they

had personally certified to be valid.

This case thus differs from Garrison, in which the

Eleventh Circuit held that the presence of Aetna as a fiscal

intermediary that reviewed the validity of Medicare claims

prevented the defendant healthcare executive from occupying

a position of trust. 133 F.3d at 841. Here, by contrast,

Noridian processed Debs’ and Dignity’s certified claims as a

matter of course, rather than scrutinizing their validity. Also,

Garrison, an executive removed from the cost reporting

process, relied on others, including financial and legal

experts, to conceal improper expenses in the cost reports

submitted to Aetna and Medicare. Id. at 841 & n.19. Here,

Sogbein and Adebimpe personally certified the validity of

their claims, and knowingly submitted claims falsely

indicating that the beneficiaries met all of the requirements

for power wheelchairs.

A contractor does not occupy a position of trust merely by

doing business with the government. But here there is more.

Medicare trusted Sogbein and Adebimpe to exercise their

professional discretion in providing appropriate medical

UNITED STATES V. ADEBIMPE 19

equipment to individuals who actually needed it and could

use it in their homes. Medicare also created a payment

mechanism—an honor system—through which equipment

suppliers that certified the validity of their claims could

receive streamlined reimbursement, and Sogbein and

Adebimpe enrolled in and used that system. The defendants’

role in this case qualified as a position of trust under

Guidelines section 3B1.3.

C

The dissent views the record differently. In concluding

the equipment suppliers here lacked the requisite professional

discretion for the enhancement to apply, the dissent argues

that a supplier’s role in determining medical need is limited

to verifying that the physician has completed a face-to-face

evaluation and seven-element order, and measuring the

beneficiary’s home—tasks the dissent describes as

“ministerial.” Dissent at 31–32. According to the dissent,

“[i]n essence, the supplier compares the physician’s order

with the detailed checklist laid out in the LCD.” Dissent at

30. The dissent characterizes the supplier’s role as merely

“reporting” to Medicare that the physician has checked all of

the procedural boxes, without independently reviewing the

substance of the physician’s medical need determination.

Dissent at 35–36.

The record demonstrates that the role of the suppliers in

this case was not so limited. Both the structure and substance

of the local coverage determinations for a power wheelchair

require the supplier to exercise discretion. The “LCD

Information” section explains that a power wheelchair is only

covered by Medicare if the “basic coverage criteria” are met.

The first basic criterion is that “[t]he beneficiary has a

20 UNITED STATES V. ADEBIMPE

mobility limitation that significantly impairs his/her ability to

participate in one or more mobility-related activities of daily

living.” The question for the power wheelchair supplier is

whether the coverage criteria are met, not merely whether the

physician has provided a seven-element order and

examination report.

Other coverage criteria require the power wheelchair

supplier to exercise judgment regarding the beneficiary’s use

of the wheelchair in the home. A power wheelchair is only

covered if “[t]he beneficiary’s home provides adequate access

between rooms, maneuvering space, and surfaces for the

operation of the power wheelchair that is provided.” The

LCD does not define how much space is “adequate.” Another

criterion is that “[u]se of a power wheelchair will

significantly improve the beneficiary’s ability to participate

in [certain mobility-related activities] and the beneficiary will

use it in the home.” Whether the coverage criteria are met for

a particular beneficiary requires a determination that the

power wheelchair will actually help the beneficiary in the

home—not whether a physician has decided that it will.

In a later section, “General Information,” the LCD

explains that “[i]t is expected that the beneficiary’s medical

records will reflect the need for the care provided.” Among

other things, the supplier is supposed to collect the

physician’s seven-element order and the report from the

physician’s face-to-face examination with the patient. The

LCD provides a list of details that the examination report

“should provide,” but also notes that the report “may include

other details,” and that “[e]ach element would not have to be

addressed in every situation”—without explaining when

particular elements are or are not required. Instead of setting

forth a hard-and-fast checklist of required content, the LCD

UNITED STATES V. ADEBIMPE 21

provides that “[t]he [physician’s] evaluation should be

tailored to the individual beneficiary’s conditions. The

history should paint a picture of the beneficiary’s functional

abilities and limitations on a typical day.”

Separate from the examination report, the LCD also says

that “[p]hysicians shall also provide reports of pertinent

laboratory tests, x-rays, and/or other diagnostic tests,” but it

does not specify which tests are required for which diagnoses.

The LCD also requires that, “[u]pon request, suppliers shall

provide notes from prior visits to give a historical perspective

of the progression of disease over time and to corroborate the

information in the face-to-face examination,” but it does not

specify how much information is sufficient to corroborate the

face-to-face examination.

In short, the LCD for a power wheelchair puts the

essential question the supplier must answer—are the coverage

criteria met—in a separate, earlier section from the question

of what supporting documents are required. The LCD does

not say anywhere that the coverage criteria are met simply

because supporting documents are provided; rather, the

criteria are met if the beneficiary actually “has a mobility

limitation,” among other things. (Emphasis added.) And

even the decision whether the supporting documentation is

adequate requires an exercise of discretion, since the LCD

allows that “[e]ach element would not have to be addressed

in every evaluation.” While the LCD provides significant

guidance to the power wheelchair supplier, it does not

provide a simple checklist that eliminates the supplier’s

discretion.

The dissent asserts that the supplier’s use of the KX

modifier, which indicates that all of the LCD coverage

22 UNITED STATES V. ADEBIMPE

criteria have been met, is not discretionary because the

supplier must use the code to obtain reimbursement. Dissent

at 31. The dissent fails to recognize the possibility that the

supplier has the discretion to not deliver equipment or not

seek reimbursement where the coverage criteria have not

been satisfied. Moreover, as the dissent acknowledges, the

supplier has the choice of using the GA or GY modifiers

instead of the KX modifier when the supplier expects that

medical necessity has not been shown. Dissent at 29. The

fact that suppliers have an incentive to seek reimbursement

does not mean that they lack the discretion to decline to file

an inadequately supported claim, or decline to represent to

Medicare that the coverage criteria have been met.

Our conclusion is supported by the witnesses’ testimony

at trial. Jody Whitten, the Noridian representative, was asked

“does the supplier have any responsibility for determining

medical necessity for that power wheelchair?” Whitten

responded, “The supplier has to know whether the beneficiary

meets the coverage criteria in order to bill it correctly. They

need to verify and collect medical records . . . . So, yes, they

do.” Whitten did not say the supplier has to know that the

physician has determined medical need; rather, she said the

supplier has to “know” whether the beneficiary “meets” the

criteria, indicating the supplier must use judgment. The fact

that this determination is made by “verifying” medical

records does not mean that the supplier lacks discretion.

Whitten also described power wheelchair suppliers’

obligation to perform a Home Assessment to ensure that the

beneficiary’s home provides adequate space. She indicated

that Medicare would not pay a claim for a power wheelchair

for which a Home Assessment had not been performed. She

explained that it is important that the device provided to the

UNITED STATES V. ADEBIMPE 23

beneficiary be “appropriate,” both for the beneficiary’s home

and for the beneficiary’s size and weight—and she noted that

there was some “wiggle room” in this latter determination.

Whitten explained that the supplier (not the physician)

initially selects the appropriate equipment: suppliers are

“pretty knowledgeable on their equipment, [they] will assess

that patient, and determine what is the best type of mobility

. . . equipment that beneficiary needs.” The assessments,

evaluations and determinations described by Whitten require

professional judgment; they are not “ministerial” activities.

Dr. Fullerton also described the supplier’s role in ways

that are inconsistent with the dissent’s “ministerial” label.

Dr. Fullerton repeatedly described the process of justifying

the medical need for a piece of equipment as a

“collaboration” between the physician and the supplier, where

“there’s an independent responsibility for each side to get it

right.”4 Indeed, Dr. Fullerton testified that a supplier would

request more documentation from a physician if the supplier

“felt” that the documentation was inadequate, describing an

exercise of judgment, not adherence to a checklist.

4

The dissent discounts Dr. Fullerton’s testimony because Dr. Fullerton

said that suppliers base their decision on the physician’s records and

physicians have the ultimate responsibility to sign off on the equipment.

Dissent at 31–32. But there is no evidence that the physician’s ultimate

approval of equipment eliminates the supplier’s independent responsibility

to determine the coverage criteria have been met. Again, suppliers have

this responsibility because “they’re the ones that are going to get

reimbursed” by Medicare for the equipment. The facts of this case

demonstrate that Medicare’s trust can be abused where both the physician

and the power equipment supplier fail to satisfy their independent

obligations.

24 UNITED STATES V. ADEBIMPE

We agree with the dissent that Medicare assigns the

physician both the initial and the final responsibility for

determining the medical need for a power wheelchair.

Moreover, it is clear that power wheelchair suppliers

generally rely on medical records prepared by the physician.

But that does not mean power wheelchair suppliers lack an

obligation to ensure the need for the equipment they provide,

or that they do not exercise discretion in meeting that

obligation. Medicare expects the power wheelchair supplier

to determine a power wheelchair is appropriate for the

beneficiary’s home and personal circumstances, and to verify

medical records actually support a determination of medical

need for the equipment. If the equipment is not appropriate

or the records do not provide enough support—perhaps

because they lack sufficient detail for the supplier to

determine medical need, or because inconsistencies in the

records raise red flags—the power wheelchair supplier is

expected to exercise discretion by not completing the order

until enough documentation is provided, or at least by

selecting the GA or GZ modifier (indicating that medical

necessity has not been shown), instead of KX (indicating that

all of the coverage criteria are satisfied).

Finally, the dissent argues that our decision will greatly

expand the reach of the enhancement, potentially including

individuals convicted of tax fraud. Dissent at 37. If the

record were as the dissent reads it, this may be a valid

concern. However, as we have emphasized, power

wheelchair suppliers do not merely “report” to Medicare that

physicians have filled out the proper paperwork. Instead,

power wheelchair suppliers are only supposed to submit a

claim for equipment with the KX modifier if they are

satisfied that the claim is appropriate and adequately justified

by medical need. The power wheelchair supplier’s decision

UNITED STATES V. ADEBIMPE 25

requires professional judgment, distinguishing this case from

that of the ordinary taxpayer.

IV

We also hold that the district court did not clearly err in

finding that Sogbein’s and Adebimpe’s abuse of their position

of trust “significantly facilitated the commission or

concealment of the offense.” See U.S. Sentencing Guidelines

Manual § 3B1.3; see also Aubrey, 800 F.3d at 1134 (district

court did not clearly err in finding contractor’s abuse of his

position of trust significantly facilitated his offense of

misappropriating construction funds, where the contractor

shifted the funds among various accounts with little

oversight). Sogbein provided individuals with expensive and

unnecessary medical equipment without performing the

required home assessments. Medicare reimbursed Sogbein at

more than three times his out-of-pocket cost for the

wheelchairs, totaling payments to Sogbein of more than $1.5

million. And Sogbein was able to obtain these

reimbursements with hardly any oversight by enrolling in

Medicare’s electronic payment system and certifying the

validity of his claims.

Once Sogbein’s company came under scrutiny from

Medicare, he sent Dr. Calaustro’s wheelchair referrals to

Adebimpe’s company, Dignity. Like Sogbein, Adebimpe

enrolled her company in Medicare’s electronic payment

system by certifying the validity of Dignity’s claims,

allowing the claims to be reimbursed automatically.

Adebimpe’s abuse of her position of trust allowed Dignity to

submit approximately $1.5 million in fraudulent claims to

Medicare, again with virtually no oversight.

26 UNITED STATES V. ADEBIMPE

In light of these facts, the district court’s conclusion that

Sogbein and Adebimpe’s abuse of their positions of trust

significantly furthered the offense was not clearly erroneous.

See Aubrey, 800 F.3d at 1134.

AFFIRMED.

PAEZ, Circuit Judge, dissenting:

I do not agree with the majority that the enhancement for

abuse of trust under United States Sentencing Guideline

§ 3B1.3 applies to Adebimpe and Sogbein’s (“defendants”)

position as durable medical equipment (“DME”) suppliers in

the Medicare program. In my view, DME suppliers do not

exercise substantial professional or managerial discretion

within Medicare’s reimbursement scheme because

Medicare’s rules and regulations confine them to a ministerial

role and leave all critical determinations of medical need to

the beneficiary’s physician. I recognize that our sister

circuits are divided on this issue, compare United States v.

Willett, 751 F.3d 335 (5th Cir. 2014) (upholding application

of abuse-of-trust enhancement to DME supplier) with United

States v. Garrison, 133 F.3d 831 (11th Cir. 1998) (rejecting

application of the enhancement to a supplier), but I find the

Eleventh Circuit’s approach most persuasive. Therefore, I

respectfully dissent from the majority’s decision to affirm the

district court’s application of the abuse-of-trust enhancement.

I.

In United States v. Contreras, we reevaluated our

precedent on the abuse-of-trust enhancement in light of the

UNITED STATES V. ADEBIMPE 27

U.S. Sentencing Commission’s revisions to the commentary

accompanying section 3B1.3. 581 F.3d 1163 (9th Cir. 2009),

opinion adopted in part, vacated in part on other grounds,

593 F.3d 1135 (9th Cir. 2010) (en banc). In Contreras, we

held that the Ninth Circuit’s prior emphasis on a defendant’s

“freedom to commit a difficult-to-detect wrong” was

“incompatible” with section 3B1.1’s revised commentary,

which made the presence of substantial “professional or

managerial discretion” the key inquiry. Id. at 1165–66. In so

concluding, we rejected the district court’s application of the

enhancement to Contreras, a prison cook who took advantage

of the fact that she “could enter the prison without being

searched” to smuggle drugs to inmates. Id. at 1168. This fact

alone “did not demonstrate the necessary discretion” to

justify the enhancement, and the court expressed concern that

“to hold otherwise would extend § 3B1.3 to virtually every

employment situation.” Id. (internal quotation marks and

alterations omitted). As detailed below, the evidence at trial

outlining the role of DME suppliers does not demonstrate that

they exercise the type of discretion the abuse-of-trust

enhancement seeks to capture as interpreted by our opinion

in Contreras.

II.

The process by which Medicare reimburses a DME

supplier for a power wheelchair is carefully outlined in a

document known as the Power Mobility Device Local

Coverage Determination (LCD).1 According to the LCD, the

first step is the completion of a “face-to-face examination”

between the physician and patient. The physician must

document the results of the examination in a detailed report,

1

The Power Mobility Device LCD was admitted at trial as Exhibit 55.

28 UNITED STATES V. ADEBIMPE

which “should be tailored to the individual beneficiary’s

condition,” “paint a picture of the beneficiary’s functional

abilities and limitations on a typical day,” and generally

“contain as much objective data as possible.”

If, after the examination, the physician believes that the

patient requires a power mobility device, she must complete

a “7-Element Order.” As the name suggests, these orders

have seven specific requirements:

1. Beneficiary’s name

2. Description of the item that is ordered. []

3. Date of the face-to-face examination

4. Pertinent diagnoses/conditions that relate to the need for

the POV or power wheelchair

5. Length of need

6. Physician’s signature

7. Date of physician signature

Although the DME supplier “may provide a template order

listing the seven required elements,” the supplier is expressly

“prohibited from completing any part of it.” Only the

physician who conducted the examination may prepare the

order, which the supplier must receive within forty-five days

of the face-to-face examination.

Relying on the physician’s order, the supplier prepares a

“detailed product description.” Although the supplier selects

the “specific power mobility device that is appropriate” based

on the order, the options are narrowly confined by specific

medical requirements. For example, a separate “Wheelchair

Seating” LCD provides that a “skin protection seat cushion”

is covered only if the beneficiary has one of several specific

medical conditions (e.g., a “current pressure ulcer”) that the

UNITED STATES V. ADEBIMPE 29

physician diagnosed.2 Moreover, final approval of the

specific device selected rests with the physician, who “must

sign and date the detailed product description and the supplier

must receive it prior to delivery.”

As a final step, “[p]rior to or at the time of delivery” of

the power mobility device, “the supplier or practitioner must

perform an onsite evaluation of the beneficiary’s home to

verify that the beneficiary can adequately maneuver the

device that is provided considering physical layout, doorway

width, doorway thresholds, and surfaces.” In other words,

Medicare requires confirmation that the device is compatible

with the beneficiary’s home.

Once this process is complete, the DME supplier submits

the claim to Medicare for payment. The supplier must add

one of four “modifier” codes to the claim submission: KX,

GA, GY, and GZ. The GA and GZ modifiers are used where

there is “an expectation of a medical necessity denial,” while

the GY modifier is required when the power mobility device

is “only needed for mobility outside the home.” This leaves

the KX modifier as the only option when the DME supplier

seeks reimbursement for a power wheelchair used within the

home and “all of the coverage criteria specified in [the] LCD

have been met.”

III.

Unlike the majority, I do not view the DME supplier’s

role in this process as “characterized by professional or

managerial discretion (i.e., substantial discretionary judgment

that is ordinarily given considerable deference).” U.S.S.G.

2

The Wheelchair Seating LCD was admitted at trial as Exhibit 57.

30 UNITED STATES V. ADEBIMPE

§ 3B1.3 cmt. n.1. Most importantly, the supplier is not

responsible for “determining the need for the equipment they

provide.” Majority Opinion (“Maj. Op.”) at 4. Rather, the

supplier verifies that the physician has followed the LCD

process by conducting the face-to-face-evaluation and

completing the 7-Element Order. In essence, the supplier

compares the physician’s order with the detailed checklist

laid out in the LCD. This does not reflect substantial

professional or managerial discretion.3 Furthermore, any add-

ons the supplier might suggest for the device must fit within

the parameters of the medically-specific LCD and must be

approved for medical need by the physician. Although the

supplier may have “some ‘wiggle room’” when matching the

device to the beneficiary’s size and weight, Maj. Op. at

22–23, wiggle room does not rise to the level of the

substantial discretion envisioned by the Guidelines. Nor does

the supplier’s performance of a home visit confer the type of

substantial discretion envisioned by the Guidelines. Although

some experience with the power mobility devices’ sizes and

functionality may be helpful, verifying “that the beneficiary

can adequately maneuver the device that is provided

considering physical layout, doorway width, doorway

thresholds, and surfaces” is not a decision that requires

“professional or managerial discretion,” let alone substantial

3

The majority is correct that, in addition to verifying the physician’s 7-

Element Order, the supplier determines that the “basic coverage criteria”

are met. Maj. Op. at 19–20. The coverage criteria, however, are largely

duplicative of the 7-Element Order, and thus do not require the exercise

of substantial discretion. For example, the majority notes that the first

criterion is whether the “beneficiary has a mobility limitation that

significantly impairs his/her ability to participate in one or more mobility-

related activities of daily living.” But this criterion largely mirrors the

fourth element in the 7-Element Order: “Pertinent diagnoses/conditions

that relate to the need for the POV or power wheelchair.”

UNITED STATES V. ADEBIMPE 31

discretion. Finally, the fact that suppliers must “personally

certify the validity of their claims to Medicare” is not a

discretionary decision when the supplier has to select the KX

modifier in order to receive reimbursement. Although

Medicare may rely on the honesty of DME suppliers who

enter KX on their claims, such reliance does not transform the

decision to enter that code into a discretionary one. A

decision not to seek reimbursement because the coverage

criteria are not satisfied is not discretionary; it is the only

decision allowed under the LCD.

The majority’s attempts to magnify the role of a DME

supplier do not accurately reflect the LCD requirements or

the testimony at trial. For example, the majority describes

Jody Whitten, the Noridian representative, as testifying that

“medical equipment suppliers have a responsibility to

determine the medical necessity of power wheelchairs[.]”

Maj. Op. at 7. But Whitten never said that the supplier

determines medical need; rather, she testified that the supplier

has to “verify and collect medical records, verify all the orders

and Detailed Product Descriptions are received in a timely

manner, and verify that the home provides enough room.”

This verification is important, but it is ministerial in nature—

only the physician is entrusted with the discretionary medical

need determination under the LCD regulations. Nor does the

supplier exercise professional discretion by sometimes

producing, upon Medicare’s request, physician notes to

corroborate laboratory results, diagnostic tests, or the findings

of the physician’s face-to-face examination. Maj. Op. at 21.

Similarly, the majority points to the testimony of Dr. John

Fullerton, the government’s Medicare expert, who stated that

a supplier can “absolutely” question a physician’s order

because both have an “independent responsibility . . . to get

32 UNITED STATES V. ADEBIMPE

it right.” When pressed, however, on the supplier’s so-called

“independent responsibility,” Dr. Fullerton stated only that

the supplier must “look[] back at the physician and get[]

physician records.” He acknowledged that “ultimately, it’s

the physician who’s responsible for signing off on the type

and the accessories” for a power wheelchair.

The majority’s analysis is also flawed because it relies on

the defendants’ fraudulent behavior to establish that they

occupied a position of trust. For example, the majority

explains that “Sogbein was not merely processing

prescriptions written by Dr. Calaustro; rather, he was

affirmatively instructing his co-conspirators to help him

deliver a specific, high-cost piece of equipment he selected.”

Maj. Op. at 17. But the fact that Sogbein directed Dr.

Calaustro to write prescriptions regardless of medical need is

the fraudulent conduct for which he was convicted. By

instructing Dr. Calaustro, he went beyond his authority as a

supplier and usurped the discretion that Medicare gives to

physicians. This is grounds for a fraud conviction, but not for

the enhancement. Similarly, as further evidence of supplier

discretion, the majority points to Dr. Fullerton’s testimony

that if a DME supplier receives the kind of “woefully

inadequate” documentation for an order that Dr. Calaustro

provided, the supplier should request more documentation

rather than deliver the order. Maj. Op. at 9. Again, however,

defendants’ failure to request additional documentation was

part of the underlying fraud in this case, rather than a

legitimate exercise of discretion approved of by Medicare.

To apply the abuse-of-trust enhancement, there must be

more than a modicum of discretion—there must be

substantial professional or managerial discretion inherent in

the role occupied by the defendant. See Contreras, 581 F.3d

UNITED STATES V. ADEBIMPE 33

at 1168. That discretion is absent here. Medicare has

carefully circumscribed DME suppliers’ role in the supplying

of power mobility devices, entrusting the critical,

discretionary decisions to physicians that have the

professional skill and training to determine a beneficiary’s

medical need. Verifying the physician’s order, confirming

the device is usable in the beneficiary’s home, and applying

the KX modifier to indicate that all Medicare criteria have

been met, while important tasks for the processing of power

mobility device claims, are ministerial in nature and do not

require substantial discretionary judgment as required by

section 3B1.3.

IV.

A.

Every Ninth Circuit case that has affirmed the application

of the enhancement involved a defendant with substantial

discretion that went well beyond the ministerial tasks that

Medicare delegates to suppliers. In United States v. Laurenti,

we affirmed the enhancement as applied to a stock broker

based on the “professional discretion Laurenti exercised in

selecting which securities to recommend, and the deference

his recommendations received in light of his special

knowledge and expertise” in the field. 731 F.3d 967, 974 (9th

Cir. 2013). Laurenti’s provision of “investment advice” and

ability to “identify securities that would further his [client’s]

objectives,” id., is a far cry from defendants’ obligation to

verify that each physician report contains Medicare’s seven

required elements and that each beneficiary’s home is large

enough to accommodate a power wheelchair.

34 UNITED STATES V. ADEBIMPE

Nor is the supplier’s role comparable to the defendant’s

in United States v. Aubrey, 800 F.3d 1115 (9th Cir. 2015). In

that case, the defendant “controll[ed] the entire operations of

a non-profit” that constructed housing projects on the Navajo

Nation Reservation.4 Id. at 1134. While managing those

projects, he improperly “shifted” HUD funds “among the

various accounts he controlled” with “little oversight” by

FDHC, the sub-grantee that supervised Aubrey’s work and

reimbursed his expenses. Id. Given those facts, we

concluded that Aubrey occupied a position of trust with

FDHC. Id. Here, by contrast, Medicare exercises significant

“oversight” over DME suppliers through the LCD rules,

which dictate every step the supplier must take to obtain

reimbursement. DME suppliers simply do not exercise the

type of freedom in processing power mobility device claims

that Aubrey enjoyed over the management of the affordable

housing developments. Further, the discretion vested in

defendants over the internal operations of their businesses

“carr[ies] no special weight” because that discretion is

unrelated to the Medicare claims reimbursement process

governed by the LCD. United States v. West, 56 F.3d 216,

221 (D.C. Cir. 1995)

4

The funding process for such projects as outlined in Aubrey was

complex. First, the Department of Housing and Urban Development

(“HUD”) allocated federal money to Indian tribes, there, the Navajo

Nation, to fund affordable housing construction. Id. at 1119. The Navajo

Nation’s Housing Authority, the recipient of the funds, delegated

responsibility for disbursing HUD funds for construction work to a series

of sub-grantees. The Fort Defiance Housing Corporation (“FDHC”) was

one of the relevant sub-grantees. FDHC entered into several development

agreements with defendant and his corporations that gave him the

authority to manage a number of housing construction projects. Id. at

1121.

UNITED STATES V. ADEBIMPE 35

In the Medicare fraud context, we have determined that

physicians occupy a position of trust. United States v.

Rutgard, 116 F.3d 1270 (9th Cir. 1997). This result is

unsurprising given that physicians are explicitly listed in the

Guidelines commentary as having the requisite professional

discretion to justify the enhancement. Both the patient and

Medicare are “easily taken advantage of if the doctor is not

honest,” id. at 1293, because a physician’s specialized

knowledge allows for obfuscation of wrongdoing. Absent

hiring government physicians to re-examine beneficiaries,

Medicare has no way to verify that the determinations of

medical need are accurate. DME suppliers, by contrast, have

the opportunity to commit fraud not because of any

professional discretion or expertise, but because the volume

of claims submitted to Medicare means the government must

rely on supplier certifications and random audits as a check

on fraudulent billing.

B.

Other circuits have recognized that specific statutory

obligations do not confer substantial discretion. In United

States v. Garrison, the Eleventh Circuit refused to apply the

enhancement to a DME supplier convicted of Medicare fraud.

133 F.3d 831 (11th Cir. 1998). The court held that

Medicare’s “statutory reporting requirements do not create a

position of trust” in the supplier, id. at 841, and distinguished

Garrison’s lack of discretion from the hypothetical “physician

who possesses the expertise to create erroneous medical

records and, consequently, fraudulent Medicare reports that

are difficult to detect and to question,” id. at 842. The

majority holds that Garrison is distinguishable from this case

because there the defendant submitted claims to a “fiscal

intermediary whose specific responsibility was to review and

36 UNITED STATES V. ADEBIMPE

approve requests for Medicare reimbursement.” Id. at 841;

Maj. Op. at 14–15, 18. But even if the fiscal intermediary in

Garrison had a larger role than Noridian did here, that still

leaves the Eleventh Circuit’s persuasive reasoning that

suppliers simply follow “statutory reporting requirements,”

id. at 842, while “physicians exercise enormous discretion,”

id. (quoting United States v. Adam, 70 F.3d 776, 782 (4th

Cir. 1995)).

The Second Circuit similarly rejected an abuse-of-trust

enhancement based on statutory reporting requirements.

United States v. Broderson, 67 F.3d 452 (2d Cir. 1995). The

court held that the defendant’s failure to comply with

“specific legal obligations,” including the “duty to . . . certify

that [] information had been accurately provided” did not

mean he occupied a position of trust. Id. at 455. The court

emphasized that “whatever ‘trust’ [the government] placed in

Broderson was based strictly on the explicit commands” of

two statutes. Id. at 456. Here, too, defendants’ “trust” stems

from Medicare’s LCD rules, not from any professional or

managerial discretion.

Contrary to the majority, I do not find persuasive the Fifth

Circuit’s contrary conclusion. As the majority explains, that

court in United States v. Willett, upheld the application of the

enhancement to a DME supplier, reasoning that “Medicare

relies on the honesty and forthrightness of DME providers in

their claim submissions.” 751 F.3d 335, 344 (5th Cir. 2014);

see also United States v. Miller, 607 F.3d 144, 150 (5th Cir.

2010) (upholding application of the enhancement to a

supplier because the government “entrusted her to provide

good faith, accurate information in seeking reimbursement,”

thus giving her the “freedom to commit a difficult-to detect

wrong, which is the primary trait of one who holds a position

UNITED STATES V. ADEBIMPE 37

of trust”) (internal quotation marks omitted). The Fifth

Circuit ignores that the presence or absence of substantial

professional or managerial discretion, conferred by the

victim, is now the critical inquiry under section 3B1.3. As

Contreras recognized, honesty and the difficulty of detecting

wrongdoing are no longer the primary considerations after the

commentary revisions to section 3B1.3. 581 F.3d at 1166.

V.

The majority attempts to cabin its expansion of the abuse-

of-trust enhancement by stating that “[a] contractor does not

occupy a position of trust merely by doing business with the

government.” Maj. Op. at 18. The majority’s reasoning,

however, can easily be interpreted to lead to that conclusion.

The majority says that “here there is more” than in the

average contractor case because “Medicare trusted

[defendants] to exercise their professional discretion in

providing appropriate medical equipment to individuals who

actually needed it and could use it in their homes.” Id. But

using the key words “professional discretion” does not make

it so. As described above, Medicare entrusts the physician

with the discretion to determine medical need and reserves to

the supplier only the responsibility to verify that the

physician’s order complies with its regulations.

The majority also relies on the fact that Medicare uses an

“honor system” that depends on suppliers’ forthrightness. Id.

As an initial matter, this conclusion erroneously flows from

the old interpretation of the Guidelines rejected by Contreras

and fails to account for the commentary revisions that make

substantial discretion the key factor. More importantly,

Medicare is far from the only government agency that relies

on an honor system backed up by audits to provide

38 UNITED STATES V. ADEBIMPE

reimbursements. “All taxpayers who file false tax returns, for

example, might be included” under the majority’s approach

because it seems to subject “virtually anyone who is

commanded by statute to make an accurate report to the

government to be subject to a Section 3B1.3 enhancement.”

Garrison, 133 F.3d at 840 (quoting Broderson, 67 F.3d at

455). Thus, in my view, the court’s opinion will lead to a

substantial expansion of this enhancement in contravention of

the commentary revisions, which purposefully “place[d] a

significant limit on the types of positions subject to the abuse-

of-trust enhancement.” Contreras, 581 F.3d at 1166 (quoting

United States v. West, 56 F.3d 216, 220 (D.C. Cir. 1995)).

***

The majority’s decision to affirm the application of the

abuse-of-trust enhancement to defendants relies on a

mischaracterization of the DME supplier’s role in the

Medicare reimbursement process. Moreover, it represents a

significant expansion of section 3B1.3’s applicability beyond

the narrow situations in which this court has previously

approved of the enhancement’s application. Because I do not

believe Medicare vests substantial professional or managerial

discretion in DME suppliers, I respectfully dissent.