United States v. Diana Gumila

In the

United States Court of Appeals

For the Seventh Circuit

____________________

No. 16-3111

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

DIANA J. GUMILA,

Defendant-Appellant.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 14 cr 411 — Charles P. Kocoras, Judge.

____________________

ARGUED APRIL 7, 2017 — DECIDED JANUARY 16, 2018

____________________

Before POSNER, RIPPLE, and SYKES, Circuit Judges.

∗

SYKES, Circuit Judge. Diana Gumila ran a home-healthcare

company that defrauded the federal government of several

million dollars. She was convicted of multiple counts of

healthcare fraud and making false statements in connection

∗ Circuit Judge Posner retired on September 2, 2017, and did not partici-

pate in the decision of this case, which is being resolved by a quorum of

the panel under 28 U.S.C. § 46(d).

2 No. 16-3111

with a healthcare matter. The district judge imposed a

below-guidelines prison sentence of 72 months followed by

24 months of supervised release.

Gumila appeals, raising several challenges to her sen-

tence. She first argues that the judge miscalculated the

financial loss attributable to her offenses. She also contends

that the 72-month prison term is substantively unreasonable.

Finally, she claims that the judge did not adequately explain

the term and conditions of supervised release. The first two

arguments are meritless. The third is waived. We affirm.

I. Background

Diana Gumila was head of clinical operations for

Suburban Home Physicians, LLC, which did business under

the name “Doctor at Home.” The company employed doc-

tors and other medical personnel to provide home medical

care to the elderly in and around Chicago. Gumila was

indicted on 21 counts of healthcare fraud in violation of

18 U.S.C. § 1347 and three counts of making a false statement

in a healthcare matter in violation of 18 U.S.C. § 1035. The

indictment alleged that Doctor at Home (1) overbilled

Medicare for medical home visits; (2) billed Medicare for

unwarranted skilled-nursing services; and (3) billed

Medicare for care-plan oversight services that were never

provided.

At trial the government introduced testimony from more

than 20 witnesses and a trove of documentary evidence

establishing that Gumila played a central role in Doctor at

Home’s scheme to defraud the government. The evidence

showed that she regularly overruled physicians who wanted

to discharge patients from their care. She instructed nonphy-

No. 16-3111 3

sician employees to bill medical services at unjustifiably high

rates (a practice known as “upcoding”). She instructed

employees to claim that patients were homebound even

when they weren’t. And she instructed employees to process

orders authorizing skilled-nursing services even if the

attending doctor did not believe the patient qualified for that

service and even when no doctor had ever examined the

patient. A jury found her guilty on all counts.

Before the sentencing hearing, the government proposed

figures for three categories of financial loss suffered by

Medicare: (1) approximately $2.375 million for unnecessary

and upcoded home visits; (2) at least $9.45 million for

skilled-nursing services that did not meet Medicare’s re-

quirements and were unnecessary; and (3) $3.779 million in

claims for care-plan oversight services that did not qualify

for payment or were never performed.

In the presentence report (“PSR”), the probation officer

substantiated those figures for the three categories of loss

and estimated the total financial loss stemming from

Gumila’s unlawful conduct to be $15.6 million. The corre-

sponding guidelines range was 151 to 188 months in prison.

The probation officer recommended a below-guidelines

sentence of 84 months in prison and a 24-month term of

supervised release. The PSR also recommended 18 specific

conditions of supervision.

Gumila filed written objections to the PSR, challenging

the loss calculation and arguing that the loss should be

limited to Medicare payments for the eight patients specifi-

cally mentioned in the indictment—for a total loss of only

$14,449. She argued for a prison sentence of 12 to 18 months.

She did not object to the recommended term or conditions of

4 No. 16-3111

supervised release. The government recommended a below-

guidelines sentence of 120 months in prison, a 24-month

term of supervised release, and $15.6 million in restitution.

At sentencing the judge concluded that the evidence es-

tablished an “overwhelming and massive scheme” to de-

fraud the Medicare program. He rejected Gumila’s argument

that the government was required to present specific evi-

dence to prove the fraudulent nature of each individual

transaction contributing to the total financial loss. He also

determined that the PSR’s loss estimate of $15.6 million was

reasonable. The judge imposed a sentence of 72 months in

prison (less than half the low end of the guidelines range)

and 24 months of supervised release. He also imposed the

18 conditions of supervision recommended by the PSR and

ordered Gumila to pay $15.6 million in restitution.

II. Discussion

On appeal Gumila raises three arguments: (1) the district

judge erred in calculating the financial loss attributable to

her; (2) the 72-month prison term is substantively unreason-

able; and (3) the judge committed procedural error by failing

to explain the term and conditions of supervised release by

reference to the relevant factors listed in 18 U.S.C. § 3553(a).

A. Loss Calculation

We review the judge’s loss calculation deferentially and

will reverse only if we find clear error. United States v.

Littrice, 666 F.3d 1053, 1060 (7th Cir. 2012). Gumila must

show that the judge’s calculation “was not only inaccurate

but outside the realm of permissible computations.” Id.

(quoting United States v. Al-Shahin, 474 F.3d 941, 950 (7th Cir.

2007)). At sentencing the government bears the burden of

No. 16-3111 5

proving the loss amount by a preponderance of the evi-

dence, but a reasonable estimate will suffice. United States v.

Schroeder, 536 F.3d 746, 752 (7th Cir. 2008).

The judge determined that the government’s method for

calculating loss was both “supported by the evidence and …

quite compelling.” He noted that Doctor at Home employed

a routine set of procedures in its scheme to defraud the

government, most of which were illegal in themselves, and

that Gumila personally orchestrated those procedures.

Gumila attacks each category of loss individually, but she

also makes a general argument that the loss calculation

should be limited to the illicit Medicare payments associated

with the eight patients listed in the indictment.

The generalized argument requires little comment. The

judge’s task was to estimate total loss, and to do so he was

permitted to approximate by scaling up the evidence “to

reflect the scope of the loss involved.” United States v. Natour,

700 F.3d 962, 978 (7th Cir. 2012). The eight specific patients

listed in the indictment were merely representative of the

thousands of patients for whom Doctor at Home submitted

fraudulent claims that were subsequently paid by the gov-

ernment. The judge was not required to limit the loss calcu-

lation solely to those eight patients when evidence

established a far more sweeping overall fraudulent scheme.

See United States v. Sutton, 582 F.3d 781, 784 (7th Cir. 2009).

Gumila’s specific challenges to the separate categories of

loss fare no better. We take each one in turn.

1. Losses Attributable to Home Visits

Medicare will pay for home visits only if there is a doc-

umented medical necessity for that type of care in lieu of an

6 No. 16-3111

office or outpatient visit. The government presented evi-

dence at trial that a vast number of the home visits per-

formed by Doctor at Home never qualified for Medicare

payment in the first place. 1 Doctor at Home also regularly

and fraudulently upcoded its home visits.

To submit a home-visit invoice to Medicare, Doctor at

Home first had to code the visit. Home visits receive one of

four different billing codes based on the severity of the

medical problem addressed during the visit, the complexity

of the medical decision reached during the visit, the type of

care provided during the visit, and the length of time for the

visit. The more complex or demanding the visit, the larger

the bill. According to Medicare regulations, high-coded

visits are justified when the medical examination is “de-

tailed” or “comprehensive,” the medical decision-making is

moderately to highly complex, and the problems presented

by the patient are moderately to highly severe. Additionally,

the normal period of time spent with a patient for a high-

coded visit should be about 40–60 minutes. On the other

hand, visits warrant one of two lower billing codes when the

examination is “problem-focused,” the medical decision-

making is straightforward and not complex, the problem

1 For example, a doctor employed by Doctor at Home testified that 60%

of her home visits did not qualify for Medicare reimbursement. The

company’s medical director stated that “with each passing day, Doctor

[a]t Home is committing fraud by seeing patients who can drive, go to a

[primary care physician,] or walk out of the house unassisted.” A

number of patients testified that they left their home regularly even

though Doctor at Home claimed them as homebound, and emails

established that patients attempted unsuccessfully to remove themselves

from Doctor at Home’s rolls of homebound patients.

No. 16-3111 7

presented is low to moderately severe, and the amount of

time spent with the patient is about 15–25 minutes.

Doctor at Home billed nearly every home visit at the two

highest codes. But several employees testified at trial that the

vast majority of these visits, which were nearly all scheduled

to occur regularly on a monthly basis, were simple check-

ups, not sick visits, and thus did not qualify for billing at

those rates. A memo drafted at Gumila’s command coached

Doctor at Home employees to cajole patients into maintain-

ing their regular schedule of home visits whenever they

tried to cancel them. Witnesses also testified that the home

visits were routine in nature and that if the visits qualified

for Medicare payment at all, they should have been coded at

the lowest level. And emails showed Gumila knew that at

least one doctor routinely paid only brief visits to the pa-

tients, sometimes not even speaking to them during the visit,

and performed no examination beyond listening to their

hearts and lungs. Nonetheless, nearly all of that doctor’s

visits were billed at the highest code. Other emails showed

that Gumila instructed employees to use only the two high-

est codes when billing the visits.

To estimate the losses attributed to these upcoded home

visits, the judge determined the amount that Medicare

would have paid had the visits been billed at a lower code

rate instead of at the top two rates. The difference totaled

$2.375 million. The judge’s calculation generously assumed

that each home visit qualified for some level of reimburse-

ment from Medicare, even though the evidence at trial

established that a large number of these visits did not quali-

fy at all. Thus, the calculation for this category was more

conservative than it might have been. See United States v.

8 No. 16-3111

Mikos, 539 F.3d 706, 714 (7th Cir. 2008) (holding that the loss

should not be discounted for value of services rendered

because the services did not qualify for Medicare payment in

the first place). We find no error in this approach.

2. Losses Attributed to Skilled-Nursing Services

Medicare reimburses for skilled-nursing services only if

the patient is homebound and requires such services. A

physician must sign an order requesting the service. Evi-

dence at trial showed that Doctor at Home trained nonphy-

sician employees to alter patient charts to make it appear

that the attending physician qualified the patient as home-

bound and to delete information indicating that the patient

didn’t need nursing services. One former employee testified

that a Doctor at Home physician would sign a stack of

orders for skilled-nursing services without examining the

patients or even reading the patients’ files. Gumila also

regularly overruled doctors who tried to discharge non-

homebound patients from nursing services. Finally, Gumila

herself authorized orders for nursing services for patients

whom no Doctor at Home physician had ever seen.

To estimate the loss attributable to the fraudulently billed

skilled-nursing services, the government focused on

Drs. Pauwaa and Newman, both of whom worked with

Doctor at Home during the relevant time period. Medicare

paid approximately $16.6 million for nursing services or-

dered by Dr. Pauwaa and approximately $8.2 million for

nursing services ordered by Dr. Newman. Based on a review

of these payments along with other claims data showing that

many of those patients who received nursing services didn’t

qualify as homebound, the judge estimated that 40% of the

payments for services ordered by Dr. Newman and 43% of

No. 16-3111 9

the payments for services ordered by Dr. Pauwaa were

directed to patients who did not qualify as homebound. This

fraudulent billing totaled about $9.35 million. 2

Though the judge limited his calculation of skilled-

nursing services to those requested by Drs. Pauwaa and

Newman, evidence established that many other employees

also fraudulently claimed patients as being homebound. In

other words, the judge’s estimate of loss for this category of

fraudulent billing was again on the conservative side.

Gumila has not identified any clear error in the judge’s

approach to estimating losses attributable to skilled-nursing

overbilling.

3. Losses Attributed to Care-Plan Oversight Services

Care-plan oversight services include physician supervi-

sion of patients requiring complex or multidisciplinary care

and ongoing physician involvement. Medicare pays for

oversight services that take 30 minutes or longer to perform

so long as certain requirements are met, including the re-

quirement that the patient’s problems are complex enough

to require a doctor’s ongoing involvement in the patient’s

care plan. Evidence at trial established that Doctor at Home

employees in Illinois and the Philippines fabricated forms

claiming Medicare reimbursement for nonexistent oversight

services. Witnesses testified that employees scoured patient

files to find anything that might be passed off as a potential-

ly covered activity on the Medicare oversight-services form

and attributed time to that service. Moreover, these employ-

2 Dr. Newman also confirmed the amount attributed to him in his own

plea agreement.

10 No. 16-3111

ees billed Medicare without ever confirming that a doctor

had spent time performing oversight services for that pa-

tient.

The judge estimated that Medicare paid $3.779 million to

Doctor at Home for these fraudulent care-plan oversight

services. The judge determined that all the Medicare invoices

in this category were fraudulent because there was no evi-

dence that any oversight services qualifying for Medicare

payment were ever performed. Gumila points out that at

least some employees filled out care-plan oversight billing

forms by referring to “services that had been documented as

performed in the charts.” But the notation alone does not

establish that oversight services were in fact performed,

were medically justified, or were accurately calculated

according to the amount of time actually spent on the patient

as required. Indeed, Gumila acknowledges that these em-

ployees did nothing to verify what services (if any) had been

performed by the attending physicians. The judge did not

clearly err in determining that none of the payments for

care-plan oversight services were warranted.

Gumila’s final challenge is that the judge’s overall calcu-

lation did not take into account the fair market value of the

services rendered. She argues that the patients received some

value from the doctors’ and nurses’ visits, which must be

reflected in any discounting of Medicare payments received

for those services. As we’ve noted, however, the judge did

account for the fair value of services actually rendered, but

only when the record arguably supported it. For medical

home visits, for example, the judge calculated the loss by

taking the difference between the amount that Doctor at

Home overbilled Medicare and the billing rates that more

No. 16-3111 11

accurately reflected the types of home visits that Doctor at

Home actually performed. For home nursing services, the

judge relied on evidence from two doctors that approximate-

ly 40% of the services ordered didn’t qualify for Medicare at

all. But for the care-plan oversight services, Gumila was

unable to establish that any of the services had even been

performed, let alone that they qualified for Medicare reim-

bursement.

B. Substantive Unreasonableness

Gumila next argues that her 72-month prison term is

substantively unreasonable. This is a steep uphill climb. Our

review is deferential, for abuse of discretion only. United

States v. Annoreno, 713 F.3d 352, 356–57 (7th Cir. 2013). A

sentence within a properly calculated guidelines range is

presumptively reasonable, United States v. Mykytiuk, 415 F.3d

606, 608 (7th Cir. 2005), but more to the point here, we have

“never deemed a below-range sentence to be unreasonably

high,” United States v. Wallace, 531 F.3d 504, 507 (7th Cir.

2008). Gumila’s 72-month sentence is less than half the low

end of the guidelines range of 151 to 188 months. She has

given us no good reason to overturn her sentence as unrea-

sonably long.

C. Supervised Release Procedural Error

The judge imposed a 24-month term of supervised re-

lease and 18 conditions of supervision as recommended in

the PSR. Gumila argues that the judge committed procedural

error by failing to adequately explain the length of the term

and the conditions of supervised release.

This argument is waived. The PSR gave Gumila written

notice of the proposed term and conditions of supervised

12 No. 16-3111

release (and the justifications for each condition) well in

advance of the sentencing hearing. The judge directed her to

respond in writing with any objections to the report. She did

so, but her memorandum challenged only the loss calcula-

tion and the PSR’s suggested evaluation of the § 3553(a)

factors in relation to the recommended prison sentence. She

did not object to any of the supervised-release conditions or

the term of supervised release.

The sentencing hearing is the “main event,” and when

the court gives advance notice of the proposed term and

conditions of supervised release, the parties can “prepare

and identify issues they wish to address.” United States v.

Lewis, 823 F.3d 1075, 1083 (7th Cir. 2016). Advance notice

permits the defendant to “present an informed response” at

the hearing. United States v. Kappes, 782 F.3d 828, 843 (7th Cir.

2015). Here the PSR gave Gumila all the notice she needed to

make an informed objection to the proposed term and

conditions of supervised release. She did not do so. We’ve

held that a defendant’s “failure to object in th[ese] circum-

stances can amount to waiver.” United States v. Gabriel,

831 F.3d 811, 814 (7th Cir. 2016) (citing Lewis, 823 F.3d at

1083–84); see also United States v. Bloch, 825 F.3d 862, 873 (7th

Cir. 2016) (stating waiver exists when there was no “lack of

notice or surprise at the conditions the district court planned

to impose”).

Gumila’s written response to the PSR challenged several

factors that would bear on the prison term and restitution

(e.g., the loss calculation), but she lodged no objection to the

proposed term or conditions of supervised release. That’s a

waiver, as we’ve recently held in a materially identical case.

No. 16-3111 13

See United States v. Ranjel, 872 F.3d 815, 821–22 (7th Cir.

2017).

AFFIRMED.